> Michael, you say: "Events don't cause
> trends ... they compound and cause
> them."

> Could you both explain what you mean by your
> statements?

Individually, an event, whatever that event may be, does not cause a trend. A series of events, sometimes unrelated, compound over time and create the trend...

After 9/11 last year, a lot of airlines asked for assistance because without it they would have to fold.

The 9/11 event itself didn't cause them the trouble. They had been in trouble for a long time before hand. Struggling. The 9/11 event highlighted it. Sped up what was most likely going to happen anyway.

A baby being born is an event. And individually, not a major thing. Yet, when it happens many many times above "normal" then we have a "baby boom."

As each individual in this "boom generation" buys the things they are interested in, the little buying event compounds with the little buying events of all the other individuals in the generation to create a trend.

If these people have children when they are 20, ten years later the child now needs more stuff... but the parents are also producing more so they can spend more.

As the adult moves towards 70 and retirement, they take money out of the stock market and spend again - some of their retirement money pays off personal debt, some goes on holidays, etc.

Either way, they stop working.

Their children, now 40 to 50, are paying off their homes, buying middle age toys, and generally not having money in stocks. They may, at this stage, begin to put money away for retirement. Then money stays out of the economy.

Individually, the events are not major - birth, spending, working, debts, saving, retiring, etc. But as a large group of people do the same things, it compounds and becomes a trend.

Two dollars is not a lot of money. So it's easy to spend it on coffee every day. It's also easy to buy a newspaper everyday for $1. And a $5 a week magazine. Yet just these three expenses add up to $110 ($60 for coffee, $30 for newspaper, $20 for magazines) after one month.

Throw in a $6 video rental once a week, and $20 on booze a week, and you can add $104 to the previous $110 and have now blown $214 on stuff. Yet you didn't notice it going because individually, the spending event was not major. But compounded over time it adds up and forms a $214 a month short-fall trend.

Businesses do not suddenly go bust. A series of bad financial decisions and bad other decisions, compounds over time to send the business down the tubes.

Let me give you an example of a "trend" which has no real single cause, and yet it is plainly visible...

Books stores in shopping malls.

If my memory serves me right it went something like this...

The classic old book store in the city. That's all there was.

Cars allowed people to live out of the city and drive in to work.

WWII encouraged people to move out of the city. Books stores followed. Shopping malls sprang up and books stores moved in. To be profitable they needed to have as many books covering as many topics as space would allow. They had to attract the walking by customer.

Without the car, it would not have happened. Without WWII it would most likely not have happened... at least not as soon as it did. Without shopping malls (or land developers taking the risk, or the large supermarkets being the major tenant and the reason people went to the shopping mall in the first place etc.)... and so on.

No single event made it happen. Events compound to create the trend.

Michael Ross