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Strategies & Market Trends : Trend Setters and Range Riders

MSFT 485.49

+1.8%

Nov 26 3:59 PM EST

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To: bobby is sleepless in seattle who started this subject	3/3/2002 5:55:17 PM
From: bafi403	of 26752

Here is a cautionary note on macro numbers: Consider a small bookstore in a mall that faces flat sales of 400 books per month, (that is, 0% "true" monthly growth). Now suppose that the bookstore loses 2/3 of normal traffic in September due to people staying at home and watching the terrorist incidents on TV; and loses 1/3 and 1/5 of normal traffic in October and November due to anthrax and military action in Afghanistan, etc. These assumptions would generate the following reported numbers for the bookstore. Books Monthly Growth Quarterly Growth Jun 400 0% 0% Jul 400 0% Aug 400 0% Sep 133 -67% -22% Oct 267 +101% Nov 320 +20% Dec 400 +25% +6% Jan 400 0% Feb 400 0% Mar 400 0% +22% Apr 400 0% May 400 0% Jun 400 0% 0% As is obvious, "reported" growth rates have been contaminated by the extreme events, even though "true" growth rates have not changed. The monthly numbers are just beginning to get cleaned up, the quarterlies and many moving average type numbers will take a while to get de-contaminated. In short, be careful about getting too excited too soon, it is still too early to pass judgement on the state of the economy. Bafi403.

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