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Today I read a news report stating that Starbucks’ profits are down 97% over the same quarter last year. Such a steep decline must be caused by more than just a bear market.

Trends can be fun an exciting, but they are hard to keep going. Gourmet coffees have been very trendy for quite a while. I’m sure many people (not me) consider going out with friends to get some expensive coffee to be an energizing lifestyle.

But trends attract trendy people who are always looking for the next big thing. This means when other things come along, they abandon their old brands for newer, trendier brands. Especially with market downturns, expensive trends are the first to get cut.

And such is the problem with Starbucks. I think that over the last 10 years they’ve been riding their own trend bubble. It has become absurd how much Starbucks has grown. For example, I’ve seen a Starbucks store next door to a Fred Meyers, with a Starbucks counter inside the store.

Starbucks’ growth has only been supportable as long as gourmet coffee remains trendy. The problem is that, for a reason unknown to me, it is no longer trendy, and thus, their profits dropped like a rock in the swimming pool.

Other trendy brands such as Krispy Kreme and Sonic should take close notice to the fate of Starbucks. They could be next.

(image source)

The following facts refer to the Dow Jones Industrial Average:

• Almost one year ago, the stock market hit an all time high.
• Since then, it has fallen over 29%.
• Today, it closed below 10,000 points. (source)
• And closed about 3.5% lower than where it closed last Friday.
• Which is more than 11% lower than where it closed a month ago.
• This is a 4 year low.
• At one point today, the stock market was down by 800 points.
• Which was the worst intra-day fall since Black Monday in 1987. (source)
• But it rallied near the end of the day, to close with a loss of 370 points. (source)
• This is the 19th largest single-day point loss ever.
• The 1st largest point loss occured one week ago.
• The 1st, 8th, 9th, 17th, and 19th worst single-day point losses have call occured in the last month. (source)
• In the last month, shares of Hewlett-Packard have dropped by almost 9%.
• Shares of Apple, IBM, and Dell have all dropped more.
• The utilities and medial sectors have fallen the most, dropping more than 5% today.
• While the transportation industry has dropped the least with less than a 1% drop.

Update Oct 7:

• On October 7, the stock market dropped another 508 points.
• This is the 5th worst single-day point loss ever.
• Adding today to the list, the 1st, 5th, 9th, 10th, 18th, and 20th worst single day losses have all occurred in the last month.
• It has dropped almost 13% in the last week.
• It has dropped almost 2000 points in the last month, or almost 16% of its value.
• And almost a 33% drop in the last year.  Think about that!  It has dropped by a whole third in just a year!

Today I passed one of those big trailer hauling semis, and I started to wonder about what it might be carrying. Bread that I might buy at the grocery store? My next couch? Fertilizer for the farm down the road?

Then I started to think about how incredibly not aerodynamic the trailer is. Anyone who has participated in a pine wood derby knows that a big block on wheels isn’t the best way to go. If you’ve felt the wind come off the end or sides of one of these trucks as it drives by, then you have felt the energy that is lost because of the inefficient design of the big box trailer.

I suppose they are made that way because that is the most inexpensive way to make a trailer. But with diesel prices near $5 per gallon, maybe it’s time to re-think that.

If big-rig trucks were more aerodynamic, then they would get better gas mileage. If they get better gas mileage, then that reduces the cost of delivery for the products they are delivering. This, in turn, can keep consumer prices slightly lower. Lower prices helps the economy.

So much of our economy depends on the distribution of goods, that maybe it is time to think uniquely about making our means of distribution more affordable.

(Image source)

J. Edward Carter & Cesar V. Conda on 368 Economists Against John Kerry

I’m convinced that Bush will only win if his supporters are vocal. This is my voice. I think that Bush has a better plan for the economy than Kerry. This article supports this.