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Finance: What is a secular trend? 13 Views
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Description:
A secular trend is something that changes over time, but is not necessarily an element in a repeated, continuing cycle.
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Transcript
- 00:00
finance a la shmoop what is a secular trend well people don't read the
- 00:07
newspaper on paper anymore people die older Americans smoke less and yeah [Man reading newspaper]
- 00:14
maybe that's related to the dying older thing Americans text while going to the
- 00:19
bathroom a whole lot more it's more than they did 20 years ago [Man with phone in bathroom]
- 00:23
these are all secular trends meaning people will likely text even more while
Full Transcript
- 00:28
they're going to the bathroom in the future [Man using smartphone]
- 00:31
all right well things that are happening quote forever unquote I eat not just in
- 00:35
a short-term cycle like an economic cycle like the decline of the economy's [Economic cycle appears]
- 00:40
growth is cyclical not secular and unless you believe we're gonna be nuked
- 00:45
by North Korea then oh yeah probably decline is secular but assuming the no [Missile explodes]
- 00:49
nuke solution the economy grows few percent a year then dips for a percent
- 00:54
in roughly seven or eight year cycles its approximated by the stock market
- 00:58
cycle in more or less why does all this matter cyclical versus secular well with
- 01:04
your stock market investor hat on a cyclical bet it's kind of like a white [Man puts stock market cap on]
- 01:09
mark on a bike tire it's gonna roll up up up and then down down down in a cycle
- 01:15
such that it won't doesn't really go anywhere over time like the paper and
- 01:19
pulp industry it kind of just stays flat but you can double your money triple [Cash piles appear]
- 01:23
your money if you buy it right at the bottom of the cycle and then sell it
- 01:26
right at the top of it right that's a cyclical bet and you can think airlines
- 01:30
well over time yeah they too don't really get all that more valuable but if [Aircraft lands on runway]
- 01:34
you buy them right like just when the New York Times is declaring that
- 01:38
whatever West Airlines is certain to now go bankrupt and then sell them when the
- 01:42
New York Times declares that whatever West Airlines is certain to be the next [Man reading newspaper]
- 01:46
Google yeah you'll have quote ridden the cycle unquote nicely there's a good coin
- 01:51
to be made from here to here but a secular trend is different like one
- 01:56
thesis might be while the world's getting hotter so people will want to [Man discussing secular trend]
- 02:00
drink more liquid that's a bullish secular trend for Coke and Pepsi or you
- 02:05
might notice that the internet along with Skype or Google Hangouts has made
- 02:09
where you live not nearly
- 02:12
as important as it used to be so there's a secular trend to live wherever [New York Times Square appears]
- 02:15
you want and that might mean a mass exodus away from the high tax expensive
- 02:20
to live in blue states to the cheaper red states secular long-term non
- 02:26
cyclical and yeah just to watch out for those nukes [Nuke with north korean flag on it appears in the sky]
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