Thursday, December 27, 2012

Corporate Profit Margins at All-Time Highs

Corporate Profits at all time highs. Can this be sustained? Some, like John Hussman, would argue no while others, like Seigal, would argue yes. Does this even matter?



The answer is yes, as high corporate profit margins are leading to continued earnings growth and higher stock prices. My guess is that profit margins will fall at some point, as one of the main tenants of competitive markets and economic theory is that out-sized profit margins are not sustainable indefinitely. As to when they fall, I do not know. It is what I call the market uncertainty principle. You can know what or when, but never both. The video is here after the jump.

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