Sunday, February 23, 2014

Are Profit Margins Mean Reverting?

Over the past couple of years, many readers have messaged me to ask about good blogs to read.  As I have said before most everything you read on the internet is useless and often repetitive.  Original ideas and thoughts are rare. 

That said, I stumbled upon a blog a few weeks back called Philosophical Economics and found it to offer interesting perspectives on many investment issues.  The author of the blog often challenges the status quo and provides unique thoughts that are contrary to many conventional wisdom.  Ideas are also well supported with evidence and not just conjecture. 

In a recent post the author questioned the commonly held idea that profit margins are mean reverting and bound to fall from currently elevated levels.  I thought the arguments were interesting enough to share, so here is a link:

http://philosophicaleconomics.wordpress.com/2014/01/10/cape/

As I've said before, unless you understand both sides of an argument you really don't understand anything.  There are intelligent people on both side of every debate and to simply write off the opposite side without thoroughly understanding their position is quite dangerous.  With that said, you still don't have to agree with one side or another but it should allow you to better defend whatever position you take. 


Best Regards,

Kevin

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