investmentwatchblog.com / Submitted by IWB, on May 23rd, 2015
CHAPEL HILL, N.C. (MarketWatch) — Watch out if corporate-profit margins narrow to their long-term average share of gross domestic product. If so, the S&P 500 Index would trade at less than 1,700 in five years, a decline of more than 20%.
I’m not necessarily forecasting such a dismal eventuality, though it’s in the realm of possibility. I merely point it out to illustrate how dependent the stock market is on wide profit margins.
Few seem to be focusing on this vulnerability.
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