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Corporate Profits as a Percentage of GDP Hits All-Time High

Interesting bit of big picture perspective here from Mark Thoma’s blog. Β The chart shows after tax corporate profits as a percentage of GDP.

Depending on your perspective you might be inclined to come to extremely different conclusions about this situation:

  • Some might be inclined to believe that this means the stock market is extremely undervalued. Β 
  • Some others might be inclined to believe that this is an entirely unstable and unsustainable environment that is likely ripe for a bit of mean reversion which would bring us back down to something closer to the 6-7% range.

What do you think?



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