While the continual question remains, why are bonds holding up? Why isn't that money flowing into equities? We highly recommend recommend this piece from Variant Perceptions. These gusy have nailed it over and over again in the past and maybe, just maybe big investors are embracing something that the little guy doesn't wish to accept. That profit margins in our "new recovery" are unsustainable. We may crawl higher, but they wouldn't bet the bank it will last long. That's great! I'd prefer reverting to the mean and loading up on names..........at lower levels. Enjoy-
Profit margins in the US have hit modern-day record levels, and this has been used to help justify high equity valuations. Consensus estimates are for profit margins to remain steady, or even increase from current levels. We disagree for ironclad economic and accounting realities, and think margins will fall, taking equities down too.
Profit margins have, at least until now, exhibited mean-reversion like behaviour. Th