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RE: this is the future, what is the reasoning behind the sudden (post COVID it seems) squeezing of profit from everywhere? Seems like every business is pushing

RE: this is the future, what is the reasoning behind the sudden (post COVID it seems) squeezing of profit from everywhere? Seems like every business is pushing profit over employees or customers. Price gauging, layoffs, all of it without any reason besides "more profit". Why the sudden influx of greed?

lotsofpulp 3y ago
Every business has always pushed profit. The only thing that changes is whether or not they have the negotiating power to get it. These are operating margins, not profit margin, but page 7 should still give an idea for which businesses have more pricing power than others. And of course, bigger companies getting bigger means businesses might simply be gaining negotiating power overall. https://www.yardeni.com/pub/sp500margin.pdf https://www.yardeni.com/pub/sp500margin.pdf
- sokoloff 3y ago
  That page of chart drives me crazy from an information visualization point of view. All of those charts could [and should] have the same Y axis scaling, including being anchored at 0% at the origin, and the information would be much more easily consumed at a glance.
supportengineer 3y ago
Greed was held back by a sense of collectivism; as that has eroded since the 1960’s, it’s become a self-sustaining feedback loop. No one looking out for me means I’d better screw everyone else over first and “get mine”.
sokoloff 3y ago
I'm not sure it's particularly sudden influx, but rather a reaction to economic conditions changing. When money is cheap, economies are expanding, and the equity markets are going gang-busters as a result (from late 2009 [or maybe back to late 2002] through late 2021), it's a relatively easy environment to borrow to expand your business [as an operating company] or to engineer returns to shareholders above the risk-free investment alternatives [as a financial company]. Now, risk-free investments (such as a 30-year US Treasury) are yielding 3x what they yielded just 3 years ago. That dramatically changes the calculus when considering whether to invest in a risk-free or a risk-on asset. To me, it would be weird if companies acted the same way in such a different environment rather than weird that they act differently.
ejb999 3y ago
Inflation has a lot to do with it - wasn't long ago huge tracks of houses in Florida could be had for $250K - now a lot of those places are selling for close to $1M - if a company has a lot of those, their risk has quadrupled.

lotsofpulp 3y ago

Every business has always pushed profit. The only thing that changes is whether or not they have the negotiating power to get it. These are operating margins, not profit margin, but page 7 should still give an idea for which businesses have more pricing power than others. And of course, bigger companies getting bigger means businesses might simply be gaining negotiating power overall. https://www.yardeni.com/pub/sp500margin.pdf https://www.yardeni.com/pub/sp500margin.pdf

sokoloff 3y ago
That page of chart drives me crazy from an information visualization point of view. All of those charts could [and should] have the same Y axis scaling, including being anchored at 0% at the origin, and the information would be much more easily consumed at a glance.

supportengineer 3y ago

Greed was held back by a sense of collectivism; as that has eroded since the 1960’s, it’s become a self-sustaining feedback loop. No one looking out for me means I’d better screw everyone else over first and “get mine”.

sokoloff 3y ago

I'm not sure it's particularly sudden influx, but rather a reaction to economic conditions changing. When money is cheap, economies are expanding, and the equity markets are going gang-busters as a result (from late 2009 [or maybe back to late 2002] through late 2021), it's a relatively easy environment to borrow to expand your business [as an operating company] or to engineer returns to shareholders above the risk-free investment alternatives [as a financial company]. Now, risk-free investments (such as a 30-year US Treasury) are yielding 3x what they yielded just 3 years ago. That dramatically changes the calculus when considering whether to invest in a risk-free or a risk-on asset. To me, it would be weird if companies acted the same way in such a different environment rather than weird that they act differently.

ejb999 3y ago

Inflation has a lot to do with it - wasn't long ago huge tracks of houses in Florida could be had for $250K - now a lot of those places are selling for close to $1M - if a company has a lot of those, their risk has quadrupled.