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TIP625: Berkshire Hathaway w/ Chris Bloomstran
We Study Billionaires - The Investor’s Podcast Network
Analysis of Historical Profit Margins and Economic Factors
Historical profit margins have fluctuated over the years, from 8.9% in 1929 to 4% in 1982, with various factors impacting these margins. Warren Buffett's prediction about profit margins in 1999 proved to be incorrect as margins continued to rise. Factors such as interest rates at 0%, tax rate changes, and the emergence of capital-light businesses have contributed to the increase in profit margins. The collective profit margin of the MAG 7 businesses is over 20%, significantly higher than the overall S&P 500. This has led to speculations about the overall profit margin potentially exceeding 13.3%. However, factors like regulation, competition, and capitalism dynamics may eventually limit this growth in profit margins. High profit margins of certain businesses may not be sustainable in the long run due to various economic factors such as inflation.
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