Tuesday, 28 October 2014

The Profits-Investment Disconnect

The Profits-Investment Disconnect - NYTimes.com: "Profits are very high, so why are companies concluding that they should return cash to stockholders rather than use it to expand their businesses?

After all, we normally think of high profits as a signal: a profitable business is one people should be trying to get into. But right now we see a combination of high profits and sluggish investment :  What’s going on? ... this kind of divergence — in which high profits don’t signal high returns to investment — is what you’d expect if a lot of those profits reflect monopoly power rather than returns on capital." 'via Blog this'

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