In economics class, if I remember, that the long term profit rate of a company should be zero. I mean that in an efficient market that a company should not be able to make a profit beyond paying its employees and covering its cost -- if I remember. If this is true then wouldn't that imply that the long term return for a company should essentially be zero or the no more then the value of the physical resources. One can see this, for example, when a second mover product comes out and increases competition, i.e in the tablet space, game consoles, etc. How does one reconcile this idea that the long term return for company should be zero with the idea that the stock market should always keep growing, i.e stocks for the long run? Thoughts?
Zero-long-run profit http://en.wikipedia.org/wiki/Perfect_competition Here is another idea.. all the profitable business opportunities are controlled my strong-man cartels...
Even in theory, cost includes the cost of capital, which is usually a couple hundred basis points or so above the risk-free rate. Voila, there's your returns.
Perhaps you should have paid more attention in economics class. I think what you're referring to is Obamanomics, where companies exist for the sole purpose of paying more taxes to enlarge the size of government.
Bunch of bs that has no bearing on reality. You may have a future as an EliteTrader moderator though.
that the long term profit rate of a company should be zero. --------------- Hmnnn.. sounds like the post office, or Amtrack or gov't housing or off track betting. Of course non of these are public traded cos. Oth, this does sound like hollywood where no movie makes any money, any and all profit is reduced by an expense.