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No. of Recommendations: 1
Stocks have returned 6.5% real (Siegel's constant) yet GDP and aggregate real sales have not risen by that for a long time (since the 1960s). The way to reconcile these is greater retention ratio, expanded P/Es, higher margins. The first two obviously cannot rise indefinitely. But this is the era of high fixed costs (of building websites, apps, cloud infrastructure) and close-to-zero variable costs. So I don't see why profits would not grow a lot faster than sales.
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