Post #7897 by mungofitch on the Berkshire Hathaway board

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the composition of the S&P is quite a bit different in the past 30 years. More profitable, less capital intensive and scaleable businesses.

Sure. As mentioned, it could stay high. (though the reasons it's higher are more to do with interest rates and labour share of income. If you're talking net income rather than cash flow, also tax rates)

But you can't extrapolate that trend. To make a buck of free cash flow requires much more than a buck of sales, and always will. The operating margin can't keep rising indefinitely.

Since you're talking about the whole economy, not just a couple of firms with great economics, it will probably always require (say) $5 or more of revenue even millennia from now. Businesses have expenses. Not a lot of people work for free, especially CEOs.

Jim

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