Post #7621 by Aussi on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤

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For the last ~20 years each dollar of sales has been worth 62% more in net profit for shareholders than it used to be in the prior ~50 years. Maybe that will last and maybe it won't, but historically it's quite the number. From January 1950 up till mid 2004, the absolute peak quarter net margin figure for aggregated non-financial US corporations was 8.48% and the median was 6.11%. So a lasting move down from recent figures around 11% would not be a big shocker.

During the last 50 years there have been several accounting standard changes especially around depreciation and how purchases of companies are handled and also companies spending on capital versus research and branding. To consider that net margins may mean revert I think you have to also consider the requirement for accounting standards and company spending and capital allocation profiles to mean revert.

Aussi

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