Americans need to take a hard look at the whole idea of #SupplyandDemand, especially when it comes to #rent. I read about cities instituting rent control/stabilization and how some residents are up in arms about it. Rent increases when demand is high, but why is that? Other than property taxes, the cost associated with that place doesn't change from month to month except for the penchant of the landlord to increase their #profitmargin. But how much profit turns into pure greed? Is 10% or 15% profit high enough to live well? Is 25%? Does 30% become greedy? That's the question we wrestle with. How much profit becomes too much at the expense of the consumer and society as a whole.

"Recent inflation has been driven by an unusual expansion of profit margins. Profit-margin led inflation occurs when companies tell their customers a convincing story that lets them raise prices without significantly reducing demand. It is inflation driven by spin, not substance."
This is from UBS chief economist!
#inflation #profit #profitmargin

https://www.ubs.com/global/en/wealth-management/insights/chief-investment-office/market-insights/paul-donovan/_jcr_content/mainpar/toplevelgrid_1847870123/col1/teaser_826301810_cop/linklist/link.0905296706.file/PS9jb250ZW50L2RhbS9hc3NldHMvd20vZ2xvYmFsL2Npby9tYXJrZXQtaW5zaWdodHMvZG9jL3doYXQtaXMtcHJvZml0LWxlZC1pbmZsYXRpb24tbWFyY2gtMjAyMy5wZGY=/what-is-profit-led-inflation-march-2023.pdf

✈️Our latest blog post explores the delicate balance between profits and public opinion at airports. Join us as we dive into Navigating the Skies🌤️
https://www.eliza-ng.me/post/airportpricingt/
#airportindustry #publicoutcry #profitmargin

#PriceControls are a form of micromanagement, and they ignore supply and demand. If a price is set too low or isnt adjusted frequently enough, it can wreak havoc, sometimes even causing producers to lose money or get out of the business altogether. This is the opposite of what price controls are intended for: Making sure that people can purchase what they need.

If we instead put a cap on the operating #ProfitMargin (as a maximum percentage), companies will never be forced to operate at a loss as a result, since prices are still allowed to flex based on #SupplyAndDemand. And yet it still puts an upper limit on the contribution of increasing #profits to the problem of #inflation, and prevents price gouging.

The current net #profitmargin for #Russell200 is 4.6%, starkly lower than S$P 500's 12.3, reflecting #smallcap 's increased vulnerability to elevated costs, chart @JPMorganAM