chomolungma, RE: This is THE more important influence on profit margins. Margins are highly correlated with competition. Less competition allows companies to raise prices. When the dollar drops it makes foreign goods more expensive and lessens competition. This results in rising profit margins.
Take a look at the historical relationship between margins and the dollar. It's not perfect, but it's not bad.
If you had called uninformed a statement that there is a historical positive correlation between a weak dollar and strong profit margins, then that would be different. And even then, as you note, the correlation isn't all that good. In fact, it isn't nearly as good as the correlation between a weak currency and weak financial markets, the concept that you called "uninformed".
Here is your exact post, with the line that you quoted above:
Amy,
From your linked article:
[from Amy] What's more, a falling dollar could discourage foreign investors in U.S. financial markets, since the returns from their investments are coming in ever-less-useful dollars.
[from you] What an uninformed comment.
Profit margins were not in this quote. Fact is, a falling dollar does indeed discourage foreign investors from US financial markets. That isn't uniformed at all. Now you're trying to change the discussion, which makes it even more evident that you're the one that is uninformed. |
