https://en.wikipedia.org/wiki/Dutch_disease
My point was businesses compete with each other, and money is one of the tools used to compete.
And growth rate and profit margins are not the same.
https://en.wikipedia.org/wiki/Dutch_disease
My point was businesses compete with each other, and money is one of the tools used to compete.
And growth rate and profit margins are not the same.
If you only ever reward investments with high rates of return it leads to atrophy in boring yet essential sectors of the market. Supermarkets, like you mentioned, have a very low profit margin (usually 1-3%). Can you imagine what would happen if no one was willing to invest in a supermarket?
>Note that having a higher profit margin is not the only way to survive, having a lower profit margin to better compete on price and gain market share is another way too. Balancing the two and delivering the right product at the right price for your customers is the key skill, but it’s a moving target.
Some investors will seek a 10% return in exchange for higher risk.
Others will be happy with a 3% return that is much lower risk.
Portfolios will include some of both types of investments depending on goals and risk tolerance.