Also don't forget that the earnings of a lot of companies (again, Microsoft
comes to mind) depend on being allowed to count employee compensation
in the form of stock options as something other than a cost. Which
also depends on a rising stock market.
dd
From dhenwood at panix.com Mon Sep 6 10:07:26 1999
>I'm wondering how much is due to financial returns, how much from
>productivity growth (value added/ hour) in manufacturing.
Some share of profits come from the bubble, no doubt, but
the numbers I used were for nonfinancial corporations.
Don't forget that for some high-flying "nonfinancial" stocks, financial returns (as opposed to core-business returns) can become not insignificant to earnings: MSFT and INTC are two companies who have benefited greatly from participating in the public market and adding to their earnings by taking advantage of out-o-whack volatility -- in particular by selling puts.
Microsoft in particular is making in the three-digits of millions (!) per quarter in the derivatives market. The last 10-Q I read said 3rd quarter total investment income was $720M ... note that in the same perios sales and marketing expenses were "only" $990M, so we're not talking about small potatoes ...
/jordan
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