FAST FIVE: Profit "Inequality": Is It Possible That S&P 500 Companies Make Money And No One Else Does?

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Appropriate or not there is something unusual at work with the profit data, as it appears the only firms making any money nowadays are those in the S&P 500.

That represented an increase of approximately $220 billion from the level of after-tax operating profits recorded in 2015.

The key takeaway here is that over the past 4 years S&P 500 companies after-tax profits increased 50%, while the earnings of everyone else recorded a decline of roughly 30%.  How can that possibly be an accurate picture of the earnings of all the companies operating in the US.

S&P 500 companies report their earnings on a financial accounting basis.

For investors, the argument being used by equity analysts and strategists that the equity market is not expensive is based on “reported” and not “actual” profits.

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