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Workers cut fabric at the Karen Kane clothing company in Los Angeles. The apparel industry in the U.S. is riding a small but growing wave of “insourcing” as costs in China and India rise.
Workers cut fabric at the Karen Kane clothing company in Los Angeles. The apparel industry in the U.S. is riding a small but growing wave of “insourcing” as costs in China and India rise.
(LUCY NICHOLSON/REUTERS)

Profit margins are heading lower. Here’s how to profit from it

Richard Bernstein agrees with the widespread observation that corporate profit margins are likely headed lower, given that they are at record highs right now and tend to revert to the mean. But that’s not making him bearish.

“A myopic focus on profit margins may miss an important investment consideration,” Mr. Bernstein, a former strategist at Merrill Lynch who now heads his own investment firm, Richard Bernstein Advisors, said in a note. “Whereas most investors remain fearful of margin compression, we prefer to search for an investment theme that could emerge if margins do indeed compress.”