Renowned economist and investor Jeremy Grantham has frequently pointed out odd trends in company profits that don't seem to relate to the overall state of the economy. Consider earnings as water flowing through a broken pipe. Even if the pipe is broken and leaking in other places, some parts of it can still carry a remarkably high amount of water.

Grantham notes that many businesses are seeing record-high profit margins in spite of the general unemployment and financial instability. This paradox implies that while certain sectors of the economy may be having difficulties, such as when valuable resources leak out of a pipe, other sectors are surprisingly doing well.

Additionally, he criticizes the market's exaggerated valuation of current earnings, which ignores potential risks and economic instability. It's like celebrating the full flow of water through intact portions of a broken pipe while ignoring the possibility that leaks elsewhere could cause it to stop at any time.

This viewpoint is a component of Grantham's larger criticism of unsustainable economic patterns and his warning against placing too much value on immediate gains in an uncertain future. His observations urge investors to examine the broader picture of economic stability and health rather than just short-term financial indicators.