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Capitalism Quote by Jeremy Grantham

“Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.” quote by Jeremy Grantham
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“Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.”

Jeremy Grantham

About This Quote

Profit margins tend to revert to average; persistent high margins signal market failure or lack of competition.

In simple terms: High profits should attract rivals; if not, the system is broken.

Key Takeaway

Watch for abnormal profit trends.

Themes

economics competition market dynamics

Mood

cautious analytical

Type

financial critical

When to use this quote

  • investment analysis
  • policy review
  • business strategy

Key Concepts

mean reversion capitalism systemic risk

Questions to Reflect On

  • Are you assuming competition will always correct excess profits?
  • What structural changes could prevent mean reversion?
A Different Perspective

If margins stay high, other factors may be at play.

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