Great Profit Expectations Can't Be Met

This column by Doug Kass was originally published on Feb. 13 at 8:56 a.m. EST on Street Insight. It's being republished as a bonus for TheStreet.com and RealMoney.com readers. For more information about subscribing to Street Insight, please click here.

"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

Yesterday we argued that a key tenet to the rosy view of the markets -- the government's release of relatively low inflation rates -- is bunk, and that the rate of inflation has been systematically understated. ...