Here's Vitaly Katsenelson's ContrarianEdge bringing home the money quote in "Margin Shrinkage – It Can Happen to You":
“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
Well there you go.
Here are the two MarketBeat pieces:
The Great Debate on Margins: Can They Keep Going Higher?
which was followed by
The Great Margins Debate: Another Analyst Says Don’t Worry
*Dec. 29, 2010
"S&P: CORPORATE PROFIT MARGINS TO BE SQUEEZED IN 2011"
Nov. 30, 2010
"Corporate Profits: What the Current Level Tells Us About S&P 500 Returns Over the Next Five Years"
Nov. 11, 2010
President Obama Has Been Very Good For Corporate America