Michael Batnick
CFA charterholder, director of research and investment committee member at Ritholtz Wealth Management, who writes about markets, investor behavior and investing...
“In order to compete effectively with these modern monopolies, you need to raise a trillion dollars. And most companies can't do that. So the natural laws of economics about competition coming in don't exist anymore. In order to compete, you need to have access to capital. Tons of it.”
Animal Spirits Podcast · October 2026
Context
Ben Carlson had just shown that median corporate profit margins have roughly doubled since the 1990s, though business schools teach that competition should erode them. Batnick says that theory is dead because the biggest companies can only be challenged with enormous capital.
Transcript
Well, yeah, there's that.
…the one that should have reverted. Remember, everyone said this is the most mean-reverting economic data point of all time, profit margins. It has to, because what they teach in business school is competition comes in, that that eats away at the profit margin and it goes away. That hasn't happened.
Well, That theory has been, I feel like we buried that 10 years ago. But officially, it's gone because in order to compete effectively with these modern monopolies, you need to raise a trillion dollars. And most companies can't do that. So the natural laws of economics about competition coming in don't exist anymore. In order to compete, you need to have access to capital. Tons of it. And
OpenAI do, and SpaceX does. And that's about it. Yeah. You're right. It's just everything is more. So the whole idea of
margins mean reverting because competition comes in. Not exactly. Let me ask you this. Is it crazy to say that the stock market today is more levered to AI than it was to the internet in 99, 2000? And I have a chart to show it. I don't know if this is proof. I'm just asking.
Oh, by far.
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