By Vitaliy N. Katsenelson, CFA Profit margins are a tick away from all-time highs and are creating the impression of cheap equity valuations. But that impression is a mirage, because today’s generous margins are destined to shrink. I first wrote about this in January 2008. Stocks are allegedly cheap now, at 15.7 times 2010 earnings. And they are cheap by historical standards. Only 10 years ago, their price/earnings ratios were double today’s; they are even cheaper if you compare their forward (2011) earnings yield of 7.3% to the 10-year Treasury yield of 3.40%. They are…
***This is a preview. Please go to http://www.econmatters.com, or mobile reader http://bit.ly/dianchu-mobile for full content. ****
