> Why this obsession with margins? In my experience companies have
> been using wage arbitrage since around 2000 to drive down their cost
> structure. Wages in places like India are moving more in line with
> ours now so the savings is evaporating. In fact, I expect to see
> others start to outsource to the US due to the falling dollar. That
> suggests to me that costs will revert to the mean, and so will
> margins. Margins drive PE...
Indeed. Profit margins are at record highs and historically are
unsustainable. Also, current valuation of S&P 500 companies already
indicate poor forward-looking returns:

http://www.passionsaving.com/stock-valuation.html

The key question right now is whether individual companies with
favorable valuations will outperform unfavorable valuations without
resorting to hedging the unfavorable?

J.