"The average Standard & Poor's company now has debt equal to 91 percent of stockholders' equity, up from 58 percent 10 years ago," observes The Elliott Wave Theorist (P.O. Box 1618, Gainesville, Ga. 30503). "Who but the euphoric would pay record prices for so little value? Any slip in the market, and corporate debt will quickly become greater than equity. Stockholders will be paying historically high prices for the privilege of owing money. How long will investors feel comfortable in that situation?"

- Enterprise Capital Appreciation Fund is even more aggressive about earnings growth than the average "aggressive growth" fund. Its portfolio's 31 percent, three-year earnings growth rate is double the group average. But ECA tempers its aggressiveness by buying stocks that are three times bigger than the sector average and holding them for a very long time. This balanced aggressiveness has produced 20.5 percent average annual gains over the past five years. Recent favorite stocks: Enron, Home Depot, Motorola, MCI, U.S. Healthcare, Microsoft, Intel.- The British economy is experiencing an upturn, leaving many of its well-publicized problems behind, observes Forbes columnist Kenneth Fisher. "Their recovery is about 18 months behind ours. It's time to buy their cyclical stocks, which are simply too cheap." Fisher's favorite British cyclicals trade as ADRs on the New York Stock Exchange: British Petroleum, British Steel and National Westminster, England's second-largest bank.

- Midcap companies, those with market capitalizations between $300 million and $3 billion, have outgrown the problems of small companies but haven't yet exhausted their growth potential like so many corporate behemoths. That's why mid-caps are growing in popularity among institutional stock pickers. Financial World magazine recently applied seven rigorous growth and profitability criteria to its entire mid-cap stock universe. The 10 highest scorers, in order: American Power Conversion, Tseng Laboratories, Ballard Medical Products, Fastenal, Surgical Care Affiliates, Buffets, Linear Technology, Biomet, PacifiCare Health System, Franklin Resources.

- If you buy government bonds individually, rather than through a mutual fund, consider dealing directly through the Federal Reserve to avoid commissions, suggests The AAII Journal (625 N. Michigan Ave., Chicago, Ill. 60611). "Your local Federal Reserve bank can provide the details. But if you choose to deal through a broker, shop around for the best deal. And plan on holding to maturity. That way you avoid sales commissions and any potential liquidity problem."

- Because most international stock markets are less efficient than ours, they present a great opportunity to the number crunchers among U.S. stock analysts, says Morningstar Mutuals (53 W. Jackson Blvd., Chicago, Ill. 60604). Morningstar believes the inefficiency of many emerging markets will be particularly beneficial for value- and fundamentals-oriented foreign funds. Its favorites: Bartlett Capital Value International, Twentieth Century International Equity, Acorn International, Oakmark International.

- Not that it's needed, but here's another strong argument against trying to time the stock market, from the Minneapolis-based brokerage house Piper Jaffray: "If you'd invested $1,000 in the S&P 500 every year since 1960, and did it at the peak for the market that year, you'd have made an average 9.7 percent annually on your money. If you'd done so at the market low each year, you'd have made 10.6 percent - only marginally better."

Investor's Notebook is a digest of investment opinion from the world's leading financial advisers. It does not recommend any specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited.

Join the Conversation
Looking for comments?
Find comments in their new home! Click the buttons at the top or within the article to view them — or use the button below for quick access.