What the experts say

Are puny P/E ratios a worry?; Investing sans stocks; The Nordic tiger

Are puny P/E ratios a worry?

Typically, when corporate earnings rise, so too does the price investors are willing to pay for company stocks, said Paul J. Lim in The New York Times. But while “most investors now say they are optimistic about stocks,” valuations as measured by price-to-earnings ratios belie that sentiment. The P/E for the Standard & Poor’s 500 index, now about 13, is down from about 15 this time last year. As the pace of growth slows, investor enthusiasm apparently has fallen. But don’t pull out of stocks just because a near-term rebound in P/E ratios seems unlikely. “Investors can still be excited about stocks based on earnings growth alone,” says Duncan W. Richardson, chief equity investment officer at Eaton Vance. A rise in P/E ratios, he says, would be “icing on the cake.”

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The Nordic tiger

There’s more to Scandinavia than high cheekbones and Swedish meatballs, said Reshma Kapadia in SmartMoney. Most Nordic economies are growing faster than those to their south, and the governments have little debt to speak of. In fact, Sweden, Norway, and Finland boast negative net debt, a clear indicator “of good fiscal health.” At a minimum, Scandinavia offers a “safe haven for investors.” But some managers believe that’s an underestimate of its potential. Many Nordic companies “are exporting powerhouses,” and stand to benefit greatly from growth in China, India, and the rest of the developing world.