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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (62247)	7/27/2019 12:47:23 AM
From: Elroy	Read Replies (1) \| Respond to of 78758

"A Value Stock is a stock with a price to book below its comparable group" I pretty much never look at it in this relative way. For example, you could take the S&P 500, get the price to book for all 500 stocks, and say that the lowest 20% are "value stocks" relative to the S&P 500. That may not be a good way to invest, but it is a good definition of value stock. Similarly, you could take 100 stocks which have a PE of 25, calculate the price to book for all 100, and then take the cheapest 10 P/B ratios and say for stocks with 25x PE, these 10 are the "value picks". It seems natural for "value" to be a derivative of stuff the company owns, and book value is what captures that.

To: Paul Senior who wrote (62247)	7/27/2019 5:51:07 PM
From: bruwin	Respond to of 78758

P/Bk is, as we know, Price of a stock divided by the Book Value per share of the stock. What is "Book Value" ? Primarily it's Total Assets - Total liabilities ..... Some will bring "Intangible Assets" into the mix. But when will a shareholder benefit from "Book Value" ? Only when a company is liquidated and its Net Assets get distributed between the current shareholders. But how sure can one be that the Assets, especially the Fixed Assets, will sell for what they are shown on the Balance Sheet ? And much the same goes for the realized Liabilities. So what then is the point of comparing the current share price of a company with a Book Value per share number that may, or may not, be what is shown at some point in the future ? But for those who wish to continue to use a P/Bk ratio, that's your choice ......