Market participants are pricing in a situation where the global economy is likely to fall again and resemble the sacking of Rome. So let’s call the situation out for what it is…a “fire sale” in the stock market. Still, whether in good times or apocalyptic times the goal of finding great investments should never change.
Finding sound investments at cheap prices just got easier as far we can tell. This is why investors should look at a firm’s Price/Book Value ratio when digging for deep value. This metric simply divides the price of the stock by a firm’s latest book value per share. The lower the book value the better the potential opportunity if something is not fundamentally wrong with the firm. If a firm’s P/BV ratio is below 1 this indicates that it’s trading below its theoretical “break up” value.
Source: Seeking Alphs
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Posted by D4L | Thursday, October 06, 2011 | ArticleLinks | 0 comments »________________________________________________________________
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