Stock Valuation: How to Employ the Price-to-Book Value Metric - Part 2 (Dispatch 5)

This is the second episode in a 2-part series discussing the price-to-book (P/B) ratio. Here, I discuss some of nuances of this metric and when it is and is not appropriate to utilize P/B. While the "old-school" value community may have widely utilized this metric in identifying cheap stocks, the ratio does have its shortcomings. Remember, book value is NOT the same as market value or intrinsic value. It has its uses; however, it is not to be applied in all circumstances. A key point I would like to drive home to investors employing the "fundamental approach," is that financial metrics require a certain level of fluidity and nuance. Apply the appropriate ones according to the unique context in which you're in. There is no "one size fits all" formula for identifying an undervalued stock. ► NAVIGATION 1:49 - Understand the dichotomy between "mark-to-market" assets (i.e. financial assets) vs. fixed assets 3:07 - Example of how book value can diverge from market value when discussing fixed assets 4:00 - Warren Buffett's discussion around moving away from book value per share as a performance indication for Berkshire Hathaway 5:53 - Where it DOES makes sense to use price-to-book 8:98 - How utilizing P/B in tandem with return on equity (ROE) offers investors a more effective ROE picture 12:05 - The key ingredient for utilizing P/B, or any financial metric ► PODCAST Podcast: http://bit.ly/2XCwXpe ► CONNECT WITH US Instagram: www.instagram.com/getbread_official Facebook: www.facebook.com/justmakinbread Twitter: https://twitter.com/justmakinbread Credits: Music: [Cosimo Fogg (201)] https://soundcloud.com/cosimo-fogg/jazzaddicts-intro... [VII 초] https://soundcloud.com/viisecs/lo-fi... [rubensoxo] https://soundcloud.com/rubensoxo/chill-lofi-beat-clfb [dBrewin'] https://soundcloud.com/darian-brewer-1/lofi