Yong-Long Lai

I’ve been doing research into value investing – ie. buying stuff below book value (it’s not exactly as clear cut as, if Price < Equity then buy).
Things you’ll want to consider are:

• Non-Current Assets – plant and equipment (how much are they really worth??)
• Are there Long term debt? heavily leverage companies are not good (especially if it takes many years to repay the debt from their net income)

Anyways, I’ve attached a diagram of the Standard and Poor’s 500 – Price to Book Ratio. We can see that in the 1980s, the Standard and Poor’s 500 index was trading at around book value. That is usually the point where great wealth is accumulated (e.g. Warren Buffet)

If you’re looking at how to find below book value stock, check out the Stock Screener I was trying out in my other post – The Intelligent Investor: Looking for Below Book Value … It’s just something I was experimenting with and I’ll refine it when I find better techniques. I think one of the better stock screener to use is the one on Money Central. If you’re on a Mac like me, don’t bother trying, it won’t work. I even tried downloading IE 5.23 for Mac (But the toolbox is only compatible for IE6 and above and Microsoft stopped support IE for Mac.

Technorati Tags: Standard and Poor, Value Investing, Warren Buffet