dckleins

Financial Stocks Trading Near Book Value

Book values for financial companies are almost irrelevant. Book values have the most value the more tangible a company/industry's actual assets are...the more physical the better. I'm studying for the CFA right now, and they specifically say that book value comparable metrics shouldn't be used for financials. The biggest problem is that a bank's assets (primarily it's loan portfolio and investment portfolio) are essentially black boxes, and also that many of the assets are m-t-m so they're extremely susceptible to market perception.