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    • Stock Market Overvaluation and the Passive Investor [view article]
      Notice how q is derived.. It is a function of book value. Depreciation and capital expenditures have to be adjusted to "arrive" at replacement cost. This measure, from my experience, is hardly even close to the "private" market value of a company - nor does it impute "economic advantage". It does not assign any value for future earnings, only book asset value. Agreed, you can use it to make a bear case... But, tell me why Bear Stearn's book value was close to $80, but the "price" was $10 (so far!)... Actually, don't tell me -- it will just upset me! Why is it that an investor will stake their financial claim on one indicator that has missed cylical highs and lows by extremes? Apr 27 01:04 PM
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