The Market Facts

So here is how I see it. . .

The price to book is the only real statistic that can possibly be used when valuing a posisition. Worst case is untill we have truth in our accounting even that number can potentially be miscontrued to be fictitious.

I'll give you an example, a CEO of a company gets incredeble benefits for increasing revenues and the value of the company. One way they can do that is if they assume they will sell everything in their ware house at a certain cost regardless of demand.

Like a 2nd grader, who sells lemonade at the stand he figures if he sells 500 cups he would have enough money to buy his new bike! So what does he do, he gets enough cups and supplies to sell 500 cups assuming that by the end of the day he will have enough money for his new bike.

This is precicly what the CEO is doing only with the knowledge that he will not sell 500 units in one day but he makes enough and books them as though they will sell in one day and boom he has turned the company around, gets a HUGE bonus and moves on to leave the next CEO to try to sell all these unwanted excess product.

Thus the price to book is a figment of their accounts imagination, and that stock price you are paying is a figment of YOUR imagination.