Worth More Dead than Alive

The entire process of investing in stocks revolves around risk, which, as I define it, is the probability of a permanent loss of capital. But what if you could find stocks that were worth more dead than they were currently valued in the marketplace? In other words, if the company went bust or decided to liquidate, equity holders would stand a chance to more than what they invested.

This special area of investing calls for nuance. Using the price-to-book ratio as a measurement for liquidation value is like a walking through a minefield. Low P/B ratios are part of the approach, but one has to really look at the individual components of what makes up the equity value of the business in order to determine the true net asset value of a business....461 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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