Book Value

Book Value

By
www.CandlestickForums.com

Book value is an accounting value of a
company.


It relates to stock price in that it includes
tangible assets minus liabilities.


It may or may not include intangibles
such as good will.


What book value does not address is the
strength of the company’s product
line, the efficiency of it
research, development, and ability to
bring salable products to market.


Book value does not assess the strength
of a company’s management or its
general promise for the future.


Book value may reveal property, cash
assets, and other matters not reflected
in the current stock price.


These items then represent a greater
intrinsic stock value than reflected in the
stock price and a margin of safety often
sought after in long term investing.


Knowing book value is essential to
fundamental analysis of stocks.


When a large investor recognizes hidden
assets in a company’s balance sheet they
may purchase the stock at a substantial
discount to forward looking value.


When this happens the whole stock
market wakes up to the opportunity.


At that time both fundamental and
technical analysis are important for
traders.


Technical analysis, especially, is
important in order to anticipate the mini
market rally that will center on the stock
in question.


Here is where technical analysis tools
such as found in Candlestick analysis
come into play.


Candlestick patterns are a visual
representation of equity price patterns
that repeat themselves over the years.


Reading Candlestick pattern formations
will let the trader “see the future” in
that the first part of the pattern
anticipates the second part.


Market analysis with Candlestick basics
goes back centuries to when Japanese
rice traders developed this technique of
representing price changes.


It is adaptable today to any sort of
market trading and is commonly used
for technical stock analysis, analysis for
options trading, and futures trading
analysis.


Book value to the accountant is the
value of an asset as reflected on a
balance sheet.


It can also be a representation of the
initial payment for an investment and
will include all associated costs.


Book value should be the total value of
corporate assets to be shared by
shareholders if the company were to be
liquidated.


A company with poor sales and little
money in the bank
could, theoretically, have substantial
property holdings.


If traders were pricing the stock based
on things like a price to earnings ratio
the property holdings would be
“invisible.”


If someone were to look at why its book
value was so high they would realize
that its book value exceeded its stock
price.


This is where buyouts occur.


Someone buys the company for its
current stock price, sells off the property
for a profit, and sells the company again
at a price based on its sales.


Traders who keep in touch with things
like book value will be ready when a
takeover attempt starts.


Typically such an effort will drive up the
price of the stock.


A savvy trader could be able to
anticipate price changes with
Candlestick chart analysis and very likely
profit from trading the stock.


Online Stock Market Reviews presented
live via the internet by Stephen Bigalow


Book Value

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