A ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value/ share.
Also known as price-equity ratio.
P/B ratio = Stock price/ total assets – intangible assets & liabilities.
A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios , be aware that this varies by industry. This ratio also gives some idea of whether you are paying too much for what would be left, if the comapny went bankrupt immediately.
Industries that require more infrastructure capital( for each dollar of profit) will usually trade at P/B ratios much lower than, for eg , consulting firms. P/B ratios are commonly used to compare banks, because most assets & liabilities of banks are constantly valued at market values.
P/B ratios , do not, however, directly provide any information on the ability of the firm to generate profits or cash for shareholders.
P/B should also be calculated on a diluted basis because stock options may well vest on sale of the company or change of control or firing of management.
The seamless integration of lifestyle planning, wealth counsel & portfolio management. We work inorder to implement a plan that incorporates your lifestyle needs,including, personal, family & business objectives with your investment portfolio.Leverage provides investors risk & opportunity. Leverage is defined as the creation of exposure greater than the capital invested. Asset managers, including many hedge funds, use leverage to take advantage of perceived opportunity, often resulting in superior performance. Frequently , only after the markets destabilize is the leverage risk fully understood.
Stock market model street will provide that leverage to stock market enthusiasts.
In the wealth management industry or field of expertise or business or vocation however appropriately taken by the market, Understanding preferences &priorities of wealthy individuals is of paramount importance.
Shifting demographics will present potential new sources of growth for wealth management firms. Before deciding which countries to enter assessment becomes essential.
Wealth management is a professional service which is the combination of financial/ investment advice, accounting/tax services& legal/estate planning .
In general wealth management is more than just investment advice, as it can encompass all parts of a persons financial life.
At the very foundation of a capitalist system is the belief in economic freedom. This freedom has two dimensions freedom of economic choice & freedom of enterprise.
Freedom of enterprise is usually more narrowly defined as the freedom to own & operate a business. It also entails the freedom to make all business decisions, limited only by competition & the interplay of the forces of supply & demand in the market place.
Individual decisions in a capitalist economy are directly influenced by self- interest. A business owner pursuing his own economic self-interest would benefit society as a whole.
The whole private equity business model is based on profit sharing. Therefore compensation is quite different from what you would encounter in a typical corporate of an investment banking.
PE firms get paid in mainly two ways Mnagement fees & carried interest.
Management fees is paid regularly. This is calculated as percentage of AUM ( Assets Under Management). Why do they have to pay this, given that they already gave the fund money to invest? This is because the PE funds have a lot of ongoing expenses that they need to cover: salaries, deal fees that pay to investment banks, consultants , travel.
Carried Interest: this is the percentage of the profits that the fund is making on the investments. For eg the limited partners may ask that the fund only gets paid if the return is over 8% p.a.
In addition the profit is calculated for the performance as a whole for the whole amount invested( that may be 10 to 15 deals) not on a deal to deal basis.
Others some PE firms charge deal fees. That means that each time they buy a company, they may charge some extra money to the investors.This is in theory to cover the extra expenses incurred during a deal.
A Portfolio becomes balanced with debt in it. It is a well understood fact that investments locked in for a longer period pay more than short term instruments. This is illustrated in the bond market & also in the bank certificate of deposit.
The stock market is indeed priced as the present value of expected dividends. Equity premium is mostly due to business cycle risk.
To understand the risk factors that cause the equity premium we decompose the equity premium into three components inflation, risk, business cycle risk & fear based risk premia.
CEO’s daily behaviour will make or break the company. Having a vision isnt enough, communicating is the key. When people get it they know how their daily job supports the vision.
In startups , earnings begin low to non-existence&share price is more about salesmanship &vision than earnings.
Mr BUFFET’s observation on CEO measurement: CEO who does not perform is frequently carried indefinetely. One reason is that performance standards for his job seldom exists.
Leading is more important than knowing.
India has seen amazing development over the years says Candace Browning, who came to this country for the first time in 1984. Now the head of Global research, Bank of America Merrill lynch, she was back in India in october as part of a corporate social responsibility initiative begun by her bank.Each of the six participants in the programme, all women in senior positions, is mentoring on Indian woman in business related activity. “My mentee is trying to start a marketing project and the challenges she is facing are fascinating,” she says.Browning who loves India’s cuisine and its vibrant colours, also draws parallels between the experiences of her mentee, and women in south africa and Tahiti in the Pacific, where the first two phases of her bank’s project were held. “Women need to be clear both about the kind of people they hire, as well as the terms under which they take up employment.” – Manasi Mithel
In technical analyses of securities trading, the stochastic oscillator is a momentum indicator that uses support & resistance levels. The term stochastic refers to the location of a current price in relation to its price range over a period of time. This method attempts to predict price turning points by comparing the closing price of a security to its price range.
This calculation finds the range between an assets high & low price during a given period of time. The idea behind this indicator is that prices tend to close near the extremes of the recent range before the turning point.