In **, some people invest in companies that are averse to high PB and think that companies with high PB have too high premiums, so they will not choose companies with high PB to invest.
Low PB, especially when the market value is already below the book value of the company, is what they like. I don't think there's much of a problem with this type of investment. Because of this aversion to the premium, the first guarantee is that there will be no losses. It's not that low PB, especially companies with a market value lower than the book value, won't be, but the space for such companies is indeed limited.
But I think there is also a disadvantage in choosing only low PB and abandoning all high PB companies.
I've given you an example before, and I'm using this one today: in a slave owner, there were two young slaves who would grow food, and they would grow about the same amount of food every year.
From this point of view, the income that they brought to the slave owners from growing grain at a certain stage was the book value. But one of the slaves may be more studious, and he will develop and improve his planting ability by constantly learning Xi.
One day, another farmer came to the village and needed to buy a slave. The price of the slave who is not good at learning may be 1pb, and the price of the slave who is studious may be 2pb
The answer is not the same. As a buyer, you may think that 1PB is cheaper, and you may also think that 2PB is cheaper.
Another example: football superstar Cristiano Ronaldo, that is, Ronaldo, when Real Madrid ** Ronaldo, the top players in the head were generally less than 5,000 euros, such as Kaka, who just won the Ballon d'Or, was only 6,500 euros at the time.
However, Ronaldo's is 9,600 euros, close to 100 million, which is close to 2PB. But we know that in the years when we had Ronaldo, Real Madrid achieved very good results, and the commercial value was greatly expanded, and later sold Ronaldo for a higher **.
You know, at the time of **, there were quite a few people who sprayed this deal, saying that Real Madrid was dead. But after a few years, no one will say that Real Madrid has lost money, but that the business that Real Madrid did at the beginning was too worthwhile.
If Real Madrid did not choose to buy Ronaldo at the beginning, but used 96 million euros, **4 2400 euros (that is, 05pb).
There is a high probability that such a huge success will not be achieved. At this time, 2PB Ronaldo is a good business. And 4 0s5PB of other players, it could be a trap.
What do the above two examples illustrate?
My understanding is that high PB and low PB require specific analysis of specific things. Why is high PB not a problem?
The key is to analyze the future output of the target land. That is, whether it has a high ROE, and whether this ROE can be sustained.
Pay attention to it, and don't get lost ...... investment