Ben Stein Wears A Small Cap

In Ben Stein’s column this week, he offers ideas for smartly investing in small caps, which have outperformed the broader market.

The article makes me want to buy $1,500 of iShares S&P Smallcap 600 Value [IJS] right now through ShareBuilder and hold onto the investment as long as possible. In the article Ben talks about the ratio of book value to market price, but I’m not sure what to look for in this figure. For this particular Exchange Traded Fund, the price to book ratio is 1.78. Is that good?

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1 thc December 16, 2005 at 8:46 pm: Price to book is a comparative measure. Value stocks will generally have a low P/B and a price to book of under 2 is usually considered a value stock (index).

Stein refers to “book to price”, the reciprocal of price to book. It’s a less commonly used form of the same statistic.
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2 Loi Tran January 30, 2006 at 7:23 pm: $1500 back in 1957 would be worth around $6.500 today after accounting for inflation. Still, $3 million+ is an impressive number.
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