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?
Updated February 7, 2012 and originally published December 16, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
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Luke Landes founded Consumerism Commentary in 2003 and has been building online communities since 1990. Luke, also known as Flexo, has contributed to PC World Magazine, US News, Forbes, and other publications. 
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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.
$1500 back in 1957 would be worth around $6.500 today after accounting for inflation. Still, $3 million+ is an impressive number.