Professor Elam

Markets sawing from over to undervaluation. I heard some naive 'expert' tell people just last week that they could 'buy' real estate at a 15% discount to market value, a great deal.  Well what you pay is market value at the time, the question is, what will market value be in the future?  Value, or the price quoted, is always changing swinging from some imaginary under to over value.

Valero VLO has dropped from $60 to $15.96.  Fiannce yahoo quotes price to book at .45, so VLO is selling for one half its book value!   so we can buy all those refineries for half price.  Gee that sounds like a bargain to me. But apparently the markets did not think so as they continue to bid VLO down.

The bottom is marked by folks that throw the assets of perfectly good companies of the bonfire of evaporating values, only to have the shrewder come in for the bargain sale. The tough part is figuring out just where that line n the sand is drawn.

but when I see a well managed company like VLO selling for one half book, that prompts my comment earlier that we should be close to some kind of washout selling climax.  And with the anniversary of 1987 Monday crash upon us, perhaps this will prove to be at least some sort of  low ssetting up.

Again, issues of valuation are why we study accounting.