Earnings and Book Value Reveal Hidden Risks in Stock Investments
The article explains how earnings and book value can help predict stock returns. Earnings yield can show the expected return on stocks, especially when considering growth. Book-to-price ratio can indicate the risk involved in buying stocks with earnings and growth. A high book-to-price suggests higher returns due to risky growth, while a low book-to-price indicates lower returns. This challenges the traditional idea of "growth" versus "value" in stock investing.