Helga, a psychologist, had always wanted to be an accountant. She bemoaned the fact that her discipline was subjective and lacked precision, and wished that she could work in a field where there were clear rules and principles. One day, she read an article in the Wall Street Journal on Global Telecom, whose stock, the report said, was trading at half its book value. From her limited knowledge of accounting, Helga knew that book value represented the accountant's estimate of what the equity in the bank was worth. “If a stock is trading at less than book value, it must be cheap,” she exclaimed, as she invested heavily in the stock.
Convinced that she was secure ...
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