No. of Recommendations: 2
"I think you're better off with KISS. Estimate a reasonable guess of what the "normal" P/B might be now and in the next few years, informed by history...Multiply current book (or peak-to-date book) by that number."
I also track P/B over time, 1965-2025, and I plot it versus time, but I don't think that that is simpler or better than plotting P versus BV. If you want to see how price tracks BV, plot price versus BV.
I do think that using one's best estimate of IV/BV and multiplying BV by that number to get IV is quick, easy and reasonable. However I don't think that the average P/B, which, as you point out, is about 1.4 since 2000, is the best estimate of IV/BV.
