No. of Recommendations: 8
I suppose one could take the point of view that any purchase done at a below-average valuation level would get you an above-average return for a while, and on-trend returns thereafter. 20 year average P/B is in the vicinity of 1.4 times book, so any entry below that would work.
That isn't a very sophisticated chain of reasoning, but it has the advantage that it's probably doable. Waiting for <1.25 times book might be a LOOONG wait. I wouldn't try holding out for anything lower than 1.35 if I wanted a good chance of being able to do the purchase.
Just make sure that the person lending you the money (you, apparently), can't ask for the loan to be repaid : )
That's why I use calls. The interest rate is higher, but I'm sure that the "loan" can't be called.
Jim
