Deep Store

The aggregate price of the S&P 500 divided by aggregate book value of equity (assets minus liabilities, per accounting standards). Annual cadence on Multpl.

Why it matters: Price-to-book is the classic balance-sheet valuation measure. It asks "how much above the company's accounting net worth is the market willing to pay?" Historically it has been most useful as a relative-cheapness indicator (cheap P/B regimes have preceded strong returns) and as a financial-sector valuation gauge (banks are typically valued in P/B terms because their assets are more measurable).

How to read it: Long-run average is roughly 2-2.5. Sub-1.5 is historically cheap (only seen in deep bear markets — 1980s, 2009). Above 4-5 is elevated. Caveat: the index-level P/B has drifted structurally higher since the 1990s because book value increasingly fails to capture intangibles (brands, software, IP). A modern Microsoft has enormous earnings power and small book value; an old US Steel had the opposite. So a "high" P/B today means less than a "high" P/B in 1980.

Caveats: Book value treats goodwill, share buybacks, and intangibles in ways that distort comparisons across decades and across sectors. Most useful for tracking *change in regime* rather than absolute level. Annual cadence on Multpl — the data only updates once a year.