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I didn't address your point, Jim, about a large, overnight drop in value. You make a good point. If the price versus BV regression indicates that a fair P/B is 1.5, and if both value and BV suddenly drop by, say, 10%, then the new BV times 1.5 will still give a reasonable estimate of IV. However if value drops by 10% because of reduced future earnings, but BV doesn't drop by 10%, then 1.5x BV will overestimate IV.
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