Dempsy Firpo was watching television.

Mesmerized.

Maybe it was that hypnotic stream of blue digits crawling along the bottom of his screen. The ones labelled "Real Time Quotes."

Dempsy was riveted. This was the market in play, the living, breathing global economy writhing before his eyes.

Something jolted his attention. It was Ron Bland, the financial rip-and-read guy, suddenly flashing on the screen. "Next, it's 'Herd Instinct,'" chirped Bland, "the program where individual investors find out which way they're supposed to stampede."

Dempsy raised his eyes a few centimeters above the streaming digits to see Bland introducing the day's guest -- The Talking Head. Conservatively dressed in dark tones, suavely tilting his hairpiece to a rakish angle, the Head smiled with the ridiculous certainty of someone convinced that he knows everything. Dempsy tilted his La-Z-Boy Recliner to its full upright position, and leaned forward.

"My my my, look at that market," tweeted Bland, touching his forelock. "Have you ever seen things in such a state?"

"Why of course," droned the Head. "I've seen it all." His deeply resonant tones inspired confidence. Poor Dempsy was already being lulled into a state of heightened suggestibility.

"So," asked Bland, "what's your latest hot tip?"

"I'd like your viewers to take a look at OVERBLOWN BROADCASTING <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FMAM)") else Response.Write("(Nasdaq: FMAM)") end if %>," pronounced The Head in measured phrases. "Here you have a corporation that owns three popular radio stations in Alexandria, Virginia. And the stock is trading in the stratosphere."

"A good short then? How did you come to that conclusion?"

The Head rolled his eyes in exasperation. Bland averted his own orbs in humility, shamed that he actually asked The Voice of Authority to explain himself.

"It's quite obvious, Ron. One only need look at Overblown's book value per share."

"Book value? Could you explain what that is for our less sophisticated viewers?"

"Certainly, Ron," said Head with forced patience. "Stated simply, if you took all of Overblown's assets, which, according to our research, amount to little more than some office furniture, a modest cash reserve, and some miscellaneous radio equipment, total it up, and divide that sum by the total number of shares outstanding, you'll find that on the auction block, the company is worth only $2 per share. Meanwhile, the stock is trading above $30! I'm afraid this sorry stock is going down, and the sooner the better as far as I'm concerned."

"I've heard enough," muttered Dempsy to himself. "I'm shorting Overblown Broadcasting tomorrow when the market opens!"

Suddenly Dempsy's television went blank. Then, with a couple of sputters of electrical static, a new face slowly phased onto the screen. Dressed in a bright orange Fool Channel blazer and a pied bell cap, it was the famed television anchor, Motley "Action News" Fool.

"Short Overblown Broadcasting? Maybe. But based on The Talking Head's rationale? Frankly Dempsy, I don't think so."

*How did The Fool know that Overblown Broadcasting was probably not a good short?*

1. The Talking Head's definition of book value is incorrect.

2. It is not unusual for a radio stock to have a low book value per share.

3. Broadcast bookkeeping methods make no accounting for book value.

4. Book value does not correlate well to share value for any stock.

The answer is 2.

It is not unusual for a radio station to have a low book value per share. And, frankly, this is common of companies in many industries.

There is much more to most companies than merely their hard assets. Also important is the nexus of relationships and commitments it has developed with a host of other entities, including its customers, its lenders, its employees, its management, and its community. A radio station, for example, may have few tangible items listed on its balance sheet, but can be worth many times that value thanks to they way it tends to the needs of its listeners, sponsors, advertisers, and community. Think of it as a collection of alliances, a harmonizing of varying interests into a profit-generating whole. There is a value in that far above and beyond a company's so called "book value."

"Then how am I supposed to know how to handle my money?" asked Firpo.

"Do your own homework! Never look at a single statistic in isolation!" cried the Fool.

"Sounds too much like work to me," said Dempsy as he grabbed the remote and switched to the Cartoon Network.

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