I've been in this investing game for years, and there's one thing I constantly see: most people confuse three concepts that seem the same but are completely different. I'm talking about nominal value, book value, and market value. They are not the same, and understanding the difference can save you many mistakes.

Let's start with the basics. Nominal value is simply the starting point. When a company goes public, it divides its share capital among all the shares it issues, and that gives you the nominal value. For example, if a company has 6,500,000 euros in capital and issues 500,000 shares, the nominal value of each is 13 euros. End of story. It's the initial price, nothing more. The reality is that in equities, this data is almost useless because shares have no expiration date. Bonds are different, but in stocks, the nominal value quickly loses relevance after issuance.

Now comes the interesting part: book value. This is really useful if you want to know whether a company is truly cheap or expensive. You take the total assets, subtract liabilities, and divide by the number of shares. This way, you see what the company's real value is according to its books. A company with assets of 7,500,000 euros and liabilities of 2,410,000 euros, with 580,000 shares issued, would have a net book value of 8.775 euros per share. This number is pure gold if you practice value investing like Warren Buffett. It tells you whether the stock is undervalued or overvalued compared to its actual price.

But here’s the problem: book value fails miserably with tech companies and small caps. Also, it’s never completely free of accounting tricks. So, although it’s a powerful tool, it’s not infallible.

And then there's market value. This is what you see on your screen every day. It’s the result of the interaction between buyers and sellers. If many want to buy, it goes up. If many want to sell, it goes down. End of story. Market value doesn’t tell you if something is expensive or cheap; it only indicates the current trading price. To know if it’s expensive or cheap, you need other indicators like the P/E ratio or the P/B ratio.

The key question is: when should you use each one? Look, you rarely use the nominal value except in convertible bonds where a fixed redemption price is set. The book value is your ally when you want to do a serious analysis of whether a company is cheap. If the P/B ratio (price divided by book value) is low compared to competitors, it’s probably undervalued. But beware, a single ratio doesn’t give you the absolute truth.

Market value is where we operate. It’s your daily reference. If you want to buy META at $109 because you think it will fall further, you place a limit order at the current market value. That’s the real price at which you can buy or sell.

What you need to understand is that market value is full of noise. Interest rate policies, sector news, economic expectations, irrational euphoria in certain sectors—all of that affects it. That’s why sometimes the price disconnects completely from what accounting says.

In summary: nominal value is historical and useless for trading; book value helps you identify real opportunities but has limitations; and market value is what you see but doesn’t always reflect reality. The key is not to cling to a single number. Combine book value analysis with market reading, and you’ll have a much clearer view. Serious investing requires context, not just ratios.