Richard0208
08-29

To the Moon. Hopefully very soon

Long-Term Investing: Look at ROE or PE?
Many investors have heard the idea that “long-term compounding ≈ ROE.” This concept was first put forward by Charlie Munger, known as the Munger Rule. In his 1981 shareholder letter, Warren Buffett also pointed out that if PE remains unchanged, a company with 14% ROE will generate a long-term investment compound return of 14% as well. When picking stocks for the long run, do you focus more on ROE or PE? Why? Do you think ROIC and FCF are more important than ROE in compounding? If you could only choose one metric for a 10-year investment decision, which one would it be?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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