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?

avatarPabloCantu
2025-10-28
It's awesome to see a good performance over the years. If I am in the top 98% it means a lot of people might not make a profit here. 
avatarnerdbull1669
2025-10-03

A Holistic Look Beyond ROE or PE Might Be Good For Our Long Term Investing

For long-term investing, it is usually not about just one metric like ROE (Return on Equity) or P/E (Price-to-Earnings ratio). Instead, investors often look at a combination of factors to form a holistic view of a company’s quality, growth potential, and valuation. In this article, I would like to share how I would break it down: 1. Quality of the Business ROE (Return on Equity): Measures how efficiently a company uses shareholders’ money to generate profits. High and consistent ROE (say, >15%) can signal strong competitive advantages (a “moat”). ROIC (Return on Invested Capital): Similar to ROE but accounts for debt as well. Often considered a cleaner measure of management quality. Margins (Gross/Operating/Net): Strong and stable margins often point to pricing power. ROE/ROIC tell you
A Holistic Look Beyond ROE or PE Might Be Good For Our Long Term Investing
avatarLeeskies
2025-09-12
It's September! (The red month of the year) So it's a good time to reflect on the YTD profits whilst my month is red....the longer term position is what's important.
avatarWhng83
2025-09-03
Learn long term investing

Dell Ups AI Target to $20B: Betting Big on GPUs

$Dell Technologies Inc.(DELL)$ delivered record revenue for its second fiscal quarter of 2026 (ending July 2025), with total revenue reaching $29.8 billion—a 19% year-over-year increase that exceeded market expectations. However, underlying concerns lurk behind the impressive figures: gross margin declined to 18.3% (down 2.9 percentage points year-over-year), traditional business growth remained sluggish, and explosive AI server deliveries squeezed profit margins. Despite exceeding expectations in AI order fulfillment, market skepticism persists regarding the company's sustained growth momentum and profitability quality.Performance: AI servers drive revenue growth, but structural challenges become more apparent.1. Explosive growth in AI infrastruc
Dell Ups AI Target to $20B: Betting Big on GPUs
avatarSuccess88
2025-08-31
For long-term investing, I look into ROE, P/E, and P/B. Example OCBC's $OCBC Bank(O39.SI)$ ROE was 12.6% in the first half of 2025, showing solid profitability. With a P/E ratio around 10.3 and a P/B of 1.25, the bank appears reasonably valued. These metrics, alongside a stable asset base, suggest a resilient and potentially attractive long-term investment. @Tiger_comments @MillionaireTiger @TigerStars @TigerEvents
avatar66kL
2025-08-31
roe [微笑] [微笑] [微笑]
avatarRichard0208
2025-08-30
Share the good news. To the moon soon
avatarMickey082024
2025-08-29

Beyond ROE and PE: Why ROIC and FCF Drive Decade-Long Returns

$S&P 500(.SPX)$ When it comes to building wealth through the stock market, the long-term investor’s most important tool isn’t clever market timing or exotic strategies—it’s the power of compounding. The challenge, however, is in identifying which companies can compound effectively over decades, and at what price they should be purchased. Two of the most commonly debated metrics among investors are Return on Equity (ROE) and the Price-to-Earnings (PE) ratio. Both hold critical information: ROE speaks to the intrinsic ability of a business to generate profits on shareholder capital, while PE reflects how the market values those earnings. The debate, therefore, is essentially about quality versus price. In this article, we’ll explore: The logic b
Beyond ROE and PE: Why ROIC and FCF Drive Decade-Long Returns
avatarECLC
2025-08-29
Information conveniently available in stock Quotes. Sometimes, do look at ROE and PE. More attractive is the dividend yield.
avatarRichard0208
2025-08-29
To the Moon. Hopefully very soon
avatarSPOT_ON
2025-08-29
Replying to @SPOT_ON:BOTH ROE AND ROIC FOR CAPITALAND CHINA IS LOOKING FANTASTIC ! $CapLand China T(AU8U.SI)$ //@SPOT_ON:CapitaLand China Trust : Commercial C-REIT Receives Approval From China Securities Regulatory Commission To Register For Its Listing On The Shanghai Stock Exchange
avatarSPOT_ON
2025-08-29
CapitaLand China Trust : Commercial C-REIT Receives Approval From China Securities Regulatory Commission To Register For Its Listing On The Shanghai Stock Exchange
avatarAN88
2025-08-29
some dividends and performing in 5 years and 1 years. value for money
avatarRampageBullArmy
2025-08-29
$Offerpad Solutions(OPAD)$ Heading 5x fold higher? Amazing! 
avatarStar in the Sky
2025-08-28
I look for both Profit Margin & Growth Rate and Free Cash Flow (FCF) and gearing before investing in " long term" stocks
avatarSamlunch
2025-08-28
PE is backward looking. Not that useful. Better to look at the business itself and management actions
avatarTheStrategist
2025-08-28
ROE
avatarhighhand
2025-08-28
more likely PE, but not just that. check EPS and revenue growth which is also related to PEG...  fast growing company is where money flows but the PE is also always high. if correction, these companies will drop the fastest too.
avatarVNW Capital
2025-08-28
In the long run, stock price is highly dependent on company's profitability and efficiency in using its resources. ROE both measures how a company effectively uses its resources to expand its long term profitability.