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?

avatarVixenvixen
08-25
$Palantir Technologies Inc.(PLTR)$  Hi Friends, I would like to share that we shouldn't purely rely on ROE or PE.  Every metrics have their own flaws. PE has it, Forward PE has it, ROE has it as well.  Nonetheless, that doesn't mean they are not useful. Rather, a combination of all these metrics & business fundamentals allow us to filter unnecessary noise.  In PLTR's case, let's dive in a little deeper into it shall we?  Personally, I hold pltr shares. High conviction. Hence, I can sell covered calls while holding its shares. This decreases my cost basis. Basically you get paid to HOLD. We then add on pullbacks.  Note: Add in tranches to conserve your dry powder. But of course you can als
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avatarGilly87
06-30

As Solid as BlackRock? 🏦

BlackRock manages over US$10 trillion in assets. That's more money than the annual economic output of almost every country on Earth. Yet despite its enormous size, many investors have never considered owning BlackRock itself. $BlackRock(BLK)$ isn't just another financial company—it's the world's largest asset manager, overseeing more than US$10 trillion in assets across ETFs, mutual funds, institutional portfolios, and retirement investments. Whether investors are buying the S&P 500, planning for retirement, or investing through institutions, there's a good chance BlackRock is involved. 📊 Market Insights 💰 Over US$13.9 trillion in Assets Under Management (AUM) BlackRock manages nearly US$14 trillion for investors worldwide, making it the lar
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As Solid as BlackRock? 🏦
avatarGilly87
06-28

👟 Nike (NKE): Turnaround Opportunity or Value Trap?

$Nike(NKE)$   Nike has fallen from nearly $180 in 2021 to around $40, but a lower stock price doesn't automatically make a stock cheap. The company is rebuilding around innovation, a stronger sport-first identity, healthier inventory, and improved wholesale partnerships. Gross margins have been stabilizing, and direct-to-consumer remains a key strength. At the same time, the challenges are real. Analysts expect another quarter of soft revenue, competition is intensifying, tariffs and higher sourcing costs remain headwinds, and some believe Nike still trades at a premium valuation despite its decline. For me, this earnings report isn't just about EPS. I'm watching: • Gross margin improvement • Inventory health • D
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👟 Nike (NKE): Turnaround Opportunity or Value Trap?
avatarAngmoh88
02-02

Want to Retire Early in Thailand?

You Don’t Need to Wait Until 65 Most people are conditioned to believe retirement only begins at 65, after decades of work and total dependence on government pensions. That model is outdated. Early retirement is not a fantasy. It is a financial strategy. You may wonder, why am I saying all this? It's simple, because my friend did this and it works! Assuming you start around age 30, you can realistically build your own income stream within 15 years, enough to live comfortably in a low-cost country like Thailand without waiting for politicians or pension systems. The method is simple, disciplined, and repeatable. The Core Idea: Build Your Own Monthly Income Instead of saving blindly, you build a dividend income engine. Invest at least USD 800 per month Spread across 12 di
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Want to Retire Early in Thailand?
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
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A Holistic Look Beyond ROE or PE Might Be Good For Our Long Term Investing
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. 
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