High ROC + High Growth = Compounding
A mental model for understanding why high returns on capital and growth rate are both required.
High ROC + High Growth = Compounding
High ROC + Low Growth = Low reinvestment opportunities and a high dividend
Low ROC + High Growth = An expanding and unproductive balance sheet
I’m always mindful of companies with high ROC and also high payout ratios. Ideally the payout should be very low. $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ(.IXIC)$ $Invesco QQQ(QQQ)$ $NASDAQ 100(NDX)$ $ProShares UltraPro Short QQQ(SQQQ)$ $DJIA(.DJI)$ $GLOBAL X DOW 30® COVERED CALL ETF(DJIA)$
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