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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Pirah Naman who wrote (47976)	10/16/2001 1:13:55 PM
From: Jurgis Bekepuris	Read Replies (1) of 54805

Pirah, >the ROE represents a sort of ceiling on your >"growth rate" whereas the Buffettology method >uses that "ceiling" as the actual growth rate. Agreed. >Or, here is a little test you can try. >Use MRK, SGP, KO, WD-40, or any other high ROE >company you can find. Then when you run your simulation, > use zero for your tax rate (tax shielded account) > and don't worry about the payout ratio >(automatic dividend reinvestment). To be precise, "automatic dividend reinvestment" will not give you the same return as "no dividend" because of the dividend taxation at company level. It will give lower return. >Compare that return to the total return for any of > the stocks over the past five or ten years. You are right. KO is a good example - 0% return in last 5 years. The reasons for this are mostly company specific and I won't bore this thread with detailed analysis, especially that KO is still overvalued. Jurgis

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