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Strategies & Market Trends : Value Investing
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To: Jurgis Bekepuris who wrote (15211)8/15/2002 11:26:44 PM
From: Dave  Read Replies (2) of 78611
 
Well, the arguments you bring up are good points, but that said, the problem is that while one industry might have a low ROE, it might be a better value.

Additionally, ROE can be manipulated by various forms of off balance sheet financing. Therefore, one should be "careful" buying companies with high ROEs.

Remember, Graham in his book "The Intelligent Investor" looks for companies that have:

- D/E <.7
- Current Ratio > 2.0
- Profitable for the past 5 to 10 years.
- Consistently paid a dividend for the past 5 to 10 years.

Now is not the time to "bastardize" the definition of "value investing" by focusing on "growth" stocks or companies that are 80%+ off its highs.
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