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Politics : Ask Michael Burke

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To: Knighty Tin who wrote (54228)	4/1/1999 4:59:00 PM
From: Tomato	Read Replies (2) of 132070

Mike, I have a question(s) that perhaps you can help me with. After reading and rereading the Buffettology book's ROE sections, I still don't get it. What, if any, is the relationship between ROE and p/e ratios? Take KO as an example - if I were to buy it today (which I won't) while it has a p/e of 43 and a ROE of say, 42, what does that tell me, if anything? There is something in Buffettology that states that it's ok to buy a stock at a high p/e if the ROE is high enough. Could you try to explain this to someone who has no accounting background. Also, is there any relationship between ROE and the growth rate?

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