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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (1017)	11/22/1998 8:17:00 PM
From: Berney	Read Replies (1) \| Respond to of 1722

Re: Return on Equity One of the methods of portfolio selection that I utilize, which was not used for the Model Portfolio, is to limit the investment universe by focusing on Return on Equity. In any given time period, a significant number of stocks will exceed the Index performance. One need only employ a logical approach to selecting a small group of these companies. Where I have gotten "burned" in the past, it is by deviating from this discipline. I've enjoyed your macro perspective of whether current levels of ROE can be maintained in the future. I profess no knowledge on this subject. Nevertheless, I would put forth the hypothesis that the ROE factor is why so many large-cap stocks, outperform their smaller brethren. Money is a fungible commodity and it will be deployed to those that have shown an ability to employ it in an efficient manner. In my early days, I spent too great an effort focusing on the attributes of the company. I did not consider that the stock had its own investment attributes (silly me). My search for the investment "key" is to come to some happy compromise between these two issues; thus, achieving an understanding of the value of the company and the value of the stock. Berney