Re: Buffettolotgy?
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Your methodology is flawed. Book value is not a good indicator of future value of the company.
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I'm looking at how a company puts their earnnings back into the company.
So let's say a company retains it's earnings (ie net profit). That's could be arugued as cash right? The cash could either be paid out as a dividend, or it could be used to put back into the company, and used to make more money.
If it's not paid out in dividend then it's put back into the company right? We should be able to look at how well that money will be used based on hisorical return on equity.
Book Value X ROE = EPS
Am i over simplyfing, or am i just really in left field?
Sarge[img]/images/graemlins/diamond.gif[/img]
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