Nicely done, Aaron. I've owned small businesses for 25+ years now, and it was only upon reading Buffett's letters that I really began to understand small business ownership at a higher level.
Similarly, the small business owner has something of a value-investing edge if they can pick up the fundamental concepts you outline here and start thinking of their own businesses as a slice of ownership (in my case, I own fractional shares anyway, so this part is easy). Applying the same logic that has kept a small business alive - not irrationally spending on things that won't make you any money, EG, helps when considering stock investments.
The ROE and retained earnings stuff was explained particularly well.
Nicely done, Aaron. I've owned small businesses for 25+ years now, and it was only upon reading Buffett's letters that I really began to understand small business ownership at a higher level.
Similarly, the small business owner has something of a value-investing edge if they can pick up the fundamental concepts you outline here and start thinking of their own businesses as a slice of ownership (in my case, I own fractional shares anyway, so this part is easy). Applying the same logic that has kept a small business alive - not irrationally spending on things that won't make you any money, EG, helps when considering stock investments.
The ROE and retained earnings stuff was explained particularly well.
How about difference between ROE and ROC in terms of owners earnings ?