Drivers of ROE in the Context of Portfolio Management

Posted on 16 CommentsPosted in Portfolio Management, Think Differently, Warren Buffett

Someone on the Corner of Berkshire and Fairfax board recently posted this comment referencing Buffett’s well-known piece on inflation from 1977. In the article, Buffett describes the variables that drive a company’s return on equity. There are only five ways that a company can improve returns: Increase turnover Cheaper leverage (reduce interest charges) More leverage (increase the amount of assets relative to a given level of equity) Lower income taxes Wider margins Notice three of the five drivers of ROE have […]

Focus on the Key Variables of an Investment

Posted on 10 CommentsPosted in Case Studies, Investment Quotes, Warren Buffett

Earlier this year I watched Lang Lang play Grieg’s Piano Concerto in A Minor—one of my all-time favorite pieces of music. The concerto is a monster—full of big octaves, virtuosity, excitement and power. It has around 30,000 notes, but the music is tied together with a simple 10 note melody that is repeated throughout the piece. I am currently working on a few different investment ideas that have numerous moving parts, but as I conduct my research, I continue coming back to […]