Why a high ROE is not enough?

Efficiency is important. You have put your money into a business, so it is natural that you want the most out of it. Hence, going after companies with a high ROE is one of the core tenets of long-term equity investing. But here's something many investors miss. High ROE by itself is not enough. Without significant earnings and revenue growth, a high ROE is akin to garnish. Without growth, a company can, at best, just maintain its ROE but rarely grow it. In addition, companies that maintain a high ROE while simultaneously growing the

This article was originally published on March 23, 2023.