On august 24th, 2016, I wrote a post about the power of the ROE.
The power of the ROE, is a curious thing. Make a one man weep, make another one sing. That's the power of the ROE.
wanted to see if the recipe worked well. So, I went back to each of the 30 high and steady ROE stocks mentioned in the post and I took a look at their performance.
Here's the stocks:
AMGN, BDX, BLL, BOH, CI, COH, COKE, CSCO, DD, EL, GPS, IDXX, JCOM, K,
KMB, LH, MDT, MIDD, MMP, MSFT, NUS, OMC, ROK, SBUX, STRA, TUP, VAR, WMT,
The performance of those 30 high ROE stocks since august 24th has been 6,2% while the S&P did slightly better with a performance of 7,3%.
First, the period is short (7 months).The shorter the period, the lesser the meaning.
Second, the stocks in this selection aren't probably still the highest and steadiest ROE stocks on the market right now. The article referred is 3 years old, so the selection may be a little different now.
At that point, you may ask: Why the fuck are you writing about something not that relevant and probably not up to date?
Well, first, I like to validate if what I wrote before is accurate. If it's not, I like to lapidate myself in public. Sadomasochist syndrom maybe.
Then, my interesting observation is that I've noticed that there's about one great winner among each 7-8 picks. There's not that much great losers, but many stocks do just OK with a few exceptions doing great. It looks to me that this high ROE selection reduces risks. The basement is not as deep as with others stocks.
It's obvious: a stock generating large amounts of money does generally way better than a stock generating a little amount of money.