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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Investment Strategies / Mechanical Investing
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Author: TheReitStuff ⎊☼🐝  😊 😞
Number: of 6243 
Subject: return on equity / mungofitch?
Date: 09/17/26 11:46 PM
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This is mostly for mungofitch but anyone who wants to contribute thoughts is very welcome. Unless their thoughts come straight from an AI, of course ;-)

I believe Jim has used high ROE as a filter / screen for picking out groups of stocks that should average high returns over various periods, and also as a component within more complex screens.

My question is quite simple. Some businesses have highly cyclical ROE. UK housebuilders just now for example, ROE is extremely low; in boom times, it's very high.

How are you calculating ROE? Are you focusing on non-cylical sectors (medical devices!) or are you making a trend adjustment of some kind for cyclicals?

TRS

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This community has written 6,224 posts about Mechanical Investing. The article-length ones it recommended most:
Dividend investing · 52 recs · 2025
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OT - Div yields and returns · 32 recs · 2024
Using AI to generate backtesting programs · 30 recs · 2025
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