Geoff Gannon June 21, 2022

Warren Buffett’s “Market Value Test” – And How to Use It

Someone who listens to the podcast wrote in with this question: “…(in a recent episode) you mention that you want to know if the capital allocation has created value or not. I was wondering how you do this kind of exercise practically? Do you look at the increase in book value/equity over time and compare that to the average ROE? When book value increased far less over a certain period of time compared with the historical average ROE I suppose that is a sign of...

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