What is Return On Equity
02:08: book value: value at the end of ownership; It can trade for a premium
04:39: the Premium (or Discount) which investors pay is a function of how fast they can add more book value to the company or pay you a dividend.
- a steady or increasing ROE is a company that knows how to reinvest their earnings
- a declining ROE is symbolic of management that doesn't know how to reinvest their capital in successful assets. Companies like this should pay most of their earnings as a dividend