The Motley Fool Discussion Boards

Previous Page

Learning to Invest / Terms, Definitions, & Jargon

URL:  http://boards.fool.com/quothagstrom-says-that-when-buffett-calculates-29382655.aspx

Subject:  Re: Buffett - Return on Equity Date:  6/27/2011  1:01 PM
Author:  JustMee01 Number:  2150 of 2221

"Hagstrom says that when Buffett calculates Return on Equity, he values marketable securities at cost so as to remove the effects of the capricious stock market on the net worth of the company and therefore the return on equity."

I think that this is more of a concern with financials or large conglomerates than with most run of the mill industrials, retailers, etc.

For any company where it is a concern, investments carried at market ("marketable securities") should be presented at both market as well as cost basis. Look in the notes to the financial statements that immediately follow the financial statements in the 10-K. One section should provide detail on their investment portfolio. The i