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Subject:  Buffett - Return on Equity Date:  6/27/2011  6:12 AM
Author:  RayneMaker Number:  2149 of 2244

In Robert Hagstronm's book The Warren Buffett Way, 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. How do you do this? Does this refer to the marketable securities which a business owns and therefore is in the asset column of the balance sheet? If so, how do you find the cost at which the business bought the securities?
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