What is “Weighing Investing”?

What is “Weighing Investing”?

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“Weighing Investing is :

P/E to ROIC Weight Ratio

or

ROIC to P/E Weight Ratio,

Relatively,

a Weighing Machine”.

— Absolute Total Compound

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“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

— Benjamin Graham

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ROIC to P/E Weight Ratio (ROIC ÷ P/E) is equivalent to ROIC × E/P.

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Remark :

Warren Buffett and Charlie Munger emphasize the importance of simplification in investing evaluation.

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Question:

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Among their investing philosophy followers, in the name of simplification, who distills till the last and most essential drop of investing?

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Answer:

Joel Greenblatt, with his Magic Formula’s Spirit:

ROIC × E/P Rating and Sorting : The Higher The Better

Equivalent to :

ROIC ÷ P/E Rating and Sorting : The Higher The Better

Or the Inverse :

P/E ÷ ROIC Rating and Sorting : The Lower The Better