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This rule of thumb can be use a reference only. But it's not totally usable, there are tonnes of stock PE higher than ROE, but the value keeps go higher.
Whatever he say of formula can use a own reference only. But real time investment is all unpredictable and no right or wrong formulation to prove anything. It's just like game of roulette only...
he just wanted to proof his theory and make more followers only... usually seasoned investors really won't D him one. Only newbie will pray him like God.