Pick Stocks With Only Two Numbers: The Complete Guide to P/E Ratio and ROE
You spent NT$300K on a stock and a year later it's only NT$200K — that's not bad luck, you were reading the wrong numbers from the start. A NT$50 stock can be 10 times more expensive than a NT$500 stock. Using the Taiwan Weighted Index's average P/E of 15–20x and ROE above 15% as quality benchmarks, this article breaks down the two core numbers — P/E ratio and ROE (including ROE trend, whether ROE comes from core operations or non-operating gains, treasury stock distortions). The Taiwan Weighted Index rose more than 3x from 2003 to 2023, but that gain was not evenly distributed across every stock. Includes 4 iron rules, 4 action steps, a five-question decision framework, and differentiated strategies by demographic. The 2000 dot-com crash saw the weighted index fall from 10,000 to around 3,000 — a 70%+ drop needing 15 years to recover. The 2008 financial crisis saw about a 60% drop with 3–4 years to recover. Many high-P/E low-ROE stocks from the 2000 high never came back. Real investors should check ROE trends for 3–5 consecutive years via the Market Observation Post System (MOPS).