Doing a Graham net-net type valuation serves a totally different...

Doing a Graham net-net type valuation serves a totally different purpose than what I am doing with return on equity.

The Graham style net-net is trying to establish a floor value so that if the company is liquidated you have some comfort that you might get a recovery.

I'm not looking at a safety net at all. I'm asking what kind of return does the company get for all of the dollars it has invested over the lifetime of the company. The book value (including goodwill) hopefully gives some approximation for that investment.

The two approaches complement each other. For the Graham approach, you of course want to strip out goodwill because it has no value (maybe) in a liquidation. For the return on equity approach, you must include goodwill because the company did spend that money on something, and you want to hold them accountable for that. Otherwise return on equity will appear much too large relative to the real investment that was made.