Posted by & filed under Part 6 Managing Financial Resources.

Description: I rarely buy a stock whose debt is greater than stockholders’ equity, or corporate net worth per share. In effect, that means I won’t give a second look to about one third of U.S. stocks.

Source: Bloomberg.com

Date: 03/15/2010

Link: http://www.bloomberg.com/apps/news?pid=20601039&sid=aReZz0vi1B5U

Questions for discussion:

  • In general, do you agree with this analysis and strategy for investing in stocks?
  • Could there be exceptions to the rule?
  • Why do you suppose that stocks that fail the Dorfman rule are still so valued by the investors?

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