Description: I rarely buy a stock whose debt is greater than stockholdersâ€™ equity, or corporate net worth per share. In effect, that means I wonâ€™t give a second look to about one third of U.S. stocks.
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 the stocks that fail the Dorfman rule are still so valued by the investors?