Not All Net-Nets Are Good Values

When the market is heating up, no investor wants to be the one caught holding the bag. Each day the market rises, the equity risk premium also rises. Yet thanks to an artificially created zero-interest-rate environment, unnatural forces continue to steer capital away from no-yield investments to equities. Against this backdrop remains one of the most appealing and most often misunderstood asset classes: net-net stocks.

If a company's net current asset value, defined as current assets minus all liabilities, exceeds the current market cap of the business, then there is a sound argument to be made that generally speaking, the company offers the greatest degree of protection from loss of capital. This general assumption becomes more relevant on a case-by-case basis....454 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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