Understanding Margin of Safety in Investment
A fundamental concept championed by Benjamin Graham that helps investors make safer investment decisions by building a buffer against potential errors in analysis or unexpected market downturns.
What is Margin of Safety?
Definition
The Margin of Safety represents the difference between an asset's intrinsic value and its market price. It acts as a buffer against human error, bad luck, or extreme market volatility.
Key Principles
- The larger the margin of safety, the lower the investment risk
- Helps protect against valuation errors
- Essential for value investing strategy
- Provides room for market fluctuations
Margin of Safety Calculator
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