Learn more about moneyandinvestments with this collection
Identifying and eliminating unnecessary expenses
How to negotiate better deals
Understanding the importance of saving
What is Margin of Safety?
‘Margin of safety’ is the difference between a stock price and its intrinsic worth, or value.
So if a stock is trading at $70 in the market, and you calculate the company’s intrinsic value as $100, you have a margin of safety of $30 (100 minus 70). In other terms, the stock is trading at a 30% discount to the company’s intrinsic value.
23
282 reads
MORE IDEAS ON THIS
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”
WARREN BUFFETT
21
306 reads
CURATED FROM
CURATED BY
Take note of these great quotes by Warren Buffett on Investing!
“
Related collections
More like this
Margin of Safety
This is a principle of investing wherein an investor purchases securities only when their market price is significantly below their intrinsic value.
The formula to determine the intrinsic value of something is:
Margin of Safety = Market Cap / Deep Value Barg...
Have Margin of Safety
Things don’t always go as planned. You need to have a buffer between what we expect to happen and what could happen. That’s margin of safety.
Engineers build a bridge to sustain more than double its maximum capacity. Investors only choose business they understand so that they can calculate ...
Why Should You Value Shares?
It is important to understand that the stock's intrinsic value is not necessarily directly tied to its current market price.
The efficient market hypothesis, a theory that states that all known information is currently priced into a stock. However, this is not always the case.
Read & Learn
20x Faster
without
deepstash
with
deepstash
with
deepstash
Access to 200,000+ ideas
—
Access to the mobile app
—
Unlimited idea saving & library
—
—
Unlimited history
—
—
Unlimited listening to ideas
—
—
Downloading & offline access
—
—
Personalized recommendations
—
—
Supercharge your mind with one idea per day
Enter your email and spend 1 minute every day to learn something new.
I agree to receive email updates