Buffett says that if you were driving a lorry weighing 9,800lbs, you would not feel comfortable driving across a bridge built to carry 10,000lb. There is not enough margin of safety.
Always leave a margin of safety. Don't try to cut things so close. You wait until something kind of shouts at you in the stock market.
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Similar ideas to The 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 sto...
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 ...
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...
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