6. Room for Error

The most important part of every plan is planning on your plan, not going according to plan.

Have room for error when estimating your future returns. For his own investments, Housel assumes the future returns he’ll earn in his lifetime will be ⅓ lower than the historic aver...

The critical element in defensive investing is what Warren Buffett calls “margin of safety” or “margin for error.” 

Here’s a way to illustrate margin for error. You find something you think will be worth $100. If you buy it for $90, you have a good chance of gain, as well as a moderate chan...

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 ...