Margin of Safety
The margin of safety is all about planning for the unexpected and leaving room for error. Think of it as a buffer—if you need an hour, give yourself 90 minutes. That extra time reduces stress and helps avoid failure.
Life’s unpredictable, and a margin of safety keeps you prepared. In investing, if you think a stock is worth $100, you wouldn’t buy it at $99. Instead, you wait for it to drop to $70. That extra $30? That’s your cushion. Warren Buffett sums it up: "Margin of Safety" is the key to sound investment. Whether it’s time, money, or anything else, it’s your safeguard against trouble.
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Margin of safety or magin of error
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...
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 sto...
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