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Margin of safety ensures protection against errors from "summary" of Security Analysis: Sixth Edition, Foreword by Warren Buffett by Benjamin Graham,David Dodd
The concept of margin of safety is essential in the field of security analysis. It serves as a protective measure against potential errors that may occur in the investment process. By incorporating a margin of safety into their analysis, investors can mitigate the risks associated with uncertainties in the market. The margin of safety is the difference between the intrinsic value of a security and its market price. This difference acts as a buffer, providing a cushion for investors in case their analysis is incorrect or unforeseen events impact the market. By purchasing securities with a margin of safety, investors are better positioned to weather fluctuations in the ma...
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