A margin of safety is crucial in investing from "summary" of The Little Book That Builds Wealth by Pat Dorsey
When it comes to investing, having a margin of safety is absolutely crucial. This concept was popularized by the legendary value investor Benjamin Graham, who is widely regarded as the father of value investing. The idea behind a margin of safety is simple yet powerful - it involves buying a stock for less than what it is worth, thus providing a cushion in case the investment does not perform as expected. By purchasing a stock at a significant discount to its intrinsic value, investors are able to protect themselves against potential losses. This margin of safety serves as a buffer, allowing investors to weather the inevitable ups and downs of the market without risking permanent capital impairment. In essence, a margin of safety provides a level of protection that can help investors avoid costly mistakes and preserve their hard-earned wealth. The concept of a margin of safety is particularly importan...
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