A Quote by Benjamin Graham
To have a true investment, there must be a true margin of safety. And a true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.
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Edge also implies what Ben Graham....called a margin of safety. You have a margin of safety when you buy an asset at a price that is substantially less than its value. As Graham noted, the margin of safety 'is available for absorbing the effect of miscalculations or worse than average luck.' ...Graham expands, "The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent at some still higher price."
If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety. So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you'd need. If you're driving a truck across a bridge that says it holds 10,000 pounds and you've got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it covers, you may feel okay, but if it's over the Grand Canyon, you may feel you want a little larger margin of safety.
High leverage is unsafe, not just for a company but the entire economy... LBOs are reducing the safety. Management loses the power to do many things. It has no margin for error and less margin for additional risk.
Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.
Most of us, no matter what we say, are walking in the dark, whistling in the dark. Nobody knows what is going to happen to him from one moment to the next, or how one will bear it. This is irreducible. And it's true of everybody. Now, it is true that the nature of society is to create, among its citizens, an illusion of safety; but it is also absolutely true that the safety is always necessarily an illusion. Artists are here to disturb the peace.
No matter that astronauts and cosmonauts had perished in precisely designed and carefully tested machines. Solid engineering could always provide a safety margin, because the engineers believed, there was complete safety in numbers.
But we agree with the NTSB that if we eliminated the thrust- reverser calculation, it would be an extra margin of safety. Airport capacity and airline efficiency are important, but safety is the most important thing.
Even with a margin of safety in the investor's favor, an individual security may work out badly. For the margin guarantees only that he has a better chance for profit than for loss - not that loss is impossible. But as the number of such commitments is increased the more certain does it become that the aggregate of the profits will exceed the aggregate of the losses.
In engineering, people have a big margin of safety. But in the financial world, people don't give a damn about safety. They let it balloon and balloon and balloon. It's aided by false accounting.
Protect the downside. Worry about the margin of safety.
It is our argument that a sufficiently low price can turn a security of mediocre quality into a sound investment opportunity - provided that the buyer is informed and experienced and he practices adequate diversification. For, if the price is low enough to create a substantial margin of safety, the security thereby meets our criterion of investment.
The three most important words in investing...Margin of Safety.
There is a close logical connection between the concept of a safety margin and the principle of diversification.
The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.
We always look at the margin of safety in the balance sheet and then worry about the business.
The reasoning isn't crazy. It's technically correct. If you're being true to the idea that government must not take positions on religious questions, then the Ninth Circuit opinion is quite persuasive.
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