A Quote by Benjamin Graham
Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.
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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.
The three most important words in investing...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.
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.
So one way to create an attractive risk/reward situation is to limit downside risk severely by investing in situations that have a large margin of safety. The upside, while still difficult to quantify, will usually take care of itself. In other words, look down, not up, when making your initial investment decision. If you don’t lose money, most of the remaining alternatives are good ones.
The secret of Soto Zen is just two words: not always so.... In Japanese, it's two words, three words in English. That is the secret of our practice.
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.
The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.
There are three words that convey the secret of the art of living, the secret of all success and happiness. One With Life.
No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the "margin of safety" - never overpaying, no matter how exciting an investment seems to be - can you minimize your odds of error.
There are only a few things investors can do to counteract risk: diversify adequately, hedge when appropriate, and invest with a margin of safety. It is a precisely because we do not and cannot know all the risks of an investment that we strive to invest at a discount. The bargain element helps to provide a cushion for when things go wrong.
Listen to the secret sound, the real sound, which is inside you. The one no one talks of speaks the secret sound to himself, and he is the one who has made it all.
There is so much investment in it of people's labor time that it will never make money. But there are other documentaries that you might make that are sort of on assignment for television that turn around in three to six months. Then the margin can be much be better for you because you're not spending three-and-a-half years on it. So I think if you're doing documentary films, that's sort of the way to look at it.
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.
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