Confronted with a challenge to distill the secret, Benjamin Graham gave us the ultimate investor safety net. It’s about always buying at a discount, creating a buffer against your own mistakes and market chaos. This single principle is arguably the most important in all of value investing.
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Meaning
It’s simple, really. Never pay full price. Always insist on a discount so large that it protects you from things going wrong.
Explanation
Look, the market is unpredictable. You will be wrong sometimes. Your analysis will be off. Companies will hit unexpected rough patches. The “margin of safety” is your personal buffer against all that chaos. It’s the difference between what a business is intrinsically worth and the price you actually pay for it. Think of it like building a bridge designed to hold 10,000 pounds, but you only ever drive 5,000-pound trucks across it. That extra capacity? That’s your margin of safety. In investing, it’s what lets you sleep soundly at night when the market gets volatile, because you didn’t bet the farm on a perfect outcome. You built in a cushion for error from the very beginning.
Quote Summary
| Context | Attributes |
|---|---|
| Original Language | English (3670) |
| Category | Wealth (107) |
| Topics | investment (18), safety (24) |
| Literary Style | formal (4), memorable (234) |
| Emotion / Mood | serious (155) |
| Overall Quote Score | 84 (319) |
Origin & Factcheck
This wisdom comes straight from the 1973 edition of “The Intelligent Investor,” written by Benjamin Graham, the man who taught Warren Buffett. It’s a cornerstone of his value investing philosophy, developed after living through the Great Depression. You’ll sometimes see the concept vaguely attributed to Buffett, but he would be the first to tell you he learned it at the feet of his professor, Graham.
Attribution Summary
| Context | Attributes |
|---|---|
| Author | Benjamin Graham (48) |
| Source Type | Book (4032) |
| Source/Book Name | The Intelligent Investor (48) |
| Origin Timeperiod | Modern (529) |
| Original Language | English (3670) |
| Authenticity | Verified (4032) |
Author Bio
Benjamin Graham, well known for investing community has brought investing to masses by focussing on analysis and risk control. After graduating from Columbia University, co-founded the Graham Newman Corporation. Benjamin Graham book list covers Security Analysis and The Intelligent Investor which shaped many generations of professionals. He is regarded as a mentor to Warren Buffett as his ideas form the basis of value investing.
Where is this quotation located?
| Quotation | Confronted with a challenge to distill the secret of sound investing into three words, we venture the motto, margin of safety |
| Book Details | Publication Year/Date: 1949; ISBN/Unique Identifier: 978-0060555665; Last edition: Revised Edition by Jason Zweig (2006), 640 pages. |
| Where is it? | Chapter 20, Approximate page 519 from 2006 edition |