Comments on: Insider: The Intelligent Magic Investor https://www.quietspeculation.com/2016/02/insider-the-intelligent-magic-investor/ Play More, Win More, Pay Less Tue, 18 Jan 2022 02:16:04 +0000 hourly 1 By: Luca Ashok https://www.quietspeculation.com/2016/02/insider-the-intelligent-magic-investor/#comment-1631960 Sun, 28 Feb 2016 16:30:08 +0000 http://www.quietspeculation.com/?p=70692#comment-1631960 In reply to Joe.

Margin of Safety, as I see it, is an overarching concept which says: given some metric that determines whether or not to buy, make sure that your cutoff “price” is sufficiently low such that even if things don’t go as expected, you won’t suffer a huge loss. I think we are both on the same page here.

]]> By: Joe https://www.quietspeculation.com/2016/02/insider-the-intelligent-magic-investor/#comment-1631915 Sun, 28 Feb 2016 12:06:57 +0000 http://www.quietspeculation.com/?p=70692#comment-1631915 “For example let’s say that your margin of safety dictates only investing in cards you expect to double in price. If your calculations happen to be wrong or if some unforeseen unlucky event occurs, you still have a lot of room before the investment will lose you money.”

That’s not how Margin of Safety works. The margin is the difference between your purchase price and where you estimate it might DROP to, being comfortable with that margin. Just because you estimate it might double doesn’t mean you have a 100% margin of safety.

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