If I invest when its undervalued, I can be wrong about a whole host of issues and still make a good return" Guy Spier "If I pay too much upfront, I'd better understand everything there is to know about the company since there is no margin of safety. In short, what is it that makes outcomes tolerable even when the future doesn't live up to your expectations? The answer is margin for error" Howard Marks "You might want to give some thought to how you'll fare if the future doesn't oblige. We don’t need much to go right in order to make money, and in many cases we can get a lot wrong and still break even." David Einhorn "Because we look for investments that have a healthy margin for error, a mis-judgment of analysis is rarely a disaster. "Always keep a large margin of safety, even if you're playing with house money" Joel Greenblatt “The greater the margin of safety implicit in a deeply depressed market or stock, the less the risk and the greater the expected return” Frank Martin Neither is sufficient on its own for us to be interested” Mark Curnin “ Margin of safety for us comes from the quality of the business and second from buying into it at a substantial discount to our estimate of intrinsic value. “The function of margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future” Ben Graham "As the future is uncertain, my advice is to remember the importance of margin of safety" Jean-Marie Eveillard "A margin of safety gives you an edge over just blindly buying stocks or an index fund" Chris Browne “There is no Margin of Safety in top-down investing” Seth Klarman “Purchasing a business at a price that provides reasonable assurance of a generous margin for error is an erudite way of saying to ourselves, ‘Buy low, stupid’” Frank Martin On his ride to the lobby, he will enjoy a large margin of safety." Ed Wachenheim The investor says hello to the lady and enters the elevator. There is one skinny old lady in the elevator. The investor waits for the next elevator. Maybe the elevator company overestimated the strength of the elevator’s cable. Maybe he underestimated the weights of the two obese men. The investor should not enter the elevator. The investor knows that he weighs 175 pounds. The investor estimates their weights at about 200 pounds each. There already are two relatively obese men in the elevator. The investor notices that the elevator is rated for 600 pounds. An analogy is an investor standing on the 10th floor of a building, waiting for an elevator to carry him to the lobby. "The concept of a margin of safety is that an investor should purchase a security at a price sufficiently below his estimate of its intrinsic value that he will have protection against permanent loss even if his estimate proves somewhat optimistic. As when you build a bridge that can hold 30-ton trucks but only drive ten-ton trucks across it, you would never want your investment fortunes to be dependent on everything going perfectly, every assumption proving accurate, every break going your way.” Seth Klarman This is Benjamin Graham’s concept of buying at a sufficient discount that even bad luck or the vissitudes of the business cycle won’t derail an investment. “The best investments have a considerable margin of safety.
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Business schools should be educating their students on how to seek out and exploit these opportunities” Mohnish Pabrai Over a lifetime, we all encounter scores of low-risk, high return bets. For them, low risk and low returns go together as do high risk and high returns. “Most of the top ranked business schools around the world do not understand margin of safety. “If you buy stock with a sufficient margin of safety, the probability is with you.” Li Lu “Is there a sufficient margin of safety?” Bruce Berkowitz “Low price is the ultimate source of margin for error” Howard Marks "The three most important words in investing - " margin of safety" and the four most dangerous - "this time is different." Frank Martin
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