Margin of Safety Quotes

The only intelligence investing is value investing...to acquire more than one is paying for.

All sensible investing is value investing

When you build a bridge, you insist that it can carry 30,000 pounds, but you only drive 10,000-pound trucks across it. And that same principle works in investing.

All intelligent investing is value investing - acquiring more that you are paying for. You must value the business in order to value the stock.

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.

Proper accounting is like engineering. You need a margin of safety. Thank God we don't design bridges and airplanes the way we do accounting.

Warren Buffett is famous for talking about the 'intrinsic value' of stocks. But while many people parrot this phrase, few know what it really means.

The three most important words in investing...Margin of Safety.

I think investors ought to focus on making sure that the stock is within their circle of competence, that it's worth a lot more than it's valued at - and once you have those two things, a stop-loss makes no sense.

We take the traditional value investor's process and just flip it around a little bit. The traditional value investor asks 'Is this cheap?' and then 'Why is it cheap?' We start by identifying a reason something might be mispriced, and then if we find a reason why something is likely mispriced, then we make a determination whether it's cheap.

The single biggest advantage a value investor has is not IQ. It's patience and waiting. Waiting for the right pitch, and waiting for many years for the right pitch.

There are three important principles to Graham's approach. [The first is to look at stocks as fractional shares of a business, which] gives you an entirely different view than most people who are in the market. [The second principle is the margin-of-safety concept, which] gives you the competitive advantage. [The third is having a true investor's attitude toward the stock market, which] if you have that attitude, you start out ahead of 99 percent of all the people who are operating in the stock market - it's an enormous advantage.

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.

The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.

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.

The consequences of overestimating a company and your ability to analyse it are greatly diminished when you're paying a lot less for it than your analysis shows it is worth.

It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

There is just no way that I can understand in God's green earth that an airline could undertake with its normal procedures the operation of the Space Shuttle. . . . You don't put parachutes on airliners because the margin of safety is built into the machine. The 727 airplanes we fly are proven vehicles with levels of safety and redundancy built in. The shuttle is a hand-made piece of experimental gear.

A rule of thumb is that the best investors focus on losers, and the winners take care of themselves.

There is no such thing as a value trap. There are investing mistakes.

Everyone has the idea of owning good companies. The problem is that they have high prices in relations to assets and earnings, and that takes all of the fun out of the game.

Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.

In security analysis the prime stress is laid upon protection against untoward events. We obtain this protection by insisting upon margins of safety, or values well in excess of the price paid.

Before starting my own investment funds, the only models I was aware of were those of Warren Buffett and Charlie Munger. Their models made a lot of sense to me, so I cloned them.

I've never met him, but I love the simplicity with which Warren Buffett describes good and bad businesses and how he makes his investment decisions.