Margin Of Safety Quotes

Nothing irrevocable had yet been spoken, but there was only the barest margin of safety left them; each of them moving delicately along the outskirts of an open question, and, once spoken, such a question - as "Do you love me?" - could never be answered or forgotten.

Nothing irrevocable had yet been spoken, but there was only the barest margin of safety left them, each of them moving delicately along the outskirts of an open question, and, once spoken, such a question-as "Do you love me?" -could never be answered or forgotten. They walked slowly, meditating, wondering, and the path sloped down from their feet and they followed, walking side by side in the most extreme intimacy of expectation; their feinting and hesitation done with, they could only await passively for resolution. Each knew, almost within a breath, what the other was thinking and wanting to say; each of them almost wept for the other. They perceived at the same moment the change in the path and each knew then the other's knowledge of it; Theodora took Eleanor's arm and, afraid to stop, they moved on slowly, close together, and ahead of them the path widened and blackened and curved.

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.

Graham figured that always using the margin of safety principle when deciding whether to purchase shares of a business from a crazy partner like Mr. Market was the secret to making safe and reliable investment profits.

In an auditorium full of stares, his was the gaze she felt. in a classroom full of students learning lies, he scribbled the truth in the margins. In a school that clung to the illusion of safety, he didn't shy from talk of violence. He didn't belong there, the way she didn't belong there, and that shared strangeness made her feel like she knew him.

This world of ours appears to be separated by a slight and precarious margin of safety from a most singular and unexpected danger.

the purpose of the margin of safety is to render the forecast unnecessary.

Conservative is avoiding a certain level of risk. Margin of safety is raising the odds of success at a given level of risk by increasing your chances of survival. Its magic is that the higher your margin of safety, the smaller your edge needs to be to have a favorable outcome.

After the sureties of youth there sets in a period of intense and intolerable complexity. With the soda-jerker this period is so short as to be almost negligible. Men higher in the scale hold out longer in the attempt to preserve the ultimate niceties of relationship, to retain "impractical" ideas of integrity. But by the late twenties the business has grown too intricate, and what has hitherto been imminent and confusing has become gradually remote and dim. Routine comes down like twilight on a harsh landscape, softening it until it is tolerable. The complexity is too subtle, too varied; the values are changing utterly with each lesion of vitality; it has begun to appear that we can learn nothing from the past with which to face the future - so we cease to be impulsive, convincible men, interested in what is ethically true by fine margins, we substitute rules of conduct for rules of integrity, we value safety above romance, we become, quite unconsciously, pragmatic. It is left to the few to be persistently concerned with the nuances of relationships - and even this few only in certain hours especially set aside for the task.

the objective of investment (in general) is not to buy at fair value, but to purchase with a margin of safety.

I eventually learned to cook by focusing on two principles. Both of them apply to all learning and will be your constant companions throughout this book: failure points and the margin of safety.

Routine comes down like twilight on a harsh landscape, softening it until it is tolerable. The complexity is too subtle, too varied; the values are changing utterly with each lesion of vitality; it has begun to appear that we can learn nothing from the past with which to face the future—so we cease to be impulsive, convincible men, interested in what is ethically true by fine margins, we substitute rules of conduct for ideas of integrity, we value safety above romance, we become, quite unconsciously, pragmatic.

Often emphasis on identity and lifestyle is appealing because it creates a false sense that one is engaged in praxis. However, praxis within any political movement that aims to have a radical transformative impact on society cannot be solely focused on creating spaces wherein would-be radicals experience safety and support. Feminist movement to end sexist oppression actively engages participants in revolutionary struggle. Struggle is rarely safe or pleasurable.

we all know we should wear a seat belt in a car, but do they make us safer? Some research suggests they might not reduce car accident fatalities because people drive with less care, feeling there is a margin of safety between them and injury.

Nothing irrevocable had yet been spoken, but there was only the barest margin of safety left them; each of them moving delicately along the outskirts of an open question, and, once spoken, such a question—as ‘Do you love me?’—could never be answered or forgotten.

Buffett also shared some of his classic bits of wisdom about growing wealth. Spend less than what you make. Know and stay within your circle of competence. The only businesses that matter are the ones you put your money in. Keep learning over time. Don’t lose. Insist on a margin of safety.

Too late I realized I shouldn't have named the casino out loud, squandering my last margin of safety. I would have to remind myself not to smile at men in bars, not to look at them, not to wear skirts or tight jeans, not to accept drinks or refuse them, not to walk alone or alongside them, not to appear rude or too inviting.

Though Moltke was working with subordinates who were totally lacking in comprehension for whatever strategic plans he may have entertained and who on occasion abused the independence granted them, those plans were sufficiently flexible to accommodate errors; that is, a large safety margin was left to ensure that mistakes would not develop into catastrophes.

Successful investors tend to be unemotional, allowing the greed and fear of others to play into their hands.

The values are changing utterly with each lesion of vitality; it has begun to appear that we can learn nothing from the past with which to face the future – so we cease to be impulsive, convincible men, interested in what is ethically true by fine margins, we substitute rules of conduct for ideas of integrity, we value safety above romance, we become, quite unconsciously, pragmatic.

The problem, of course, with throwing people away is that they don't go away. They stay in the society that turned its back on them. And whether that society likes it or not, they find all sorts of things to do.

On 3 timeless ideas for investing Benjamin Graham, three fundamentally basic ideas: 1. You should look at stocks as part of ownership of a business. 2. You should look at market fluctuations in terms of his "Mr. Market" example & make them your friend rather than your enemy by essentially profiting from folly rather participating in it, & finally, 3. The 3 most important words in investing are "margin of safety" - ...always building a 15,000 pound bridge if you're going to be driving 10,000 pound truck across it...

If you really want to be right (or at least improve the odds of being right), you have to start by acknowledging your fallibility, deliberately seeking out your mistakes, and figuring out what caused you to make them. This truth has long been recognized in domains where being right is not just a zingy little ego boost but a matter of real urgency: in transportation, industrial design, food and drug safety, nuclear energy, and so forth. When they are at their best, such domains have a productive obsession with error. They try to imagine every possible reason a mistake could occur, they prevent as many of them as possible, and they conduct exhaustive postmortems on the ones that slip through. By embracing error as inevitable, these industries are better able to anticipate mistakes, prevent them, and respond appropriately when those prevention efforts fail.

THIS IS HOW AMERICA BECAME A HOTSPOT OF A GLOBAL PANDEMIC. Because my generation was raised to believe not just that safety is for dweebs but that it’s EVIL! Maverick is a full psycho and would definitely be at the “reopen America” protests because he wants the RIGHT to get his b-hole waxed even if he isn’t actually GOING to go get his b-hole waxed and even though he knows that many thousands more marginalized and high-risk people will die and many b-hole waxing businesses will ultimately fail because you cannot sustain an economy on a handful of slobbering fascists who feel the need, the need for a Jamba Juice. Goose alludes to some dark past involving Maverick’s dad, who was also a fighter pilot: “Every time we go up there, it’s like you’re flyin’ against a ghost.” And I’m sorry, but that is not an excuse! Go to therapy! You can be in a men’s group with Snape!

Some characters in fiction and our families exist as levers, to turn everything upside down and thereby knock out of the park some of our old presumptions, pretensions, convictions, and illusions of safety. These people, both in fiction and at the holiday table, tend to be annoying and on the margins.

Each spine with its shelf-mark code in familiar typewriter font, each date stamp a footprint of readers gone before and each shelf with its alphabetical ordering - these things align to provide the orderliness so cherished in a library. There is safety and structure amongst the stacks. Everything has a place, and you have found yours.

One example of a high-tech company that submits to a Graham type of analysis is Amazon.com. Though it does business exclusively on the Web, Amazon is essentially a retailer, and it may be evaluated in the same way as Wal-Mart, Sears, and so forth. The question, as always, is, does the business provide an adequate margin of safety at a given market price. For much of Amazon’s short life, the stock was wildly overpriced. But when the dot-com bubble burst, its securities collapsed. Buffett himself bought Amazon’s deeply discounted bonds after the crash, when there was much fearful talk that Amazon was headed for bankruptcy. The bonds subsequently rose to par, and Buffett made a killing.

Whether any of us like it or not, queer people are not going away, and every day, queer kids are born into the Church. Their health and safety should be our primary concern. Is there room for them in the church? I want to believe that there is, but the truth of Elder Uchtdorf's comment depends on our ability to make room for people who sit on the margins.

Zero-tolerance discipline policies, specifically the controversial category of willful defiance, have become a routine way by which to punish and marginalize Black girls in learning spaces when they directly confront adults or indirectly complicate the teacher’s ability to manage the classroom—not necessarily actions that pose a threat to the physical safety of anyone on campus.

Basically, Graham breaks the art of investing down into two simple variables – price and value. Value is what a business is worth. Price is what you have to pay to get it. Given the stock market’s manic-depressive behavior, numerous occasions arise where a business’ market price is distinctly out of line with its true business value. In such instances, an investor may be able to purchase a dollar of value for just 50 cents. Note that there is no mention here of interest rates, economic forecasts, technical charts, market cycles, etc. The only issues are price and value. I should also note that Graham emphasizes a large margin of safety. The strategy is not to buy a dollar of value for 97 cents. Rather, the gap should be dramatic so as to absorb the effects of miscalculation and worse-than-average luck.

There is nothing esoteric about value investing. It is simply the process of determining the value underlying a security and then buying it at a considerable discount from that value. It is really that simple. The greatest challenge is maintaining the requisite patience and discipline to buy only when prices are attractive and to sell when they are not, avoiding the short-term performance frenzy that engulfs most market participants.

Nothing irrevocable had yet been spoken, but there was only the barest margin of safety left them; each of them moving delicately along the outskirts of an open question, and, once spoken, such a question-as “Do you love me?”-could never be answered or forgotten. They walked slowly, meditating, wondering, and the path sloped down from their feet and they followed, walking side by side in the most extreme intimacy of expectation; their feinting and hesitation done with, they could only await passively for resolution. Each knew, almost within a breath, what the other was thinking and wanting to say; each of them almost wept for the other. They perceived at the same moment the change in the path and each knew then the other’s knowledge of it; Theodora took Eleanor’s arm and, afraid to stop, they moved on slowly, close together, and ahead of them the path widened and blackened and curved.

Elite panic in disaster, as identified by the contemporary disaster scholars, is shaped by belief, belief that since human beings at large are bestial and dangerous, the believer must himself or herself act with savagery to ensure individual safety or the safety of his or her interests. The elites that panic are, in times of crisis, the minority, and understanding that could marginalize or even disarm them, literally and psychologically, as well as the media that magnify their message. This would help open the way to create a world more like the brief utopias that flash up in disaster.

The RBMK’s stunning dual lack of the most crucial containment barriers is a glaring omission that should never have been considered, let alone designed, approved and built. Select Soviet Ministers were made aware of these inadequacies before the reactors were chosen, but still the RBMK design was selected over the competing ‘Vodo-Vodyanoi Energetichesky Reaktor’ (VVER, or ‘Water-Water Power Reactor’), a pressurised water reactor which was safer, but more expensive and marginally less powerful. Conventional wisdom at the time was that the RBMK could never cause a large-scale accident, because industry safety regulations would always be adhered to. Extra safety measures, they decided, were unnecessary.

Throughout history, white women have chosen racial solidarity with white men over gender solidarity with women of color in an attempt to gain access to the fruits of capitalist triumph. An alternative to that erroneous path is to choose solidarity with other women, other mothers in particular: to seek the resonances between our lives so that we may begin to repair the gaps. Erich Fromm wrote 'Important and radical changes are necessary if love is to become a social and not highly individualistic, marginal phenomenon.' I asked Erin Spahr of the Perinatal Mood Disorders clinic at Johns Hopkins what her strategies were for low-income women of color versus upper-middle-class white women. She responded that in all cases, she tried to validate the woman's experience. She tried to provide a sense of safety, to help the woman discover her own fears o that she could be present emotionally for her child. She listened. This is a form of love- a space between people, for confessions and hopes and flaws, and for the seed of solidarity to germinate.

The modern Berkshire Hathaway that he had created churned out new beads for the rosary almost like a clockwork. Buffett’s hunt for things to buy had become more ambitious, free of the cigar butts and lawsuits of the decades before. The great engine of compounding worked as a servant on his behalf, at exponential speed and under the gathering approval of a public gaze. The method was the same: estimate an investment’s intrinsic value, handicap its risk, buy using margin of safety, concentrate, stay in the circle of competence, let it roll as compounding did the work. Anyone could understand these simple ideas, but few could execute them. Even though Buffett made the process look effortless, the technique and discipline underlying it actually did involve an enormous amount of work for him and his employees. As

An October 2015 Gallup poll found that a 56 to 41 percent margin of Americans believe that increased concealed carry leads to improved safety.3 The results are reversed only among Democrats and those with postgraduate degrees. This is quite a change from 2005, when 65 percent of Americans told Gallup that they felt less safe in places allowing concealed weapons.

Brailsford, Duflo and Vowles see weaknesses with a different set of eyes. Every error, every flaw, every failure, however small, is a marginal gain in disguise. This information is regarded not as a threat but as an opportunity. They are, in a sense, like aviation safety experts, who regard every near-miss event as a precious chance to avert an accident before it happens.

It’s different from being conservative. Conservative is avoiding a certain level of risk. Margin of safety is raising the odds of success at a given level of risk by increasing your chances of survival.

2. Planning is important, but the most important part of every plan is to plan on the plan not going according to plan. What’s the saying? You plan, God laughs. Financial and investment planning are critical, because they let you know whether your current actions are within the realm of reasonable. But few plans of any kind survive their first encounter with the real world. If you’re projecting your income, savings rate, and market returns over the next 20 years, think about all the big stuff that’s happened in the last 20 years that no one could have foreseen: September 11th, a housing boom and bust that caused nearly 10 million Americans to lose their homes, a financial crisis that caused almost nine million to lose their jobs, a record-breaking stock-market rally that ensued, and a coronavirus that shakes the world as I write this. A plan is only useful if it can survive reality. And a future filled with unknowns is everyone’s reality. A good plan doesn’t pretend this weren’t true; it embraces it and emphasizes room for error. The more you need specific elements of a plan to be true, the more fragile your financial life becomes. If there’s enough room for error in your savings rate that you can say, “It’d be great if the market returns 8% a year over the next 30 years, but if it only does 4% a year I’ll still be OK,” the more valuable your plan becomes. Many bets fail not because they were wrong, but because they were mostly right in a situation that required things to be exactly right. Room for error—often called margin of safety—is one of the most underappreciated forces in finance. It comes in many forms: A frugal budget, flexible thinking, and a loose timeline—anything that lets you live happily with a range of outcomes. It’s different from being conservative. Conservative is avoiding a certain level of risk. Margin of safety is raising the odds of success at a given level of risk by increasing your chances of survival. Its magic is that the higher your margin of safety, the smaller your edge needs to be to have a favorable outcome.

This book aims to systematically overcome all of the above failure points, step-by-step. THE MARGIN OF SAFETY—IF WARREN BUFFETT DESIGNED MENUS Most cookbooks ignore how unreliable recipes can be.

The careful investor, when he hears such tales, should ask a key question: At what price is this company a good buy? What price is too high? Suppose, after doing your analysis of the company’s financial statements, management, business model, and prospects, you conclude that it’s worth buying at $40 a share, at which price you expect not only a satisfactory excess risk-adjusted return but have a margin of safety in case your analysis is flawed. Suppose you also conclude that the expected return at $80 is substandard, so the stock is likely overpriced. Typically you’ll avoid investing in stocks when they are trading above your buy price but, if you follow many companies carefully, from time to time some will be attractive purchases. The range between your “buy” price and the “likely overpriced” level, in this case from $40 to $80, is likely to be narrower for better, more experienced investors, enabling them to participate in more situations and with greater confidence.

Many bets fail not because they were wrong, but because they were mostly right in a situation that required things to be exactly right. Room for error—often called margin of safety—is one of the most underappreciated forces in finance. It comes in many forms: A frugal budget, flexible thinking, and a loose timeline— anything that lets you live happily with a range of outcomes.

When our ancestors were separated from the safety of the group, they needed to react defensively even to marginal threats, since they might well turn out to be lethal. But in modern life that same hypervigilance causes us to misread harmless or even welcoming people and situations as threats. Fleeing into self-preservation mode, we’ll avoid people and distrust even those

Look at stocks as part ownership of a business. 2. Look at Mr. Market—volatile stock price fluctuations—as your friend rather than your enemy. View risk as the possibility of permanent loss of purchasing power, and uncertainty as the unpredictability regarding the degree of variability in the possible range of outcomes. 3. Remember the three most important words in investing: “margin of safety.” 4. Evaluate any news item or event only in terms of its impact on (a) future interest rates and (b) the intrinsic value of the business, which is the discounted value of the cash that can be taken out during its remaining life, adjusted for the uncertainty around receiving those cash flows. 5. Think in terms of opportunity costs when evaluating new ideas and keep a very high hurdle rate for incoming investments. Be unreasonable. When you look at a business and get a strong desire from within saying, “I wish I owned this business,” that is the kind of business in which you should be investing. A great investment idea doesn’t need hours to analyze. More often than not, it is love at first sight. 6. Think probabilistically rather than deterministically, because the future is never certain and it is really a set of branching probability streams. At the same time, avoid the risk of ruin, when making decisions, by focusing on consequences rather than just on raw probabilities in isolation. Some risks are just not worth taking, whatever the potential upside may be. 7. Never underestimate the power of incentives in any given situation. 8. When making decisions, involve both the left side of your brain (logic, analysis, and math) and the right side (intuition, creativity, and emotions). 9. Engage in visual thinking, which helps us to better understand complex information, organize our thoughts, and improve our ability to think and communicate. 10. Invert, always invert. You can avoid a lot of pain by visualizing your life after you have lost a lot of money trading or speculating using derivatives or leverage. If the visuals unnerve you, don’t do anything that could get you remotely close to reaching such a situation. 11. Vicariously learn from others throughout life. Embrace everlasting humility to succeed in this endeavor. 12. Embrace the power of long-term compounding. All the great things in life come from compound interest.

we often remind people to distinguish between the idea of safety and comfort. When we fight for safety for the marginalized, what we’re talking about is safety from being discriminated against, harassed, assaulted, fired, or killed by the system and supremacist culture, which has historically criminalized, subjugated, exploited, and violated them and continues to do so.

Warren Buffett is one of the most successful investors of the 20th century and a self-described “value investor.” He aims to buy stocks at a discount (below intrinsic value), so that even with a worst-case scenario, he can do well. This discount is referred to as the “margin of safety,” and it’s the bedrock principle of some of the brightest minds in the investing world (e.g., Seth Klarman). It doesn’t guarantee a good investment, but it allows room for error.

The contract is markedly different from the old one, in which companies and employees’ fates rose and fell together, like a marriage. He quotes an employee memo from the CEO of General Electric in the 1980s: “If loyalty means that this company will ignore poor performance, then loyalty is off the table.”49 In the global “spot market,” companies are driven only by the need to remain competitive, passing the task on to individuals to remain competitive as producing bodies. This “new contract,” alongside other missing forms of government protection, closes the margin for refusal and leads to a life lived in economic fear. When Hacker describes the new situation faced by those for whom precarity was not already a matter of course, the margin has eroded completely: “Americans increasingly find themselves on an economic tightrope, without an adequate safety net if—as is ever more likely—they lose their footing.

Marshall-Wells was a good investment for shareholders at Buffett’s purchase price; an investor would have earned a mid-to-high-teens internal rate of return (IRR) if he sold at the price Ambrook paid in 1956.54,55 The investment is a good illustration of the value investment approach Ben Graham espoused proving effective; the hard assets offered downside protection and provided a margin of safety, allowing the investor to earn a good return despite mediocre future business performance.

Vegetables provide two to four times the protein anyone would need during any activity. Scientific studies tell us we need 2.5 percent of our calories in the form of protein. The World Health Organization has added a safety margin to protein requirements and says that we need 5 percent of our calories in the form of protein.

THE BEAUTY OF VALUE INVESTING is its logical simplicity. It is based on two principles: What’s it worth (intrinsic value), and don’t lose money (margin of safety).

I quickly convinced myself that the true key to material happiness lay in a modest standard of living which could be achieved with little difficulty under almost all economic conditions”—the margin-of-safety idea applied to personal finance.21

In the lean approach, companies are taught that prices are set by the market and that one way to improve profit margin is to reduce costs. This thinking flies in the face of "cost plus" thinking, where we look first at our own costs and set prices based on our desired profit margin. The reality is that most companies whether manufacturers or hospitals, do not have market power to set prices as they wish.

A January 2016 poll by Investor’s Business Daily found that a 52 to 42 percent margin of Americans believe that gun ownership is more likely to increase public safety than gun control is to keep guns out of the hands of criminals.5 In a June 2015 Rasmussen poll, 68 percent of Americans said that they would feel safer living in a neighborhood where guns are allowed.

ahead of ICAO audit By Tarun Shukla | 527 words New Delhi: India's civil aviation regulator has decided to restructure its safety board and hire airline safety professionals ahead of an audit by the UN's aviation watchdog ICAO (International Civil Aviation Organization). The Directorate General of Civil Aviation (DGCA) announced its intent, and advertised the positions on its website. ICAO told the Indian regulator recently that it would come down to India to conduct an audit, its third in just over a decade, Mint reported on 12 February. Previous ICAO audits had highlighted the paucity of safety inspectors in DGCA. After its 2006 and 2012 audits, ICAO had placed the country in its list of 13 worst-performing nations. US regulator Federal Aviation Authority followed ICAO's 2012 audit with its own and downgraded India, effectively barring new flights to the US by Indian airlines. FAA is expected to visit India in the summer to review its downgrade. The result of the ICAO and FAA audits will have a bearing on the ability of existing Indian airlines to operate more flights to the US and some international destinations and on new airlines' ability to start flights to these destinations. The regulator plans to hire three directors of safety on short-term contracts to be part of the accident investigation board, according to the information on DGCA's website. This is first time the DGCA is hiring external staff for this board, which is critical to ascertain the reasoning for any crashes, misses or other safety related events in the country. These officers, the DGCA said on its website, must have at least 12 years of experience in aviation, specifically on the technical aspects, and have a degree in aeronautical engineering. DGCA has been asked by international regulators to hire at least 75 flight inspectors. It has only 51. India's private airlines offer better pay and perks to inspectors compared with DGCA. The aviation ministry told DGCA in January to speed up the recruitment and do whatever was necessary to get more inspectors on board, a government official said, speaking on condition of anonymity. DGCA has also announced it will hire flight operations inspectors as consultants on a short-term basis for a period of one year with a fixed remuneration of `1.25 lakh per month. "There will be a review after six months and subsequent continuation will be decided on the basis of outcome of the review," DGCA said in its advertisement. The remuneration of `1.25 lakh is higher than the salary of many existing DGCA officers. In its 2006 audit, ICAO said it found that "a number of final reports of accident and serious incident investigations carried out by the DGCA were not sent to the (member) states concerned or to ICAO when it was applicable". DGCA had also "not established a voluntary incident reporting system to facilitate the collection of safety information that may not otherwise be captured by the state's mandatory incident reporting system". In response, DGCA "submitted a corrective action plan which was never implemented", said Mohan Ranganthan, an aviation safety analyst and former member of government appointed safety council, said of DGCA. He added that the regulator will be caught out this time. Restructuring DGCA is the key to better air safety, said former director general of civil aviation M.R. Sivaraman. Hotel industry growth is expected to strengthen to 9-11% in 2015-16: Icra By P.R. Sanjai | 304 words Mumbai: Rating agency Icra Ltd on Monday said Indian hotel industry revenue growth is expected to strengthen to 9-11% in 2015-16, driven by a modest increase in occupancy and small increase in rates. "Industry wide revenues are expected to grow by 5-8% in 2014-15. Over the next 12 months, Icra expects RevPAR (revenue per available room) to improve by 7-8% driven by up to 5% pickup in occupancies and 2-3% growth in average room rates (ARR)," Icra said. Further, margins are expected to remain largely flat for 2014-15 while

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.

Graham developed his core principles, which are at least as valid today as they were during his lifetime: A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price. The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists. The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be. 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. The secret to your financial success is inside yourself. If you become a critical thinker who takes no Wall Street “fact” on faith, and you invest with patient confidence, you can take steady advantage of even the worst bear markets. By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.

A strong-minded approach to investment, firmly based on the margin-of-safety principle, can yield handsome rewards. But a decision to try for these emoluments rather than for the assured fruits of defensive investment should not be made without much self-examination.

dramatically, but helium gas was 10 times as expensive. Under these conditions, Dr. Eckener, a pilot whose primary concern was safety and as Director of a Company attempting to make a profit, he was forced to make a difficult decision. His discussions with American businessmen and political officials had not resulted in the helium gas he so badly wanted. On the other hand he realized, an airship without lifting gas could not fly. His own company officials believed hydrogen to be safe and they did not share the American concern nor that of Eckener. During many of the flights in 1936, U.S. Naval officials were onboard the LZ-129, to study German operating methods of using hydrogen gas. Their resulting reports concluded that hydrogen properly used, was safe and should be considered used in any new or future American airships. The building of a dream The LZ-129 was a typical design for a Zeppelin airship, only it’s size was so remarkable. The structure was primarily built of triangular girders made of Duralumin, the interior was divided by a wire braced main frame, into 16 bays, in which each held a gas cell.2 Duralumin was an alloy of aluminum and copper with traces of magnesium, manganese, iron and silicon. It had been discovered by Dr. Alfred Wilm and his assistant Ing. Jablonsky, in September 1906. Late one Saturday evening, Jablonsky had completed testing numerous pieces and was ready to go home, when Dr. Wilm entered the lab, with just one more test. To everyone’s astonishment, the test piece was harder, with only ½% more Magnesium having been added. The last train for Berlin had departed and the two men worked the through the weekend, to perfect their Duralumin. Although Dr. Wilm wanted to obtain a patent on this new metal, that so many industries so badly required, he failed to take action. By not obtaining a patent, he gave German industry the opportunity to copy. Count von Zeppelin was amongst the first to realize the value of this new material. Dr. Alfred Wilm did not achieve the wealth he so rightfully desired and passed away on a small farm in the Riesengebirge, on August 6, 1937. Dr. Wilm placed an important mark on not only Zeppelin history, but in the design of countless airplanes ever since.3 The first Zeppelin airships had been constructed of simple aluminum, which is considerably weaker, so that strength was a major problem. It was not until LZ-26, which was the only Zeppelin assembled in Frankfurt-Rebstock, that Duralumin was practically used. Designed as a passenger airship, production of it’s parts had begun, when World War One started. Suddenly, this airship was no longer needed for civilian purposes and would fulfill military requirements only marginally. In order to provide space in the Friedrichshafen Zeppelin Sheds, for newer and larger designs; the completed girders and materials were transported to Frankfurt for assembly. The ship, approx. only 1/8 the

They went together to the pond. The frogs, frozen by the movement, sat still. Fourteen golden eyes like nuggets gleamed unwinking from the margin. Some squatted on dead reeds and immersed branches. Tranced by the half-apprehended movement above them they relied for safety upon immobility. Some hung by one slim hand like children to a raft. All had been stricken to stone by the human appearance. Only the sun, shifting in the sky, tickled the fire in the nuggets in their green heads.

LIFE FORMULAS I (2008) These are notes to myself. Your frame of reference, and therefore your calculations, may vary. These are not definitions—these are algorithms for success. Contributions are welcome. → Happiness = Health + Wealth + Good Relationships → Health = Exercise + Diet + Sleep → Exercise = High Intensity Resistance Training + Sports + Rest → Diet = Natural Foods + Intermittent Fasting + Plants → Sleep = No alarms + 8–9 hours + Circadian rhythms → Wealth = Income + Wealth * (Return on Investment) → Income = Accountability + Leverage + Specific Knowledge → Accountability = Personal Branding + Personal Platform + Taking Risk? → Leverage = Capital + People + Intellectual Property → Specific Knowledge = Knowing how to do something society cannot yet easily train other people to do → Return on Investment = “Buy-and-Hold” + Valuation + Margin of Safety [72]

A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price. The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists. The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be. 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. The secret to your financial success is inside yourself. If you become a critical thinker who takes no Wall Street “fact” on faith, and you invest with patient confidence, you can take steady advantage of even the worst bear markets. By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.

Room for error—often called margin of safety—is one of the most underappreciated forces in finance.

Benjamin Graham said, “The purpose of the margin of safety is to render the forecast unnecessary.” The more flexibility you have, the less you need to know what happens next.

Knowing how to properly value a business gives you the perfect investing edge as it allows to disregard what the market thinks and turn that into an advantage by exploiting market mispricing. However, don’t expect precision, this is also what makes value investing relatively easy, you just need to compare the current stock price to your range of values.

Life Formulas I (2008) These are notes to myself. Your frame of reference, and therefore your calculations, may vary. These are not definitions—these are algorithms for success. Contributions are welcome. Happiness = Health + Wealth + Good Relationships Health = Exercise + Diet + Sleep Exercise = High Intensity Resistance Training + Sports + Rest Diet = Natural Foods + Intermittent Fasting + Plants Sleep = No alarms + 8–9 hours + Circadian rhythms Wealth = Income + Wealth * (Return on Investment) Income = Accountability + Leverage + Specific Knowledge Accountability = Personal Branding + Personal Platform + Taking Risk? Leverage = Capital + People + Intellectual Property Specific Knowledge = Knowing how to do something society cannot yet easily train other people to do Return on Investment = “Buy-and-Hold” + Valuation + Margin of Safety [72] Naval’s Rules (2016) Be present above all else. Desire is suffering. (Buddha) Anger is a hot coal you hold in your hand while waiting to throw it at someone else. (Buddha) If you can’t see yourself working with someone for life, don’t work with them for a day. Reading (learning) is the ultimate meta-skill and can be traded for anything else. All the real benefits in life come from compound interest. Earn with your mind, not your time. 99 percent of all effort is wasted. Total honesty at all times. It’s almost always possible to be honest and positive. Praise specifically, criticize generally. (Warren Buffett) Truth is that which has predictive power. Watch every thought. (Ask “Why am I having this thought?”) All greatness comes from suffering. Love is given, not received. Enlightenment is the space between your thoughts. (Eckhart Tolle) Mathematics is the language of nature.

need a community that will also provide for my safety. No good has been done by further wounding the walking wounded. Love asks me to call communities—family, friends, and especially churches—to account. The church, especially, is burdened with this call. As proclaimers of the good news and servants of the love of God, we are accountable to create a space that protects the vulnerable and invites us into healing.

If I didn’t already own this stock, would I want to buy it at this price? If I had no idea what the stock price was, would I want to own a piece of this business? Now that the stock is even cheaper, hasn’t my margin of safety (see Chapter Six, p. 149) gotten even wider?

As BusinessWeek put it during the heart of a bear market long ago, “For investors…low stock prices remain a disincentive to buy.” But if the value of the business is solid, a declining stock price should be an incentive to buy, because it enables you to get more shares for less. And if the stock price drops below the business value, you have that rare opportunity that Graham called a “margin of safety”—the assurance that you can increase your stake for less than what it is actually worth.

When people of privilege pursue affluence, autonomy, safety, and power above everything else, not only do they miss out on the liberating and restorative work of Jesus, but they participate in greater inequality, segregation, and suffering for the most marginalized people in their community. When people of means pursue what is best for them and their own in an unequal society, their actions inevitably harm the common good. People like myself end up disobeying the central commandment of Jesus - to love God and to love our neighbors as ourselves - all in the name of pursuing a dream life for ourselves.

have no idea what I’ll use the savings for in the future. Few financial plans that only prepare for known risks have enough margin of safety to survive the real world.

The idea is that you have to take risk to get ahead, but no risk that can wipe you out is ever worth taking. The odds are in your favor when playing Russian roulette. But the downside is not worth the potential upside. There is no margin of safety that can compensate for the risk.

Investors still need to ask, how stable is the enterprise, and what are its future prospects? What are its earnings and cash flow? What is the downside risk of owning it? What is its liquidation value? How capable and honest is its management? What would you pay for the stock of this company if it were public? What factors might cause the owner of this business to sell control at a bargain price? Similarly, the pair never addressed how to analyze the purchase of an office building or apartment complex. Real estate bargains come about for the same reasons as securities bargains—an urgent need for cash, inability to perform proper analysis, a bearish macro view, or investor disfavor or neglect. In a bad real estate climate, tighter lending standards can cause even healthy properties to sell at distressed prices. Graham and Dodd’s principles—such as the stability of cash flow, sufficiency of return, and analysis of downside risk—allow us to identify real estate investments with a margin of safety in any market environment.

Part of the problem is that our politicians, media, and criminal justice institutions too often equate justice with revenge. Popular culture is suffused with revenge fantasies in which the aggrieved bring horrible retribution down on those who have hurt them. Often this involves a fantasy of those who have been placed on the margins taking aim at the powerful; it’s a fantasy of empowerment through violence. Police and prisons have come to be our preferred tools for inflicting punishment. Our entire criminal justice system has become a gigantic revenge factory. Three-strikes laws, sex-offender registries, the death penalty, and abolishing parole are about retribution, not safety. Whole segments of our society have been deemed always-already guilty. This is not justice; it is oppression. Real justice would look to restore people and communities, to rebuild trust and social cohesion, to offer people a way forward, to reduce the social forces that drive crime, and to treat both victims and perpetrators as full human beings. Our police and larger criminal justice system not only fail at this but rarely see it as even related to their mission.

I trade in accordance to my means and always leave myself an ample margin of safety.

Thus, in sum, we say that to have a true investment there must be present 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.

Room for error—often called margin of safety—is one of the most underappreciated forces in finance. It comes in many forms: A frugal budget, flexible thinking, and a loose timeline—anything that lets you live happily with a range of outcomes.

The power held by corporate giants was terrifying even before the CEO decided to leverage that power for their own murderous ends. A supply shortage. A profit-driven business decision. Cost cuts or poorly thought-out policies that reduced safety margins, forced people into unemployment, or added more pressure to frontline workers already stretched thin. A price hike of an essential medicine. (Wolfram hadn’t forged new ground there.) These things, especially in the health and medical industry, routinely killed far more people than the average serial killer could ever aspire to. And yet so few of them resulted in criminal charges. Indirect manslaughter for profit was far more societally acceptable than one person purposefully ending lives on a smaller scale.

Stocks are ownership shares of businesses,” which “you’re valuing and trying to buy at a discount.” The key, then, is to identify situations in which there’s a particularly large spread between the price and the value of the business. That spread gives you a margin of safety, which Greenblatt (like Graham and Buffett) regards as the single most important concept in investing.

In my view, investors should usually refrain from purchasing a “full position” (the maximum dollar commitment they intend to make) in a given security all at once. Those who fail to heed this advice may be compelled to watch a subsequent price decline helplessly, with no buying power in reserve. Buying a partial position leaves reserves that permit investors to “average down,” lowering their average cost per share, if prices decline.

Economist Paul Rosenstein-Rodan has pointed to the “tremble factor” in understanding human motivation. “In the building practices of ancient Rome, when scaffolding was removed from a completed Roman arch, the Roman engineer stood beneath. If the arch came crashing down, he was the first to know. Thus his concern for the quality of the arch was intensely personal, and it is not surprising that so many Roman arches have survived.” Why should investing be any different? Money managers who invested their own assets in parallel with clients would quickly abandon their relative-performance orientation.

Benjamin Graham understood that an asset or business worth $1 today could be worth 75 cents or $1.25 in the near future. He also understood that he might even be wrong about today’s value. Therefore Graham had no interest in paying $1 for $1 of value. There was no advantage in doing so, and losses could result. Graham was only interested in buying at a substantial discount from underlying value. By investing at a discount, he knew that he was unlikely to experience losses. The discount provided a margin of safety.

Financially distressed and bankrupt securities, corporate recapitalizations, and exchange offers all fall into the category of asset conversions, in which investors’ existing holdings are exchanged for one or more new securities. Distressed and bankrupt businesses are often identified in the financial press; specialized publications and research services also provide information on such companies and their securities.

There is another unique aspect to thrift conversions. Unlike many IPOs, in which insiders who bought at very low prices sell some of their shares at the time of the offering, in a thrift conversion insiders virtually always buy shares alongside the public and at the same price.

Owing to a debtor’s ability to reject contracts of nearly all types, a bankrupt company is frequently in a position to become a low-cost competitor in its industry upon reorganization. Unprofitable, high-cost facilities are closed or sold, above-market lease costs are reduced to market levels, and a company’s overstated assets are typically written down on its books to fair-market value, thereby reducing future depreciation charges. The bankruptcy process can sometimes serve as a salutary catharsis, allowing troubled firms the opportunity to improve their business operations.

You want a broker with sufficient clout within his or her firm to provide you with access to analysts and traders, one with experience to handle your account properly and to know when to call you and when not to waste your time. You don’t want a totally inexperienced broker who is learning at your expense, a complacent broker satisfied with mediocre results, or one so successful that your account is relatively unimportant.

Value investing by its very nature is contrarian. Out-of-favor securities may be undervalued; popular securities almost never are. What the herd is buying is, by definition, in favor. Securities in favor have already been bid up in price on the basis of optimistic expectations and are unlikely to represent good value that has been overlooked.

At times a particular method may stand out as the most appropriate. Net present value would be most applicable, for example, in valuing a high-return business with stable cash flows such as a consumer-products company; its liquidation value would be far too low. Similarly, a business with regulated rates of return on assets such as a utility might best be valued using NPV analysis. Liquidation analysis is probably the most appropriate method for valuing an unprofitable business whose stock trades well below book value. A closed-end fund or other company that owns only marketable securities should be valued by the stock market method; no other makes sense.

Although at one time a measure of a business’s prosperity, it has become a relic: stocks should simply not be bought on the basis of their dividend yield. Too often struggling companies sport high dividend yields, not because the dividends have been increased, but because the share prices have fallen. Fearing that the stock price will drop further if the dividend is cut, managements maintain the payout, weakening the company even more.

The second method of business valuation analyzes liquidation value, the expected proceeds if a company were to be dismantled and the assets sold off. Breakup value, one variant of liquidation analysis, considers each of the components of a business at its highest valuation, whether as part of a going concern or not.

The method was the same: Estimate an investment’s intrinsic value, handicap its risk, buy using margin of safety, concentrate, stay in the circle of competence, let it roll as compounding did the work.

Facebook’s products routinely garnered higher growth rates at the expense of content quality and user safety. Features that produced marginal usage increases were disproportionately responsible for spam on WhatsApp, the explosive growth of hate groups, and the spread of false news stories via reshares, he wrote.

Benjamin Graham said, “The purpose of the margin of safety is to render the forecast unnecessary.” The more flexibility you have, the less you need to know what happens next. And never forget John Maynard Keynes: “In the long run we’re all dead.

1. Treat a share of stock as a proportional ownership of the business. 2.  Buy at a significant discount to intrinsic value to create a margin of safety. 3. Make a bipolar Mr. Market your servant rather than your master. 4. Be rational, objective, and dispassionate. Munger has said these four bedrock Graham principles “will never be obsolete.” An investor who does not follow these principles is not a Graham value investor. The Graham value investing system really is that simple.

When failure is expensive, it’s worth investing in large margins of safety.

Emotional investors and speculators inevitably lose money.

Many unsuccessful investors regard the stock market as a way to make money without working rather than as a way to invest capital in order to earn a decent return

The purpose of the margin of safety is to render the forecast unnecessary.” The more flexibility you have, the less you need to know what happens next. And never forget John Maynard Keynes: “In the long run we’re all dead.

Predicting what you’ll use your savings for assumes you live in a world where you know exactly what your future expenses will be, which no one does. I save a lot and I have no idea what I’ll use the savings for in the future. Few financial plans that only prepare for known risks have enough margin of safety to survive the real world. In fact, the most important part of every plan is planning on your plan no going according to plan.

Key concept: Psychological safety is a condition in which you feel (1) included, (2) safe to learn, (3) safe to contribute, and (4) safe to challenge the status quo—all without fear of being embarrassed, marginalized, or punished in some way.