“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.” MatterSeemsRiskExcitingSafetyErrorsInvestmentInvestingCarefulInvestorsOddsMarginsInsistingBeing WrongOverpaying Book:The Intelligent Investor, Rev. Ed Source: The Intelligent Investor, Rev. Ed
“The investor should be aware that even though safety of its principal and interest may be unquestioned, a long term bond could vary widely in market price in response to changes in interest rates.” ShouldMayLongTermInterestSafetyResponseRateInvestingLong TermInvestorsPrincipalVaryInterest Rate Author:Benjamin Graham
“Even with a margin of safety in the investor's favor, an individual security may work out badly. For the margin guarantees only that he has a better chance for profit than for loss - not that loss is impossible. But as the number of such commitments is increased the more certain does it become that the aggregate of the profits will exceed the aggregate of the losses.” MayDoeCertainIndividualChanceLossNumbersImpossibleSecurityCommitmentSafetyInvestingProfitWork OutFavorsGuaranteesInvestorsExceedMargins Author:Benjamin Graham
“There are only a few things investors can do to counteract risk: diversify adequately, hedge when appropriate, and invest with a margin of safety. It is a precisely because we do not and cannot know all the risks of an investment that we strive to invest at a discount. The bargain element helps to provide a cushion for when things go wrong.” KnowsHelpingCan DoRiskElementsSafetyInvestmentStriveInvestingAppropriateInvestorsMarginsBargainsDiscountsCushionsWhen Things Go Wrong Author:Seth Klarman
“Investors frequently benefit from making decisions with less than perfect knowledge and are well rewarded for bearing the risk of uncertainty. The time other investors spend delving into the last unanswered detail may cost them the chance to buy into situations at prices so low they offer a margin of safety despite the incomplete information” WellsMayLastsChanceDecisionPerfectSituationRiskInformationCostOffersBenefitsLowsSafetyDetailsDespiteUncertaintyInvestorsMarginsIncompleteMaking DecisionsUnansweredDelvingIncomplete Information Author:Seth Klarman
“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.” PeopleIfsGivingFirstsLooksImportantDifferentThreeViewsAttitudePrinciplesShareApproachPercentConceptsAdvantageThirdsSafetyEnormousInvestorsMarginsCompetitive AdvantageDifferent Views Author:Warren Buffett
“An investor who proposes to ignore near-term market fluctuations needs greater resources for safety and must not operate on so large a scale, if at all, with borrowed money.” IfsNeedsTermGreaterResourcesSafetyScalesInvestorsProposeBorrowedFluctuationBorrowed Money Book:General Theory Of Employment , Interest And Money Source: General Theory Of Employment , Interest And Money
“Imagine if investors in Wal-Mart really cared about bribery at that company's overseas operations or safety standards at its overseas manufacturing plants. If investors pulled their capital, corporate leaders would have to respond.” IfsCompanyLeaderImagineStandardsSafetyPlantCorporateOperationsInvestorsManufacturingBribery Author:Eliot Spitzer
“Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of good business conditions. The purchasers view the good current earnings as equivalent to 'earning power' and assume that prosperity is equivalent to safety.” YearsLossViewsQualityConditionsSecurityTaughtLowsSafetyAssumingCurrentsProsperityObservationChiefsInvestorsEarningTaught UsGood BusinessPurchasers Author:Benjamin Graham