To have a margin of safety means to prepare for a harsher scenario than you might expect. In finance, it means buying an asset for a lower price than you value the asset. That means that you have a buffer in case you’re wrong. Margin of safety is relevant in all our dealings in life. Generally, the more you know about a topic, you need a smaller margin of safety because you can anticipate downsides more easily.
Margin of Safety
Margin of Safety
Margin of Safety
To have a margin of safety means to prepare for a harsher scenario than you might expect. In finance, it means buying an asset for a lower price than you value the asset. That means that you have a buffer in case you’re wrong. Margin of safety is relevant in all our dealings in life. Generally, the more you know about a topic, you need a smaller margin of safety because you can anticipate downsides more easily.