Value Investing: Provide a Margin of Safety

The idea of buying a company at a bargain price to achieve a margin of safety, provides a buffer if business events don't turn out exactly as predicted (and they won't).

The value investing style calls for building in margins of safety by buying at a reasonable price.

The style also suggests finding margins of safety within the business itself, for instance:

• so called "moats" or competitive advantages that differentiate the business from its competitors
• a large cash hoard, or,
• the absence of debt.

These offer a financial margin of safety.