MARGIN OF SAFETY PRINCIPLE ****

MARGIN OF SAFETY PRINCIPLE ****

Value investors worry that they might be wrong when complying with these first five principles.

So they add a belt in addition to these suspenders.

Drawing on the point that prices are different than values, value investors insist on as large a favourable margin of difference between them as possible.

Doing so produces a margin of safety against judgment error.

While none of these 10 principles should be ignored, this is the most fundamental and universal.

Obeying this one promotes obedience to the others as well.

Also read: 10 TENETS OF VALUE INVESTING

1. MR. MARKET PRINCIPLE
2. BUSINESS ANALYST PRINCIPLE
3. REASONABLE PRICE PRINCIPLE
4. PATSY PRINCIPLE
5. CIRCLE OF COMPETENCE PRINCIPLE ****
6. MOAT PRINCIPLE
7. MARGIN OF SAFETY PRINCIPLE ****
8. IN-LAW PRINCIPLE
9. ELITISM PRINCIPLE
10. OWNER PRINCIPLE