By: La Papillion
Oh my, how time flies...Friday already and another week gone by. As KK would have said, only left XXXX weeks more to go :)
I realised I didn't blog much this week, so since I have both the energy and the time to do it now, I shall try to post some thoughts that are in my mind. It's about margin of safety.
I did civil engineering before, so the concept of margin of safety isn't new to me, except that it wasn't known in the engineering jargon as margin of safety - it's called factor of safety. Different words, same meaning. Thus, you can imagine that my eyes lit up when I first read Benjamin's Graham classic book - The Intelligent Investor. The concept of having a safety margin is EXACTLY the same as designing something bigger - a bridge or a building or what other things that civil engineers do.
I'll illustrate with examples..
For stocks,
1. We analyse the business and see if it's worth taking a closer look. Hence there is a screening procedure, otherwise all the stocks in the world will require 10 lifetimes or more to scrutinize closely - not possible. Read more...