Margin of Safety
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Margin of safety sounds like a complicated investing term, but the basic idea is something we use every day. We leave early for an appointment, keep extra money available for an unexpected expense, or allow some room for a mistake when making an important decision.
Investing is no different.
In this episode, I explain margin of safety in plain English and show why investors should not build their financial future on the assumption that everything will go exactly as planned. Stock prices can fall, companies can disappoint, and our estimates can be wrong.
The goal isn't to predict the future perfectly. It's to leave yourself enough room to be wrong without letting one mistake become a financial disaster.
A simple idea that can make a big difference in how you think about investing.