financial margin of safety

The financial margin of safety is the difference between a company’s intrinsic value (its true worth based on fundamentals) and its current market price. It acts as a buffer, protecting investors from errors or unforeseen declines by purchasing stocks or assets at a price significantly below their estimated value. This approach reduces risk, providing more assurance that even if the market or company's performance falters, the investment remains reasonably secure and less likely to result in loss. Essentially, it’s a strategic cushion to enhance investment safety and long-term stability.