Margin of Safety

You have to have the knowledge to enable you to make a very general estimate about the value of the underlying business. But you do not cut it close. That is what Ben Graham meant by having a margin of safety. You don’t try and buy businesses worth $83 million for 80$ million. You leave your self an enormous margin.

Warren Buffett – American value investor, Chairman of Berkshire Hathaway (b. 1930)