Margin of Safety: Why The Price You Pay Matters (Part 4) (011)

Investing Mastermind Podcast

Feb 14 2023 • 24 mins

Part four of an ongoing series on Warren Buffett and Charlie Munger's 4 principles of investing. We walk through these investing principles in the form of a checklist that you can download here:

We go through these 4 steps in a company before we invest in its stock. The 4 investing principles/steps we discuss in this series are: 1) Understanding the business (circle of competence), 2) Management (honest & competent), 3) Moat (favorable long term prospects), and 4) Margin of Safety (available at an attractive price).

Today's topic is especially exciting on the subject of Margin of Safety, or buying something of high quality at a discount to its value. In the context of investing, you want to figure out the "intrinsic value" of a company during your research or homework phase of studying businesses. It's important to note that the stock market's price on a company is not always equal to the company's value.

Once we figure out the company's intrinsic value per share, we then would want to buy its stock at a discount (margin of safety) by calculating a final stock buy price using various valuation methods that we discussed in this episode.

Learn more about Signe's investing workshop at: