“I would rather buy a wonderful company with a fair price rather than a fair company with a wonderful price”.------- “You are right not because you think you are right or people think you are right but because your data is right”. -------Warren Buffet.
Friday, February 2, 2018
Margin of Safety - How Important Is It in Investing?
Margin of Safety (MoS) is the only thing which i hold and am trying to hold firmly when selecting a company to invest in:
(1) MoS is the difference between the Intrinsic Value of a Stock and its Market Price.
(2) Could be used to prevent the Market Price for much volatility (even though we are not able to predict the movement of the market from time to time).
(3) Cash, Operating Cash Flow, Free Cash Flow, Current Ratio, Debt to Equity Ratio, GP Margin, NP Margin, The Consistency of Revenue & Profit QoQ & YoY - are used as a Quantitative Metric in my selection of stock.
(4) Future Plan of the business (short & long term), Vision & Mission, Business Strategy, Management Team - are used as a Qualitative Metric.
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