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.

1 comment:

  1. Margin of safety is really important for the one who want to make great profit in the market. It will also ensure to avoid the chances of risk due to volatility of the market. Also taking services from a stock market advisory can be fruitful in earning more profit.

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