How to Apply a Margin of Safety like Benjamin Graham! (Margin of Safety Explained + Example)

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In this video, we got into detail on one of the most important things investors should do before buying a stock, which is applying a margin of safety. Margin of safety is the principle of buying a security at a significant discount to its intrinsic value, which is thought to not only provide high-return opportunities but also to minimize the downside risk of an investment.

Valuation model videos:
Multiples Valuation:
Dividend Discount Model:
Discounted Cash Flow Analysis:
Graham's Valuation:

I am not a Financial advisor or licensed professional. Nothing I say or produce on YouTube, or anywhere else, should be considered as advice. All content is for educational purposes only. I am not responsible for any financial losses or gains. Invest and trade at your own risk.

[davidporter]

It might be better to characterize the prices between acceptable buy and intrinsic value as "hold" instead of sell. Sell above intrinsic maybe with some margin that could be driven by an analysis of intrinsic earnings per share vs. typical SD of EPS.

[xhesitase]

I dont usually Subsribe on patreon channels, but your analysis is very organized and simple, and your spreadsheet is a nice tool to add, while scouraging for good stock. Thanks.

[shak_Fu]

Hello @Dividendology. Could you please reveiw your formula here for buy/sell versus your video posted on intrinsic value buy/sell formula and clarify. You use current<acceptable here and in the other vide you used intrinsic instead of acceptable. Which one is it?

[joebaez]

Evening So you the way to set up the Buy or Sell option in two different ways.
1-Is. =IF(Acceptable Buying Price is < then Intrinsic value then, "Buy", "Sell")
2-Is =IF(Current Price is < then Acceptable Buying Price then, "Buy', "Sell")

which one is it boss?
love your stuff man keep it coming

[marcolorenzovalerianodelro]

Maybe i missed it... But what was the point of dividing the current price by the intrinsic value?

[carloscallau]

This is very interesting, but with current yields and prices, everything shows a "difference" of 150% - 200%+, so, even the intrinsic value is far below the current stock price. Of any stock.

[FireEggplant]

I did PG with a EPS of 5.69 and a GR of 5.07% and Y at 4.4 and the intrinsic value was 48.9 and margin of safety of 35% and the acceptable buy price is $31.81, does this sound right? It hasn’t hit 31.81 in 5 years

[splinx]

How do I make the last valuation model with 4 valuation methods being combined?

[blakiplops]

Very well explained video, but one thing I don't understand is dont all four methods already have a margin of safety applied?

[gnanonimen]

When you calculate whether to sell, shouldn't we divide intrinsic value by margin of safety, or 81.34/0.65=125.14 acceptable sell price in this example, giving us a range of 52.87-125.14 where we neither sell or buy to account for mistakes in calculating intrinsic value? Isn't that the whole point of having a margin of safety in the first place? I'm new to this so could be something I'm overlooking.

[velwear]

Question? What if the intrinsic value is so low that it's almost impossible to buy at the price? An example would be let's say I wanted to buy "AAPL" at the intrinsic percentage price equaling out to be $69.99. What are the odds that at the price I would be able to ever get into the trade if it never reaches a $69.00 value? Are there other exceptions to getting in at a reasonable price? If it's a really great company, I could never imagine them falling that low in price. Granted ever so often we have a crash but do we just sit and wait for that? I mean even right now as I'm typing this Apple is sitting at 189.43. 12/5/23

[seanpetersen]

What do you do with small-cap companies that have no data on projected growth yet? (ie you have no growth projection number to plug in)

[Sandeesh_Srikantam]

Do we have any hint about when this intrinsic value price would be reached ?

[joewellosobni]

why did you change grahams value expression!? because of change actual situation? this two coefficients changes in our times?

[shiloazriel]

You are the best ! You are brutally underrated and thats a shame

[maksmax]

How to get the Growth rate automatically populate in the google sheet?

[yonkokokoko]

Hi sir, I just applied the formula on the company STLA (Stellantis) which interests me a lot. I get a result of 215 dollars while the stock is at 12 dollars. I do not understand this result

[kamilbelhadj]

Where did you find your current yield on aaa corporate bonds?

[jordancanica]

what happens if the company has a negative EPS? the outcome is negative, should I just assume it to be positive?

[Njsrufrider]

ALSO IF THE CURRENT PRICE IS LESS THE ACCEPTABLE BUY PRICE, AND ITS A STOCK YOU BELIEVE IN, WOULDNT YOU WANT TO BUY IT?