Margin Of Safety: An Analysis Of Graham's The Intelligent Investor

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a high chance of loss. The Investor must control his nerves when ups or downs come, thus pricing is much more important than timing. This subject will be discussed further in the next chapter. The price is determined by the investors evaluation and not by the average price, which can result from poor competence from the Enterprise’s side (Buffett Books K, 2017). Margin of Safety As a key feature of Graham’s book “The Intelligent Investor” the Margin of Safety is essential for the value investor, meaning for both Enterprising and Defensive Investor. It is a concept of choosing the best and undervalued Stocks or bonds. Graham’s theory led him to four very simple. First principle: “know what you are doing- know your business”. Graham is trying …show more content…

If you have formed a conclusion from the facts and if you know your judgment is sound, act on it- even though others may hesitate or differ”. The investor is not wrong if the crowd disagrees, and the other way around. It is also I important for the investor in both Enterprising and Defensive Investor to diversify with the amount of different Stocks and bonds. To summarize the investor does not have to obey all of these principles, unless he does not become too greedy or ambitious. Or as Graham himself explains: “To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks” (Graham B. , The Intelligent Investor S. 523-524). Trading Volume The trading volume shows the overall activity of the Stock and Bond Market of how much is being sold and bought in one period of time. As a result, they show the market liquidity and the supply and demand for securities. When the Volume works an early indicator so when it declines so do the prices this indication of volume changes will be vital for the next chapter of Warren Buffet’s Market philosophy (Cabot Wealth, 2017). Market Psychology To states Warren Buffet’s distinctive psychology one quote of his special attitude towards the Market: “Be fearful when others are greedy. Be greedy when others are

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