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Margin of Safety Definition and How to Use it

By Mike Price – Updated Feb 25, 2025 at 10:43PM

Key Points

  • Margin of safety measures the risk by showing the gap between a stock's current price and its intrinsic value.
  • Investors should seek a margin of safety of over 20% to minimize investment risks.
  • Calculating margin of safety involves methods like DCF, comparing multiples, or assessing liquidation value.
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