“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety” - Benjamin Graham BY RADHIKA SETHI | 2 Mins Read The margin of safety principle was popularised by famous British-born American investor Benjamin Graham, also known as the father of value investing and his followers, most notably Warren Buffett. The principle of Margin of Safety refers to one in which an investor only purchases securities when their market price is significantly below their intrinsic value. The difference between the market price and the intrinsic value is referred to as Margin Of Safety. For an investment with less risk, it is advisable to buy this security when this difference is present. For example, if one was to determine that the intrinsic value of ABC stock is Rs 1620, which is well below its share price of RS1920, he might apply a discount of 20% for a target purchase price of Rs1300. In this example,...