Valuation Terms
Margin of Safety
A buffer between estimated value and the price paid.
Also called: valuation buffer
What it means
Margin of safety means buying or evaluating an asset with room for error between your estimate of value and the current price. The idea is that forecasts can be wrong, so a buffer may reduce downside from mistakes or bad surprises.
Why it matters
It teaches users that valuation is not about perfect precision. It is about handling uncertainty intelligently.