--- title: "Meaning & Key Takeaway of: A margin of safety is achieved when…" description: "\"A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extre..." image: "https://sms4smile.com/quotes/i/a7a/seth-klarman-1979_bad-luck_a-margin-of-safety-is-achieved-when-secu_2707625.png" --- # A margin of safety is achieved when securities are… ![“A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.” quote by Seth Klarman](https://sms4smile.com/quotes/i/a7a/seth-klarman-1979_bad-luck_a-margin-of-safety-is-achieved-when-secu_2707625.png) [Download](https://sms4smile.com/quotes/i/a7a/seth-klarman-1979_bad-luck_a-margin-of-safety-is-achieved-when-secu_2707625.png) [Open image](https://sms4smile.com/quotes/i/a7a/seth-klarman-1979_bad-luck_a-margin-of-safety-is-achieved-when-secu_2707625.png) > “A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.” [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Investing with a safety margin protects against errors, bad luck, and market volatility. **In simple terms:** Buy below value to guard against risk. Key Takeaway Invest below intrinsic value. Themes risk management value investing uncertainty Mood analytical cautious Type financial educational When to use this quote - stock selection - portfolio construction - risk assessment - long‑term planning Key Concepts finance behavioral economics Questions to Reflect On - How do you determine an appropriate margin? - What risks are you willing to accept? A Different Perspective Margin may limit upside potential. ★ ★ ★ ★ ★ No ratings yet [Bad luck](https://sms4smile.com/quotes/about/bad-luck/) [Changing World](https://sms4smile.com/quotes/about/changing-world/) [Complexes](https://sms4smile.com/quotes/about/complexes/) [Customer](https://sms4smile.com/quotes/about/customer/) [Extremes](https://sms4smile.com/quotes/about/extremes/) [Human error](https://sms4smile.com/quotes/about/human-error/) [Humans](https://sms4smile.com/quotes/about/humans/) [Luck](https://sms4smile.com/quotes/about/luck/) [Safety](https://sms4smile.com/quotes/about/safety/) [Security](https://sms4smile.com/quotes/about/security/) [Unpredictable](https://sms4smile.com/quotes/about/unpredictable/) [Values](https://sms4smile.com/quotes/about/values/) [Volatility](https://sms4smile.com/quotes/about/volatility/) [World](https://sms4smile.com/quotes/about/world/) ## Related quotes > [Edge also implies what Ben Graham…called a margin of safety. You have a margin of safety when you buy an asset at a price…](https://sms4smile.com/quotes/michael-mauboussin/edge-also-implies-what-ben-graham-called-a-margin-of-safety-you-have/) [Michael Mauboussin](https://sms4smile.com/quotes/author/michael-mauboussin/) > [Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.](https://sms4smile.com/quotes/benjamin-graham/confronted-with-a-challenge-to-distill-the-secret-of-sound-investment/) [Benjamin Graham](https://sms4smile.com/quotes/author/benjamin-graham/) > [The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent…](https://sms4smile.com/quotes/benjamin-graham/the-margin-of-safety-is-always-dependent-on-the-price-paid-it-will-be/) [Benjamin Graham](https://sms4smile.com/quotes/author/benjamin-graham/) > [The three most important words in investing...Margin of Safety.](https://sms4smile.com/quotes/warren-buffett/the-three-most-important-words-in-investing-margin-of-safety/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [We are facing extreme volatility.](https://sms4smile.com/quotes/carlos-ghosn/we-are-facing-extreme-volatility/) [Carlos Ghosn](https://sms4smile.com/quotes/author/carlos-ghosn/) > [Investors should pay attention not only to whether but also to why current holdings are undervalued. It is critical to know why you have…](https://sms4smile.com/quotes/seth-klarman/investors-should-pay-attention-not-only-to-whether-but-also-to-why/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Value in relation to price, not price alone, must determine your investment decisions. If you look to Mr Market as a creator of investment…](https://sms4smile.com/quotes/seth-klarman/value-in-relation-to-price-not-price-alone-must-determine-your/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [The market is often stupid, but you can't focus on that. Focus on the underlying value of dividends and earnings.](https://sms4smile.com/quotes/john-c-bogle/the-market-is-often-stupid-but-you-can-t-focus-on-that-focus-on-the/) [John C. Bogle](https://sms4smile.com/quotes/author/john-c-bogle/) > [I think if art has one underlying value, it's that.](https://sms4smile.com/quotes/tavares-strachan/i-think-if-art-has-one-underlying-value-it-s-that/) [Tavares Strachan](https://sms4smile.com/quotes/author/tavares-strachan/) > [The real underlying value comes if you can put a company back into a running state and it becomes a successful viable entity if…](https://sms4smile.com/quotes/chanda-kochhar/the-real-underlying-value-comes-if-you-can-put-a-company-back-into-a/) [Chanda Kochhar](https://sms4smile.com/quotes/author/chanda-kochhar/) > [A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying…](https://sms4smile.com/quotes/benjamin-graham/a-stock-is-not-just-a-ticker-symbol-or-an-electronic-blip-it-is-an/) [Benjamin Graham](https://sms4smile.com/quotes/author/benjamin-graham/) > [Volatility is a symptom that people have no idea of the underlying value-that they have stopped playing the asset game. They're not buying because…](https://sms4smile.com/quotes/jeremy-grantham/volatility-is-a-symptom-that-people-have-no-idea-of-the-underlying/) [Jeremy Grantham](https://sms4smile.com/quotes/author/jeremy-grantham/) > [Volatility is a symptom that people have no idea of the underlying value.](https://sms4smile.com/quotes/jeremy-grantham/volatility-is-a-symptom-that-people-have-no-idea-of-the-underlying-2/) [Jeremy Grantham](https://sms4smile.com/quotes/author/jeremy-grantham/) > [The difference between the price we pay for a stock and its liquidation value gives us a margin of safety. This kind of investing…](https://sms4smile.com/quotes/peter-cundill/the-difference-between-the-price-we-pay-for-a-stock-and-its/) [Peter Cundill](https://sms4smile.com/quotes/author/peter-cundill/) > [No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on…](https://sms4smile.com/quotes/benjamin-graham/no-matter-how-careful-you-are-the-one-risk-no-investor-can-ever/) [Benjamin Graham](https://sms4smile.com/quotes/author/benjamin-graham/) ## More by Seth Klarman > [Unlike return, however, risk is no more quantifiable at the end of an investment that it was at its beginning. Risk simply cannot be…](https://sms4smile.com/quotes/seth-klarman/unlike-return-however-risk-is-no-more-quantifiable-at-the-end-of-an/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Because investors are not usually penalized for adhering to conventional practices, doing so is the less professionally risky strategy, even though it virtually guarantees…](https://sms4smile.com/quotes/seth-klarman/because-investors-are-not-usually-penalized-for-adhering-to/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Value investing is risk aversion.](https://sms4smile.com/quotes/seth-klarman/value-investing-is-risk-aversion/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [Be focused on process and not outcome](https://sms4smile.com/quotes/seth-klarman/be-focused-on-process-and-not-outcome/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [There is an old saying, "How did you go bankrupt?" 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They are blissfully unaware of adverse selection and moral hazard. Investors should never trust them.](https://sms4smile.com/quotes/seth-klarman/ratings-agencies-are-highly-conflicted-unimaginative-dupes-they-are/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) > [It is crucial to have a strategy in place before problems hit, precisely because no one can accurately predict the future direction of the…](https://sms4smile.com/quotes/seth-klarman/it-is-crucial-to-have-a-strategy-in-place-before-problems-hit/) [Seth Klarman](https://sms4smile.com/quotes/author/seth-klarman/) [Explore all 193 Seth Klarman quotes ](https://sms4smile.com/quotes/author/seth-klarman/) ## More Bad luck quotes > [“You never talk to the pitcher when…” He shook his head. “You just never talk to the pitcher when--” “I just wanted to congratulate…](https://sms4smile.com/quotes/rachel-hawthorne/you-never-talk-to-the-pitcher-when-he-shook-his-head-you-just-never/) [Rachel Hawthorne](https://sms4smile.com/quotes/author/rachel-hawthorne/) > [Bad luck isn't brought by broken mirrors, but by broken minds](https://sms4smile.com/quotes/ramandeep-singh/bad-luck-isn-t-brought-by-broken-mirrors-but-by-broken-minds/) [Ramandeep Singh](https://sms4smile.com/quotes/author/ramandeep-singh/) > [I never knew an early-rising, hard-working, prudent man, careful of his earnings, and strictly honest who complained of bad luck.](https://sms4smile.com/quotes/henry-ward-beecher/i-never-knew-an-early-rising-hard-working-prudent-man-careful-of-his/) [Henry Ward Beecher](https://sms4smile.com/quotes/author/henry-ward-beecher/) > [“I didn't do any of what they told me,' she said, 'because the more I thought about it, the more I realized that it…](https://sms4smile.com/quotes/gabriel-garc-a-m-rquez/i-didn-t-do-any-of-what-they-told-me-she-said-because-the-more-i/) [Gabriel García Márquez](https://sms4smile.com/quotes/author/gabriel-garc-a-m-rquez/) > [“Everyone knows it is bad luck to step on a toad or on the shadow of a tree, to walk under a ladder,”](https://sms4smile.com/quotes/anonymous/everyone-knows-it-is-bad-luck-to-step-on-a-toad-or-on-the-shadow-of-a/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [“Because the core of my personal philosophy is that everything that happens to us benefits us, I was also spared the futility of cursing…](https://sms4smile.com/quotes/anonymous/because-the-core-of-my-personal-philosophy-is-that-everything-that/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [“There is no bad luck in the world but whitefolks”](https://sms4smile.com/quotes/toni-morrison/there-is-no-bad-luck-in-the-world-but-whitefolks/) [Toni Morrison](https://sms4smile.com/quotes/author/toni-morrison/) > [The biggest trap, the biggest dungeon in life isn't laziness or bad luck, it's comfort.](https://sms4smile.com/quotes/robert-kiyosaki/the-biggest-trap-the-biggest-dungeon-in-life-isn-t-laziness-or-bad/) [Robert Kiyosaki](https://sms4smile.com/quotes/author/robert-kiyosaki/) > [All of us have bad luck and good luck. The man who persists through the bad luck - who keeps right on going -…](https://sms4smile.com/quotes/robert-collier/all-of-us-have-bad-luck-and-good-luck-the-man-who-persists-through/) [Robert Collier](https://sms4smile.com/quotes/author/robert-collier/) > [“I was just beginning to wonder how long I would have to wait when finally a guard sauntered up and said, “Galloway, get your…](https://sms4smile.com/quotes/noah-galloway/i-was-just-beginning-to-wonder-how-long-i-would-have-to-wait-when/) [Noah Galloway](https://sms4smile.com/quotes/author/noah-galloway/) > [“Oh, I don’t buy lottery tickets... because if I won, and I was capable of that kind of odd luck, then I would also…](https://sms4smile.com/quotes/chrissi-sepe/oh-i-don-t-buy-lottery-tickets-because-if-i-won-and-i-was-capable-of/) Chrissi Sepe > [“Before Tessa could answer, there was a knock at the door, and a familiar voice. "It's Jem. Tessa, are you there?" 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