IP & Art

"The Intelligent Investor" of Benjamin Graham created the concept of " a margin of safety" which is very useful in the actural investment on the stock.

First, because of the fluctation of the stock price, he emphasized the importance of ensuring the margin of safety, which will minimize of the risk of being a wrong investment. 

Then, how can we ensure a margin of safety?

It will be ensured if we buy the stock at a low price, compared with the actual intrinsic value of the stock. Normally, it will be better at the price of less than the value of the stock x 2/3. 

And then, the next stpe will be the evaluation of the stock. How can we evaluate the stock value. 

It will be interpreted that the Value will be calculated as followings.

Value = current (normal) earnings x (8.5 + 2 X expected annual growth rate( expected frowth of earning on the next 7 - 10 years)

To learn his insights, we need to read his book as closely as possible.