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Margin of Safety

Margin of safety is the percentage discount between a stock's current market price and its estimated intrinsic value. It acts as a buffer against valuation errors — the wider the gap, the more room an investor has to be wrong and still avoid a loss. The concept was formalized by Benjamin Graham in Security Analysis (1934).

HOW IT WORKS

Calculate margin of safety with:

Margin of Safety = (Intrinsic Value − Market Price) ÷ Intrinsic Value

Intrinsic value is estimated using methods such as discounted cash flow (DCF), asset-based valuation, or earnings power value. A stock trading at $150 against a DCF-derived intrinsic value of $210 carries a 28.6% margin of safety. Graham required a 33–50% discount before buying; modern practitioners scale the threshold to business quality, accepting 20% for a stable compounder and 50%+ for a cyclical or lower-quality name. The margin of safety is only as reliable as the underlying valuation — a large discount to a flawed estimate still represents overpaying.

IN TAPEBOARD

Use the Valuation panel to enter your intrinsic value estimate alongside a ticker's live price; Tapeboard calculates and displays the current margin of safety in real time. Set a price alert at your required discount threshold so you are notified when a watchlist stock crosses into buy territory. In the Screener, filter by minimum margin of safety percentage to surface candidates that meet your entry criteria across the full universe of covered equities.

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