varmuusmarginaalin

Varmuusmarginaali, known in English as margin of safety, is a core concept in value investing, popularized by Benjamin Graham. It represents the difference between the intrinsic value of a stock and its market price. Investors seek to buy securities when their market price is significantly below their estimated intrinsic value, creating this margin.

The purpose of a varmuusmarginaali is to provide a buffer against unforeseen events, errors in valuation, or simply market fluctuations. Even with meticulous analysis, it's impossible to predict the future with certainty. A substantial varmuusmarginaali helps protect the investor's capital if their assessment of the company's worth proves to be overly optimistic or if external factors negatively impact the business.

Graham advocated for a significant margin, suggesting that investors should aim to buy stocks at no more than two-thirds of their calculated intrinsic value. This would imply a minimum varmuusmarginaali of 33%. The exact size of the desired margin can vary depending on the investor's risk tolerance, the quality and predictability of the business, and the overall market conditions.

For example, if an investor estimates a company's intrinsic value to be $100 per share, they might only consider buying it if the market price falls to $70 or below, thus establishing a $30 varmuusmarginaali. This approach prioritizes capital preservation and aims to generate returns not just from the company's future growth but also from the initial undervaluation being corrected by the market. It's a strategy designed for prudence and long-term success in investing.