Margin of safety: The invincible defence for shrewd investors

Recently, a friend of mine, a portfolio manager, shared an interesting interaction he had with a client. This portfolio manager is one of the increasingly rare investors who firmly believe that stock price movements should ultimately reflect the financial performance of the companies they represent. In the current overheated market, he had been advising caution. However, his client was unimpressed. The client mentioned that his wife was about to enrol in a two-week course on technical analysis, after which he planned to entrust her with a significant amount of capital to leverage her newly acquired skills for substantial returns.

This article was originally published on November 06, 2024.