Margin of safety is a fundamental investing concept introduced by Benjamin Graham — the father of value investing — and popularised by Warren Buffett, referring to the difference between the intrinsic value of a security (its true underlying worth based on fundamentals) and its current market price. The margin of safety acts as a buffer against errors in valuation analysis, unexpected business deterioration, or adverse market conditions — the wider the gap between intrinsic value and market price, the greater the protection for the investor. For example, if a stock's intrinsic value is estimated at ₹100 per share but it is trading at ₹70, the margin of safety is 30%. Graham recommended purchasing securities only when they trade at a significant discount to intrinsic value — typically 25–50% — as the margin of safety is the primary risk management tool in value investing. For investors on Ventura Securities applying fundamental analysis to Indian equities, a discipline of buying with an adequate margin of safety is the cornerstone of long-term wealth preservation and capital protection across market cycles.
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