In this lesson, we dive into the core principles of value investing: Fair Value and the Margin of Safety. Many investors believe the biggest mistake is picking the wrong company, but often, the real error is paying the wrong price.
We break down the essential formula:
Fair Value = Intrinsic Value – Margin of Safety
Using a practical example, we demonstrate how an intrinsic value of ₹100 with a 30% margin of safety results in a buy target of ₹70. This disciplined approach, used by legends like Warren Buffett, protects you from market volatility and helps ensure you always “invest with safety.” Remember: Price is what you pay; value is what you get.
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