The basic premise of margin-of-safety-investing is to purchase shares in companies for less than their intrinsic worth.
The basic premise of margin-of-safety-investing is to purchase shares in companies for less than their intrinsic worth. By buying companies at a discount, you create a safety margin if things don't go as planned or the market dips. Warren Buffet made his fortune by buying companies at just the right time. What he would do is keep a close eye on these companies over time, and when they encountered some form of temporary difficulty, became out of favour with the market, or the price dipped, that's when he would pounce and make big purchases. This requires some analysis and patience, but the rewards can be very significant. Joel Greenblatt and Phil Town have some great free tools online to help you quickly develop margin-of-safety tools.