Investing with Margin of Safety- A Value Investment approach

Why investing is not easy:

  • One of the critical questions investors have to answer is ‘what price is the right price’, given that the future always tends to be fraught with uncertainty.
  • As one size doesn’t fit all, valuation methods if applied without differentiating the ‘nature of the business’ can produce inconsistent and unsatisfactory outcomes.
  • The Target price approach as followed by industry participants is one dimensional and tends to be more price movement driven reflecting the herd mentality.

Vikas Biyani, Associate Director Cum Investment Advisor, Multi-Act Trade and Investments Pvt. Ltd., signifies the importance of applying a Margin of Safety as a disciplined tool to keep behavioural biases in check while taking investment decisions. He also explains why looking at both reward and risk, based on a systematic approach to valuation, is a prudent strategy in investing.


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