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| | An Old Fashioned Margin of Safety |
 | | In his classic work, The Intelligent Investor, Benjamin Graham suggested that passive investors, who do not actively research the best value stocks, may achieve their margin of safety against the likelihood at times of falling equity prices, by keeping a percentage of their liquid assets invested in bonds. |
 | | On the other hand, for the individual willing to take a more active role in his or her investments, he recommended a different kind of margin of safety, one based on an analysis of the value of the company whose shares were to be purchased. |
 | | I believe that, to the extent one can purchase equity assets that meet such strict criteria, for a margin of safety below their intrinsic value price, it is reasonable to dispense with the portfolio allocation method of protecting one's assets from loss. |
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