Margin of Safety, Explained

When contemplating an investment, I might get excited about a company and want to immediately snap up shares of its stock. But I’ve learned that I should try to determine the value of the company and a fair price for the company’s stock before buying. As a general rule, I don’t want to pay more for a company than it is worth.

Going further with this idea, I may decide to invest only if I can pay less than the company’s value. If I adopt this philosophy, I buy shares of a company only when its price represents a bargain or discount from its value. That is, I incorporate a margin of safety into my investing decisions.

This idea of a “margin of safety” has been articulated and popularized by value investing thought leaders Benjamin Graham, the author of The Intelligent Investor, and Warren Buffett, Graham disciple and billionaire investor.

The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, and nonexistent at some still higher price.” — Benjamin Graham, The Intelligent Investor

Dogs of the Dow, Investing Strategy Explained

Investors are often involved in a quest to beat the market. That is, they want to make investing decisions that deliver performance results better than a passive investing strategy, such as one involving the purchase of market-index funds.

The Dogs of the Dow represents an investing strategy developed with the goal of outperforming the Dow, a market index. It involves using a simple formula to identify the top 10 undervalued stocks among the Dow holdings, which consist of 30 blue-chip stocks. There are derivatives of this strategy, also designed in hopes of outperforming the market.

Index Funds, Defined

You may have read that the best way to get started in investing is to buy index funds. But if you’re new to investing, you may wonder why? I’ll explain why some people think index funds are special and how to invest in them if you think so too.

Loyal3 Review and Update: No Free Place to Invest

The Loyal3 platform is closing and fee-free investing through Loyal3 is ending. According to an email update from Loyal3, investments will be transferred to a new platform with FolioFirst starting on May 22, 2017. Commission-free trading will continue; however, there is a $5 monthly fee for this privilege.

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