Margin of Safety

Investing in the stock market carries risk, particularly when investors seek high returns by taking on more risk. Speculation—the attempted acquisition of a financial instrument at an artificially low price, with the goal of selling it at a higher price—can lead to substantial losses. But investing according to value principles—adhering to the notion that stocks should be bought when they’re undervalued and sold when they’re overvalued—also has an excellent historical track record. In Margin of Safety, Seth A. Klarman explains why value investing succeeds time and time again, and how to do it effectively.