28 July 2011

Margin of Safety - Second Thought on it

I always emphasize on the margin of safety in the investment. I have adjusted my mind recently after learning yi jing. yi jing is the book written by the Chinese long time ago. It was about 'yin' and 'yang' that lead your to the harmony lifestyle. After I have learnt about it, I realized that we must find a balance on our working or daily activities. You cannot push too hard to get the perfect work or perfect job. In fact, we cannot find the 'perfect' things in our life, as there are still a lot of improvement to be done.

If we use understand this concept, then we would be able to understand that the margin of safety is just a 'guideline' for you to invest in the stock market or real estate market. You could not be able to always buy the stocks / real estate in the lowest point and sell it on the highest point. We must also cannot push ourselves too hard to just follow the investment philosophy without adjusting it after certain period. Most of us know that if you are pushing a people into a corner, there will be any negative impact to the person himself/herself. We should always follow the nature of the investment by setting up the goal, waiting for the buying opportunity as well as selling opportunity to come.

Margin of safety is just a guide line to me. And the formula of the margin of safety is dynamic (in other word, it will not always static as the environment changes).

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