Benjamin Graham
What you will learn
Distinguish a quoted market price from a researched value estimate and explain why a margin of safety cannot remove uncertainty.
Read and apply
Read the maintained investor page for the full explanation and source links. Return here for the course questions and navigation.
Check your understanding
Choose an answer, then open the feedback.
What is Graham’s margin-of-safety principle concerned with?
A. Uncertainty in value estimates and price paid. B. A guaranteed bargain. C. Chart momentum alone.Show answer and feedback
A. A gap between price and estimated value can allow for error, but does not guarantee protection.
Why review a company’s balance sheet?
A. It guarantees a price rise. B. It shows assets, obligations and financial position. C. It replaces all other statements.Show answer and feedback
B. Debt and liquidity help assess downside alongside earnings and cash flow.
What is a risk of a low valuation multiple?
A. It proves safety. B. It removes uncertainty. C. The business may be deteriorating.Show answer and feedback
C. Cheap-looking metrics need context and current evidence.
Why question: Why should a learner write down the assumptions behind an estimated value?
Show a sample explanation
The estimate is sensitive to uncertain future results; explicit assumptions reveal where the margin could fail.
Try a balance-sheet check
Open Apple’s prefilled SEC filing search. In its latest 10-K, record cash, debt and the reporting date. Explain one reason those figures alone cannot establish a safe purchase price.
Key takeaways
- Always demand a margin of safety between price and value.
- View stocks as fractional ownership of businesses, not tickers.
- Treat the market as Mr. Market: there to serve you, not to guide you.
- Investment requires analysis, safety of principal, and adequate return.
- The investor’s greatest enemy is almost always himself.
This lesson is for general financial education only. It does not provide personal financial advice, stock recommendations, or a guarantee of investment results.
AI responses are for educational purposes. Always verify with official course materials.
This lesson teaches a concept. It is general education, not advice about your money. Before you act on anything you learn here, speak to someone licensed.
Sources and reference material
Primary sources and original reference material for the concepts discussed on this page.
References added 14 October 2026.
AI responses are for educational purposes. Always verify with official course materials.
This lesson teaches a concept. It is general education, not advice about your money. Before you act on anything you learn here, speak to someone licensed.
This lesson teaches a concept. It is general education, not advice about your money. Before you act on anything you learn here, speak to someone licensed.
