Intelligent Investor
What you will learn
Explain why a margin of safety depends on evidence and why a valuation estimate can be wrong.
Read and apply
Read the Intelligent Investor book page (opens in a new tab)
On the book page, choose one idea relevant to the objective above. Write what evidence would support it and what could weaken it. Then complete the filing or source activity below and return to these course questions.
Check your understanding
Choose an answer, then open the feedback.
What is Graham’s margin-of-safety idea meant to address?
A. Uncertainty in an estimate and the price paid. B. Guaranteed future profit. C. Daily chart timing.Show answer and feedback
A. A valuation gap may allow for error, but it does not guarantee protection.
What is a useful distinction between investment and speculation?
A. Investments never lose. B. The evidence and assumptions supporting the decision. C. A famous endorsement.Show answer and feedback
B. Both involve risk; an investment case should be grounded in evidence and a reasonable price.
Why can Mr. Market’s changing quote be useful?
A. It proves intrinsic value every day. B. It requires trading every swing. C. It offers prices to assess against a separate valuation estimate.Show answer and feedback
C. Market price and estimated value can diverge, but the estimate itself can be wrong.
Why question: Why should a learner record the assumptions behind a margin-of-safety estimate?
Show a sample explanation
Future earnings, cash flows and risks are uncertain. Writing assumptions makes the estimate testable and exposes where it may fail.
Try the margin-of-safety evidence check
Open the prefilled SEC filing search. Open Apple’s prefilled SEC filing search. In the latest 10-K, record the reporting period, one earnings figure and one disclosed risk. Explain why neither figure alone determines a safe purchase price.
Key takeaways
- A valuation gap may allow for error, but it does not guarantee protection.
- Investment and speculation both involve risk; an investment case should be grounded in evidence and a reasonable price.
- Market price and estimated value can diverge, but the estimate itself can be wrong.
This activity is for financial education. An example or book framework does not guarantee 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.
- SEC EDGAR: Apple company filings
- Benjamin Graham: The Intelligent Investor (publisher record)
- Berkshire Hathaway: 1992 shareholder letter on margin of safety
- Berkshire Hathaway: 1994 shareholder letter on uncertain value estimates
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.
