Margin of safety

Margin of safety is the gap between what a stock is estimated to actually be worth, its intrinsic value, and the price it currently trades at in the market. Buying with a large margin of safety means paying meaningfully less than that estimated value, which is a central idea in value investing popularized by Benjamin Graham.

The point of a margin of safety is to build in a buffer for being wrong. Since intrinsic value is always an estimate, not a precise figure, buying at a real discount to that estimate gives an investor room for error before the investment actually loses money.