Calculating Margin of Safety | Phil Town

[@PhilTownRule1Investing]

Is margin of safety part of your company evaluation process? Leave a comment below. Learn about the Four Ms and how they can help you invest in the right companies at the right time: bit.ly/3aEAUkm

[@Jefferyadams210]

I will be forever grateful to you, you changed my whole life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you Maria Reyes.

[@PhilipOrlick]

I'm surprised you know her. I've been making a lot of profits investing with her for a few months now.

[@francistyler372]

Maria Reyes changed my life because of the high profits I got from investing with her.

[@karenrobinson598]

You invest with Maria Reyes too? Wow that woman has been a blessing to me and my family.

[@Kareenwood8738]

I'm new at this, please how can I reach her?

[@andrewholmes-171]

I was skeptical at first till I decided to try. Its huge returns is awesome. I can't say much

[@MapAtlass]

Finding a business with a 50% margin of safety and one that has all the right fundamentals is really hard work 😱😀

[@rokyericksonroks]

Exactly. You must be right whilst others are wrong. That is, wrong enough to depress the share price into the margin of safety range. How often will that ever occur?

[@MapAtlass]

@@rokyericksonroks Not often, last time I saw it was in March, when Facebook went below $150, it was around 40% discounted in my opinion.

[@sten260]

yes its almost impossible depends if the market is overvalued in general (which it has been for 10 years now), but you dont need to find very many of them. and if you find something like that you have to buy very heavy so you hold only few of those for long term and you are pretty safe

[@jfjsas07]

That's why usually we look for "events". It's hard most times, especially hard with an overpriced overall market, but not that difficult when the market, or some specific sector, crashes, there is panic and fear, and almost no one wants to buy this particular stock.

[@jac123451000]

How about market cap divided by free cash flow of last year. If the price to free cash flow falls under 10 ,it is assumed to be underpriced or within the margin of safety .is this calculation valid .

[@TheDhammaHub]

Extrapolate from the current earnings/earnings growth-rate into the future to see how much a company likely grows and for what price you can buy it to make at least X%. The divide it by 2. Kinda easy!

[@PhilTownRule1Investing]

Awesome. 💯 Thanks for sharing.

[@Dociy]

Hi Phil, I am from India, I read your book and my perspective of investing changed totally after that. Thank for writing it so simply. I want to ask you that - some of very good company whose PE are triple or quadruple that of Growth rate- and they usually tend to hover around that PE only even during bad market situations . if we follow our rule of taking future PE double that of Growth rate- we never reach around current price. How to evaluate such companies- I know they are great company with great moat and never run on discount. Shall we avoid such good companies? And when we consider growth rate( equity) I look for 10,5,3,1yr GROWTH RATE And suppose 10yr -24, 5yr-21,3yr-18, 1yr -16: in this scenario what growth rate I should consider.

[@Je.rone_]

I even use a margin of safety when i drive

[@omni1562]

Same! Hahahah

[@rokyericksonroks]

I use it on my scorecard when I golf.

[@joshuaoconnor5696]

Hey Phil! I really enjoy your videos! I am a little new to investing and I am currently learning and playing around with the Rule One investing toolbox. I have a question about how to figure in dividends into the margin of safety calculation. It looks like the MOS calculator will only calculate MOS based on the increase of stock price, but if I understand this correctly, it does not account for dividends. If I wanted to figure in dividends, would the best way to do this be to adjust MARR (minimum acceptable rate of return) downwards to account for something like dividend yield per share?

[@reynaldolabayen9823]

Hi sir Phil, I just have a question on MARR. As mentioned in the video, it is 15%. While in computing for the MOS, it is 4 (15%). As per my understanding, it will be computed as 100/15 which is equal to 6.67. Is my understanding for the MARR incorrect? Thank you.

[@Papi4.44]

Do we multiply by the forward pe ratio or the ttm pe ratio?

[@rihardsgr]

Forward. Because at this point your goal is to find out ''future'' stock price.

[@sten260]

isnt DropBox (dbx) good deal right now? its forward PE is only 20 and its growing revenues like 15% - 20% per year. seems really cheap for growth company

[@alvinalasi6588]

Thanks for sharing, outstanding podcast and terrific explanation. Simple and on point about how Buffett's approach on MOS

[@eckkeust7868]

Great video, I have read your daughter's book. Quick question: TSLA @ $2150, P/E 1,114, EPS 1.93 today. At what price point will YOU personally buy in after 5-1split, assuming $400/share post-split? $200?

[@omni1562]

I love this checklist series

[@PhilTownRule1Investing]

Happy to hear it. Thanks for following along!

[@claudioc6581]

It would be difficult for Buffett to apply a 50% Margin of Safety anymore because of the size of Berkshire which allows him to only buy 'elephants'. Normally, the most followed stocks (large-caps) tend to have narrower Margins of Safety when undervalued, in contrast to small-caps which can go down to crazy undervaluations, say 80%. Thanks for the video Phil, it's really interesting to see your thought process for valuing a business.

[@mohamedshetta8849]

Thank you sir we love you

[@MetalBum]

Now what do we do with QQQ going up and ip

[@jtteger1715]

up up up!!!!!

[@rokyericksonroks]

Sell the rip. (. ...but buy the dip)

[@totadol]

I find these videos are very difficult to understand. anyone else struggling? I'm trying though

[@makemoneysecrets6182]

🔥🔥🔥

[@thylacine622]

So 99% of all big companies would have to drop 80% in price to even be near the MOS. This will be a long waiting time...

[@hugomeza2910]

I think you might have a good point. I would love to buy more of Apple, acquire shares of Amazon but they would have to drop 80% to be at a 50% margin of safety. I don’t think that’s gonna happen even with a market crash.

[@Mossberg930]

Small caps!

[@Joe99]

If you use Amazon as an example you never would have bought it, which explains why Buffett missed out. What I'd like to know is a good MOS calculation for growth stocks.

[@CaseyBurnsInvesting]

Everybody borrow a little bit from the Don, Warren Buffett.

[@jlrob85]

I love you Danielle but listen to your Dad and write down the points later 😍😍

[@losdog13]

who's the girl?