Margin of Safety in 2026: How to Apply It with Real Assumptions

Margin of safety is not a slogan about buying cheap stocks. It is a structured response to uncertainty in cash-flow forecasts, capital costs, and competitive outcomes.

Start with a conservative base case, then run downside and stress cases. A position qualifies only when expected return is attractive even under conservative assumptions.

Use valuation ranges instead of single-point targets. If your intrinsic value range is narrow only because assumptions are optimistic, the margin is probably fake.

The objective is survival plus compounding. Avoiding permanent capital loss is mathematically more important than chasing perfect upside.