I'm at least huh and I'm Josh Klein and we're the hosts have built for change. A podcaster mic censure. I'm built for change were talking to business leaders from every corner of the world that are harnessing change to reinvent the future of their business. We are discussing ideas like the importance of ethical, ai or how productivity soars when companies truly listen to what their employees value. These are insights, leaders need to know tat they had so subject de built for change. Wherever you get your pa gas You are a lover of affirmations or you ve just heard about how powerful they can be than you are going to love the dealing affirmations for women, podcast created by the women's meditation network and hosted by the amazing jody guard every morning, you'll receive an episode that is dedicated to one specific affirmation, so you can have the space to reflect on it and receive the power with follow and start listening now to the daily after

nations for women podcast on your favorite podcast player. This is optimal finance daily episode. Twenty four, fifty two, a margin of safety by nick mutually of dollars and data dot com, and I'm your host and personal finances cs Diana Mariam, we're gonna, get right to today's post, We optimize your life, a margin of safety by nick, mature, We of dollars and data dotcom on the surface, the life of christina sant house, not seem particularly remarkable she has a masters degree in speech pathology. She her own home, she's married, but there's something different about christina. She only has half a brain at the age of seven christina wisdom.

Nosed with encephalitis a rare neurological condition characterized by frequent seizures. As a result, it was recommended that she undergo a hemisphere. Direct me- or half of her brain would be removed. The procedure was performed in there. T ninety six when Christina was eight years old by the now famous politician and neurosurgeon ben Carson as a risk All of the surgery christina lost me of the motor skills on the left side of her body, but today she has the ability to walk. Lives are mostly normal life. I tell this story because it illustrates How amazing natural systems can be at adapting to change and thriving in the face of uncertainty, you may do so that, after losing half a brain, most individuals would be completely non functional, but you would be wrong

since undergoing a hemisphere. Act me do experience, change motor skills, but one studies suggest that cognitive changes were not major. This is what makes life so amazing. It explains why we can live with. Only one kidney, though, were born with two. It explains how our brains can adapt to changes. That is narrow path. The city even when we're missing an entire hemisphere. If you think about it, this all boils down to net Oh systems, relying on redundancy to increase the chance of survival, in other words, nature, has a trick up its sleeve a margin of safety when it comes to investing having a marginal Safety increases the chance of financial survival and is arguably the most important and difficult investment rule of all. To illustrate this consider the following question: what is the most?

important piece of information when it comes to buying a stock, is it management, growth, prospects, profitability? No, no and know the most. Port in piece of information when buying a stock or any asset, is the price you pay that's right, even with bad management, terrible growth and bad profitability, there exists some price, possibly a negative price. That is, I pay you to own it at which every asset would be a good investment. All the other aspects of an investment would fail you if you pay the wrong price. This is the fundamental tenant of value investing and the data to back it.

Is extensive. If you still don't believe me consider what Warren Buffett said to brent ashore over dinner last night price is my due diligence. This simply a profound idea is the essence behind a margin of safety. It implies that you can still profit from an investment even after getting some bad luck. If you can get a good enough price, Therefore, if you think the intrinsic value of a company as a hundred dollars a share, and you get a four fifty dollars, you have quite a bit of willow room for bad things to happen, such as law suits bad management, a kiley jenner, too. He'd etc. So you can recover Dan Rasmussen. recently wrote an incredible piece on his experience in private equity that backs this idea. Further quote, one p firm did such an allison and found that over fifty percent of deals done at valuations of more than ten times eba lost money and that the aggregate multiple of money

was barely over one point: zero acts, that is, for every dollar invested Slightly more than one dollar was returned to investors and quote once again hire purchase prices imply lower returns. You may be thinking that price only matters for the first few years, but over longer periods the price paid shouldn't matter I even implied this when I previously discussed evaluations and showed how annualized real overturns converged over longer time periods for the? U s: stock market. However, my friend Jake pointed out how even small differences and annual returns can make huge dollar differences when compounded, I looked into this further and realise that he was completely right. If you look at every thirty year period, for the u s, stock market from eighteen. Eighty one onward you'll see that law We're starting valuations, imply higher future dollar growth. There is a clear

negative relationship between initial thou and future dollar growth, while valuations aren't completely predictive, they do seem to matter so, Ah, you investing must be killing it right now, right, nope, it's either underperforming or doing ok but it depends on how you measure it, and this is why value investing, despite being arguably the important investing rule across all time and space is also one of the most difficult ignorance is easier than catching falling knives, despite all the evidence just gust about how much purchase price matters in investing. I still think you should move sleep ignore this advice. If you're, an average retail investor, why buying, when things are cheap, requires you to time the market to some extent, this is difficult because you could buy when you think something is cheap and then it gets. Four

cheaper in the med faber value talk, he makes the following joke. That illustrates his point quote: what do you call a market? That's down. Ninety percent That's a market that was down eighty percent and then proceeded to go down. Fifty percent more end quote trying to buy an investment, as its bottom mean. One is catching a falling knife and it can be both difficult and scary. So what should you do instead of exclusively trying to buy cheap, consider the following number? One dollar cost average or, as I love to say, just keep buying. While this is not optimal mathematically, since you sometimes buy assets as inflated valuations behave early, it is by far the best solution. I know, for the average retail investor buying consistently is an ignorant approach to mark evaluations that is far easier than catching a falling knife and number two added value till to your equity allocation.

There are lots of value. E t. Have a mutual funds out there that can give you some value exposure. I wouldn't put too much of my total equity in this, though, as value is known to go through periods of under performance which can make holding me investment difficult. If any of this got you interested in learning more about value investing, I recommend following books. To start the intelligent investor benjamin, graham and decency, ze. The education of a value investor by guy spear security. analysis by benjamin, graham and David L died and margin of safety by south carmen. This book is out of print difficult to find currently cells for seven hundred dollars for reuse copy. Best of luck. If you find one you just listen to the post, titled a margin of safe by nick moduli of of dollars and data dot com, I'm elite, you an android,

climb and where the hosts of built for change podcast from accenture I built for change. We're talking to business leaders from every corner of the world that are harnessing changed to reinvent the future of their business were discussing ideas like the importance of ethical ay I or how productivity sores when companies truly listen to other employees value these are inside. leaders need to know tat they had so subject. de built for change wherever you get your podcasts gas. This article reminded me of a question. I see all the time from new investors their curious if they should wait for a market downturn to start investing. I think, as import. You remember that you'll almost never win by trying to time the market and that time in the market is much more effective for building wealth. The strategy of investing regularly, regardless of what the market is doing, is known as dollar cos.

averaging, and it reduces the impact of volatility on the overall purchase of your investments. This strand Gee removes a much of the detail, work of attempting to time the market in order to make purchases of equities at the best prices. A great example of this prodigy at work is with a four o one k, you're, making regular contributions from every paycheck, regardless of what the market's doing dollar ass averaging guarantees a mathematically favourable average price for your investment, because you're buying at both the highs and lows. It also pairs well long term. Passive investment strategy. truly allows you to invested and forget it and that's around for another Monday show have a great start here, weak and I'll, be back tomorrow. We're optimal life, awaits