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This podcast introduces financial frameworks as an essential tool for making sound financial decisions. The podcast outlines frameworks, provides concepts and tools while asking listeners questions. The emphasis is on learning by doing and includes two problems to be addressed by answering questions, doing some research and thinking about the values that go into financial decision making. This is an interdisciplinary approach to financial decision-making.
Episodes
Thursday May 11, 2023
Financial Frameworks Podcast 29: Translating Margin of Safety from Concept to Tool
Thursday May 11, 2023
Thursday May 11, 2023
Margin of safety is an important concept, but how do I apply it in practical terms. This podcast shows how value investors like Warren Buffett use Owner's Earnings and the Discounted Cash Flow method to invest. Fancy terms but basic math and sensible thinking. I think you'll find the description of both methods clear and helpful.
Financial Frameworks' previous podcast focused on linking your overall investment strategy with two techniques for estimating future stock values or prices. Because Financial Frameworks believes in balancing future growth with safety, I’m following that podcast with one that focuses on translating the concept of margin of safety to a set of calculations that you can pair with the earnings tools to fit your overall investing strategy.
Today we’’ll discuss margin of safety basics, contexts, then, using Berkshire Hathaway as an example, do a margin of safety calculation using Owner’s Earnings and the Discounted Cash Flow model. We’ll also talk about current market issues and, as always, present you with your usual problem for you to apply the tools to your situation.
Version: 20240320
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