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Margin of Safety

A simple example given by Benjamin Graham illustrates the concept of margin of safety: a bridge designed to carry trucks up to 10 tonnes should, in theory, be able to withstand the weight of a 10-tonne truck. However, this doesn’t leave much room for error in case of engineers that erred slightly in their calculations, or time that has weakened the structure, and so on. In contrast, a 5-tonne truck should easily make it to the other side.