I should also note that Graham emphasizes a large margin of safety. The strategy is not to buy a dollar of value for 97 cents. Rather, the gap should be dramatic so as to absorb the effects of miscalculation and worse-than-average luck. As Buffett puts it, “When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000-pound trucks across it.” Over time, diversified portfolios of such stocks have provided superior returns with below-average risk.
