An interesting way to approach a margin of safety is to do it in stages. Let’s say you start buying a stock with a small part of your portfolio when the margin of safety is 20%. In case it becomes 40% you buy a larger part, if it goes to 60% you buy an even larger part. In this way, if you invest just 1% of your portfolio when the margin of safety is 20%, you get sufficient time to learn about the company and determine whether the value is real or there are some hidden risks.
