ATLASMargin of Safety: What It Is and How to Use It
ATLAS Team · Updated November 2, 2026
The margin of safety is the difference between what you estimate a stock is worth and the price you pay, expressed as a percentage of that value. It is a buffer against mistakes in your estimate and against bad luck. If you think a company is worth $100 and pay $70, your margin of safety is 30%.
Where the idea comes from
The idea was popularised by Benjamin Graham in "The Intelligent Investor" and in earlier work with David Dodd. Graham argued that a valuation is never exact, so the investor should buy only when the price is well below the estimate. The gap does not make a loss impossible. It makes a loss from an ordinary error less likely.
The formula
Margin of safety = (fair value − price) ÷ fair value. With a fair value of $100 and a price of $70 it is 30%. With a price of $110 it is −10%: you are paying more than the estimate and there is no buffer.
ATLAS shows the opposite measure on each company page: the price compared with fair value ("the price is X% below fair value"). A price 30% below the mid-point equals a margin of safety of 30%.
Live examples
The table lists the largest S&P 500 companies with the ATLAS fair value gap and the confidence level. Notice how a gap is worth more when the confidence is high.
Live ATLAS data · Data as of November 2, 2026
| Company | Price | Price vs fair value | Margin of safety | Confidence |
|---|---|---|---|---|
| Apple AAPL | $338.18 | 71% above | −71.3% | Medium |
| NVIDIA NVDA | $206.95 | 33% above | −33.4% | Medium |
| Microsoft MSFT | $520.45 | close to fair value (−14%) | +14.0% | Medium |
| Alphabet GOOGL | $283.50 | 27% above | −26.8% | Medium |
| Amazon.com AMZN | $250.68 | 31% below | +31.3% | Low |
| Meta Platforms META | $611.51 | close to fair value (−13%) | +13.2% | High |
Figures update through the day. Fair value is an estimate with a range and a confidence level, not a price target. Educational, not advice.
How big should the margin be?
There is no universal answer, but it should grow with your uncertainty:
- Stable business with predictable cash flow and high confidence: a small margin may be enough.
- Cyclical or fast-changing business, or low confidence: ask for a much larger one, or pass.
- Use the fair value range, not only the mid-point. A price below the low end of the range gives a more conservative margin.
Common mistakes
- Treating a large gap as proof. A 60% gap can mean the market sees a real problem.
- Using only one estimate. Compare the DCF, the peer value and your own view.
- Ignoring the time it can take. The price can stay below value for years.
- Confusing margin of safety with diversification. The margin protects against a wrong estimate of one company; spreading across several companies protects against company-specific bad luck. See how to build a portfolio.
What it does not do
A margin of safety does not predict a rise. It only changes the odds in your favour if your estimate is reasonable. See how ATLAS describes odds in stock probabilities explained.
Frequently asked questions
What is a good margin of safety?
It depends on how uncertain the estimate is. Stable, predictable companies can justify a smaller margin; cyclical or opaque ones need a bigger one.
Is margin of safety the same as upside?
No. Upside is how much the price would need to rise to reach fair value. The margin of safety is measured against fair value: (fair value − price) ÷ fair value.
Who invented the margin of safety?
The concept is associated with Benjamin Graham and David Dodd, who wrote about it in the 1930s and in "The Intelligent Investor" (1949).
Does ATLAS show a margin of safety?
ATLAS shows the gap between price and fair value with a range and a confidence level, which is the information you need to judge your own margin.
See this on any stock in ATLAS
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- Stock probabilities explainedIs it cheap? Valuation
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