Buffett on Managing Risks

Came across this excerpt from Buffett about managing risk and i feel it gives us an exceptional look into how Buffett views risk when buying stocks

"We bought all of our WPC holdings in mid-1973 at a price of not more than one-fourth of the then per-share business value of the enterprise. Calculating the price/value ratio required no unusual insights. Most security analysts, media brokers, and media executives would have estimated WPC’s intrinsic business value at $400 to $500 million just as we did. And its $100 million stock market valuation was published daily for all to see . Our advantage, rather, was attitude: we had learned from Ben Graham that the key to successful investing was the purchase of shares in good businesses when market prices were at a large discount from underlying business values"


Buying a stock/business at a huge margin of safety helps mitigate losses.Moreover, with the case of Washington Post,he had an excellent management running the business that had a local monopoly in where it was based.So by understanding the business well and buying at a huge margin of safety when the markets were bearish helped Buffett manage his risks and carve out his investment record.Indeed, the man is a genius!!

Regards,
Manpreet