Margin of Safety Planning: How to Prepare for the Risks You Don’t See Coming

Charlie Munger said if you can't react calmly to a 50% market decline at least a few times in your life, you're not fit to be a common shareholder. And that's kind of the point. Risk isn't just price moving. There are so many different types of risk that can hurt you in different ways. So today, Andrew and I are gonna kinda break that down on the main types of risk you need to worry about, give you some examples, and walk you through what's most important and what you can expect when you're dealing with these types of risk. So here we go. You're tuned in. You're tuned in. To the investing for beginners podcast. Investing for beginners podcast. The show for the long term investor. We cut through the noise to focus on what works. Compounding, discipline, discipline, and the conviction to buy wonderful businesses and stick with them. Your path to financial freedom start now. And welcome back to investing for beginners. My name is Stephen Morris, and across from me is the ever risk adverse, Andrew Sather. And today, since since we spent last episode talking a lot about, like, this hype around, the the decline of tech stocks that got Andrew and I kinda thinking, like, maybe we should break down some of these risks because, honestly, I don't wanna speak for Andrew. But I but we we kinda feel like what they're talking about in all those articles is not really risk. It's just hype. But there are real forms of risk. And but with that being said, there are real forms of risk. Volatility is not one of them really. It's to be expected. So that's what we're gonna be diving into today. I don't know, Andrew. Like like, I guess volatility is where where we can start on the risk scale. I I guess when I think of volatility, like, yes, it hurts sometimes, but it I always look at volatility as, like, a temporary pain. It's like going to the gym. And, actually, I think that's a great analogy, volatility in in the gym. Like, like, you go to the gym if you go to the gym just twice in your life, like, you're not gonna see any growth. But if you go, you know, three, four times a week, you you're gonna see growth eventually. But during that time of getting gaining that growth, like, it hurts. You're sore every single day. Like, it literally hurts to scratch your back because your arms are so freaking sore. Not a joke. So, I mean, like, how do you look at at at that type of risk, if you will, and and kinda temper yourself to not buy into into the hype? Yeah. I mean, it's absolutely the right way to think about it. One of the things in finance that's a very commonly repeated phrase is there's no free lunch on Wall Street. And so when you look at making …