Margin of Safety is a term popularized by Benjamin Graham and Warren Buffett. It means that once you’ve valued a stock, you should take another 20-50% off just to be on the safe side. For example, if you think a stock is worth $100 a share, then you should lower your price target to $50-$80. The wide range accounts for risk tolerance. The less sure you are about an investment, then the higher the margin safety you’d require.
In Jesse Ventura’s book, “I Ain’t Got Time To Bleed,” he talks about his days as an underwater demolitions expert in the Navy. He would calculate down to the ounce how much C4 he needed to blow up a bridge, and then double it. That was his margin of safety.