Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value.

In the traditional theory of value investing, there is a particularly important concept, and it can even be said that the concept ranks first in importance - the margin of safety.

Buffett describes it this way: If you buy something worth 10 $ for 4 $, you have a good margin of safety at this time.

There is nothing wrong with this statement.

But today I want to show you this question from a different angle:

We know that every transaction in the crypto market has a counterparty, which means that if A is buying, there must be one or several Bs selling.

If it is really a crypto with an intrinsic value of 10 $, and A buys it when it falls to 4 $, at this time, from the perspective of A, it has a sufficient margin of safety.

So if we switch a perspective, what does it mean for B who sells at this time?

For B, this means “Blood Diamond”.

Imagine that a person is optimistic about a crypto and buys it. As a result, the crypto not only did not rise, but instead fell all the way, hitting 20% off, 70% off, 40% off, and finally 40% off.

Selling at this time, is your heart bleeding?

It is a margin of safety for A, and a “Blood Diamond” for B.

“Blood Diamond” usually come out of stampede.

Second, the revolution is not a dinner party, and the process of style switching often has a great killing effect on market sentiment.