Benjamin Graham：Diversification and Margin of Safety
Benjamin Graham《The Intelligent Investor》· Chapter 20, Margin of Safety as the Central Concept of Investment · Investing · Decision · Wealth
Diversification is an established tenet of conservative investment. By accepting it so universally, investors are really demonstrating their acceptance of the margin-of-safety principle, to which diversification is the companion.
Source：
https://archive.org/details/the-intelligent-investor-benjamin-graham_202508
Locator：Chapter 20, pp. 518–519, paragraph beginning “There is a close logical connection between the concept of a safety margin and the principle of diversification” · Verified：2026-10-19 · Verification：Exact match
Reading
Diversification is the practical companion of the margin-of-safety principle.
Context
Graham treated diversification not as mere “buying more names” but as the companion of the margin-of-safety principle. Even a margin of safety cannot prevent any single security from turning out badly; spreading enough independent commitments makes the aggregate result more reliable. The logic resembles insurance underwriting.
Today's question
Could one wrong judgment in your portfolio be catastrophic—and is diversification protecting you or diluting your edge?
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