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Area Of Expertise
A circle of competence is the subject area which matches a person's skills or expert, expertise. The concept was developed by Warren Buffett and Charlie Munger as what they call a mental model, a codified form of business acumen, concerning the investment strategy of limiting one's investment, financial investments in areas where an individual may have limited understanding or experience, while concentrating in areas where one has the greatest familiarity. The strategy emphasizes the importance of aligning one's subjective assessment with actual competence. Buffett summarized the concept in the motto, "Know your circle of competence, and stick within it. The size of that circle is not very important; knowing its boundaries, however, is vital." In his 1996 letter to Berkshire Hathaway, Buffett further expanded: What an investor needs is the ability to correctly evaluate selected businesses. Note that word 'selected': You don't have to be an expert on every company, or even many. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Circle Of Competence
A circle of competence is the subject area which matches a person's skills or expert, expertise. The concept was developed by Warren Buffett and Charlie Munger as what they call a mental model, a codified form of business acumen, concerning the investment strategy of limiting one's investment, financial investments in areas where an individual may have limited understanding or experience, while concentrating in areas where one has the greatest familiarity. The strategy emphasizes the importance of aligning one's subjective assessment with actual competence. Buffett summarized the concept in the motto, "Know your circle of competence, and stick within it. The size of that circle is not very important; knowing its boundaries, however, is vital." In his 1996 letter to Berkshire Hathaway, Buffett further expanded: What an investor needs is the ability to correctly evaluate selected businesses. Note that word 'selected': You don't have to be an expert on every company, or even many. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
