Understand what you know, and know what you don’t
“Defining your circle of competence is the most important aspect of investing. It’s not important how large your circle is; you don’t have to be an expert on everything. But knowing where the perimeter of that circle of what you know and what you don’t know and staying inside of it is all important.” Talk with UGA students 2009
“It’s vital, however, that we recognize the perimeter of our ‘circle of competence’ and stay well inside of it. Even then, we will make some mistakes, both with stocks and businesses. But they will not be the disasters that occur, for example, when a long-rising market induces purchases that are based on anticipated price behavior and a desire to be where the action is.” Shareholder letter, 2013
