Warren Buffett: How To Build Your Circle Of Competence

Developing a circle of competence is a fundamentally important part of every investors’ education. The circle of competence is a term Warren Buffett has used over the years as a way to focus investors on only operating in areas they knew best. Investors who ignore this advice and operate outside of the areas they know best, leave themselves open to sudden shocks and losses if they invest in something they don’t understand. It is impossible to build a circle of competence overnight. Building an in-depth understanding of one sector or industry requires patience, time, and effort. Buffett’s favorite sector Buffett’s…