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He believes in staying within one's circle of competence from "summary" of Warren Buffett's Ground Rules by Jeremy Miller
Warren Buffett emphasizes the importance of staying within one's circle of competence when making investment decisions. This means that an investor should only invest in companies or industries that they understand well. Buffett believes that by sticking to what you know, you can minimize the risk of making poor investment choices. This approach is rooted in the idea that it is better to focus on a few areas where you have expertise rather than spreading yourself too thin. Buffett's circle of competence is not limited to a specific industry or sector. It can also encompass understanding a company's business model, competitive advantage, and management team. By staying within this circle, investors can make more informed decisions based on their knowledge and expertise. This approach allows Buffett to avoid investments that are outside his area of expertise, even i...
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