"Activity is the mother’s milk of Wall Street," said Buffett. "People have this whole different attitude just because there’s a little number up there flashing around all the time."
Great resource, thank you for sharing. How do you think about the tension between staying within your Circle of Competence vs. expanding that circle? After all, nobody is born with a circle of competence, it must expand at some point - so how do you decide when to stop?
Hi Gary - That's such a great point and I wish Buffett and Munger addressed it in greater depth. Because, just from the example in this article (and for better or worse), he did eventually expand the circle enough to include IBM, Apple, etc. While they often spoke about the discipline about staying in your circle of competence, there was also an element of growth and expanding knowledge that showed up in their careers.
Todd Combs once touched on this by saying that he views it as concentric circles of competence, where you can build your existing circle outwards with concentric circles. I think he used the example of understanding car companies and then studying their financing operations in order to grow your knowledge and understanding of the financial industry -- and, soon enough, you have added that to your circle of competence.
Nice write up about Circle of Competence, and even though most of us know it - the concept is counterintuitive and that makes it unique. Good job, as usual - distilling all the collected wisdom in one email. Thanks
Great resource, thank you for sharing. How do you think about the tension between staying within your Circle of Competence vs. expanding that circle? After all, nobody is born with a circle of competence, it must expand at some point - so how do you decide when to stop?
Hi Gary - That's such a great point and I wish Buffett and Munger addressed it in greater depth. Because, just from the example in this article (and for better or worse), he did eventually expand the circle enough to include IBM, Apple, etc. While they often spoke about the discipline about staying in your circle of competence, there was also an element of growth and expanding knowledge that showed up in their careers.
Todd Combs once touched on this by saying that he views it as concentric circles of competence, where you can build your existing circle outwards with concentric circles. I think he used the example of understanding car companies and then studying their financing operations in order to grow your knowledge and understanding of the financial industry -- and, soon enough, you have added that to your circle of competence.
These points are so priceless.
Appreciate the share. Definitely enjoy the less well-known wisdom from Buffett!
Thanks VP!
Nice write up about Circle of Competence, and even though most of us know it - the concept is counterintuitive and that makes it unique. Good job, as usual - distilling all the collected wisdom in one email. Thanks
Thanks Dhanya! I really appreciate it!