Conscious Investor Knowledge Base

Category » Circle of Competence

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1. What is a circle of competence?
   A circle of competence is a collection of industries or sectors that you understand the most. Or perhaps that you have the most interest in. Warren Buffett makes it very clear that it is important to know what your circle of competence is. He also says that it is important to know what its boun ...
2. Why does Warren Buffett consider that knowing your circle of competence is important?
   It is an essential part of investing like Warren Buffett to understand the company that you are investing in. Buffett explains, ?Draw a circle around the businesses you understand and then eliminate those that fail to qualify on the basis of value, good management, and limited exposure to hard ...