Circle of Competence
Operate where you understand the drivers, risks, and values; pass on the rest.
Published: 2025-12-26
Definition
Your circle of competence is the domain where you can appraise value versus price using facts and experience.
Graham's point
Investment must be businesslike; if you cannot explain how value is created and what can impair it, you are speculating.
How to use
Stay within industries you can model; expand slowly and intentionally; avoid paying up outside your circle.