Circle of Competence, Hobbies vs. Hustles, & More

This weekend, I’m attending the Berkshire Hathaway Annual Shareholder Meeting in Omaha, Nebraska. For the uninitiated, this is the annual event hosted by Warren Buffett and Charlie Munger that is attended by over 40,000 people from around the world.

The actual event is pretty simple: Two legendary 90+ year old investors sit in front of 40,000 people and answer questions for hours on end. Their energy and enthusiasm is infectious. I’m not sure how many more years they’ll be able to do it, so I’m taking the opportunity to see them live again.

In honor of Buffett and Munger, today’s framework is one of their classics: the Circle of Competence.

The Circle of Competence says that each person has a unique set of skills, knowledge, and experience that they can use to analyze and evaluate opportunities effectively.

By identifying and judiciously staying within their Circle of Competence, you can avoid making uninformed decisions and reduce the risk of loss.

 
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