The Circle of Competence mental model was developed by Warren Buffett and Charlie Munger. It is a model that describes the area that matches a person's skills, abilities, or expertise. Buffett and Munger used the model to describe limiting one's financial investments away from areas you have limited understanding or expertise and instead focusing on areas where you have the greatest familiarity or edge. Part of the model involves the importance of accurately assessing one's own abilities relative to what one may think they might know.
Progress Leaves Clues
Circle of Competence Mental Model
(If you haven't already watched the video):
https://youtu.be/GnqWP9dZdr8
The Circle of Competence mental model was developed by Warren Buffett and Charlie Munger. It is a model that describes the area that matches a person's skills, abilities, or expertise. Buffett and Munger used the model to describe limiting one's financial investments away from areas you have limited understanding or expertise and instead focusing on areas where you have the greatest familiarity or edge. Part of the model involves the importance of accurately assessing one's own abilities relative to what one may think they might know.
1 year ago | [YT] | 7