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Lessons From Warren Buffett

Lessons From Warren Buffett: Can’t Find a Good Investment? Beware Enlarging Your Circle

Every investor has a circle of competency that encompasses the companies and types of investments that they understand. What do you do when you can’t find anything that fits in that circle? In Warren Buffett’s case, he prefers to wait rather than hoping he can enlarge the circle.

“If we have trouble finding things within our circle, we will not enlarge the circle,” Warren Buffett said at the 1995 Berkshire Hathaway Annual Meeting. “You know, we’ll wait. That’s our approach.”

Warren Buffett is quick to point out that just because something in not in your circle of competency, it doesn’t mean it isn’t in somebody else’s. What Buffett understands when it comes to technology companies and what Bill Gates understands are vastly different. However, Buffett wants to understand it himself, not just take a recommendation from someone more expert than him.

Hear Buffett’s full explanation

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© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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