28 min
Finding Companies In Your Circle of Competence (Part 1) (008) Investing Mastermind Podcast
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- Investing
This podcast episode is the first in a discussion series about Warren Buffett and Charlie Munger's 4 principles of investing. We walk through these investing principles in the form of a checklist that you can download here: https://investionista.com/checklist/
In this style of investing, we learn a lot about companies before we invest in their stocks. The 4 investing principles/steps we discuss in this series are: 1) Understanding the business (circle of competence), 2) Management (honest & competent), 3) Moat (favorable long term prospects), and 4) Margin of Safety (available at an attractive price).
Today's deep dive is focused on the circle of competence or working toward the point where we truly believe we understand the business. We provide new investors with ways they can brainstorm in getting to know a company they might wish to invest in. We also discuss how guru investors (the best investors) can give us ideas about potential investments we may wish to study.
One way that we learned how to figure out what businesses could be within our circle of competence is called the "Three Circles Exercise." Learn more about how this exercise works by watching Michelle's video: https://youtu.be/7HP5Ky__zso
Before we invest, we want to make sure the business matches our personal values and ethics. We also consider how the company impacts the world. It's also important to define the boundaries of our knowledge so that we don't invest in companies or industries that we don't fully understand.
This podcast episode is the first in a discussion series about Warren Buffett and Charlie Munger's 4 principles of investing. We walk through these investing principles in the form of a checklist that you can download here: https://investionista.com/checklist/
In this style of investing, we learn a lot about companies before we invest in their stocks. The 4 investing principles/steps we discuss in this series are: 1) Understanding the business (circle of competence), 2) Management (honest & competent), 3) Moat (favorable long term prospects), and 4) Margin of Safety (available at an attractive price).
Today's deep dive is focused on the circle of competence or working toward the point where we truly believe we understand the business. We provide new investors with ways they can brainstorm in getting to know a company they might wish to invest in. We also discuss how guru investors (the best investors) can give us ideas about potential investments we may wish to study.
One way that we learned how to figure out what businesses could be within our circle of competence is called the "Three Circles Exercise." Learn more about how this exercise works by watching Michelle's video: https://youtu.be/7HP5Ky__zso
Before we invest, we want to make sure the business matches our personal values and ethics. We also consider how the company impacts the world. It's also important to define the boundaries of our knowledge so that we don't invest in companies or industries that we don't fully understand.
28 min