process
Circle of competence honesty
The rule
Knowing where your understanding ends helps more than a list of things you like. Draw that line honestly, like knowing which lanes you can drive.
Where it flips
But this circle should grow as you study. Used badly, it becomes a polite excuse to never learn a new industry.
You protect yourself by writing down the edge of what you really understand. This is not about sounding humble. It is about knowing which facts sit outside what you can honestly judge today.
A worked example
A note says 'great technology platform'. The honest line asks whether you can explain why customers stay, how the money is made, how the accounts work, and who the rivals are, all without borrowed phrases.
How to spot it
- ·borrowed language
- ·money-making not explained
- ·no clear evidence that would prove you wrong
Warren Buffett & Charlie Munger · Berkshire Hathaway shareholder letters and talks