If we have a strength, it is in recognizing when we are operating well within our circle of competence and when we are approaching the perimeter.

The most important thing in terms of your circle of competence is not how large the area of it is, but how well you've defined the perimeter.

Everybody's got a different circle of competence. The important thing is not how big the circle is. The important thing is staying inside the circle.

What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don't have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.