Circle of competence is key to successful investing

IF YOU have ever felt overwhelmed by information when investing, you are not alone.

As investors, keeping up with this constant flow of business updates is important in deciding if you want to buy, hold or sell a stock. But if you own many stocks, monitoring multiple businesses can be a daunting task.

There is a better way to go about it. In 1996, Warren Buffett, one of the world’s best investors, coined the term “circle of competence” in Berkshire Hathaway’s annual shareholder letter.