What is the circle of competence, warren buffet rules-stock market, cashermaking
In today’s article, I will tell you what is called the circle of competence. And how important it is in the stock market, if you want to invest in the stock market and make money from it, then you must read this article, it is part of the stock market. We will talk about why the Circle of Competence is so important.
#1: Circle of Competence
- What is the Circle of Competence
- Warren Buffett Rules
- How To Build a Circle Of Competence
Friends, will you ever seek treatment from a doctor who is half a doctor and half a lawyer? Your answer would be that I will not treat you. You will always go to an expert doctor. The expert will go to the lawyer. For example, there is a businessman who has a lot of restaurants but if you go to him and start asking for textile business experience, it will be absolutely irrelevant.
Because it has nothing to do with the textile industry, this is the circle of competition and the same formula is used in investing. Warren Buffett says that it is very important to build a circle of competition before you invest in any field. That’s why you invest in something you can understand.
It is not right to invest only after reading the final report. You have to focus on everything about the company. If you show the annual reports to anyone, they will see and say whether the company is performing well or not. That’s what you learn everything about the company. And I can see their feature quite well.
If the government announces that we will boost the real estate business, then both steel and cement will be boosted automatically, because, without cement and steel, the real estate business can never be boosted. So if you have knowledge of these things then you can see how this company will perform in the feature. You can see some of its features.
And if you say we understand everything, it doesn’t happen. It will be much harder for you to make an investment if you understand everything. Because every industry performs very differently. It is impossible to be an expert in understanding everything. A person can’t run a mobile business, open a restaurant, do petrol business, do e-commerce, open a computer shop and go ahead in every business.
That person will fail in all business. There is a saying in English Jack of all trades, master of “none. When it comes to the market, you need to understand the industry. Share market is not so difficult.
If you become an expert in any one industry, you will be able to make a lot of money from that one industry. Are. All you have to do is focus on one thing and pay attention to it and be an expert in the same industry.
Obviously, the market needs every industry. The market cannot function without any industry because the government needs every industry.
- Etc All Industries
And as much as there are industries, the market needs everyone. There are always some companies that are market leaders. You may not know it but you can be an expert in many industries like you can be an expert in all the products sold around you.
If I tell someone what a nestle company is like, they are going to read the annual report and they will tell me what business that company does and how well that company performs. And the company that looks great because of its leadership, where there is an investment in the company can get a very good profit product Warren Buffett calls this monopoly Moat. You just have to be more discriminating with the help you render toward other people.
#2: How To Build a Circle Of Competence
You will see for yourself that if you are a banker then you will know the things about banking that a common man does not know. Understand more. That is why you will see for yourself how and in what industry you can become more expert or you know a little bit about this industry and after reading about it you can become an expert.
- 2nd Way
You follow your predictions, you see how expert you are in which industry then you will learn things about it and understand this industry and you will become an expert in it. Increase your knowledge of the good companies in this industry and build your circle of Competence.
Right now there are very few companies registered on the Pakistan Stock Exchange which will not make it difficult for you to find good companies because the number of listed companies will be very high in the future. As China is building many industries and many new companies, many new industries have come to Pakistan.
And then you will find it very difficult to find any good company on the stock exchange. That’s why Warren Buffett is so rich. The companies were listed on the stock exchange. And finding good companies was not too difficult so he invested in a very good company and today he is the richest man.
And at the moment, a lot of companies are registered on the stock exchange, which has led to a lot of competition on the stock exchange. Anyone who starts a meeting at that time will be very difficult to get rich without leaving the Pakistan Stock Exchange of any outside company. So there are still very few companies registered on Pakistan Stock Exchange. You can also invest in it. Do it and you can be rich.
If you have three flavors of ice cream, it will be easier for you to choose, but if you have 30 flavors of ice cream, it will be much more difficult to choose for coffee.
- PSX Listed Companies 350+
- NYSE 4000+ Listed Companies
- Indian Stock Exchange 5000+ Listed Companies
Now it is very easy to find companies for investment but if these companies are more than 350+ then it will be very difficult to find any good company and it has become much more difficult to get rich but if you just mine Read the whole series where I have written the article about every single thing that the stock exchange has made you quite an expert, so you must read the whole article.
So I hope you liked this article. If you like it then please read the whole article where I have told you about everything. You must read all my articles so that you can read everything. See you later in this article and I will give you new information like this.