#1
Know Your Limits
"The most successful investors stay within their circle of competence. Know what you understand well and resist the temptation to venture outside it."
Stay within your circle of competence.
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Jeremy Grantham⭕ Circle of Competence
Jeremy Grantham's Circle of Competence Rules
Jeremy Grantham (born October 6, 1938) is a British investor and co-founder of GMO (Grantham, Mayo, & van Otterloo), a Boston-based asset management firm managing over $60 billion in assets. He is renowned for his expertise in identifying and predicting market bubbles. Grantham successfully predicted the Japanese asset bubble in the late 1980s, the dot-com bubble in 2000, and the...
3 principles·Circle of Competence
3 Key Circle of Competence Principles
#2
Deep Understanding Required
"Surface-level knowledge is dangerous in investing. Develop deep expertise in your areas of focus. True understanding means knowing what could go wrong."
Develop deep expertise, not surface knowledge.
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Expand Knowledge Gradually
"Expand your circle of competence gradually over time. Each new area of expertise adds potential opportunities, but only if mastered thoroughly."
Expand expertise gradually, one area at a time.
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What are Jeremy Grantham's key circle of competence principles?
Jeremy Grantham has 3 key principles on circle of competence. The most important one is "Know Your Limits" — The most successful investors stay within their circle of competence.
How does Jeremy Grantham apply circle of competence in practice?
Jeremy Grantham applies circle of competence through several key principles including "Know Your Limits" and "Deep Understanding Required". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Jeremy Grantham's approach to circle of competence unique?
Jeremy Grantham's approach to circle of competence is distinguished by a focus on long-term thinking and fundamental analysis. With 3 specific principles in this area, Jeremy Grantham provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
