#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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John Neff⭕ Circle of Competence
John Neff's Circle of Competence Rules
John B. Neff (September 19, 1931 – June 4, 2019) was an American investor and mutual fund manager. He managed the Vanguard Windsor Fund from 1964 to 1995, achieving an average annual return of 13.7%, outperforming the S&P 500 by over 3% annually for 31 years. Neff was known as a "low P/E investor," consistently seeking undervalued stocks that 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 John Neff's key circle of competence principles?
John Neff 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 John Neff apply circle of competence in practice?
John Neff 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 John Neff's approach to circle of competence unique?
John Neff'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, John Neff provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
