#1
Study Before Investing
"Before making any investment, study the situation thoroughly. Know everything about the company, the industry, and the country."
Thorough study must precede every investment.
Read Full Analysis →
John Templeton⭕ Circle of Competence
John Templeton's Circle of Competence Rules
These are 3 Circle of Competence principles distilled from John Templeton's writing and public remarks. Use them as a decision checkpoint: translate each rule into a yes/no test, write what evidence would change your mind, and set a review date before you act. When a rule feels vague, open the full principle page and capture the driver you can verify (cash flows, leverage, incentives, competitive edge). This is educational, not investment advice—double-check primary sources and fit every rule to your time horizon, risk budget, and constraints.
matrix.rulesQuickChecklistTitle
- Clarify your decision: time horizon, position size, and what would change your mind.
- Choose 3–5 principles from this Circle of Competence set and write each as a yes/no check.
- Define 2–3 disconfirming signals (invalidation triggers) before you act.
- Record the inputs you used (numbers, sources, assumptions) so you can audit later.
3 principles·Circle of Competence
3 Key Circle of Competence Principles
#2
Expand Your Circle Globally
"Expand your knowledge beyond your home country. The investor who studies only domestic markets is like the farmer who plants only one crop."
Study global markets to find more opportunities.
Read Full Analysis →#3
Know What You Own
"Never invest in a company you can't explain simply. If you don't understand it, you can't evaluate its prospects."
Only invest in what you can understand.
Read Full Analysis →How to apply John Templeton's Circle of Competence principles
Use this page as a workflow, not a collection of quotes. Pick 3–5 principles, translate each into a concrete check, and review your decisions on a fixed cadence. These are educational guardrails—always verify facts and match them to your own constraints.
- Clarify your decision: time horizon, position size, and what would change your mind.
- Choose 3–5 principles from this Circle of Competence set and write each as a yes/no check.
- Define 2–3 disconfirming signals (invalidation triggers) before you act.
- Record the inputs you used (numbers, sources, assumptions) so you can audit later.
- Run the checklist when you feel urgency (FOMO, panic) and delay action if you cannot answer.
- Review outcomes on your cadence: what you followed, what you ignored, and what to adjust next cycle.
Boundaries and common misreads
- Don’t treat a principle as a buy/sell signal—convert it into evidence you can verify.
- Avoid “name-dropping” John Templeton: if you can’t explain the reasoning, you can’t borrow the rule.
- If the situation is outside your circle of competence, the right move is often to pass.
- Separate risk from uncertainty: write what could go wrong and what would confirm it.
- If two principles conflict, slow down and document the trade-off instead of forcing certainty.
Rehearse a scenario decision → ·Run a weekly toolkit → ·Browse all principles →
About John Templeton
Templeton pioneered global diversification, investing in international markets when most American investors focused solely on domestic stocks. His investment philosophy centered on finding "maximum pessimism" – buying when others were most fearful.
Frequently Asked Questions
What are John Templeton's key circle of competence principles?
John Templeton has 3 key principles on circle of competence. The most important one is "Study Before Investing" — Before making any investment, study the situation thoroughly.
How does John Templeton apply circle of competence in practice?
John Templeton applies circle of competence through several key principles including "Study Before Investing" and "Expand Your Circle Globally". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes John Templeton's approach to circle of competence unique?
John Templeton'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 Templeton provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
How do I validate John Templeton's Circle of Competence rules without blindly copying them?
Treat each principle as a hypothesis. Write the evidence you would need, collect it from primary sources when possible (filings, letters, transcripts), and note what would invalidate the conclusion. If you can’t define inputs and triggers, you’re not applying the rule—you’re quoting it.
What’s a practical review cadence for applying Circle of Competence principles?
Pick a cadence you can sustain (weekly or monthly) and review process signals first: whether you followed your checklist, respected your boundaries, and documented assumptions. Only then look at outcomes. The goal is fewer low-quality decisions, not perfect prediction.
