#1
Circle of Competence
"Stay within your circle of competence. Only invest in what you truly understand."
Invest only within your circle of competence to avoid costly mistakes.
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Li Lu⭕ Circle of Competence
Li Lu's Circle of Competence Rules
Li Lu (born April 6, 1966) is a Chinese-American investor and founder of Himalaya Capital Management. He is one of the few fund managers to have Charlie Munger as a personal investor, and Munger has called him one of the finest investors he has ever known. Born in China during the Cultural Revolution, Li Lu was a student leader during...
3 principles·Circle of Competence
3 Key Circle of Competence Principles
#2
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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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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What are Li Lu's key circle of competence principles?
Li Lu has 3 key principles on circle of competence. The most important one is "Circle of Competence" — Stay within your circle of competence.
How does Li Lu apply circle of competence in practice?
Li Lu applies circle of competence through several key principles including "Circle of Competence" and "Know Your Limits". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Li Lu's approach to circle of competence unique?
Li Lu'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, Li Lu provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
