Warren Buffett: Focus on the 'circle of competence' in investing.

Warren Buffett emphasizes evaluating companies within your 'circle of competence' and prioritizing businesses with durable earnings, a point he made in a 1996 Berkshire Hathaway shareholder letter and in examples cited in the article.

Warren Buffett emphasizes evaluating companies that fall within an investor's "circle of competence." He made the point in a 1996 Berkshire Hathaway shareholder letter, saying investors need only evaluate businesses they understand and must know the boundaries of that circle. The article reports that Buffett prioritizes business fundamentals and durable earnings over trends, forecasts, or buzzwords. It cites examples such as Buffett's investments in Coca-Cola and See's Candies and his avoidance of the dot-com craze. Key points: - Buffett wrote in 1996 that investors need to evaluate companies within their "circle of competence" and that knowing its boundaries is important. - The article quotes Buffett saying an investor's goal is to buy, at a rational price, a part interest in an easily-understandable business whose earnings are likely to be materially higher over five, 10, and 20 years. - The article mentions Buffett's long-term positions in Coca-Cola and See's Candies and his avoidance of the 1990s dot-com boom as illustrations of the approach. - Financial advisor Pamela Sams is quoted saying Buffett's style keeps attention on what a business does and why it matters, and the article mentions Apple as an example Buffett later viewed as a consumer-focused company. Summary: The article presents Buffett's "circle of competence" rule as a disciplined way to emphasize business fundamentals and durable earnings rather than market hype. Undetermined at this time.