Bitcoin is climbing toward 100 million won these days.
Nvidia stock is up 87% in a year.
Everyone around you has a story about making money,
and in a world like that it feels like you have to be poking around everywhere just to keep up.
AI, coins, real estate, stocks, an online store. Feels like you have to do all of it.
Up until last year I was there too. I’d decide I should learn property auctions or open an online store, and then I couldn’t concentrate on my actual work. I spent real time and money studying auctions and stocks. What I got out of it was losses and the habit of measuring myself against other people.
Since I learned the idea of the circle of competence, I only work on what I’m good at.
Your circle of competence, today’s idea, is the range of your knowledge and expertise. The fields you know well and do well. Some of you might know it better as your turf. Mine is writing and coding, for example. Auctions and stocks are outside it.
Do you know your own circle of competence?
Charlie Munger, Warren Buffett’s partner, said that knowing what you don’t know is more useful than being smart. Someone who knows which fields he’s bad at can avoid the competitions that are stacked against him. Compete where you have no advantage and the other side does, and you’ll probably lose.
The Art of War: he who knows when he can fight and when he cannot will win.
The circle of competence is what comes to mind when I see people picking up one side job after another because everyone else is. The ones spending the time and money often come away with nothing, and the people selling the courses and the books are the ones who profit. Giving up the advantage you hold inside your own circle to go compete outside it can be a foolish decision.
Auctions and stocks are outside my circle. They’re stacked against me. I’d lose time and money. (I’ve already lost plenty.) So I stopped paying attention to the real estate everyone else is in. I don’t look at coins. For stocks I only accumulate US index ETFs. These days I put my attention on writing, reading books about story, and sorting out my thinking. And on writing a newsletter, like this one.
Are you holding the high ground inside your own circle of competence?
Or are you playing a losing game inside someone else’s?
So how do you find your own circle of competence? I’ll cover that in the next post.
Read part 2 on the circle of competence:
How to live doing only what you’re good at - circle of competence (2)
Reference links
https://blog.naver.com/jeunkim/223195237481
https://jmagazine.joins.com/economist/view/325343
https://fs.blog/circle-of-competence/
Next week I’ll go over a way of thinking that predicts the future.
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