That basic knowledge, along with some understanding of accounting and a little bit of study, would enable one to evaluate and invest in any number of restaurants and restaurant chains; public or private. It’s not all that complicated.
However, can most of us say we understand the workings of a microchip company or a biotech drug company at the same level? Perhaps not.
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Understanding your Circle of Competence: How Warren Buffett Avoids Problemse prices to generate a profit on the food and drinks you serve—after all of your operating expenses have been paid. Though the cuisine, atmosphere, and price points will vary by restaurant, they all have to follow the same economic formula.
<span>That basic knowledge, along with some understanding of accounting and a little bit of study, would enable one to evaluate and invest in any number of restaurants and restaurant chains; public or private. It’s not all that complicated.
However, can most of us say we understand the workings of a microchip company or a biotech drug company at the same level? Perhaps not.
But as Buffett so eloquently put it, we do not necessarily need to understand these more esoteric areas to invest capital. Far more important is to honestly define what we do know and Summary
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