Thread by @trengriffin

1/ Assume you don't have an information technology circle of competence. How much of a handicap do you have in beating a investing benchmark?

"The best performing Sector in the last 10 years is S&P Information Technology- a +19.28% annualized return." lazyportfolioetf.com/sp-500-sector-…

2/ Munger: "If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge.  You've got to play within your own Circle of Competence.”

3/ The new stocks that Berkshire bought as revealed in the 13-F filing are definitely not stocks I would buy.

I use the Charlie Munger investing system, but I buy very different stocks because I do have a technology circle of competence. google.com/amp/s/finance.…

4/ Why doesn't Buffett acquire a circle of competence in information technology stocks? Not only isn't that simple to do but the level of uncertainty is fundamentally higher. Buffett wants to be able to do a DCF in his head. Doing that for a subscription business isn't possible.

5/ Charlie Munger:

"I look at telecom and all the change and my reaction is that of Samuel Goldman: 'Include me out.' I’m just not suited for this; I don’t know how to predict those outcomes, so I leave it to other people."

No circle of competence in tech is a performance drag

6/ Warren Buffett: "I don't have any idea how telecommunications shakes out. It's just a game I don't understand. I don't worry about what I don't know. I worry about being sure about what I do know. And telecommunications doesn't fall within that group." Berkshire 2003 meeting.

7/ Since I have relatively a lot of my assets invested in information technology stocks I use a barbell portfolio. Some assets with relatively lower covariance are needed to avoid my portfolio looking like the picture below. I have zero desire to "return to go" financially.