Defining your circle of competence is the most important aspect of investing. It's not how large your circle is. You don't have to be an expert on everything. But knowing where the perimeter of that circle of what you know and what you don't know is, and staying inside of it is all important. Oracle of Omaha, Warren Buffett. Well done. Testing $1 million to $2 million. Okay. I have an old-fashioned belief that I can only should expect to make money and things that I understand. And when I say understand, I don't mean understand, you know, what the product does or anything like that. I mean understand what the economics of the business are likely to look at. Look like 10 years from now or 20 years from now. I know in general what the economics of say, ringly chewing gum will look like 10 years from now. The internet isn't going to change the way people chew gum. It isn't going to change which gum they chew. You know, if you own the chewing gum market in a big way, and you've got double mint, the spare mint, and the juicy fruit, those brands will be there 10 years from now. So I can't pinpoint exactly what the numbers are going to look like on ringly, but I'm not going to be way off if I try to look forward on something like that. That evaluating that company is within what I call my circle of competence. I understand what they do. I understand the economics of it. I understand the competitive aspects of the business. There can be all kinds of companies that have wonderful futures, but I don't know which ones they are. I've given talks in the past where I carry within a 70-page, tightly printed list, and it shows 2000 auto companies. Now, at the start of the 20th century, you had seen what the auto was going to do to this country. The impact it would have on the lives of your children, the grandchildren, and so on. It just transformed the American landscape. But of those 2000 companies, three basically survived, and they haven't done that well at many times. So how do you pick three winners out of 2000? I mean, it's not so easy to do. It's easy when you look back, but it's not so easy looking forward. So you could have been dead right on the fact that the auto industry, in fact, you probably couldn't have predicted how big an impact it would have. But if you'd brought companies across the board, you wouldn't have made any money. Because the economic characteristics of that business were not easy to define. I said, oh, I've always said the easier thing to do is figure out who loses. And what you really should have done in 1905 or so when you saw what was going to happen with the auto is you should have gone short horses. There were 20 million horses in 1900, and there's about 4 million horses now. So it's easy to figure out the losers. You know, the loser is the horse. But the winner was the auto overall, but 2000 companies just about failed a few merged out and so on. There were three companies, auto companies, in the Dow industrials. In the 1920s and 30s, Studebaker, Nash, Calbinator, and Hudson Motor. Now those names are all familiar to me, and maybe some of them are familiar to you, but they're not making any cars. They didn't make money. And yet at one time, they were in the Dow 30. They were the aristocrats of American business, and they got cramed. So figuring out the economic characteristics of the winners in a wonderful business are not easy. In North Carolina, you know, Orville and Wilbur took off, or I guess Orville took off, and Wilbur watched. I'd have been Wilbur. But if you could have seen the future of the airline business from that point forward, then how that would transform things. You know, it would have blown you away. And it's excited people incidentally ever since. But if there had been a capitalist that Kitty Hawk, he should have shot Orville down. I mean, because it's done nothing but cost investors' money. There were over 400 airplane companies in the 1920s and 30s alone. There was an Omaha. There was an Nebraska. We were the Silicon Valley of apparently a Bearcraft. And they all disappeared. It's been a terrible business. At the end of 1991, if you added up the aggregate earnings from all airline companies with billions poured in, since Wilbur and Orville were down there, they came to less than zero. The number of passengers went up every year. Now, the importance of the industry was dramatically increased decade by decade. And nobody made any money. So figuring out the economic consequences. TV. I think there's, I don't know, 20, 25 million cents a year sold in the United States. I don't think there's one of them made in the United States anymore. I mean, you'd say TV said, Manufacturer, what a wonderful business. Everybody. And now nobody had a TV in 1950. There are about 45 to 50. Everybody has multiple sets now. But nobody has in the United States. They made any real money making the sense that they're all out of business. And one of the magnavoxes, the RCA's, all of those companies. Radio was the equivalent of the 20 over 500 companies making radios in the 1920s. Again, I don't think there's a U.S. radio manufacturer at the present time. But Coca-Cola, you know, I was at 1884 and Jacob's Farmers, or whatever, and fellow comes up with something. A lot of copies are sold over the years. But now you've got a company that is selling roughly 1.1 billion, eight ounce servings of its product, not all Coke's, bright and some others, daily throughout the world. 17 years later. So understanding the economic characteristics of a business is different than predicting the fact that an industry is going to do wonderfully. And so when I look at the internet businesses, or I look at tech meshes, I say this is a marvelous thing. And I love to play around on the computer. And now I order my books from Amazon. I order my books from Amazon. I order my books from Amazon. I order my books from Amazon. I'm Amazon. I don't know all kinds of things. I don't know all kinds of things, but I don't know who's going to win. And as I know who's going to win, I'm not interested in investing. I'll just play around on the computer. Defining your circle of competence is the most important aspect of investing. It's not how large your circle is. You don't have to be an expert on everything. But knowing where the perimeter of that circle of what you know and what you don't know is, and staying inside of it is all important. Tom Watson, senior, who started IBM, said in his book, he said, I'm no genius. But I'm smart in spots, and I stay around those spots. And that is the key. So if I understand a few things, and I stick in that arena, I'll do okay. And if I know what I understand, I'm going to get excited about it, because my neighbors are talking about stocks are going up and everything. They start fooling around someplace else. Eventually, I'll get cream.