I want you to picture yourself drawing a large circle. Once you've drawn that, in that large circle, I want you to draw another circle that is only 30% the size of the large circle.
Now, The smaller circle, I want you to label, "What you know", and the outer circle, which is the larger circle, I want you to label, "What you think you know".
This mental model is known as the circle of competence. Knowing the difference between what you know and what you think you know is what makes you a successful investor and allowed Warren Buffett to avoid complicated problems.
Want to know how to identify your circle of competence? Check out this episode to find out the framework to identify your circle of competence.
