What is your profession/career?

[born2invest]

Do you think your profession therefore creates your investment "circle of competence" ?

From my work in logisitcs and transport I'm therefore more informed on the likes of Port of Tauranga, Mainfreight, CTI Logistics, Royal Wolf Holdings, etc than the average person.

I'm finding it quite difficult to increase my circle of competence outside of really basic and easy to understand businesses.

For example, I've itentified NIB Holdings (health insurance) and Mermaid Marine Australia (oil & gas marine services) on the ASX as companies that have good financials. However, I really do not have a thorough understanding of the insurance or oil and gas industries to know if NIB or Mermaid Marine will be a good company in 5 or 10 years or that "edge" that I get from an industry that I understand.

Should I therefore work to increase my circle of competence and train up myself to better understand the ins and outs of the insurance and oil & gas industies or just sit in my comfort zone within transport, logistics, retail, etc.

I read trade journals, reports from oil & gas independent research, university study papers, annual reports of competitors, government research reports, etc on both of these industries but I still can't get my head around and have the confidence to invest in a company in an industry that I don't feel I can predict into the future.

My current holdings are Supply Network Limited (aftermarket truck and bus parts) which I have bought periodically over the past few years and Credit Corp Group (debt collector) which I have held for about 1.5 years. I feel I have a good understanding of the trucking/transport industry hence my investment. I have also had a bit of background in the debt collection industry from working at a retail bank and from observing people spending on credit and being unable to pay it back and from observing my old university friends unable to pay the bills and them teaching me the process they went through.

[buns]

I don't want to drag this away from the topic but this is a good question.

My short answer is, you can look outside your circle of competence.

I believe you only need to grasp the overall, high level, indicators of competitive advantage in that industry and where that is heading over whatever span you are investing. Where you go to the nth degree, you are going to go around in circles, i.e where assumptions are too detailed and could net out with other parts of your valuation/assessment.

General market nous, which you would have gained in any role where there's competition and forces of capitalism will give you the basis to understand what drives most companies. However, certain industry's which are heavily exposed to technology see their competitive advantages whirl wind for all sorts of reasons and those opportunities are best left to ones with detailed knowledge or speculators.

Think about corporate level management, you see CEO's, CFO's and GM's switch between sectors all of the time as general principles apply to most businesses.

You do need to be careful with this. It's easy to read 3-4 articles which all confirm your original belief and convince yourself you understand the company/industry.

[jimmyco]

Mechanical Engineer working in Power Industry. First post - have only recently started investing

[kiora]

Agricultural Services now enjoying extended gap year sic /s > investments include private equity ,farm equity partnerships,listed equities, PIE Fund (thanks to Liz,one of my better investments)

[Dej]

Chemical Engineer for a biofuels company - but a change to be occurring soon!

[iceman]

Interesting reading on this thread ! I am a Commercial deep sea fisherman working overseas.

[lissica]

Emergency doctor in Australia, coming back to NZ end of year.

Would much rather be a molecular biologist, but doesn't pay the bills.

[Huskeez]

Mines in Queensland! Hollllla

[blobbles]

I am a database IT guy and dabble in development in various languages... I see us IT people are well represented!

[tosspot]

Student 2nd year business