One of the very important lessons I learnt from studying Warren Buffett is to only invest within your circle of competence.

This means investing only in industries and businesses that are easy to understand, easy to value and with highly predictable future cash flows.

If you follow this principle, it would mean focusing only only 1% of stocks in the market and ignoring the 99% that are too difficult to understand and value.

For me, the 99% of industries I ignore/avoid are:

oil and gas, commodities, mining, automotive, alternative energy, loss making companies, airlines, manufacturing, most banks, property developers, shipping etc..

By only focusing on the 1% of business that have very predictable revenue & cash flows, wide economic moats, recurring income, low maintenance capex, high margins, high scalability, high return on capital, I constantly outperform the indexes with very little effort.