Investment procedures apply equally to all investors because they are based on unchanging principles.
In contrast, the selection process differs for each individual investor because it reflects the circle of competence, or circle of interest which becomes a circle of increasing competence with the accumulation of experience by the individual investor.
The circle of competence is a specific application of the general principle of differential knowledge.
The economist Friedrich A. Hayek (1899 - 1992) noted that "practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made."
The circle of competence of each investor reflects his or her personal qualities including risk tolerance, temperament, interests, knowledge, intelligence, and judgmental ability.
Therefore, each step in the selection process will uniquely conform to the particular individual investor.
In addition, the circle of competence of each investor represents an arena where he or she has no competition from other market participants.
This arena is a confidential monopoly created by the investor. This secret monopoly position is a proprietary interest in intellectual property. With confidentiality, there is no second guessing of an investor's judgments by others.
The investor uses the tools and techniques of security analysis, but the investor's job is not the same as the security analyst's job.
Where a security analyst must be prepared to appraise the value of every common stock or other security traded in the market ...
The investor only needs to appraise those stocks in his circle of competence!