Circle of Competence Investing: Why I Passed on a Fast-Growing Stock

Circle of Competence Investing: Why I Passed on a Fast-Growing Stock

I almost bought a fast-growing stock at 52-week lows. Here’s what passing taught me about circle of competence investing, conviction, and investing discipline.

Lou LaMedica Lou LaMedica
Feb 26, 2026
Personal Finance Mindset
Circle of Competence Investing: Why I Passed on a Fast-Growing Stock
TABLE OF CONTENTS
Circle of Competence Investing: Why I Passed on a Fast-Growing Stock
Conviction Feels Different When You Live It
Demand You Can See
The Stock I Passed
What Investing Discipline Really Means

Circle of Competence Investing: Why I Passed on a Fast-Growing Stock

I almost bought in to Mercado Libre today @$1,750 a share.
52-week lows.
30% annual growth for 5 years.
Dominant platform in South America.
On paper, it looked powerful.
But the hardest part of investing isn’t finding ideas.
It’s knowing when to pass on a stock.
But then I asked myself a simple question:
Do I actually understand this business?
The honest answer was no.
And that’s where circle of competence investing begins.

Conviction Feels Different When You Live It

With Intuit Inc., buying was easy.
I use QuickBooks.
I talk to other business owners.
No one debates accounting software. You just use it.
Switching is painful.
Payroll is integrated.
Taxes are sticky.
That’s not spreadsheet analysis.
That’s lived experience.
It’s conviction investing rooted in behavior I see every week running a business.
I wrote more about that in Why I Bought Intuit During the AI Panic and Focused on Small Business Reality, when investor psychology was dominated by AI fear instead of customer reality.
INTU dropped 10% right after I bought it.
I didn’t second-guess myself.
Because I understand the customer.

Demand You Can See

With Novo Nordisk, I don’t use weight-loss drugs.
But I understand demand.
Americans are obese.
Americans prefer pills to lifestyle overhaul.
Chronic conditions don’t disappear.
That’s not complicated modeling.
That’s a long-term investing mindset rooted in observable behavior.
I explored that thinking in Novo Nordisk Stock: The Duopoly GLP-1 Thesis, where the conviction came from structural demand — not quarterly noise.
When your thesis aligns with reality, volatility doesn’t shake you.
That’s investing discipline.

The Stock I Passed

With Mercado Libre, I saw growth.
But I don’t:
  • Live in Brazil
  • Use the platform
  • Understand the credit cycle
  • Feel the customer behavior
If it drops 25%, I wouldn’t double down.
I’d look for reassurance.
And that’s the difference between ownership and speculation.
Circle of competence investing isn’t about how smart you are.
It’s about whether you can explain, in plain language, why customers won’t leave.
If you can’t, you’re renting the stock.

What Investing Discipline Really Means

Investing discipline isn’t buying every promising company.
It’s passing when clarity isn’t there.
It’s understanding your own limits.
It’s recognizing when excitement is replacing comprehension.
Circle of competence investing gives you emotional stability.
It protects you from noise.
It allows you to sleep when markets fall.
Passing isn’t weakness.
Passing is strength.
Cash is a position.
Clarity compounds.
“Know what’s enough. Build what matters.”
 
Lou LaMedica
Lou LaMedica

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