In their latest column for Kiplinger’s, Whitney Tilson and John Heins discuss the importance of investing within — while trying to expand — your “circle of confidence”.

“Staying within your circle of competence is a central tenet of value investing,” Tilson and Heins write. “It’s clear that you’re more likely to succeed by investing in situations, companies and industries you know well rather than by dabbling in the unfamiliar.” Over the years, they say, they’ve seen many examples of investors “swing[ing] at pitches outside of their investing strike zone,” often leading to trouble.

You can, however, widen your circle of confidence, Tilson and Heins say. They quote value investor Bill Miller, who once said, “There’s no reason to say, ‘Here’s my circle of competence, and it’s never getting any bigger because I’m not going to learn anything new.’ We’re trying to understand new things if we can.”

Tilson and Heins say they agree. They offer three examples of recent picks that show how they have expanded their circle of confidence: Microsoft, CIT Group, and BP. To see why they like those stocks, click here to read the full article.