Title: 8 Ways to Think Like Warren Buffett
Headings: 8 Ways to Think Like Warren Buffett
8 Ways to Think Like Warren Buffett
1. Stocks Are a Business
2. Increase Your Investment
3. Reduce Portfolio Turnover
Warren Buffett: InvestoTrivia Part 2
4. Have Alternative Benchmarks
5. Think in Probabilities
6. Understand the Psychology
7. Ignore Market Forecasts
8. Wait for the Fat Pitch
The Bottom Line
Article Sources

Content: Buffett suggests that investors focus on the economics of the companies they own (in other words the underlying businesses), and then try to weigh the probability that certain events will or will not transpire, much like a Bridge player checks the probabilities of his opponents' hands. He adds that by focusing on the economic aspect of the equation and not the stock price, an investor will be more accurate in his or her ability to judge probability. Thinking in probabilities has its advantages. For example, an investor that ponders the probability that a company will report a certain earnings growth rate over a five- or ten-year period is much more apt to ride out short-term fluctuations in the share price. By extension, this means that his investment returns are likely to be superior and that he will also realize fewer transaction and/or capital gains costs. 6. Understand the Psychology
Very simply, this means that individuals must understand that there is a psychological mindset that the successful investor tends to have. More specifically, the successful investor will focus on probabilities and economic issues while letting decisions be ruled by rational, as opposed to emotional, thinking. More than anything, investors' own emotions can be their worst enemy. Buffett contends that the key to overcoming emotions is being able to retain your belief in the real fundamentals of the business, and not get too concerned about the stock market.