8 Tips for Thinking Like Buffett, Part 2

Yesterday, we looked at four of the eight tips Investopedia offers for thinking like Warren Buffett. Here are the remaining 8 tips for investing like Buffett:

1. Consider probabilities: Warren Buffett is a fan of the card game Bridge, in which successful players beat their opponents by considering probabilities. Likewise, you can think of stocks in terms of probabilities. The Investopedia article points out that investors who consider the probability of a good return over 10 years is likely to ride out down cycles to find success in the long-term.
2. Realize that investing has psychological aspects: We would like to be unemotional in our investments, but instead, it is better to look at how you approach investing from a psychological standpoint, and then find a mindset that works for you.
3. Don’t pay attention to market forecasts: No one can truly predict the market. Buffett points out that investors should instead pay attention to the fundamentals of their investments, and choose those that will do well over the long term. These will likely ride out down markets, and do well during bull markets.
4. Wait for the good investments: Instead of investing in a bunch of mediocre companies, Warren Buffett suggests that you think as though you only have around 20 investment choices for your lifetime portfolio. This way, you will carefully choose what is most likely to work well for you over a lifetime.

As you can see, there is a lot of potential for making good decisions and thinking in a way that will help you see long-term success with your portfolio. But it requires research and discipline.

Image source: Ethan Bloch via Flickr