Warren Buffet has the mentality of a long-distance runner. He knows he will outperform others because he has more endurance. While others worry about short-term gains, he is thinking about the finish line. He puts every investment through the same process of financial analysis.
Don’t make your stock purchases or sales dependent upon current headlines, according to Warren Buffet. Look at the return on investment. Stock investments are about the most efficient use of money. This return-on-equity (ROE) calculation compares companies who deliver the best results based on the inputs they were given.
We may not have been born with the same wealth of talents. In financial circles, the money that companies get has equal value. One dollar equals one dollar. This assessment permits comparison between investments in different markets. Given one dollar – “What does the company do with that one dollar?” The highest profits accrue to the most efficient enterprises.
Source: Best Finance Schools