When Berkshire Hathaway CEO Warren Buffett makes investing decisions, he focuses on one thing only: the facts.
"You have to be able to play out your hand under all circumstances," Buffett told shareholders in 2006. "But if you can play out your hand, and you've got the right facts, and you reason by yourself, and you let the market serve you and not instruct you, you can't miss."
Your opinions and emotions aren't likely to help you. "Being contrarian has no special virtue over being a trend follower," Buffett says. Instead, the Oracle of Omaha suggests taking a pragmatic approach to investing decisions. First, gather all of your facts. Next, learn how to dissect them to find the pertinent information you need to make your decision. For Buffett, that means looking for the pieces that are "important and knowable."
"If something's important but unknowable, forget it," he says. "I mean, it may be important whether somebody's going to drop a nuclear weapon tomorrow, but it's unknowable."