WARREN BUFFETT'S INVESTMENT FORMULA
🎯 Warren Buffett's investment method is based on a simple yet profound formula: Consider potential profits and risks by using probabilities. Instead of relying solely on intuition or market trends, Buffett calculates based on the probabilities of gains and losses, combined with potential profits and levels of risk.
💡 Buffett's successful investment formula can be expressed as follows:
Investment Success = (Probability of Gain x Potential Gain Amount) - (Probability of Loss x Potential Loss Amount)
If the result is a positive number, it means that this investment decision has a sustainable profit expectation. Although it is not a perfect method, this approach helps investors systematically assess profits and risks, ensuring that they only invest in opportunities with positive expectations – that is, opportunities that are likely to yield higher returns than risks.
🔑 Core message: To achieve sustainable success in investing, carefully consider the probabilities of profits and risks. Focusing on opportunities with positive expectations helps you make informed investment decisions and minimize risks. Buffett's method shows that patience and discipline in evaluating probabilities and expectations can lead to long-term positive outcomes in investing.
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📊 Calculated probabilities,
💰 Profits minus risks,
🔢 Positive, success comes.
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