Tickers in this Article: WFMI, WMT, KR, SWY
Many investors have had successful careers being contrarians. They see the market zigging, so they zag. One of the greatest examples is, of course, Warren Buffett. He was scolded for avoiding the internet boom, but as usual, he took the last laugh. Here's another tip for successful investing: imagine.

IN PICTURES: World's Greatest Investors

Imagine There Are No Stock Prices

Make believe that stock markets and stock prices don't exist. Investments are made based on the assets and earning ability of the business and not the movement in stock price. Much to the detriment of most investors, they equate stock price movement to business performance. The result: expensive mistakes.

Imagine You Are The CEO
Convince yourself that by owning even one share of stock, you are the owner of the entire business. If you can train your mind and emotions to think this way, you are less likely to abandon ship at the first sign of trouble. These two notions may sound silly but in fact they are programmed into the minds of the world's most successful investors.

Imagine: Today's Examples
Today's markets require this blend of patience and business-like mentality. Consider Whole Foods (Nasdaq:WFMI), which sells for a market cap of $2.6 billion. From a business point of view, if you tried to rebuild this company's store base from scratch - nearly 300 stores located on some of the most valuable pieces of real estate in the U.S - it would cost you a lot more than $2.6 billion. That's not even considering the marketing and branding image that Whole Foods has built for itself over the past thirty years.

The company's strongest competitors are traditional grocers like Kroger (NYSE:KR), Safeway (NYSE:SWY) and Wal-Mart (NYSE:WMT). All these businesses have substantially increased their organic and natural foods exposure but that hasn't stopped the long-term appeal of Whole Foods.

Wal-Mart, which has a market cap of nearly $200 billion today, could easily invest $3 billion into a new venture if it thought it could go head-to-head with Whole Foods. But they aren't and neither are the others. Kroger's sales are almost 10 times greater than Whole Foods, yet its EBITDA is only 7 times greater. The key is to imagine what Whole Foods will be like five years from now; in all likelihood, it will be a bigger and more profitable business. (For more, see Evaluating Grocery Store Stocks)

The Bottom Line
Most poor investment decisions are made due to too much friction - moving in and out of stocks as if they were symbols and numbers with no underlying business supporting them. By looking at more than these companies stock prices, you can find reliable predictors for success. Put your businessman's hat on and you're more likely to make intelligent investment decisions.

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