While there are many books, gurus, and websites telling investors that “that you too can invest like Warren Buffett” …the sad truth is—you really can't.

The average investor can't be like Buffett; he is extremely intellectual, his IQ is off the charts, Charlie Munger said, “The man is a learning machine.”

So how can stock investors be more Buffett-like?

I asked this question to Alice Schroeder, author to The Snowball: Warren Buffett and the Business of Life, when I interviewed her in April 2010. Schroeder was the only author given complete access to Buffett's family, friends, and business associates.

Schroeder shared the three Buffett-like investment principles that the average investor can use — handicapping, compounding, and margin of safety:

Handicapping
Warren has his own way of explaining things, but handicapping to me is all of the different things that determine whether you should even be thinking about an investment and then all the details that prepare you to value it.

And so you start with whether it's within your circle of competence, does the business have some cataclysmic risk factor out on the tail that makes you not want to even touch it, for example, asbestos was something like that for a lot of companies for a while.

You should be looking at the management, are they evil or are they shareholder-oriented?  Is the product likely to become obsolete easily?  Is it a fashion business, which is bad? Does it have a rational competition? Is it a commodity? Are there hidden assets or liabilities? Do they have legal problems? How do the cash flows work? Is it a capital-intensive business or a cash flow generator? Is it a fundamentally good business?

These are all things that require a great deal of thought, but what you're doing is you're putting together brick-by-brick a picture if you were to invest in this business, what are the odds in your favor of being right.