The investment business can claim a bunch of smart people. Whether you're talking about analysts from Wharton, "quants" from MIT, or value gurus from Columbia, the investment industry has become uber-competitive. So how's one to get an edge in the stock market? Well, having a superior understanding of psychology can give even the smallest investor a leg up.

It's all in the approach
Why was Warren Buffett able to capture value in Wells Fargo (NYSE:WFC) in the banking crisis of the '90s when others predicted its bankruptcy? Why did Eddie Lampert make billions off Sears Holdings (NASDAQ:SHLD) fresh out of bankruptcy when so many other smart investors ignored it?

The great investors approach investment ideas in a superior way over the rest of us. For example, I was totally blown away when I read that Buffett calculated that Inside Value selection Coca-Cola (NYSE:KO) makes about one cent in profit per serving and that Gillette --now a unit of Procter & Gamble (NYSE:PG) -- charges customers about an $11 premium for its razors versus disposables over the course of a year. He therefore concluded that Coke's and Gillette's economic moats were unassailable, given their brands, distributional strength, and economies of scale.

What was amazing about the analysis was that it was a very novel approach. However, it struck at the very crux of the matter -- and in a single statistic, it provided the fulcrum for billion-dollar investment theses.

Outside the style box
What the great investors do often goes beyond slapping multiples on estimated earnings or free cash flows, or building detailed spreadsheets. In fact, it seems that many great investors don't build valuation models at all.

So what is it? I think one of the key things the greats do is to draw from knowledge in several different fields. For example, I've read many times that Bill Miller and his team of analysts at Legg Mason (NYSE:LM) spend a lot of time learning about things that seemingly have nothing to do with investing, such as honeybee and ant colonies. Yet looking at such things often gives these investors tools to dissect different types of companies. In Miller's case, it seems to have resulted in some home runs, in the case of Stock Advisor recommendations Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY).

A clear mind
To avoid the hustle and bustle of downtown Manhattan, Buffett chose to live and work in his hometown of Omaha, Neb., and doing so seems to improve his focus. In fact, Buffett often says he spends his days reading newspapers, talking on the phone, and just thinking a lot. I read in a Forbes article once that Mohnish Pabrai generally tries to avoid having a busy schedule -- and he actually takes a nap every afternoon.

Avoiding the daily vagaries of a busy schedule and a stressful environment can do wonders for an investor's ability to think and analyze. Perhaps that's one of the biggest competitive edges, even though it doesn't get a lot of notice.

A winner's attitude
Don't laugh -- I honestly believe that a winning attitude can contribute to investment success. I think a positive attitude manifests in much more rigorous analysis and causes winning investors to seek out management that they think reflects that positive attitude.

Foolish thoughts
Psychology plays a huge role in how we analyze companies, how we go about our investment processes, and how we handle our portfolios in the context of the broader stock market. By contemplating how to think about investing, and continually probing and exploring different angles, investors can mentally improve their future investment returns.

Related Foolishness:

Coca-Cola and Legg Mason are Inside Value picks. Amazon and eBay are Stock Advisor recommendations. Try any one of our investing services free for 30 days.

Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates hearing your comments, concerns, and complaints. The Motley Fool has a disclosure policy.