This advice came from Ronald Muhlenkamp the founder and president of Muhlenkamp & Company. Ron is a value focused guru who has outperformed the markets over the last 15 years.

“There are 3 things that will help you do well in the market.
* A consistent philosophy - know what you do and know that it works (there are many options here)

* Perspective - know when your philosophy works and when it won’t. Know that the market moves in cycles and that you need to be patient.

* Discipline - The first two are easy compared to this one. Once you have philosophy and perspective, you have them forever. Discipline, however, is a battle you need to fight every day. If you get greedy when a stock’s up 30% and fearful when a stock’s down 30% but act against those gut impulses, that’s you fighting the discipline battle. Discipline is something every investor confronts every day, and it’s what separates the great investors from the pack.”

It is essential for investors to develop a philosophy and then a strategy on how to implement their philosophy. The first step to formulating your philosophy is getting to know yourself. Examining your strengths and weaknesses your like and dislikes.

• Are you a big picture or detailed person?
• How much time do you spend thinking about the past, present and future?
• Do you like to swing for the fences or are you happy stealing bases?

It is time for a confession. I dug out Ron’s advice as last night I lost the discipline battle. I acted rashly, without due consideration and the market quickly gave me a swift kick. Fortunately it was small slip and I consider it an inexpensive lesson.

If you want to read more advice from Ron, here are his Basic Financial Maxims I Want My Kids to Know. It you still want more then he has written a couple books; including, Ron’s Road to Wealth: Insights for the Curious Investor.

Or you can scroll through The Muhlenkamp Memorandum letters which contain plethora of investing wisdom.
For example this one on the parallels between investing and farming.

Cheers
Dean