Discipline — whether in stock investing, training for a race, or studying to complete an exam — can determine the rate of success or failure. Whether using value investing, momentum, or asset allocation, we attempt to apply these facets to achieve long-term success on behalf of our clients.

Albeit, discipline is WHY you want to invest with us, even though this may at times cause you to question your investments. Take for example, my experience studying for the CFA exam. To sit for the exam on the first Saturday in June, I figured I would have to begin studying the first week of January.

In order to study for five months straight, I had to have discipline. This is not to say my energy and motivation did not wane. Of course, there were plenty of times that I felt I could not go on. One particular Tuesday, I was emotionally burnt out and could not study a minute longer. I called a friend on a cold wintery day in late March to say “Let’s play hooky.” We grabbed lunch, went to the movie theater in the mid-afternoon for not one movie, but two, and proceeded to go to bed early.

This type of mental break was not in my plan at all. But the brief respite allowed me to get back on track and continue plowing away in my studies.

Investing requires many of the same characteristics of discipline, including patience, common sense and a long-term approach. But these can feel far, far away in the middle of winter when stock prices are not moving your way.

In other words, much like my approach to studying for the CFA exam, we believe that a disciplined approach to investing gives the best chance to achieve long-term success.

Prepare For Market Conditions with Adequate Training and Discipline

We are committed to our investment approach, although at times it can appear as though it is going the wrong way. We view investing as an ownership in a stream of cash flow. There are times when investments are recognized for this cash flow and at other times, they are not. While we may be ahead of the game, we know that our discipline will lead us to be more often right than wrong.

Discipline can be seen by some as a relic in a time of hedge funds, index investing, high frequency trading, and shorter attention spans. With each new peak in the recent upturn of cheap money and excessive lending by the government, discipline is criticized as being outdated or irrelevant to current market conditions.

However, discipline has not lead us astray in our studies, in training for a competition, running a business or throughout the investment process.

Constant training — whether it is for an exam, triathlon or buying a stock — has provided success one step at a time. The training process is not always glamorous, but it gets the job done. It is only when training gets lax and discipline wanes that reaching retirement successfully does not ensue.

By: James Cornehlsen CFA