Like Peter Lynch Said, You Gotta Believe

In his latest column for Forbes.com, Validea CEO John Reese invokes mutual fund legend Peter Lynch in discussing the importance of staying disciplined when the market gets rough.

“As Lynch noted, humans are emotional creatures, and we can get particularly emotional when our money is involved,” writes Reese. “When our stocks or the broader market start declining, or a strategy stops working in the short-term, the wait for a rebound can seem interminable. Every bone in your body will be telling you to sell, sell, sell, that if you stick with your approach, you’ll lose it all — your retirement money, your kids’ college tuition, you name it.”

“But,” he continues, “if you have studied and learned from great strategists like Lynch and [Joel] Greenblatt, and you’ve examined research showing how poor market-timing decisions crush many investors’ portfolios over the long haul, you can stay calm during such difficult periods.”

That, Reese says, is why he’s sticking with a couple of his worst-performing strategies so far in 2014 — his Motley Fool and Martin Zweig-based approaches. Both have stellar long term track records, and Reese says he expects them to rebound strongly. He looks at a handful of picks from these models, including Anika Therapeutics — a favorite of both.