Every investor/trader goes through slumps. Whether it is a function of changes in market trends or due to faulty decision making every trader faces this issue from time to time. The question is what to do about it? Honestly it depends on how you got there.
If you have been following a well-designed and thoroughly tested system down to the letter it may very well be that the market is simply going through a phase that is hostile to your style. This trader may need nothing, except maybe trading smaller until the phase has passed. However if the trader is making impulsive decisions that do not jibe with their overall process then further soul searching may be in order.
Andrew Feinberg at Kiplinger's relates the case of a trader who simply trades too much. Although his intitial decision making is sound any bump in the road seems to force an exit from what would have been a good trade. Feinberg's solution is a sound for those traders with an itchy trigger finger.
Conclusion: Information overload can be hazardous to your wealth. The more information you have, it seems, the greater your urge to trade. What this really means, in effect, is that this relentless news flow is crowding out the more important information that caused you to buy the stock in the first place. If you really think that Apple's (AAPL) long-term position in computers, iPods and home entertainment is attractive, then you shouldn’t be shaken out of the stock because of its current product transition difficulties.
It is not only traders who face the challenges of an investment slump. Jay Loomis in The Journal News relates the case of Robert Olstein, the portfolio manager of the Olstein Financial Alert Fund (OFALX). Despite an enviable long term track record Olstein has hit a rough patch recently due in part to an underweighting in the hot energy sector.
Olstein relates stock picking to that of hitting in baseball. Nobody hits 1.000 either in investing or in baseball, but dealing with the rough patches distinguishes the great from the merely average. The challenge is to learn from their mistakes, and not "make the same error twice."
Investors need to focus on the process that they use to choose stocks. While every stock pick will not end up being a winner, a disciplined, time-tested process will be a blessing during those inevitable rough patches.