That's what investors should always be doing, of course. But it seems especially appropriate to mention after a quietly painful few days in the market. (Do you feel any less worse because you lost money on light volume? On a day when the bulls, as quoted on


, were saying, "It can't go on like this," you just knew it could.)

I'm writing about the importance of thinking in the investment process because of several recent conversations over beers and burgers with professional investors I respect.

They said that thinking is the hardest thing they do. Ain't that the truth in a noisy world where


has become background music. Investors are surrounded by a global infrastructure of analysts, strategists, brokers, academicians, regulators, newsletters, CEOs, flacks and, last but not least, journalists, all devoted to giving you reasons to act. We rarely give you reasons to think -- to sit by yourself in a quiet room and consider what investing is all about.

'Everyone is focused on when we will see the bottom,' said a short-seller. 'The market is a humbling animal. Perhaps the more intelligent question would be, "Am I going to lose more money?"'



investing about?

There is no single definition, but one that has stood the test of time is from a bible of Wall Street --

Security Analysis

by Benjamin Graham. On page 54 of the 1934 edition -- it's there in later editions, too -- Graham wrote, "An investment operation is one, which upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative."

Are you an investor or a speculator? Are you


or are you


? Now -- when the market is slowly eroding -- is a good time to get this distinction straight in your mind. The market may go up. The market may simply hang around these levels. Or it may go down. In the face of uncertainty, professional investors say, you should carefully consider the reasons why you own what you do.

The 'Insane Notion' of Daily Trading

I was having a beer the other day with a young hedge fund manager on Park Avenue. This guy is about 30 years old, no graybeard like Buffett or Soros. And yet he, too, was expressing amazement at investor attitudes today.

"The notion that as an investor you have to do something every day is insane and at odds with what investing is about," he said.

He decried the tendency of investors to demand instantaneous gratification from the market. The flip side, he said, is that when the market falls, as the Comp has done by a wrenching 37.3% since March 10, people expect the pain to end quickly. "The whole world is geared around short-term results and immediate gratification," he said. "Short-term investing is an oxymoron."

His advice to investors? Don't be a moron. Think before you invest. Do your homework on companies. Do your own homework on your fund manager's top holdings. We may live in an era when more information is available than ever before, but everyone else has that information, too. It's what you make of the information that counts.

Another investor, a veteran short-seller who has survived the bull market of the past two years, said over lunch today that he has been the beneficiary of people's mindless investing. (He is up 15% this year.) By this he meant that they had bid up companies whose fundamentals did not justify the lofty prices. His portfolio says to him that people are beginning to pay for such impulsiveness.

"I sense a growing impatience among investors who are used to instant gratification in their stock portfolios," the short-seller said. "Everyone is focused on when we will see the bottom. The market is a humbling animal. Perhaps the more intelligent question would be, 'Am I going to lose more money?'"

His bottom line? If you have thoughtlessly put money into the market, you might want to take it out. Think about it.