[A] reactive investor tends to reverse existing investment positions only when provoked by pain. Investment positions are sold when they have declined enough to trigger fear or panic. Investment positions are purchased in a rush to “catch” or “ride” them. My impression is that the single best mark of a reactive investor is the tendency to measure investment success by the amount gained or lost on any particular day.
Then there are the ones with an investment process and disciplines:
In contrast, the investor who responds puts much more emphasis on daily actions than on daily outcomes. That doesn't mean ignoring outcomes, but it means following a specific, well-studied discipline with the expectation that the results will emerge through repeated application. As usual, those results are best measured in terms of long-term return and risk over the complete market cycle.
In other words, a responsive investor has a discipline. He responds to the changes in his models and indicators and adjusts his portfolio according to a discipline.
Good investors need to understand the importance of having a process and discpline. Life isn’t just about price momentum and stop losses.