With the Dow sitting atop 13,000, investors are elated. And why shouldn't they be? Milestones are fun. But as recently as a few weeks ago, investors were dismal. The economy was slowing and the market was dropping.

Even master money manager Ron Muhlenkamp, an investor whose namesake fund has pasted the market by more than four percentage points annually over the past 10 years, couldn't steer clear of widespread pessimism. Here was Bloomberg News on April 8:

Muhlenkamp's mutual fund dropped 4.8% since the start of the year ... the worst performance of 90 competing funds tracked by Bloomberg.

And when The New York Times asked Muhlenkamp about standing pat with the same stocks during that stretch of underperformance, he challenged investors to take a long-term view:

"It takes a little patience and a little guts, but we think you will get paid for it."

And I'd be remiss if I didn't mention that my colleagues Brian Richards and Todd Wenning, back in January, agreed.

Patience pays big
So how has Muhlenkamp fared in the short time since the fund was ranked No. 90 out of 90? Let's take a look at some of his fund's top holdings and their performance since the beginning of April:


Return since 4/2/2007

Merrill Lynch (NYSE:MER)


Citigroup (NYSE:C)


Countrywide Financial (NYSE:CFC)


Terex (NYSE:TEX)




Caterpillar (NYSE:CAT)


Meritage Homes (NYSE:MTH)


All told, earnings season has been kind to Muhlenkamp. The fund's up nearly 8% for the month, and I wouldn't be surprised if there's a happy hour planned for Friday in Wexford, Pa., to celebrate its more than $165 million in gains.

Mo' money, mo' problems
Of course, there might not be a happy hour. After all, these short-term gains matter to Muhlenkamp about as much as that short-term underperformance did -- not at all. And that's for the better. Fortunes aren't made in weeks, months, or even a year or two; they're made over decades.

Muhlenkamp is one of the few stock pickers who has shown what it takes to make a fortune over decades. How does he do it? According to his fund's prospectus, he looks for companies with superior returns on equity, buys them cheap, and holds them for three or more years.

Once again, that's:

  1. Buy good companies (businesses that consistently deliver profits on shareholder investment).
  2. Buy them cheap.
  3. Hold them for three or more years.

Of course, Muhlenkamp is the first to admit that this strategy doesn't bear fruit every year. As he told SmartMoney earlier this year, "One year out of four, I look dumb."

Do you mind looking dumb?
Well, Muhlenkamp may have looked dumb a few weeks ago, but he's looked pretty darn smart this April -- and for the past 10 years. So even if you don't want to invest in Ron Muhlenkamp's fund, you can use his lessons to improve your portfolio and make yourself a better investor.

Because the biggest advantage you have over Wall Street is your patience. You're not subject to arbitrary performance reviews, and you don't have to dress up your portfolio holdings to impress a long list of clients.

In other words, you have the luxury to:

  1. Buy good companies.
  2. Buy them cheap.
  3. Hold them for three or more years.

Channel Ron Muhlenkamp
At our Motley Fool Stock Advisor investing service, Fool co-founders David and Tom Gardner have beat the market 73% to 34% over the past five years by applying Muhlenkamp's three criteria (as well as a few of their own) to their stock selection process. In fact, one of their favorite traits to find in a company is management that's building the business to last the next 100 years.

And when that's the case, it doesn't matter if the stock's been moving up or down the past few months. So to answer the question I posed in the title: No, even with the Dow north of 13,000, you haven't missed your chance to add money to the market. That's because it's always a good time to add money as long as you:

  1. Buy good companies.
  2. Buy them cheap.
  3. Hold them for three or more years.

If you'd like a list of good companies trading for good prices, take a look at Stock Advisor free for 30 days. There's no obligation to subscribe, and you'll immediately have access to our favorite picks for new money now. Simply click here to get started.

Tim Hanson owns shares of Muhlenkamp. Muhlenkamp is a Motley Fool Champion Funds recommendation. Meritage Homes is a Stock Advisor pick. The Fool's disclosure policy is a big fan of Muhlenkamp's music (particularly "Jack and Diane").