It's all too predictable.

When there's bad news in the equity markets, the summer investors and sunshine analysts fold up their tents and sell their stocks. And it's usually at the exact wrong time, too.

A good illustration of this phenomenon is the $7.75 billion investors took out of stock mutual funds in December 2002. The market is up 70% since then.

Be the smart money
But it's difficult to go against the herd. No one wants to be the one left holding the bag if stocks drop further. For example:


2007 Return

YTD Return

Bear Stearns (NYSE: BSC)



Nortel Networks (NYSE: NT)



Lehman Brothers (NYSE: LEH)



*Source: Capital IQ, a division of Standard & Poor's.

On the other hand, knowledgeable investors know that being contrarian can pay off:


2007 Return

YTD Return

Melco PBL Entertainment (Nasdaq: MPEL)



Panera Bread (Nasdaq: PNRA)



Hovnanian Enterprises (NYSE: HOV)



Trying to figure out when to bob and when to weave poses quite a dilemma. Sometimes, all we need is encouragement from a seasoned and proven investor like Warren Buffett or Neil Woodford to get us back in the game. In a recent interview, Woodford advised that "This is certainly not a time to be deserting equity."

Wait, who the heck is Neil Woodford?
If you haven't heard of Neil Woodford before, don't fret -- he's largely unknown in the United States. But now might be the perfect time to get to know him. Woodford is one of the most famous investors in the United Kingdom, where he has headed the U.K.-based Invesco Perpetual High Income Fund for 20 years.

Woodford's High Income Fund is one of the most widely held in the U.K., and for good reason: The fund consistently outperforms both the market and its peer group.

Over the past 10 years, Woodford has delivered 10% annualized gains to shareholders with the added bonus of a dividend yield of more than 3.5%. If you think that's an impressive feat, you'd be correct. According to Morningstar data, no U.S.-based large-cap value fund manager with more than 10 years on the job was able to replicate those results.

When the going gets tough ...
The secret to Woodford's success may be his long-term perspective. In his words, "Short-term performance is something I don't tend to focus too much on. I certainly feel that short-term performance and anything really below a year ... is pretty irrelevant, frankly."

Woodford also doesn't take fliers on fads. Instead, he sticks to companies with reliable earnings and a long track record of increasing shareholder value. A look at his current portfolio reveals defensive stocks such as British American Tobacco, BP (NYSE: BP), and GlaxoSmithKline.

That's what we like to see
In other words, Woodford may shift his strategy to undervalued defensive stocks when the economy hits a rough patch, but he maintains a long-term perspective and doesn't abandon equities altogether. This is this sort of disciplined and experienced mutual fund manager who can encourage investors like us to stay focused on the long run and, at times, save us from ourselves.

Discipline and experience are two of the key traits that Fool fund guru Amanda Kish looks for when recommending mutual funds for our Motley Fool Champion Funds service.

If you'd like to take a peek at her past selections and current top recommendations, a free 30-day trial to Champion Funds is yours. Just click here to get started.

Fool contributor Todd Wenning salutes Woodford's success with a cup of Earl Grey. He does not own shares of any company mentioned. Melco PBL Entertainment is a Motley Fool Global Gains pick. Panera Bread is a Hidden Gems Pay Dirt recommendation. GlaxoSmithKline is an Income Investor selection. The Fool's disclosure policy is all across the universe.