Here's a fact I've observed over years of market investing: Markets go up and markets go down.

If you are speculator, this phenomenon might be of prime importance. Investors, on the other hand, are not predominantly focused on the markets' movements in a given week or month. Of course, investors need to participate in rising markets at some point to realize profits on their investments. But markets ultimately rise as long as the underlying economy produces some sort of growth. Populations increase, and people need food, furniture, housing, cars, medicine, and so on. The point is that, on average, stocks ultimately go up.

The forever formula
It would seem then, that the recipe for market success is to buy and hold for a really long time. As Warren Buffett quips, "My favorite holding period is forever." If you were buying Coca-Cola (NYSE: KO) or Wal-Mart (NYSE: WMT) during their early years, you would have done well to buy and hold "forever." Over decades, you will make more money in these types of franchises than you would in just about any other investment strategy, once you factor in expenses. However, companies such as Coke, Wrigley (NYSE: WWY) or even Procter & Gamble (NYSE: PG) aren't too common. If you can find such a company, then, yes, buy it and forget about it. If not, then you need to do the next best thing.

Zig when the market zags
Going against conventional wisdom can be difficult, but as I've said before, "conventional wisdom" is usually short on actual wisdom. It is easy for me to say, for example, "Investors should be buying in declining markets and selling in rising ones." It's easy for me to say that when a compelling investment presents itself, you ought to bet big. Yet following such advice requires a degree of conviction that we don't easily find in our nature. For instance, very few investors could bring themselves to invest 10%, 20%, or even 30% of their portfolio in a business mired in scandal. Yet I'm convinced that what sets the great investors apart from the good ones is their ability to see temporary circumstances for what they are and remain invested in solid businesses.

I believe that superior investment skill has more to do with temperament than with a high IQ. Successful long-term investors will inevitably look stupid in the short run. And they will have to endure severe rebukes from Wall Street while they wait alone. For years, Buffett was seen as losing his touch for not participating in the great Internet boom. But those who heed Buffett's and Ben Graham's sage advice -- that you are neither right nor wrong because the crowd disagrees with you; you are right because your data and reasoning are right -- find it very simple to think independently and ignore the crowds.

Sit still
Philosopher Blaise Pascal famously remarked, "All men's miseries derive from not being able to sit in a quiet room alone." Little did Pascal know that he was inadvertently referring to stock-market participants. Look no further than the market volatility of the past couple of weeks to appreciate the value of his statement. Last week, Mr. Market's mood was very sour in the mornings, only to brighten up by the end of the day. On one day, the general indexes began the day down nearly 4% and ended the day down about 1%. The next day, the Dow was down nearly 3% in the morning and ended the day up nearly 3%. Did the economic fundamentals of the business world change in a manner of hours or days?

Before rushing to act, investors should ask themselves whether, in the course of one trading day, the economic fundamentals of their businesses have deteriorated to such an extent that those businesses are now worth materially less than they were the day before. Thinking about your investments in this businesslike manner will eliminate a lot of costly market activity.

Further Foolishness:

Coke and Wal-Mart are both Motley Fool Inside Value recommendations. Take a free 30-day trial and see whether the Inside Value team's business-focused model of investing is right for you.

Fool contributor Sham Gad is the managing partner of the Gad Partners Fund. He has no stakes in the companies mentioned in this article. Wrigley is an Income Investor recommendation. The Fool has a disclosure policy.