Investing is not an exact science. That’s why experience and judgment are just as essential as fundamental analysis in successful investing.

That’s also why a balanced temperament is so important. It can keep you on a steady course and help you avoid losses.

Here’s a piece of stock market advice that can help you judge your own temperament for investing.

Consider these three common investor mentalities. Do any sound familiar?

• Statistical bears. These overly cautious pessimists lack imagination. When doing their own investing, they zero in on a handful of statistical measures — earnings, dividends, the length of time the market has been rising and how much it has gained. If they see any sort of resemblance between today’s figures and those of past market peaks, they assume stock prices are headed for collapse.
  
  It’s a mistake to narrow your field of vision when stock investing. Statistical bears take it to extremes. They’re a little like the 19th-century engineers who studied bumblebee anatomy and concluded that bees simply could not fly, according to known laws of physics. The laws of physics never change, but our understanding of them continually expands. That’s also true of our knowledge of stock investing.

Invest in your Financial Future for FREE Learn everything you need to know in '9 Secrets of Successful Wealth Management' for FREE from The Successful Investor. Secrets of Successful Wealth Management: 9 steps to the life you've always wanted, before and after retirement.  I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

• Starry-eyed bulls. These optimists have too much imagination and too little caution. They accept or develop overblown ideas of the potential of each new stock they invest in, or indeed of the market as a whole. But they neglect to consider what can go wrong. Having invested too heavily themselves, they try to get friends and relatives involved, as well.
• Skeptical optimists. Experience tells these investors that it pays to take an optimistic view, but to temper it with hard-edged skepticism.
  
  These investors study market indicators and statistics, but see them in light of changing accounting rules, as well as trends in interest rates and the economy. They do sometimes get excited about junior stocks, but they recognize that new or unproven companies involve extra risk. After all, mineral finds are valuable because they’re rare, and technological innovations face heavy competition.
  
  Above all, skeptical optimists recognize that they are investing in a company, rather than an economy, a mineral find or a product. We think you should follow their example. Focus your stock investing on companies that make money, pay dividends and serve customers well. In the end, these are your surest signs of a successful investment.

What’s more, if you recognize yourself in the third of these mentalities, it’s likely you have the kind of balanced temperament that will help you succeed in investing.

Our report on bargain stocks is the most recent in a series of reports I’ve written as free downloads on TSI Network. Previously, I wrote “Dividend Stocks: How High Dividend Stocks Can Supercharge Your Income Investing,” which showed investors how to zero in on the best Canadian dividend stocks for your portfolio.

To get started, click here to download your copy of Bargain Stocks: Your Guide to Finding the Best Undervalued Stocks. I’d also encourage you to share the report with a friend.