What is Disciplined Investing and How to Get Started With It?

Investing is a topic of interest for anyone looking to build wealth and improve their financial well being. However, many beginner investors face a hard time getting started on this journey. In this blog, we will talk about disciplined investing, aka value investing, which is contrary to emotional investing.

We have also consulted a financial expert to help us better understand these two investment types. Also note that this blog is not supposed to be a full, comprehensive guide on how to do disciplined investing. Instead, our goal is to merely show you the path. So, by the end of it, you will have a better idea of what you should be learning about to become a better investor.

What is Emotional Investing? 

Usually, when people are new to investing and haven’t had a lot of practice in it, let their emotions influence them instead of analyzing. Emotions like fear and greed lead people to make bad decisions like buying and selling at the worst possible time. Sometimes, people may even make an investment and forget about it altogether.

This approach can result in huge losses and missed opportunities. As a result, many beginner investors get demotivated and come to the conclusion that investing is not for them. This is a pitfall that aspiring investors must avoid if they are to progress in their investment journey and build wealth.

What is Disciplined Investing? 

To better understand this approach to investing, we consulted Mr. Alan Locke, a huge believer in disciplined investing and a financial expert residing in Palatine, IL. He explains, “Disciplined investing is about making informed decisions based on thorough analysis and future projections, rather than being swayed by current market trends or short-term fluctuations.” 

Many people just look at the stock price trends while making their investment decisions. Some people even get tempted to buy a stock based on some social media trends or news stories. This approach usually results in heavy losses and bad investing experiences. A better way is to look at the qualitative aspects of a company, their future plans, their industry, etc.

Sure, this method is more complex and time consuming, but the rewards are well worth the effort.

Real-World Example 

Consider the case of Warren Buffet, one of the most successful investors in the world. He is known for his disciplined approach to investing, often choosing to invest in companies with strong fundamentals and long-term growth potential, rather than chasing after the latest market trends. This approach has allowed him to consistently generate high returns over the long term.

How Do You Do Disciplined Investing?

We would again like to quote Mr. Locke on this matter. When asked how he goes about disciplined investing at his firm, he said, “We try to calculate what the profits will be next year and then calculate the share price based on that. Then we compare it to the current price and see if it will be a good investment.”

It is important to note that you may not be able to accurately predict the future earnings or the value of a company in your first attempt. It takes a lot of experience to do so. With adequate research, education, and strictly following the habit of investing with discipline, you will get closer and closer to the point where you will be making near accurate predictions.

So, What You Should Be Learning?

Taking away from the information provided above, we understand that disciplined investing is based on two main things: predicting the future earnings of a company and evaluating their value. Once you have the value, you can then calculate their share price. You can find several articles on these topics on the internet that are just a Google search away.

To get you started, we will just provide some basic information about these topics:

Predicting Future Earnings 

Predicting future earnings involves analyzing a company’s financial statements, market position, and economic trends. Investors often look at a company’s revenue growth, profit margins, and cost control measures. They also consider the company’s competitive position and the overall health of the industry in which it operates.

Additionally, understanding the broader industry landscape and macroeconomic conditions allows for contextualizing earnings potential within market dynamics. You can estimate, and company guidance provides further insights into market expectations. Qualitative factors such as new product launches, management changes, and regulatory developments play a crucial role in shaping future earnings trajectories. Through continuous monitoring and adjustment of models, analysts refine their predictions, recognizing the inherent uncertainties and risks inherent in forecasting.

Evaluating Value

Evaluating a company’s value often involves techniques like discounted cash flow (DCF) analysis, price-to-earnings (P/E) ratio comparison, and book value assessment. Be sure to learn about each of these techniques to see what suits you better. You can also use all three methods together to evaluate the value more accurately.

Evaluating the value of a company involves a multifaceted approach that encompasses financial analysis, market dynamics, and qualitative assessments. Delve into the financial statements to assess key metrics such as earnings, cash flow, and assets to determine the company’s intrinsic worth.

Concurrently, understanding the industry landscape and market trends aids in contextualizing the company’s position and potential for growth. Economic factors, including interest rates, inflation, and consumer sentiment, are also integral to evaluating value as they influence future cash flows and discount rates.

Furthermore, qualitative factors such as brand strength, competitive advantages, and management quality contribute to determining the company’s long-term viability and attractiveness as an investment.

By synthesizing these elements and employing valuation methodologies such as discounted cash flow analysis, comparable company analysis, and asset-based approaches, analysts can arrive at a comprehensive assessment of the company’s intrinsic value, guiding investment decisions.

Calculating The Share Price 

Once you have an estimate of a company’s future earnings and have evaluated its value, you can calculate the theoretical share price. One common method is the Dividend Discount Model (DDM), which calculates the present value of a company’s future dividends. Another method is the Earnings Per Share (EPS) model, which involves dividing the company’s profit by the number of outstanding shares. It’s important to remember that these models provide theoretical prices, and actual market prices can be influenced by a variety of factors, including investor sentiment and market volatility.


In conclusion, disciplined investing is a methodical approach to building wealth that emphasizes analysis over emotion. It requires a deep understanding of financial metrics, a commitment to ongoing education, and the patience to wait for long-term results.

While it may seem daunting at first, with time and practice, anyone can become a disciplined investor. Remember, the journey of investing is not a sprint but a marathon. It’s not about getting rich quick but about building sustainable wealth over time. So, equip yourself with the right knowledge, stay disciplined, and embark on your journey to financial freedom. Happy investing!

What is Disciplined Investing and How to Get Started With It?

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