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(from Carl Richards’ in the 3/26/2013 New York Times – click here for the original post. Carl is a certified financial planner in Park City, Utah and director of investor education at the BAM Alliance. His book, “The Behavior Gap,” was published last year. His sketches are archived on the New York Times’ Bucks blog.)

If you have been awake for the last five years, your investing experience has probably been anything but smooth. Scary markets like the one that bottomed out in March 2009 often cause us to do crazy things. This craziness may be temporary, but it doesn’t take long to make what I call the big mistake: ditching your well-designed investing plan to either buy high or sell low.

Scary markets often lead us to crazy things.

Believe me, I understand. After watching the markets for a long time, I think the market of 2008-9 was the scariest one I have lived through. A lot of us were so scared we went looking for alternatives to our disciplined investing strategy — and in hindsight, that was a terrible mistake.

Hindsight is the crucial word in the previous sentence. If you bailed on your investing plan in early 2009, by now it has become painfully obvious that it was a bad idea. By almost any measure, the market has more than doubled since those dark days.

So let’s think about this behavior for a minute. We spend a lot of time designing a rational, long-term investing plan. We do this presumably when we are thinking clearly about our goals and incorporating all the historical evidence about risk and reward.

Then, when things get crazy, we scrap that rational plan and tell ourselves there is another way. We make a change that in hindsight turns out to be a bad idea. Then we repeat that process every few years. It would be comical if it weren’t so painful.

Avoiding this kind of dysfunctional behavior is the crux of investing. The biggest risk investors face is getting scared out of their plans at exactly the wrong time. The problem, of course, is that markets like the one we experienced in 2008-9 are not unique. We have seen similar troubles before and we will see them again.

Scary markets aren’t the only things that make us act crazy. Exciting markets cause us to do foolish things, too. Those mistakes look just as obvious in hindsight. Did anyone become a real estate investor in early 2007?

If you haven’t made the big mistake yet, you’re lucky. Chances are, though, you are going to be tempted again. So the question is, how do we identify the big mistake before we make it? What are the telltale signs of impending stupidity?

I have been watching this behavior for a long time. The big mistake is usually part of telling ourselves one of a number of stories. These stories are carefully constructed to persuade us that our long-term, rational plan is no longer valid.

It is amazing how similar the stories are. You hear them from friends, family and co-workers. The problems happen when we start telling these stories to ourselves. Let me walk you through a few of them.

How many of us have said, “I just can’t take this anymore”? We often say this when we are scared and want out of the market, as many of us did in 2009. It sometimes goes with statements like, “I just want to be on the sidelines until things get better.”

But we often find ourselves saying the same thing during raging bull markets, right before we ditch our plan and go all-in on the “next big thing.” We just can’t take sitting on our boring, diversified portfolio anymore — not with technology stocks screaming higher, or while we watch our neighbor making a fortune flipping houses.

A close relative of the “I can’t take it anymore” story is “I need to get in on this.” The feeling often starts with a conversation, maybe with the people you ride bikes with on Saturday mornings. They seem to have access to some secret information, or they know about some sexy, sophisticated new investment. We start to tell ourselves that our little diversified investment portfolio is too boring. Too simple. We want to believe there is something better out there.

The same story could start when you hear people at the club taking about a new investment manager whom everyone is using. He is supposed to be the next Warren E. Buffett. Of course, he could be the next Bernard L. Madoff. In fact, Mr. Madoff reportedly spent a lot of time at golf clubs in Florida looking for new clients.

We want to believe there is someone out there who has figured out the secret formula or who has a special gift for investing. But investing doesn’t really work that way. Even if there were someone out there whose choices worked far and away better than a well-designed, diversified investment plan, the chances of you and your fellow club members finding that person are extremely low.

Here is another story that reflects wanting to believe something about the market that is just not true. Have you ever heard yourself justify an investing move by saying: “Have you seen where the market is going?” We tend to utter these words right before we bail on our investing plan during bull or bear markets because the trend feels so obvious. Don’t you see it, it’s a line! It’s headed up! (Or down!).

But focus on the words in this story for a second. We can’t really see where the market is going. We can only see where it has been. We all know that past performance is no guarantee of future results. And while it seems that the past should give us some clues about the future, the market’s behavior last week has no bearing on the market’s behavior next week.

Finally, one of the most dangerous stories floating around is that we can somehow earn more income from our investments without taking more risk. The reason this story is so dangerous is that low interest rates are a big problem for savers right now.

At times like these, there are always plenty of people offering investments that they claim are as safe as a C.D. but that can give you the higher interest rates you desperately need. As you read this, there are people taking risks they do not understand in pursuit of higher yields. You don’t want to buy into these “safe” products, only to be kicking yourself in three years for believing that risk and return are somehow no longer related.

So what can you do when you find yourself believing any of these stories? Hit the brakes for a second and remind yourself that only one story matters. Unfortunately, it’s a very boring one: the key to investing success is having a diversified, well-designed plan and sticking to it for a long, long time.

I really wish we could make this story sexier, more sophisticated and more fun, because maybe we would be more likely to believe it. But since we can’t make it sexy, try making it harder to ignore. Build a support group of friends to call on when you are tempted to believe one of these bogus investing stories. When I get nervous, I call a trusted friend and say, “Hey, tell me that story again, the one about having a well-designed plan.”

Or record a video of yourself telling the future, nervous you to calm down and remember the only true investing story. Cue it up on your computer before you make a big investing decision.

Do whatever you can to block out these stories that bring on the big mistake. Because the difference between a successful investor and one who looks back with hindsight on painfully bad moves is not that they don’t hear the same tempting stories. It’s that they don’t act on them.