Since the first day I started working in the stock and bond business, the old timers, who I have always sought out as a great source of advice, have said almost without exception, “The markets don’t change.”

This mantra was always in response to those in the business who, following a big run-up or downturn in the market, would make the claim that “it’s different this time.” This claim of new market rules usually was an effort to support buying at the top of a market, or buying when things seem over priced.

The former, the old timer’s advice, was, until now, always correct. Markets have always been the markets. They run up, they fall down. They always fall a lot faster than they go up and if you wait until everyone gets in to convince you its ok to do it you will lose money.

This time though I believe some things have changed in the markets, the changes may be of a temporary nature, but this definitely is not our grandfather’s or father’s market.

What I think has changed is how investors will have to prepare themselves mentally for the markets for the next three to five years. It’s called a trading discipline and you will have to change yours or get out of the market. You can stay in and try to do the jump in and out game, but you’ll get crushed even faster than in the past.

Since the majority of small investors have no trading discipline anyway, this will be a new concept for them. There is still a lot of money to be made in stocks and bonds; it will just take a few shifts in expectations and procedures to get to it.

The first change is that this is not a trading market. Some will continue to get lucky with their guesses, and the select few who always seem to make money will, but going forward, the big money will be made by those who can wait it out and use dollar cost averaging to their benefit.

Trading requires some amount of predictability, the biggest change in the new market is the little predictability the markets ever had has been driven underground by the huge collapse of confidence. This market today is jumpier than at any time in our history. The slightest suspicion, wind shift or rumor makes this thing plummet. We will see more falls over the next five years than at a rock climbing competition.

The trader’s position has always been just this side of insane, but now it has crossed the line. With virtually no fundamentals, no confidence that the changes that have been put in place by the Obama administration will produce any lasting results, the debt, the monetization of the debt, the politicalization of the banks and a world community that has grave misgivings about the future of our markets and economy, you’d have to be crazy to think you could predict anything.

What will work going forward are positions in companies like Clorox (CLX). There are the usual reasons to own a stock like this, and the new reasons that work within the new market rules.

First, the usual reasons: The company recently raised their earnings projections. They will earn around $3.70 this year and $4.17 next. The dividend is $1.84, about a 3.4% yield, and there’s plenty of cash to pay it. Their profit margin is rising, they have abundant cash, they’re paying down their debt and they have stable brands; bleach, Kingsford Charcoal, Brita, Glad Bags, Burt’s Bees Skin Care and Greenworks Detergents.

A solid company with reasonable prospects.

In this economy this is what I call a slap in the face investment. It is about $51 per share, was as high as $65 in the last 52 weeks, was as low as $46 and has been showing a very nice upward trend for the past three months.

The new reasons to own it: It isn’t sexy, it will not run off the charts with breaking news, it pays a good dividend that appears to be safe, it won’t be subject to big swings, it won’t fall off the charts because of a rumor, it is expected to show an incredibly boring growth rate of around 15% going forward and most importantly you can own it and still retire on time.

In fact, this stock has everything you will need to survive the next five years; stability, fundamentals, solid management, income and products that consumers will need and buy.

Why income, because I expect to see major, I mean major swings in this market. If you don’t have some type of money showing up in your account from a bond or a safe dividend there will be extended periods in the new market when you probably won’t see any money at all.

The second aspect of your investing you must change is to average into this market. Take advantage of the big price swings we will definitely see. Make the volatility work for you. As Warren Buffet said recently, “I love when things are this bad.”

Investors must learn to cheer when the market crashes, it’s a buying opportunity. If you’re in the right stocks you have virtually nothing to worry about except where you’ll get more money to buy into the dips.

Shift your expectations and investing style for the next five years or be prepared to be very disappointed. Get out of the Stock of the Month Club, get back to boring, solid companies you can live with.

This is the same advice my old timer friends in the markets have been giving me for years. Maybe things haven’t changed that much after all. Maybe we’ve just been dropped kicked back to reality.

Good luck!

Steve