Stay the Course: Why Time-Tested Strategies Outperform Trends

Introduction

Investing often feels like chasing a moving target. From meme stocks to cryptocurrency surges, there’s no shortage of trendy opportunities promising quick gains. These stories dominate headlines, sparking the 'fear of missing out' (FOMO) among retail and professional investors alike.

Yet when the dust settles, most of these “hot” opportunities fail to generate lasting wealth. More often, they leave investors with frustration, regret, and avoidable losses.

Focusing on time-tested strategies built on discipline, data, and decades of market evidence is hard. The strategies may not deliver overnight riches, but they have repeatedly proven their resilience across generations of investors and turbulent market cycles. They don't make headlines, at least not initially, but they do stand the test of time.

Why do people chase the latest 'Hot Investment Trend'

Hot trends are exciting. Whether it’s the latest AI stock, a booming commodity, or a celebrity-backed crypto token. Social platforms amplify these narratives and it's easy for investors to get swept up, but history shows this leads to:

• Buying high and selling low (the opposite of what is intended)
• Increased trading costs from frequent buying and selling (it's inefficient)
• Missing out on long-term compounding investments by switching strategies too often

The pattern is remarkably consistent. During the dot-com bubble, many investors piled into internet stocks near their peak, only to see values collapse by more than 70%.

More recently, meme stocks such as GameStop-spurred by the r/wallstreetbets Reddit crowd in January 2021-soared from under $20 to an intraday peak of $483 during regular trading (and briefly over $500 in pre-market).  Yet the stock closed at just $86.88 on January 27, 2021, and within days had plunged about 88% to around $10.17, erasing billions in market value.

The same cycle has played out repeatedly: excitement, frenzy, collapse.

Why do they keep falling into this trap?

Because human behaviour isn’t built for long-term investing.

For over 30 years, DALBAR’s Quantitative Analysis of Investor Behavior has tracked the performance gap between market returns and what investors actually earn. In 2023 alone, the average equity investor underperformed the S&P 500 by 5.5%, the third-largest gap in the last decade.

The culprit is consistently emotional, reactionary behavior.

Over longer horizons, the compounding effect of these missteps is stark. Over 20 years, investors earned 8.7% annually vs. 9.7% for the market. That single percentage point translates to ending with $5.3 million instead of $6.3 million on a $1 million investment. 

DALBAR’s conclusion is clear:

Emotional, reactionary decisions cost investors dearly - particularly when they miss rebound days.

Why we commit to Time-Tested Strategies

If Investors who chase trends and let emotions dictate their actions are consistently underperform, how should you avoid this? 

Just avoid playing the game entirely.

What we look for:

• Harnessing long-term compounding by staying invested.
• Staying efficient - with low costs, so returns stay in your hands and not the financial services industry.
• Align and customize for your goals

We’ve seen that the most reliable path to wealth creation isn’t a series of lucky bets, it’s a slow, intentional journey built on patience and consistency.

Discipline: The Real Edge in Investing

Discipline is what turns evidence into results. Markets will always fluctuate, but investors who:

• Stay invested through downturns instead of selling in panic
• Rebalance deliberately to maintain their risk/return balance
• Stick with their strategy in both euphoric and fearful period

…tend to outperform those who abandon their plan at the worst possible times.

This disciplined approach isn’t just advice, it’s the way to build and manage your portfolios. Time-tested strategies are designed to remove emotion from the process, ensure deliberate rebalancing, and keep clients aligned with their long-term goals.

What Makes a Strategy “Time-Tested”?

It takes decades of research and market history to point to a set of strategies that can be considered "Time-Tested". These approaches have earned the trust of generations of investors by delivering returns while managing risk. You find them in companies like Vanguard or labeled as diversified low cost strategies. However, not every investment approach deserves the label “time-tested.”

To be time-tested, a strategy must be:

These criteria help separate enduring strategies from short-lived trends.

Proven Strategies that have endured

Strategic Asset Allocation

Balancing equities, fixed income, and other assets according to each investor's risk profile provides resilience and growth across cycles.

We deep dive into this in our Strategic Asset Allocation article.

Diversification & Rebalancing

Diversification works because different asset classes, sectors, and geographies don’t all move in perfect lockstep. Just as important is the discipline of periodic rebalancing.

Factor-Based Investing

A factor is a characteristic of a stock or asset that explains why it tends to deliver higher or lower returns over time.

The most widely recognized factors include:

• Value: Companies trading at cheaper prices relative to fundamentals (like earnings or book value). Over time, these stocks tend to deliver higher returns as markets eventually recognize their worth.
• Quality: Firms with strong balance sheets, steady profits, and efficient operations. These companies are often more resilient in downturns and compound steadily over time.
• Momentum: Stocks that have been rising tend to keep rising in the short-to-medium term, as investors pile in. While it sounds counterintuitive, decades of data show that momentum is persistent across global markets.

Why do these factors work? Some have an economic basis - value stocks compensate investors for taking on higher perceived risk, while quality stocks reward stability. Others have a behavioural explanation - investors overreact to news, chase trends too late, or overlook boring but solid businesses. Factors capture these recurring patterns in human behavior.

Cost Discipline

Fees are a silent performance killer. Every percentage point paid in management costs is a percentage point taken away from returns, and over time the effect compounds dramatically.

Buy-and-Hold Discipline

One of the simplest, yet hardest, strategies is staying invested. Buy-and-hold works because it lets compounding do its job, allowing small gains to build on each other over time. The alternative, trying to jump in and out of the market, often backfires. Selling during downturns and waiting too long to re-enter means missing the sharp rebound days that drive a large share of long-term returns.

Why Short-Term Noise Doesn’t Break Long-Term Wealth

Market downturns can feel catastrophic in the moment, but history shows they are temporary interruptions in a much longer growth story.

Consider three recent episodes:

• Tech Bubble (2000–2002): The Nasdaq fell nearly 80%, but diversified portfolios with exposure beyond speculative tech recovered. Broad U.S. markets were back at new highs within five years, while many dot-com darlings disappeared entirely.
• Global Financial Crisis (2008): The S&P 500 dropped over 50% at its trough, but investors who stayed in balanced portfolios recovered almost all losses by 2013. Those who sold in panic missed the rebound that began in March 2009 - one of the strongest bull markets in history.
• COVID-19 Crash (2020): Global equities fell more than 30% in weeks, yet markets fully recovered within months and ended the year higher than they began. Investors who stayed the course benefited; those who exited locked in losses.

Case Studies: Proof in Practice

The principles of Time-tested strategies aren’t just theory, they’ve been proven in practice by investors at every level.

• Warren Buffett built one of the world’s largest fortunes by buying great businesses at fair prices and holding them for decades. His investments in Coca-Cola and American Express show how patience and compounding outperform trend-chasing.
• Canadian Pension Funds like CPPIB manage hundreds of billions with a generational mandate. They avoid speculation, prioritize diversification, and consistently outperform short-term traders by taking advantage of their long horizon.
• Index Funds and ETFs have repeatedly outperformed most active managers over 10- and 20-year horizons, according to Morningstar and S&P data. Their low costs and broad diversification make them a textbook example of evidence-based investing.

Conclusion: Stay Consistent. Stay Invested.

Time-tested strategies work not because they are magical, but because they align with both human psychology and economic fundamentals. Markets are unpredictable in the short run, but remarkably consistent over the long term. History shows that disciplined investors who endure short-term volatility are rewarded with long-term growth, while those who chase trends or panic often fall behind.

Wealth isn’t built on prediction or luck, it’s built on patience, consistency, and evidence based strategy. That’s what we stand for, and that’s what we deliver.

Trust the process, ignore the noise, and let compounding do its quiet but powerful work.