Numerous studies suggest that both individual and professional investors could improve their returns via disciplined investment strategies. Yet, investors rarely follow such strategies.

Many investors may lack the discipline to rely on profitable long-term strategies, particularly when recent trading success has increased their confidence in their own judgment-a common occurrence at the end of a sustained bull market like that experienced over the past few years.

Chasing for... disappointments

At that time, many investors chased returns through time, precipitating unusually large aggregate cash inflows into the stock market, mainly via mutual funds, after dramatic runups. Too often, their advisor, analysts, economists and strategists jumped on board and called for a never-ending bull market with the expectation of high short-term returns.

However, when the overstretched stock market collapsed, individual and professional investors suffered large portfolio losses. Newspapers are now teeming with articles concerning the meltdown of the stock market. The economy lost its momentum and the bears are talking about a probable recession.

Too often, after a sequence of bad news, investors defer their investment or adopt a very cautious approach. Their advisors rediscover the virtue of long-term investing but lack the nerve to advise their clients to invest in the stock market or to follow a disciplined approach.

Eventually, the economy and the markets recover and investors remain unhappy because they missed the rally.

One step behind the market

Active investors who chase returns usually remain one step behind the market. Unfortunately, this approach is often promoted by financial analysts who react or comment in the financial press after the fact. Those analysts are obsessed by the idea of calling the direction of the market and are often on the wrong side, putting too much emphasis on the call and not enough on the long-term objectives of the investor.

One of the only ways to stay ahead of the market

One of the only proven methods to generate higher returns remains investing for the long-term, in good times and times, with a disciplined approach.

According to this method, the investor establishes a long-term financial objective with conservative expectations. He or she should pursue the same approach of investing notwithstanding the state of the market or the economy. The investor will not forestall or delay his or her investments because of the financial press and comments by analysts.

Despite its passive nature, this remains one of the only ways to stay ahead of the market. In short, filter out the noise and stay disciplined.