Every investor loves a great idea.

A single insight – spotting a breakout company early, catching an emerging trend like crypto, or seeing the housing bubble forming back in ‘07 – can be the spark that creates a fortune.  

But investors who actually keep their gains?

I’d argue they share one powerful habit that’s easy to underestimate.

Big wins start with great ideas… but they endure through discipline.

Having a structure – a plan that guides how much to invest, where to rebalance, and when to stay the course, even when markets get loud – could be the No. 1 difference between chasing trends and building lasting wealth.

Today, we’ll look at the data behind that idea…

What decades of market research reveal about how disciplined investors outperform over time…

And how you can start applying those same principles to your own strategy immediately.

The One Study That Changed How We Think About Investing

I was reminded of this recently in a conversation with Matt Milner of Crowdability, the venture-investing research service, when he mentioned a famed 1986 study by Nobel laureate Gary Brinson. 

Along with Randolph Hood and Gilbert Beebower, Brinson published a groundbreaking paper titled Determinants of Portfolio Performance in the Financial Analysts Journal.¹ The team examined 91 large U.S. pension funds and found that more than 93% of the variability in returns came from asset allocation decisions – not from market timing or individual security selection.²

In other words, the biggest factor driving portfolio outcomes for these extremely well-funded, professional investment shops wasn’t which stocks or bonds they chose – many of them were chasing the same ideas – but how they divided their money among them.

Later studies reinforced this finding. A 2000 update by Brinson and colleagues, and subsequent analyses by firms like Vanguard and Morningstar, have repeatedly shown that a sound allocation strategy, and sticking to it, explains the lion’s share of long-term performance.³

So investors can obsess over stock tips or fund rankings as much as they like – there are returns (and fun) to be had. But the studies are a reminder not to miss the forest for the trees: the true determinant of long-term success is discipline in allocation, not brilliance in selection.

Ideas Still Matter

This is not to say that great ideas don’t matter, or that anyone should go cancel their newsletters. Quite the opposite, actually. Anyone who’s ever seen what happens when even 1% of their portfolio lands a once-in-a-lifetime investment knows how powerful a single insight can be.

And research backs up that commonsense truth. Notably, William Jahnke (1997)⁴ and Ibbotson & Kaplan (2000)⁵ argued that Brinson’s conclusions were sometimes oversimplified. They pointed out that while asset allocation explains much of the variation between portfolios, security selection and timing can still meaningfully influence long-term results – particularly for active investors.

Brinson’s dataset focused mainly on large institutional portfolios with steady policies, not individual investors who may deviate or take tactical positions. Jahnke and others built on that foundation, showing that it’s the combination that has long separated truly great performers from the rest: the ability to identify opportunities – and the discipline to build them into an overall portfolio.

The 4-6% Mistake: What Emotion Costs Investors Every Year

The Brinson study quantified what most experienced investors already suspected: markets reward patience and process, not prediction.

Behavioral finance research backs this up…

Studies from DALBAR, for example, show that the average investor underperforms the market by 4-6% per year – largely because of emotional decision-making.⁶

If you’ve ever read a sharp piece of investment research, you know the thrill of discovery – that rush of finding something others have missed. But acting on that insight, and more importantly, staying with it through market noise and economic uncertainty, is the real challenge.

Because investing success isn’t just about what you know. It’s about what you do consistently.

Do you have the time, energy, and emotional bandwidth to rebalance regularly, ride through corrections, to resist chasing trends? Many investors don’t. They have families and day jobs.

And that’s okay. That’s exactly why WorthNet exists.

The “Missing Link” in Many Investors’ Plans…

At WorthNet, our goal is simple: to connect individual investors with experienced advisers who do the hard work of monitoring markets and managing portfolios night and day – so you don’t have to. We built our selective network of hand-picked, deeply experienced advisers to bridge the gap between ideas and execution.

And it’s why we chose Horizon Investment Services as one of those partners… 

Among the advisers we evaluated, Horizon stood out with its consistent application of active stock selection, combined with disciplined models for allocation and exposure.

The team at Horizon has been publishing the Dow Theory Forecasts since 1946 – one of the longest-running investment letters in America – and managing money for more than 25 years.⁷

Their disciplined, value-driven models now power over $70 billion in investments, through portfolios they manage directly and strategies licensed to Wall Street firms for ETFs and investment trusts.⁸

Horizon’s CEO, Charles “Chuck” Carlson, who’s been with the firm for more than 40 years, remains in my humble opinion one of the steady voices in the industry – a proponent of concentrated, high-conviction portfolios of a few dozen carefully researched stocks.

Through booms, busts, bubbles, and crises, he’s found high conviction investments and stuck with them while others fled to cash or chased memes. In a recent conversation, Chuck shared with me how keeping a close eye on Horizon’s core indicators has kept them 80-85% allocated in the current market run-up, despite higher historical P/E ratios and a record high “Buffet indicator.”

That consistency is the hallmark of disciplined investing.

The Payoff for Staying the Course

If that research teaches anything, it’s that investors who stick to a plan tend to fare far better than those who react emotionally.

Consider the two decades from 2000 to 2020. Despite two major bear markets, a balanced 60/40 stock-bond portfolio returned an average of 6.4% per year…

While the average equity investor earned just 4.2%, according to a widely cited Morningstar survey.⁹

That difference – small on paper – compounds to a 40% shortfall over twenty years.

Disciplined allocation, not prediction, is what separates long-term winners from perpetual chasers, according to the research. That’s why many of the world’s most successful investors, from institutional endowments like Yale and Harvard to individual legends like Warren Buffett, emphasize process over panic.

Takeaway: Find Your Partner in Discipline

If you believe – as decades of research show – that asset allocation and consistency drive the vast majority of long-term results, then the real question becomes: What are you doing to ensure that discipline sticks?

That’s where partnership matters.

If you’re ready to work with a team that applies this philosophy day in and day out – one that will help incorporate your ideas and insights into their disciplined models and manage the day-to-day for you – click below to learn more about Chuck and get in touch with his team at Horizon today.

Because ideas spark potential – but discipline unlocks results.

1. Brinson, G. P., Hood, L. R., & Beebower, G. L. (1995; originally 1986). “Determinants of Portfolio Performance.” Financial Analysts Journal, 51(1), 133–138. Available at: https://rpc.cfainstitute.org/research/financial-analysts-journal/1995/determinants-of-portfolio-performance ↩︎
2. Ibid. ↩︎
3. Brinson, G. P., Singer, B. D., & Beebower, G. L. (1991). “Determinants of Portfolio Performance II: An Update.” Financial Analysts Journal, 47(3), 40–48. Working copy (PDF): https://www.timothyburger.com/Determinants_Brinson_1991.pdf 
   Vanguard Research. Wallick, D. W., Shanahan, J., & Tasopoulos, C. (2012). “The Global Case for Strategic Asset Allocation.” Original Vanguard link is no longer publicly available; a working Vanguard-branded copy is archived here: https://www.fa-mag.com/userfiles/white_papers/wp_5.pdf  ↩︎
4. Jahnke, W. W. (1997). “The Asset Allocation Hoax.” Journal of Financial Planning, 10(1), 109–113. Official reprint (PDF): https://www.financialplanningassociation.org/sites/default/files/2021-08/AUG04%20The%20Asset%20Allocation%20Hoax.pdf ↩︎
5. Ibbotson, R. G., & Kaplan, P. D. (2000). “Does Asset Allocation Policy Explain 40, 90, or 100 Percent of Performance?” Financial Analysts Journal, 56(1), 26–33. Working copy (PDF): https://www.bancoinvest.pt/docs/default-source/fundamentais-alocacao-de-activos/assetallocationexplain.pdf ↩︎
6. DALBAR, Inc. (2023). Quantitative Analysis of Investor Behavior (QAIB). Official product page: https://www.dalbar.com/QAIB Publicly accessible 2023 QAIB report (PDF mirror): https://atlasfinancialinc.com/wp-content/uploads/2023/06/DALBAR-2023-QAIB.pdf ↩︎
7. Dow Theory Forecasts, Horizon Publishing Co., a sister company of Horizon Investment Services, LLC; est. 1946. Current newsletter site: https://dtf.horizonpublishing.com/ Product description: https://subscriber.horizonpublishing.com/HPC/product/dow-theory-forecasts ↩︎
8. Horizon Investment Services — company representations regarding assets powered by Horizon models/licensing. WorthNet adviser profile: https://worthnet.com/adviser-network/horizon/ Horizon Investment Services (firm site): https://horizoninvestment.com/ ↩︎
9. Morningstar Research (2021). “Mind the Gap 2021: A report on investor returns in the United States.” Full report (PDF): https://assets.contentstack.io/v3/assets/blt4eb669caa7dc65b2/ bltb2d6bba9e3f9288a/ 619f9763fb0e2a1280d94a59/2021-mind-the-gap.pdf ↩︎