Sometimes the market drops, as do even the greatest companies within it. Last week was one of those weeks, as both the S&P 500 index and the real-money Inflation-Protected Income Growth portfolio lost a bit of value since the previous week's update.

For an investor looking to ride through the ups and downs that the market will have, investing based on a strategy that can stand the test of time matters at least as much as the individual investments. That's the true benefit of investing in a way similar to how the iPIG Portfolio operates. It's a strategy based on the teachings of Benjamin Graham, the father of value investing and the man who taught investments to Warren Buffett.

It may not set the world on fire, and there's no guarantee that it will trounce the market. Still, it has survived since the Great Depression era and made significant money for generations of investors who have followed it. That's pretty much the definition of staying power and surviving the test of time.

And what is that successful investing strategy?
The iPIG portfolio's selection strategy is based on three key factors:

• Dividends -- Consistently paid, covered by operations, and growing as the business does.
• Valuation -- Somewhere between fairly priced and downright cheap, based on the fundamentals.
• Diversification -- Each position is separated enough so that troubles in any one company or industry wouldn't take down the entire portfolio.

It's not exactly rocket science -- even though Raytheon (RTN +0.00%), one of the portfolio's top-performing picks, does make the Patriot anti-missile rocket system. In fact, Raytheon was selected when fears of the defense sequestration knocked its shares down to a reasonable price. The company's growing and well-covered dividend, along with its reasonable price due to those sequestration fears, were the key drivers that made it a worthwhile pick.

While Raytheon relies on innovative defense systems to earn its revenue, tremendous innovation isn't really needed to earn a spot in the iPIG portfolio. Indeed, Teva Pharmacuticals (TEVA +0.89%) has a spot in the portfolio because it's the world's largest manufacturer of generic medications. Executional excellence, scale, and a low-cost mind-set (at a reasonable valuation with a well-covered and rising dividend) are what earned Teva its spot.

Similarly, McDonald's (MCD -0.59%) has a spot in the portfolio, even though at its core, what it does is basically sell a $0.15 hamburger, adjusted for inflation. It just does so on a worldwide scale, with incredible operating efficiency and cost discipline, and it passes on a reasonable share of its profits to its investors in the form of a rising dividend.

Likewise, the railroads are based on technology dating back to the early 1800s. But still, CSX (CSX -0.43%) and Union Pacific (UNP -0.31%) each earned half a slot in the iPIG portfolio. The technology may date back centuries, but the fundamental need to move stuff from point A to point B cheaply and safely hasn't changed.

Indeed, these days, the railroads are enjoying something of a renaissance, as cost- and ecology-conscious shippers are moving to intermodal transit as an alternative to long-haul trucking. Both of the iPIG portfolio's railroads are taking part in that renaissance, and passing along some of the profits to their shareholders.

If there's a common theme that holds these five companies -- and the other 16 currently in the portfolio -- together, it's that they earned their spots in the portfolio because they fit the overall strategy. Dividends, valuation, and diversification may not be rocket science, but it's a strategy that has worked for generations and continues to work for the iPIG portfolio today.

And what of that iPIG portfolio?
As of last Friday's close, the iPIG portfolio is still performing to expectations, with every selection's dividend either in line with or ahead of where it was at the time it was picked. From a total return perspective, the portfolio has clocked 21.7% returns since its December 2012 inception, just about keeping pace with an S&P 500 index fund with the dividends taken as cash. Put it all together, and the iPIG portfolio finished the week looking like this:

Data from the iPIG portfolio brokerage account, as of Aug. 9, 2013.

To follow the IPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the IPIG portfolio, simply click here.