The recent market volatility may be driving you crazy, but the way to avoid most of the grief and maximize your profits is the same as it has always been. It's what Buffett and many other successful investors do -- follow a strategy that's been proven to work time and time again.

The strategy
A recent study by Morningstar looked at mutual fund returns over the past 15 years. Morningstar categorized funds according to investment style and compared performance against the Dow Jones Wilshire 5000, an index of all actively traded U.S. stocks.

The study showed that while only 33% of funds outperformed the index, a full 71% of value funds outperformed. Value funds easily beat the funds of all the other investment styles examined.

This excellent performance isn't limited to recent times. An Ibbotson Associates study shows value outperforming both growth and the S&P 500 going all the way back to 1926!

And nothing's changed. The way to beat this sort of market is to use the strategy that has outperformed for decades: Buy stocks for less than they're worth.

Why value wins
Value investing works because it greatly reduces the chance of permanent losses. Stocks tend to gravitate toward their fair value. So, undervalued stocks are often buoyant even in a stormy market. According to Morningstar, during the 2000 to 2002 bear market, 80% of non-value funds lost money, while only 40% of value funds did. That's a huge difference -- not just for your portfolio, but also for your peace of mind.

In fact, you can actually benefit from a bumpy market if it drives stocks below their fair value. Internet companies were hit hard during that crash. In most cases, it was justified, but the top tier of Internet companies -- Cisco Systems (NASDAQ:CSCO), (NASDAQ:AMZN), and eBay (NASDAQ:EBAY) -- became unreasonably cheap. These were the stocks that everyone knew. They were the strongest financially, the best brands, and the most likely to grow and prosper. They were true bargains, and each has at least doubled since hitting its low.

A similar opportunity may be developing from the credit bubble. Look at Washington Mutual (NYSE:WM), Merrill Lynch (NYSE:MER), and Moody's (NYSE:MCO). They've all taken big hits because the future doesn't seem particularly bright. There's been little indication of a turnaround in the housing or asset-backed securities markets. But these are solid, dominant businesses. While the turnaround might not happen next month -- and not every company will survive -- the opportunity has arisen to pick up some outstanding businesses at very cheap prices.

The Foolish bottom line
So don't panic when the market's volatile. Instead, look for the chance to buy an excellent stock at a great price. Our Inside Value team is relishing the opportunities that the market's volatility has provided.

Nobody knows when the market will bounce, but we are prepared with some of the best values we've ever discovered. If you want to see what we've found so far, we offer a free trial.

If Fool contributor Richard Gibbons became a professional gurgitator, he would avoid the mayonnaise category. He does not have a position in any of the stocks discussed above. Moody's, eBay, and are Stock Advisor recommendations. Washington Mutual is an Income Investor selection. His unabashed admiration of the Fool disclosure policy remains unrequited.