Living through the past year, we've all had a chance to witness history in the making. Unprecedented levels of government support and economic turmoil have stretched the global economy to the breaking point -- or perhaps past it, depending on your point of view.

At the pace of current events, you simply don't have time to understand immediately the long-term ramifications of everything that's going on. In the coming months and years, the situation will resolve itself -- one way or the other -- and you'll have time to reflect more fully on everything that's happened.

But against all the losses that you've seen in your portfolio, the only thing you have to show for it is the experience you've gained. And one important takeaway from the bear market that many investors have discovered for the first time is that the boring stocks they once shunned when times were good turned out to perform much better than the hot stocks they chose to invest in instead.

Boring can be good.
When the stock market is booming, no one seems happy with just average gains. Even when you're making money, you always seem to focus on how other investors are making more because they picked different stocks.

That can be a bad influence on your investing strategy. Without realizing it, you might find yourself gravitating toward stocks that carry the prospect of higher returns -- but also bear higher risk. And while that risk may stay invisible for a while, it'll eventually come home to roost … as we've all discovered over the past year.

For instance, when you compare some of the best-performing small- and mid-sized companies during the bull market from 2003 to 2007 against a list of more commonly held large-cap stocks, you can see how tried-and-true blue-chip shareholders could've gotten jealous:

Stock

Market Cap (Millions)

Performance 3/31/2003 to 9/30/2007

Titanium Metals (NYSE:TIE)

755

6,308%

U.S. Steel (NYSE:X)

2,050

1,026%

Wynn Resorts (NASDAQ:WYNN)

1,690

992%

Valero Energy (NYSE:VLO)

8,440

571%

ExxonMobil (NYSE:XOM)

307,470

192%

Nike (NYSE:NKE)

19,330

142%

Qualcomm (NASDAQ:QCOM)

57,120

145%

Source: Yahoo! Finance. Market cap values reflect Mar. 5 closing price.

Plenty of performance-chasing investors likely couldn't resist the temptation to jump out of their boring stocks to try to grab these top performers. But that left them especially vulnerable when the bottom fell out of the stock market:

Stock

Performance 9/30/2007 to 3/5/2009

Performance 3/31/2003 to 3/5/2009

Titanium Metals

(87%)

718%

U.S. Steel

(83%)

92%

Wynn Resorts

(89%)

18%

Valero Energy

(75%)

68%

ExxonMobil

(31%)

102%

Nike

(30%)

69%

Qualcomm

(16%)

105%

Source: Yahoo! Finance.

Note that for those who held those high-performing stocks throughout the period, from 2003 to today, the outsized gains during the good years at least partially made up for their losses. But too often, investors who show up late to the game get the worst of both worlds: They miss out on the stock's best years, and then get in just in time to suffer really big losses.

Don't forget
It's hard to imagine now, but when stocks start to recover, your inner greed will reassert itself over your present fear. So remember these two takeaways:

  • If you're comfortable with big risk, you deserve the big rewards that come with it. So don't grab great performers only after they've hit the top gainer charts -- identify them either before their big gains or after they've seen their stock prices take a substantial hit.
  • On the other hand, if the bear market taught you that you're not ready for high-risk stocks, don't get envious when someone else's stocks do better than yours. Stick with high-quality stocks and you'll do fine in the end.

Either way, the key is earning the best performance you can over the long haul without losing your shirt in the process. If you remember nothing else from this terrible time, that alone will go a long way toward helping you avoid repeating mistakes you may have made.

For more on investing in a bear market, read about:

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Fool contributor Dan Caplinger tries to learn from all of his mistakes. He doesn't own shares of the companies mentioned in this article. Titanium Metals is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy does your remembering for you.