So yes, in terms of European record, Real has definetely been better. But I think we are conflating two issues here: (1) How you get players and (2) How you set out your transfer policy.
Personally, I think Real's success during early stage of the above period was largely due to the foundation built buy Lorenzo Sanz, as their European success during his tenure was far more notable. Since a waste of sperm Perez took over, marketing has taken a priority over sporting success, and if buying big players for the sake of it, well I don't think we should follow Madrid. Then again, I understand your point. A well thought out transfer, which incorporates big names, is the best ones, and there is no reason why you can't be good at getting players as well as finding out which players to get. I believe Moggi was on the process of doing exactly that, bar for all that travesty we experienced last year. Real pitty, because I think we could have won a CL last year, considering how things panned out.