The "value averaging" strategy provides an emotionless way to follow the advice to buy low and sell high while buying an index.
The idea is to fix a regular amount you want to increase your portfolio by, say monthly.
Let's say it's $100.
The first month, you buy $100 of shares. Total share value: $100.
The second month, your share value has fallen to $80, so you buy $120 of shares. Total share value: $200.
Third month. Shares have surged and are now worth $250. You buy $50 of shares. Total share value: $300.
Fourth month. Shares continue to surge. Your portfolio is now worth $420. You sell $20 of shares and place the cash in reserve. Total share value: $400.
The idea is to fix a regular amount you want to increase your portfolio by, say monthly.
Let's say it's $100.
The first month, you buy $100 of shares. Total share value: $100.
The second month, your share value has fallen to $80, so you buy $120 of shares. Total share value: $200.
Third month. Shares have surged and are now worth $250. You buy $50 of shares. Total share value: $300.
Fourth month. Shares continue to surge. Your portfolio is now worth $420. You sell $20 of shares and place the cash in reserve. Total share value: $400.
Described in detail by Michael Edleson:
http://www.amazon.com/Value-Averaging-Strategy-Investment-Cl...
Probably the first "intelligent layperson" investment guide I've ever seen with instructions on how to perform monte carlo simulations.