Once you learn how to identify good stocks, a reliable way to smooth out the ups and downs of the stock market is through dollar-cost averaging . Your fixed number of dollars will automatically buy more shares when prices are low than they will when prices are high. As a result, the average purchase price of your stock will be lower than the average of the market prices over the same length of time. Dollar-cost averaging won't automatically produce a profit. But by investing on a regular schedule and sticking with your plan, you're virtually guaranteed to do better in a generally rising market than investors who try to time market highs and lows.
History shows that the odds are strongly against that kind of timing.
First, a growing number of companies are willing to sell shares directly to investors, thus allowing you to bypass brokers' commissions. The Kiplinger Washington Editors, Inc.