Maintaining buying (or selling) discipline in the sharemarket

For the first time in my investing career I'm coming up against the problem of maintaining discipline in my investment approach. This is because I am completely convinced that this is a buyers market. As I am a long term investor the week to week and month to month movements in share prices do not bother me at all however against nearly all historical averages the markets look cheap.

The problem is that I have set my self investment goals outlined in my 2012 financial objectives which basically revolve around certain allocations on a monthly basis. Given my belief in the value in the market (which I may cover in greater detail in a later post) the temptation is to reallocate funds from my investment property loan into the stock market (effectively gearing up my portfolio).

There are real benefits to having an investment plan, not least being that it stops you from foolishly buying during periods where prices and sentiment are high and also forces you to buy when the market looks terrible and it is tempting to stay away. I confess that I have not always followed this plan. When the market was tanking in the second half of 2011, I was largely out of it and I lost out on buying at some of the lowest points there. The market is back at these low points and I want to be careful of not going too far the other way.

I have decided to largely stick to my investment goals. I have set myself a limit of 50% on the up and downside when it comes to new investment in the stock market every month (i.e. $1,650 - $5,000) with the requirement that I never be more than $5,000 away from my planned allocation.