[disneysteve]

Your friend is wrong, plain and simple. What he/she is attempting to do is called market timing, guessing when prices will peak and bottom out and investing at the bottom and selling at the top. The only problem is it isn't possible because nobody knows when a particular stock will start rising or falling.

I agree with safari. The way to go is dollar-cost-averaging. Set up an automatic investment plan and put a set amount of money into the account each month (or each quarter). When prices are low, your money will get you more shares. When prices are high, it will get you fewer shares. Over time, your average cost basis per share will likely be lower than if you had invested in one lump sum.