I invest in over 30 mutual funds that are in equities in my Roth IRA. Where will this month's investments go? Into whichever mutual fund has the lowest balance. (I'm quasi retired and currently working, thus currently investing, but we'll pretend I'm still working all year.) It doesn't matter why that particular mutual fund is lower than the others. I buy into it.
Likewise in retirement I do my 4% annual withdrawal (usually it's 1/3rd of 1% monthly) from whatever mutual fund has the highest balance.
I would say the overall strategy is an excellent one, although I’m not sure you need 30 mutual funds to do it.
Portfolio rebalancing is a very solid way to go. You force yourself to buy low and sell high, but without trying to “time” the market.
Agreed. Additionally, a critical factor that needs to be considered in investing is time horizon. The portfolio of a 25 year old has considerable more time/years to recover from a bear market as compared to someone who's 70. Respective investments need to factor the investor's remaining years on earth, i.e.. his investment time-horizon.
On a different note, I read some posters talking about buying low and selling high. If there was a science/method to accurately time the market, we'd all be billionaires. This is why conventional investment wisdom would agree with you: "The simplest way to play the game of prices is to have a diversified portfolio in many asset classes."