We pool dividends and new money and buy as opportunities come up. But generally we don't keep large quantities of cash and prefer to invest in whatever is fairly valued or better at the time. If nothing is available for a discount, we'll buy the highest quality companies that we already own up to certain point. We're not looking to smack home runs, just consistently churn out singles and doubles and minimize strike outs. Sometimes you get lucky and get a home run anyways
edit: Just want to add. Outperformance is actually not a main criteria of ours. Its nice and makes you feel good, but the important thing for us is income growth. Outperformance just happened to come with the companies that are the safest and grow their dividends consistently. We want to retire early, and to do that we need income replacement. Not the high yield questionable growth/sustainability stuff from unit trusts and what not, but solid income growth from the best companies in the world that sell things people need in good times or bad.