buy and hold

Definition

An investment strategy in which stocks are bought and then held for a long period, regardless of the market's fluctuations. The buy and hold approach to investing in stocks rests upon the assumption that in the very long term (over the course of, say, 10 or 20 years) stock prices will go up, but the average investor doesn't know what will happen tomorrow. Historical data from the past 50 years supports this claim. The logic behind the idea is that in a capitalist society the economy will keep expanding, so profits will keep growing and both stock prices and stock dividends will increase as a result. There may be short term fluctuations, due to business cycles or rising inflation, but in the long term these will be smoothed out and the market as a whole will rise. Two additional benefits to the buy and hold strategy are that trading commissions can be reduced and taxes can be reduced or deferred by buying and selling less often and holding longer.

Use buy and hold in a sentence

You should try to find a good stock and use buy and hold on it and ride with all of the jumps it makes.

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The buy and hold strategy was not working and I wondered when he was gonna change it up and try something new.

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To increase his profits at the end of the year, Scott decided to buy and hold. This method had worked for him in the past.

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