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.
Cite this definition
Related Terms
in and out, long-term, position trader
Related Research Articles from the InvestorGuide.com University
Stocks and Your Portfolio I like this company, but should I add it to my portfolio? This article talks about diversification and balancing risk with your stock selections.

Short Selling What is short selling? Learn how it works and why it happens. Find out about the pitfalls and the potential risk involved with this practice.

Choosing a Stock Which companies should I invest in? Learn how to find a company, gather the research, and do the analysis. Also gives suggestions of things to look for while conducting this process.

Related Resources from InvestorGuide.com
Stock of the Day Newsletter Learn about stocks that are making headlines today by signing up for our free newsletter.
Stock Research Tool Using our stock research tool, you have access to our stock tracker, quotes, interactive charts, news, analysis and profile information. Click here to use our stock research tool or enter a stock ticker here:
Featured Sponsor
Start earning $200 to $900 a day working at home. No experience necessary. Money-back guarantee.
|