Buy and hold

Buy and hold is an investment strategy where an investor buys stocks and holds them for a long time.

This is based on the view that in the long run financial markets give a good rate of return even while taking into account a degree of volatility. It says that investors will never see such returns if they bail out after a decline. This viewpoint holds that market timing, i.e. the concept that one can enter the market on the lows and sell on the highs, does not work; attempting such timing gives negative results, at least for small or unsophisticated investors, so it is better for them to simply buy and hold.

The antithesis of buy-and-hold is the concept of day trading, in which money can be made in the short term if an individual tries to short on the peaks, and buy on the lows with greater money coming with greater volatility.

One argument for the strategy is the efficient-market hypothesis (EMH): If every security is fairly valued at all times, then there is really no point to trade. Some take the buy-and-hold strategy to an extreme, advocating that you should never sell a security unless you need the money.