Buy-and-Hold

Buy-and-Hold

An investment strategy in which one does not do any trading on a portfolio between the initial selection of the securities and the end of a certain time period, which is usually a long time. A buy-and-hold strategy ignores short- and medium-term trends and concentrates exclusively on the long-term. A buy-and-hold strategy also attempts to eliminate any emotional trading that may be done foolishly during a particular bear market. In general, a buy-and-hold strategy yields a solid return as the market trends upward with time. However, it can be exceptionally risky during a prolonged and severe bear market or recession. For example, if one used a buy-and-hold strategy starting in 1929 and held it throughout the Great Depression, one would have had to wait most of one's life before seeing a profit on the portfolio. See also: Active investing.

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Buy-and-hold. Buy-and-hold investors take a long-term view of investing, generally keeping a bond from date of issue to date of maturity and holding onto shares of a stock through bull and bear markets.

Among the advantages of following a buy-and-hold strategy are increased opportunity for your assets to compound and reduced trading costs. Among the risks are continuing to hold investments that are no longer living up to reasonable expectations.