Buy-and-Hold Strategy

Buy-and-hold strategy

A passive investment strategy with no active buying and selling of stocks from the time the portfolio is created until the end of the investment horizon. Opposite of active strategy.

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buy-and-hold strategy

The investment strategy of purchasing securities and holding them for extended periods of time. Investors using the buy-and-hold strategy select companies on the basis of their long-term outlook. Such investors are not influenced by short- or intermediate-term movements in the price of a security.

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Buy-and-Hold Strategy

An investment strategy in which one does not do any trading on one's portfolio between the initial selection of the securities and the end of a certain time period, which is usually a long time from the creation of the portfolio. A buy-and-hold strategy ignores short- and medium-term trends and concentrates exclusively on the long-term. A buy-and-hold strategy can also attempt 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 strategy.