Buy and hold refers to an investing strategy practiced favorably by passive investors (or couch-potato investors). When buying and holding, the investor usually ignores the day-to-day and maybe even month-to-month fluctuations in the stock's price. The investor lets his or her money increase with the growth of the overall market, which, over the long term, tends to increase consistently.

In contrast to a buy-and-hold strategy, active investing attempts to profit from shorter-term price movements that typically last less than one year. Keep in mind, however, that even though long-term holding is typically more than five years, the meaning of "short term" and "long term" is not absolute or fixed. Active investors sell stock mostly according to what's currently happening in the stock market.

It's also important to remember that a buy-and-hold strategy works best when you've done all the proper research to ensure that you buy a high-quality company. It's a gamble to buy stock randomly without doing the proper research.

To learn more about buy-and-hold practices, check out How Portfolio Laziness Pays Off.

  1. Can I still make money with a couch-potato portfolio?

    The couch-potato portfolio is an indexing investment strategy that requires only yearly monitoring by an investor. An investor ... Read Answer >>
  2. What are common trading strategies used in a bull market?

    Discover four commonly used trading strategies by investors and analysts to make profits from a prolonged bull market, including ... Read Answer >>
  3. Under what circumstances is short selling advisable?

    Find out when short selling a stock is profitable and what an investor should keep in mind before deciding to pursue a short ... Read Answer >>
  4. When short selling, how long should you hold on to a short?

    Explore the reasons for short selling and the various factors that influence how long an investor may wish to maintain a ... Read Answer >>
Related Articles
  1. Investing

    Equity Investing For The Buy-And-Holder

    The buy-and-hold investment strategy requires investors to disregard their emotional responses to market movements.
  2. Investing

    Why It Pays To Be A Lazy Investor

    Be a couch potato! This passive, but diversified, investing strategy could be for you.
  3. Managing Wealth

    Why Blue Chip Stocks Are Key to Buy-and Hold Investing

    Several blue chip stocks have proven that buy-and-hold investing still works, even after the huge declines of the Great Recession.
  4. Insights

    Buy and Hold: Comfortable, But Mind the Risks

    Don't let the comfort of buying and holding blind you into hurting your portfolio.
  5. Investing

    Buy-And-Hold Investing Vs. Market Timing

    If volatility and emotion are removed, passive, long-term investing comes out on top.
  6. Financial Advisor

    Why Market Timing Should Be Left to the Pros

    Marketing timing is generally a bad idea for the average investor. Here's why it should be left to the pros.
  7. Investing

    Is Your Investment Strategy Going Extinct?

    Investors need to be aware that time moves on and often leaves trendy investing techniques in the dustbin.
  8. Retirement

    Is Passive Investing Effective for Retirement Savings?

    Learn about the differences between active and passive investing for those approaching retirement. Discover how passive investing is gaining popularity.
  9. Investing

    Know When To Buy & Hold It, Know When To Fold It

    A passive buy-and-hold strategy using ETFs is one of the most efficient ways of building a portfolio.
  1. Buy And Hold

    A passive investment strategy in which an investor buys stocks ...
  2. Hold

    An analyst's recommendation to neither buy nor sell a security. ...
  3. Coattail Investing

    An investment strategy in which investors mimic the trades of ...
  4. Long Term

    Holding an asset for an extended period of time. Depending on ...
  5. Active Investing

    An investment strategy involving ongoing buying and selling actions ...
  6. Passive Investing

    Passive investing is an investment strategy that limits buying ...
Hot Definitions
  1. Nest Egg

    A substantial sum of money that has been saved or invested for a specific purpose. A nest egg is generally earmarked for ...
  2. Denial Of Service Attack (DoS)

    An intentional cyberattack carried out on networks, websites and online resources in order to restrict access to its legitimate ...
  3. Perkins Loan

    A loan program that provides low-interest student loans to undergraduate and graduate students who demonstrate exceptional ...
  4. Wealth Management

    A high-level professional service that combines financial/investment advice, accounting/tax services, retirement planning ...
  5. Assets Under Management - AUM

    The market value of assets that an investment company manages on behalf of investors. Assets under management (AUM) is looked ...
  6. Subprime Auto Loan

    A type of auto loan approved for people with substandard credit scores or limited credit histories. There is no official ...
Trading Center