| The most well-known investment strategy in the | | | | Buffett. If you look at many of his investments |
| world is the buy-and-hold strategy. The thought is | | | | they tend to be in boring companies as opposed |
| that if you buy stock in a fundamentally sound | | | | to high-flying technology stocks. |
| company, then overtime that stock should be | | | | The main problem with the buy-and-hold strategy |
| worth more than what you paid for it to begin | | | | is it fails miserably in bear markets. Individual |
| with. One of the advantages of the buy-and-hold | | | | investors who hold onto stocks no matter what |
| strategy is that the investor does not have to | | | | may find themselves losing everything they have |
| constantly watch his or her stocks. Investors who | | | | gained if they can not recognize the signs of a |
| bought into companies such as IBM and GE in the | | | | bear market. This is brought on by the belief that |
| early days saw their investments rise dramatically | | | | eventually all stocks they own will have to return |
| year after year without much effort. Another | | | | back to their original price. The truth is though |
| benefit of this strategy is that you will not be | | | | that many stocks may never return to their past |
| paying a lot in commission cost, because you are | | | | glory thus leaving the buy-and-hold investors |
| not constantly buying and selling stocks. This | | | | hanging onto a huge loss year after year. |
| strategy works very well as long as there are | | | | I personally have never been a big fan of this |
| more bull markets than bear markets. | | | | strategy, and feel it holds back potential huge |
| Buy-and-hold investors try to hang on to a stock | | | | gains that can be made with a little more hands |
| as long as a company remains fundamentally | | | | on involvement with your portfolio. If you are |
| sound. They do not tend to chase stock charts or | | | | someone that prefers the hands off buy-and-hold |
| news. They simply look at the bottom line of the | | | | strategy, I still believe it is a must to use |
| company itself. One of the most successful | | | | stop-loss orders to protect your investments |
| buy-and-hold investors in the world is Warren | | | | when bear markets occur. |