Is the "buy and hold" investing method a good one?

It seems that in the long run, stock prices don't really increase a lot because of all the ups and downs.

At what point do you sell your stocK? A ten percent return?

in short term, stock market is sentiment driven. over long haul, it is profit driven. as long as the company able to grow, it stock price have no upside limit as yet.

buy and hold is what make warren buffer billionaire. on the other hand, soros gain reputation as a savvy traders. so, both are profitable, but up to you which you prefer.

from your financial goal, you can know when you should sell the stock. without that, you'll be directionless.

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You should only buy and hold the Dow. Buying and holding a company stock gives you endless problems and sleepless nights just monitoring all their news. I only swing trade individual company stocks and buy and hold the DIA, which is the Dow ETF.

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well I have several at 10% (one at 33%) and all of them are going (the one at 33% has been with me for at least 4 years now) to be long term. On such high gains I would recommend a stop order say around 5% that way you have your money and a profit to boot so if the market does tank hard you can get back in quick. and catch it in a tailspin. But look at some of the stocks in 6 months and streatch it out to 3-5 years you will see a difference.

In regards to the above post, a few things I want to mention. The Dow Jones Industrial Index index did not return to the same level for over several decades after the great crash ... however, this does not mean that investors did not break even until that point. That index only measures the price of the stocks, and does not include dividends. Investors who bought a broad basket of stocks in 1929, held them, reinvested the dividends, would have still made a real return (return minus inflation) of 3.2% from 1929 to 1939. (See page 185 of my book.) Secondly, most investors do not just invest a large lump sum of money into the stock market at once. And if they did they would rarely do it on exactly the peak day before a great market crash. Instead, most of us invest small amounts at regular intervals. If you would have continued to make small investments in the 1930s, your contributions would have bought stocks at cheaper and cheaper prices as the market fell. This would set you up for tremendous returns when the market recovered. Thirdly, this example does not take into account investors who were well diversified in bonds and international stocks. Bonds did tremendously well in every market crash. This will help to offset losses in a market crash and will then allow you to purchase even more cheap stocks when you rebalance.

Consider a landmark study by a man named H. Negat Seybun. I cannot find the actual study, but it has been referenced several times in my readings. He found that 95% of the significant market gains over a thirty-year period came from only 90 days.

From the years 1963 to 1993, there were roughly 7,500 trading days. Professor Seybun ranked each trading day according to how much the market index lost or gained that day. He then looked at the top 90 days. With the aid of his computer, he posed the question, "What would happen if a person removed his money during those 90 crucial days? If we negate the effects of those 90 days, what would the 30-year return be?" Professor Seybun found that if you had been out of stocks during the market's best 90 days, your average annual return dropped from 11.3% to only 3.3%. Let me put this into perspective for you.

Scenario A: You invest $10,000 in the year 1963 in a broad index mutual fund that tracks the entire stock market. You remove your money (sell your shares) the day before each of these 90 top-performing days, putting it back one day later. You wind up with an average annual return of 3.3%. Using the www.moneychimp.com compound interest calculator, with a 3.3% return rate, your $10,000 turns into $26,486 at the end of 30 years (the year 1993). Interestingly, the rate of inflation was about 4% during this time, so you would have actually lost purchasing power.

Scenario B: You invest $10,000 in the year 1963 and leave it in this index mutual fund for 30 years, never taking you money out. You get an average annual return of 11.3%. What would you have in the year 1993? $248,230. A 9-fold increase in wealth based on only 1.2% of the trading days. Inconceivable, yet true!

Those 90 days were spread randomly over that 30 year period. Think you can predict the next 90 crucial days? What if, in the pursuit of trying to get your money out during a market downturn, you miss one of those crucial days? What if, by waiting till next year to start your retirement investing, you miss out on a crucial day or two? Can you afford not to be in the stock market?

I discuss the advantages of a buy-and-hold strategy along with keeping your costs low in my free downloadable book at http://www.invest-for-retirement.com

There are no guarantees about any method of trading. Naturally when you buy-and-hold a stock you will catch ups and downs, but each stock will be different on how drastically those moves are.

As far as when you should sell a stock really comes down to your own greed and self-control.

The best way to control your own greed and emotions when it comes to trading stocks is to learn how to use stop-loss orders and trailing stops. Once u take your emotions out of the equation you will have many more successful trades.

There are many factors affecting when one should sell stock, if the stock is a poor performer consider dumping it, "buy and hold" can be a major loser's concept, riding the stock down is very bad. Concerning when to sell a good performing stock, minor corrections of five per cent is tolerable, but the lost of 10% value can be a major hit, factoring in brokage buy and sell fees. Consider purchasing a good mutual fund, the risk is less, because the fund manager will sell off poor performers and make purchases of stock that are going up.
Remember not to invest money you can not afford to lose, do not invest in penny stock or inital public offerings.
You may consider purchasing a good investers book that is simple to understand. A few links are provided to some ruther inexpensive books. I have no assoication with the books or anyone that sells them.

"Buy and hold" works great during long, secular bull markets -- such as in the 1980s and 1990s. But it's a recipe for disaster in long bear markets. If you had bought stocks just before the crash of 1929 and held them, you wouldn't have broken even until the the 1950s.
This style of investing isn't for everybody, but I don't trade the market -- I trade individual stocks. I look for certain chart patterns -- usually breakouts from areas of congestion or breaks above/below a trend line -- and then initiate the trade. I always set a stop, based on support or resistance or the trend line, that gets me out of the market automatically if the trade isn't working out. I win more often than I lose, and I'm never in a position where I am riding to the bottom of a crash.
A great reference on this type of trading is the book "Trader Vic -- Methods of a Wall Street Master," by Victor Sperandeo.

I would say no, buy and hold does not work!
Read some books on technical analysis of the stock market. You can make money in the market only if you concentrate on keeping your losses small. Sell your loosers and let your winners run. Purchasing the wrong stock at the wrong time will increase your losses. Study stocks that had large upward trends. Check out yahoo ComputerProgramPicks. Best of luck to you. Having luck is executing with a prepared mind.

Yes - if you hold for as long as the stock is making you money. Lifetime of products and corporations has shrunk - so you may only hold for a week, a month, or a few quarters.

Determining when to sell is as important as when to buy. Providing a complete answer would go beyond the Yahoo format, but our stock picking group - http://finance.groups.yahoo.com/group/TradingZoom/ - discusses it regularly, you are welcome to join.

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