The Relevance of the Buy and Hold Strategy
The human brain and consciousness are so structured that it's much easier for any investor to buy assets than to profit from short trades.
Buying is straightforward: buy shares, then sell them at a profit after they rise in price, even receiving dividends.
Buying low and selling high is, so to speak, the natural desire of every speculator, especially when everyone else is buying, making it seem virtually impossible to incur losses with this strategy.
This strategy is applicable not only to the stock market, but also to the precious metals and real estate markets.
People often think about how much they could have made by buying and then selling, rather than how much they would have lost if the price of a particular asset had fallen.
Moreover, the popularity of investments in the stock market was not hindered even by the price collapses that recurred with enviable regularity.
The essence of the "Buy and Hold" strategy
The basic idea behind buy-and-hold is to buy an asset and then hold it until selling it at a higher price.
The strategy involves long-term investments for a year or more, as the long-term perspective is where the biggest profits can be made.
Just think of Apple's stock price, which rose from $1 to $200 per share over 20 years. Everything becomes clear.
One of the most prominent proponents of this strategy is Warren Buffett, and what's most surprising is that he is practically the only proponent of the "Buy and Hold" strategy among investors of this scale.
At one time, Buffett bought quite a few undervalued shares, and sometimes entire companies, which subsequently brought in billions in profits.
Therefore, the basic buy-and-hold principle is to buy securities of companies whose value is not yet high but whose growth potential is quite significant.
These are typically shares priced no higher than $1-5 per share and recently listed on the stock exchange. The company's profitability and the amount of dividends it pays per share also play a significant role.
How relevant is the “Buy and Hold” strategy?
It now seems like everything that should have gone up in price has, and there's no longer any point in buying Apple at $200 or Microsoft at $300, much less Amazon at $1,600. Especially after the latest price collapse.
In reality, things aren't so bad; even now, you can find inexpensive company shares at quite reasonable prices and with good growth prospects. Many investors choose securities priced under $10 for long-term investments.
This primarily applies to internet companies and securities from the European market segment, where prices are still not that high.
Shares that are just entering the stock exchange are also very popular. You can find out how to subscribe to the first placement here - https://time-forex.com/inv/akcii-ipo
You may also be interested in:
- Brokers where you can buy securities - https://time-forex.com/vsebrokery/brokery-fondowogo-rynka
- Investing in PAMM accounts - http://time-forex.com/pamm
- Forex Trading Strategies - http://time-forex.com/strategy
