The buy and hold strategy refers to an investment move requiring investors to hold on to their stock for a long period of time rather than getting involved in daily trading. The theory behind buy and hold is that, in the long term, most investments end up providing a good return, even if they seem to decline over short periods. Buy and hold is the preferred system of investment for small investors who are looking for a way to save rather than engaging in the quick system of buying and selling according to market timing.

The theory behind the buy and hold strategy is that good assets always grow over a long period of time, even if they seem to decline at some points. People who use the buy and hold strategy usually buy stocks or shares from companies they respect and love, companies that have a proven track of success and are "here to stay." This can mean anything from Coca-Cola shares to Internet stocks.

Buy and hold investors do not concentrate exclusively on stocks; many buy property or invest in long-term holdings. Property buying is a common strategy used by buy and hold investors. In fact, the average US home increases in price more than 500 times over a period of twenty years, making property one of the best investments strategy in the market.

One of the main benefits of a buy and hold strategy is the easiness of the process. Investors using this tactic do not have to worry about the daily fluctuations of the market, and only need to sell if and when their self-imposed deadline approaches. A buy and hold strategy also has tax benefits, as the government offers reduced rates for long-term investments.

The main disadvantage of the buy and hold strategy is that many investors do not know when to sell. While it is true that most stocks can be hold for a long time, many do peak, both up and down, at some point, in which the investor should either sell or diversify his portfolio.