Best strategy for buying and holding individual investors?
In this moment of gratification, "buy" is a good investment strategy? The answer is "It depends." I know that this is an easy way to take, but it really depends on individual investors.
Buying and holding strategies There are several advantages that it is by all times the largest stock market investor Warren Buffet. Therefore, it can not all be bad.
One big advantage to investors is that you do not have time to learn the market. Buying and holding is a great investment strategy if you do not have time to research the charts or if you do not have time to keep up with the news.
Another big plus, you do not have to pay a lot of commissions for trading, eating into your profits.
Many people do not consider the things that come from buying and holding tax incentives. It is easier to enter 3 or 4 transactions, rather than 300 to 400 transactions, at tax time.
The downside of buying and holding strategies is when you try to hold your stock in a bear market. You can see that a large portion of your profits are completely eliminated. Therefore, if you are using a buy and hold strategy, you should at least use a trailing stop to keep your earnings (or more importantly, keep your capital).
Do not set trailing stops too close, or you will close a little within days, but do not set them so that you lose most of the profits when there is a major correction in the market. You should also regularly monitor your location to determine where trailing stops should be placed.
Most stocks used in buying and holding strategies are old blue chips, for example, if you buy Wal-Mart for the first time, you will do well. However, for every Wal-Mart there are hundreds of stocks that just barely remain the same and you will stick to their minimum gain.
Another drawback is that most stocks tend to be plateaus or fall after a significant gain, so you end up holding a stock that circulates and nowhere. With some hands-on applications, your rate of return can be greatly improved. After all, your main reason for investing is getting your return on investment.