Anonymous
How does the buy and hold strategy work as compared to sell at higher price?
I read that buy and hold tends to win? If I hold stock with avg px 100 and it increases to 300, I will earn a profit of 200 if I sell it. However, if I continue to hold and for eg it drops to 80, I would have incurred loss instead. How does the buy and hold method works? Is it just simply market is unpredictable? Can someone explain to me? I am trying to understand the buy and hold strategy.
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It is about missing the best days of the market. Many studied had shown, so just trust the statistic.
You will never know when a stock or ETF may rocket. Eg, recent Tesla shoot from $900 to $1000+ just 1-2day.
if your stock increase to $300, it drop to $80 today. The following day it might just continue to drop or pop to $500, nobody will know.
Thus if it is a good buisness, and you dont need the money just hold. If you got extra money, if the stock drop just buy more.
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Buy and Hold works for Index Investing most of the time. Since the market activity tend to increase ...
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Yes, unpredictable. successful active stockpicking is not longterm possible. could read: B. Malkiel