Portfolio Management Strategy
2. Buy-And-Hold Strategy
A buy-and-hold strategy means exactly that an investor buys stocks and basically holds them until some future time in order to meet some objective. The emphasis is on avoiding transaction costs, additional search costs, and so forth. The investor believes that such a strategy will, over some period; of time, produce results as good as alternatives that require active management whereby some securities are deemed not satisfactory; sold, and replaced with other securities. These alternatives incur transaction costs and involve inevitable mistakes.
Notice that a buy-and-hold strategy is applicable to the investor's portfolio whatever its composition. It may be large or small, and it may emphasize various types of stocks.
A buy-and-hold strategy means exactly that an investor buys stocks and basically holds them until some future time in order to meet some objective. The emphasis is on avoiding transaction costs, additional search costs, and so forth. The investor believes that such a strategy will, over some period; of time, produce results as good as alternatives that require active management whereby some securities are deemed not satisfactory; sold, and replaced with other securities. These alternatives incur transaction costs and involve inevitable mistakes.
Notice that a buy-and-hold strategy is applicable to the investor's portfolio whatever its composition. It may be large or small, and it may emphasize various types of stocks.
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