"Hold" is a term commonly used in investing to indicate the decision to retain an investment for an extended period rather than selling it. It suggests a long-term investment strategy where investors hold onto their positions with the expectation of benefiting from potential future gains.
Investors who hold believe in the potential growth and value appreciation of the investment over time, rather than attempting to time the market or take advantage of short-term price fluctuations. The "hold" strategy helps investors avoid making impulsive or emotionally driven investment decisions. By staying committed to their investment plan, investors can avoid reacting to short-term market volatility or noise and maintain a more objective and rational approach.
Before deciding to hold an investment, investors typically conduct fundamental analysis to assess the underlying value and growth potential of the investment. They consider factors such as financial performance, industry trends, competitive advantages, management quality, and overall market conditions. This analysis provides a foundation for the decision to hold the investment.
By staying invested over the long term, investors may benefit from compounding returns, reduced trading costs, and potentially lower tax liabilities associated with short-term capital gains. However, while the "hold" strategy suggests maintaining investments for the long term, you should periodically review your portfolio and reasses your holdings. Market conditions, industry dynamics, and individual company performance can change over time.