What does a "buy-and-hold" investment strategy involve?

A "buy-and-hold" investment strategy involves purchasing stocks and maintaining them for an extended period, regardless of market fluctuations. This approach is grounded in the belief that, over time, the stock market tends to rise, rewarding long-term investors despite short-term volatility. Investors who adopt this strategy often focus on the fundamental value of the stocks they buy, with the expectation that they will appreciate in value over several years or even decades.

By disregarding short-term market movements and not engaging in frequent buying and selling, investors aim to avoid the pitfalls of timing the market, which can lead to higher transaction costs and emotional decision-making. Instead, they embrace a patience-driven approach, allowing their investments to grow over time through the effects of compounding and the potential appreciation of the companies in which they invest. This strategy is especially popular among those who believe in the long-term growth potential of the stock market and prefer a more passive investment management style.