While traders adhere to the former paradigm, most investors fall into the latter category. Armed with the mantra of “buy low, sell high,” these investors seek out undervalued stocks and buy them with the intent to hold on to these positions for months, if not years. To them, a company’s strong fundamental characteristics and sound management supersede all the chaos and flux that is inherent in the market, and in time, the stock will reward them with a large return on their capital.
After all, who wouldn’t want to own Apple Inc. (APPL) when it was trading at $6 per share or Netflix, Inc. (NFLX) at $17? If you are a prospective buy-and-hold investor, then read on to learn about the pros and cons of this popular and highly effective strategy.