A New Perspective on Buy & Hold

People think there are two ways to make money in the stock market. They think either they have to buy the best company out there and hold on to their stock forever, or they think they have to  buy the next hot thing, the newest little company and hold onto their stock forever. The similarity between these two ideas is that you buy, and you hold, forever. The idea is that hopefully you'll make money over a long period of time. The problem with this is that time kills money, because of something called inflation.

Many people experienced the downside of “buy and hold” in 2008. The value of your money went down over 18%. You'd have to make more than 18% to make up for it over that long period of time. Hopefully then you make enough to protect your money. “Buy and hold” is about protecting the money you have. It's not really about trying to get rich, and a lot of people don't know that. They think, "I've gotta buy a stock and hold it forever and then I'll be rich!" They don't realize they're doing the wrong thing.

If you want to potentially get rich, or if you just want to try to increase your income, you might have to try a more aggressive approach. You might need to think about short-term trading. Short-term trades are typically a little higher risk, but if you understand the law of risk return, then you know that's important.

Come to a TRADEway event. We will teach you all about the law of risk return and why it's important for your trades, and we will even teach you some concepts to help you with long term trades, buy-and-hold, so you can do both! It doesn't mean you have to do one or the other. There are many ways to trade, but you need to learn what to do to reach your goals.