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Does Buy And Hold Stock Investing Still Work?

By: Bruce Lipski

When you start investing in the stock market, there are many bits of advice you will hear. One of them has always been that investing in stocks long term is one of the most profitable investment strategies. Buy stocks of good solid companies, you were told, and hold them for years. Don't trade stocks and try to time the market, just buy and hold them.

Does the buy and hold stock strategy still work in 2008? It seems it might not. The world has changed an awful lot in the last 50 years and that includes businesses. Years ago, you could pick a solid company, say an automobile company, and you could count on it growing year after year. Everything moved slower in those days and that included competition and the advancement of new technologies. You could pick a whole list of industry leaders, invest in them, and be sure that they would be worth more in 10 years than they were today.

In today's world, a good company with a leading technology may be ahead in the marketplace now, but left in the dust just a couple of years down the road. Things happen so fast now that it is hard to pick a company to buy stock in that you feel confident that will still be a leader 10 years from now.

In the old days, large companies rarely had scandals or went bankrupt. Today, scandal and bankruptcy seem to be common place and stock prices can fluctuate wildly. Today's investors buy stock in seemingly great companies, like Ciitgroup or Washington Mutual, only to find themselves down 75% several months later.

The Internet has also contributed to the rapid pace of the current day's stock market. Day trading is something that was never done before the Internet. Everyone now has instant stock quotes and the ability to make trades effortlessly with the touch of a button. Information is instant and it is everywhere no matter where you live.

The world moves at such a fast pace now that it seems you can no longer buy a stock, sock it away, and come back 5 or 10 years later and be guaranteed of a gain. When you buy a stock now, you need to constantly monitor it to make sure nothing drastic changes. You need to be able to make decisions constantly of whether to continue to hold it or sell it.

About the author:
Do you want to learn how to buy stocks for beginners? Or maybe you want to learn how to open a stock market account. If you do please visit my site Stock Market For Beginners.

More Finance information like Bruce Lipski's at Credit-Voitures.com

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