The buy and hold strategy is based on the assumption that in the long run stock prices will go up, and historical data over the past five decades appears to support this assumption.

The logic behind the assumption is that capitalist economies expand. Consequently, prices and profits rise and their growth is reflected in the price of stock and dividends as well.

This strategy is used by many small investors who possess neither an intimate knowledge of trading nor the necessary time to follow stock markets.

It is a low cost strategy and its immediate benefits are reduced trading commissions and taxes.

The opposite of buy and hold is day trading.