Investment Portfolio Strategy: Buy & Hold vs Buy & Sell

When you buy securities you buy them to realize a gain in one form or another.
Some of us can keep securities forever while some of us buy securities for
extremely short periods of time sometimes just a few seconds. Before you make
an investment or buy something you should determine what you’re going to do with
it and know in advance how you are going to get out.

Buy & Hold Strategy
A lot of people buy and hold securities with no real plan in mind. Say you buy
a 1,000 Bank of America shares at $6.00 and you plan to “hold” them for an undetermined
amount of time. One day down the road a few years from now, say Bank of America
shares recover to $20.00 per share. You’ve made $14.00 while racking in dividend
over the years (although it isn’t much at the time of writing this article) and
want to sell. $14.00 would be a 233% gain of your original investment, not bad
at all.

Buy & Sell Strategy
Most of us aren’t very patient and would sell a stock or security earlier than
the example used above. You could buy the Bank of America stock at $6.00 and sell
it when it hits $9.00. You could wait for it come back to $8.00 and buy it again
and sell it when it hits $12.00. This would be buying and selling. Of course,
life isn’t that simple and you will often have times when the stock falls after
you have made the purchase or the price keeps rising after you have bought it.

Mixing the two strategies Up
As an investor this where I stand and I suggest you take a look at it too.
Instead of sticking to a simple buy & hold or buy & sell, try mixing the two
together so that you can make shorter profits while being invested longer term.

For example, say you buy 2,000 shares of Bank of America at $6.00. At this
point you would designate 1,000 shares as you “Buy & Hold” strategy allocation.
And with the other 1,000 shares you would designate them as your “Buy & Sell”
strategy allocation.

The “Buy & Hold” shares you will keep until you really think you can’t do much
more with the shares, such as the shares tripling. Have something set in
concrete so that you will know when to sell them.

The “Buy & Sell” shares you have more leeway with. You can say that when you
realize a 10% or 15% gain you will sell them. Then after that you can add more
money to your account and buy more shares at a different price or buy the
shares back when (if) the market falls.

Mo2 Thinks
I should state the obvious, your portfolio is not going to consist of one stock.
So when you are mixing the two strategies together, you should consider mixing
it up with several different shares and see what you can come up with. Every
investor is different and that’s what makes us unique. Try different things out
and see what works for you. This is how I invest, at least part of my money and
therefore I decided to share it with you.

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