Traditional financial theory holds that the best way for average investors to acquire wealth over the long term is to become a ‘buy and hold’ investor. The basis for this notion is rooted in the fact that stock market values have progressively grown over an extended time interval. For example, the 20-year period from 1974 to 1994 saw a relatively smooth growth trajectory, even when accounting for the market crash of 1987. When investing in this kind of market, it is quite rational to ‘buy and hold’ because of the steady value progression over time.
