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The Merits of buy and Hold Strategy in International Financial Markets

Author

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  • Enow, Samuel Tabot

    (Research associate, The IIE Varsity college, Durban, South Africa)

Abstract

In the dynamic world of investment, numerous strategies have emerged and keep evolving over time. One such strategy that has stood the test of time is the buy and hold strategy which is favored by many successful long-term investors which focuses on acquiring quality assets and maintaining a long-term investment horizon. A buy and hold strategy is a long-term investment approach that involves purchasing assets and holding onto them for an extended period, regardless of short-term market fluctuations. Understanding the merit of this strategy in financial markets can empower investors to make informed decisions and develop a disciplined investment mindset for achieving their financial goals. Accordingly, the aim of this study was to empirically explore the merits of a buy and hold strategy in financial markets due to its perceived significant impact for active market participants. A Sharpe ratio was utilized for six financial markets from June 13, 2018, to June 13, 2023. The findings revealed that market participants can use a buy and hold strategy in the Nasdaq, CAC 40 and Nikkei 225 to enhance the value of their portfolio over a long-term period. Upon selecting a particular risk tolerance and investment horizon, market participants may earn significant returns on their portfolios.

Suggested Citation

  • Enow, Samuel Tabot, 2023. "The Merits of buy and Hold Strategy in International Financial Markets," Journal of Economic and Social Development, Clinical Journals Press, vol. 10(02), pages 01-05, September.
    • Handle: RePEc:ris:joeasd:0039
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    References listed on IDEAS

    as
    1. Kozak Sylwester, 2017. "Degree of Convergence of the Efficiency of the Polish Equity Investment Funds Obtained with Measures Based on the Sharpe Ratio," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 13(3), pages 33-42, September.
    2. Rohnn Sanderson & Nancy L. Lumpkin-Sowers, 2018. "Buy and Hold in the New Age of Stock Market Volatility: A Story about ETFs," IJFS, MDPI, vol. 6(3), pages 1-14, September.
    3. Silvio John Camilleri & Ritienne Farrugia, 2018. "The Risk-Adjusted Performance of Alternative Investment Funds and UCITS: A Comparative Analysis," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(7), pages 1-23, July.
    4. Mariana Hatmanu & Cristina Cautisanu, 2021. "The Impact of COVID-19 Pandemic on Stock Market: Evidence from Romania," IJERPH, MDPI, vol. 18(17), pages 1-22, September.
    5. Samuel Tabot Enow, 2022. "Modelling Stock Market Prices Using the Open, High and Closes Prices. Evidence from International Financial Markets," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 15(3), pages 52-59, December.
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    More about this item

    Keywords

    Buy and Hold Strategy; Financial Markets; Fundamental Analysis; Behavioral Finance;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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