#MarketCorrectionBuyOrHODL

For investors in the stock market, it is a general rule to assume that long-term assets should not be needed in the three- to five-year range. This provides a cushion of time to allow for markets to carry through their normal cycles.

However, what's even more important than how you define long-term is how you design the strategy you use to make long-term investments. This means deciding between buy-and-hold (passive management) investing or marketing timing (active management).

Key Takeaways

Buy-and-hold involves buying securities to hold for a long-term period, although the definition of long-term varies based on the investor.

Market timing includes actively buying and selling to try and get into the market at the most advantageous times while avoiding the disastrous times.

Research shows that long-term buy-and-hold tends to outperform, where market timing remains very difficult. Much of the market’s greatest returns or declines are concentrated in a short time frame.

There is an in-between strategy that combines buy-and-hold with active security selection; examples include allocation adjustments and tax management.