Many of us here at the Fool adhere to the "long-term buy and hold" philosophy. Of course, just what the long term is has different definitions for different people. One thing's for sure, though: Unless you're a short-term speculator, the long term is certainly more than a few months or quarters, and it can sometimes hold some challenges for investors.

However, identifying great companies to invest in and holding them for a very long period of time is a great way to make amazing returns.

Get committed
The amorphous long term is a philosophical point well worth pondering. A five- to 10-year time frame (or more) certainly isn't out of the question, although some investors might prefer just a few years. I recently read Common Stocks and Uncommon Profits and Other Writings by Philip Fisher, and his views on long-term investing really resonated with me. The late Mr. Fisher proposed finding well-managed, growth-oriented companies with large market opportunities and holding positions in those stocks for years -- maybe even forever.

The power of holding for the long term is evident in David and Tom Gardner's Motley Fool Stock Advisor scorecard. Stock Advisor debuted in 2002. If you look at all the picks from that year, every single one has double- or triple-digit percentage gains. For example, as of this writing, Marvel Entertainment, picked in July 2002, has a 670% gain. And Moody's, which was recommended in the April 2002 debut issue, has appreciated 250%.

Investing for the long term does require the ability to be honest with one's self as to whether the future of a given company is still growth-oriented. These are not decisions any of us should take lightly, since we could leave big money on the table if we misjudge and sell our shares too soon (not to mention if we sell at a loss, only to find out that the negative sentiment was far from the truth).

In his writings, Fisher also addressed the fact that sometimes short-term negative psychology on Wall Street may suppress a stock, regardless of whether that psychology is warranted or prescient. Such negative sentiment may come from bear markets, macroeconomic concerns, fears that a company's future growth isn't bright, or a misinterpretation that a stock's valuation has outpaced future growth. Blindly following such short-term and often emotional sentiment can, of course, be dangerous to your portfolio.

Look beyond the year ahead
Many great investors condone long-term investing, which requires diligent homework and the willingness to become part owners of great businesses worthy of holding for years to come. Of course, the long-term view just about guarantees that even the best companies will, at some point, suffer from short-term issues or negative sentiment. A certain quote from investing giant Peter Lynch comes to mind here: "The key to making money in stocks is not to get scared out of them."

Indeed, there's often good reason to stand by your stocks despite negative sentiment. For example, Urban Outfitters (NASDAQ:URBN) has had one heck of a tough year, given a major fashion shift that occurred. Some of its customers steered clear of the new styles and its sales and profits took a hit. But as a shareholder, I still believe that its long-term outlook is bright, given its smart management, solid balance sheet, individualistic brands, and room for ample new store expansion. I'm holding.

Investors have to identify the companies that truly deserve the "buy-and-hold-maybe-forever" stamp of approval -- there is heated disagreement on whether the hottest stocks of today really fit the bill and can justify their high valuations (or exceedingly positive investor sentiment) well into the future. For example, can Google's (NASDAQ:GOOG) search-engine dominance last forever? Is the Heelys (NASDAQ:HLYS) craze a flash in the pan, or will it prove a rolling rite of passage for every child? Will Apple (NASDAQ:AAPL) products continue to fly off the shelves, especially if iPod fanaticism subsides?

The long haul
So, Fools, maybe the best resolution for 2007 is to look well beyond just this year.

It's not always easy to identify the best companies to hold for long periods. If you'd like some help, you can try Stock Advisor free for 30 days. Every month, David and Tom Gardner recommend great businesses with exceptional financial characteristics and passionate leaders, and provide frequent updates on their current thinking on those stocks. Click here to see all their picks and research free for a month.

Alyce Lomax owns shares of Urban Outfitters. The Fool has a disclosure policy.