The financial crisis and the subsequent swoon in the stock market is calling into question the long-term buy and hold strategy and the level of risk associated with holding stocks -- even blue chips such as General Electric (NYSE:GE), Citigroup (NYSE:C), or ExxonMobil (NYSE:XOM) -- over the long term.

As part of the Fool's series to answer the question, "Is long-term buy and hold dead?" I spoke with Bryant Riley, founder of Riley Investment Management and investment banking firm B. Riley & Co. Rather than focusing on the big-cap Boeings (NYSE:BA) of the world, Riley and his team focus on small caps like Silicon Storage Technology (NASDAQ:SSTI) and Integrated Silicon Solutions (NASDAQ:ISSI).

Riley isn't sure whether the strategy "buy and hold" is dead, but he doesn't think it's a smart way to invest. "I've never been a believer in buying a company and holding it forever," he said in an interview. "Our average holding period can be three to five years, but that would assume that the market is more efficient than it is. In my opinion, the market gets oversold and underbought, and that's the opportunity."

Riley bases his strategy on hard valuation. He examines price targets based on valuation metrics. "For us to just say, 'OK we'll hold on to XYZ -- it's a good company,' and then just let it blow through a valuation, isn't reasonable in our view. ... The market has a tendency to overshoot on both sides of the equation, so we will take that opportunity to move on to a different situation that might be valid to what we think is undervalued [or overvalued.]"

One way Riley and his team examine prospective investments is by looking at a company that is encountering difficulties because of the macroeconomic slowdown, but is well-positioned for an economic turn. "We'll say right now it's trading at, say, three times cash flow; they're a market leader, and we think that in a normalized environment they should trade at six or seven times cash flow," he said. "If it reaches that price, we'll be disciplined about selling it."

Riley also points out that when he looks at stocks on screens, he looks at them as businesses. "I try to forget the fact that they go up and down," he said. Riley also says he hopes one thing that individual investors have learned from the market meltdown is that stocks are companies, not just numbers on a screen.

If investors don't have the time to scrutinize individual stocks, Riley recommends either buying companies you know or buying indexes or exchange-traded funds (ETFs). "I think it's a much better strategy to buy companies that you understand," he said. "If you can't do that, then own a basket of them through indexes, which will also keep you diversified."

Riley also says individual investors should put money to work in both U.S. and foreign stocks.

In terms of future investing opportunities, Riley says he thinks there are going to be a lot of opportunities to make money in the stock market in the next 10 years, especially in specific companies.

He notes one source for future gains is going to be a lot of merger and acquisition activity, as consolidation accelerates and larger companies gobble up smaller companies. "The benefits of the whole sub-$500 million public company market have reversed themselves," Riley said. "They're all negative now, as expenses overtake income."

Right now, Riley says he thinks people are underinvested. "It seems to me that people are being overly conservative and need to come back into the market. I would be more bullish than bearish."

Readers should note that Riley's approach -- though successful -- might not fit for everyone. Weigh in with your opinions on Riley's approach and "long-term buy and hold" by leaving a comment below.

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Jennifer Schonberger does not own shares of any of the companies mentioned in this article. The Motley Fool has a disclosure policy.