Buy & Hold Strategy in Investing: What Is It?

What Is a Buy & Hold Strategy in Investing?

By Adam Levy – Updated Oct 8, 2025 at 3:04 AM EST

Key Points

Buy-and-hold strategy focuses on long-term gains from well-performing companies.
Active investing aims for short-term profits by timing market highs and lows.
Buffett's buy-and-hold investment in Coca-Cola exemplifies this approach.

It's generally understood that stocks can produce better returns than many other types of securities. But anyone who has ever looked at a stock chart knows that stock prices often don't increase smoothly. A buy-and-hold strategy ignores the short-term peaks and valleys and makes the most of the long-term potential of stock investing.

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A person stacking coins next to a wood clock cutout. — Image source: Getty Images.

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Financial Securities

A tradeable asset that holds monetary value.

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Asset Management

A service offered by financial companies to oversee their clients' financial assets. Many asset managers decide how to administer a client's assets based on their investment strategy.

Coca-Cola has also split its stock four times since Berkshire established its initial position. The company currently owns 400 million shares worth around $24 billion. Berkshire's cost basis for those shares is just $1.3 billion.

From the start of 1988 to the end of 2021, the price of Coca-Cola shares grew 25-fold, and the company reliably pays an appealing and growing dividend. (By comparison, the S&P 500 (^GSPC -0.43%) index increased about 19-fold in the same period.)

But Coca-Cola shares didn't outperform the market throughout that entire 34-year period. For example, from the start of 1998 to the end of 2006, the price of Coca-Cola shares declined almost 28%, while the S&P 500 increased by more than 46%. Over the last half of the 2010s, from 2016 through 2020, Coca-Cola shares increased in value by just 28%, while the S&P 500 index gained 84%.

Buffett has held his shares of Coca-Cola the whole time and maintains his conviction that the beverage giant will continue to produce solid returns over the long term.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.