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Bulkowski's Hold On!

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As of 10/18/2019
  Indus: 26,770 -255.68 -0.9%  
  Trans: 10,509 +12.56 +0.1%  
  Utils: 866 +3.67 +0.4%  
  Nasdaq: 8,090 -67.31 -0.8%  
  S&P 500: 2,986 -11.75 -0.4%  
YTD
 +14.8%  
 +14.6%  
 +21.5%  
 +21.9%  
 +19.1%  
  Targets    Overview: 10/14/2019  
  Up arrow27,600 or 26,000 by 11/01/2019
  Up arrow10,880 or 9,700 by 11/01/2019
  Up arrow900 or 845 by 11/01/2019
  Up arrow8,225 or 7,700 by 11/01/2019
  Up arrow3,050 or 2,900 by 11/01/2019
As of 10/18/2019
  Indus: 26,770 -255.68 -0.9%  
  Trans: 10,509 +12.56 +0.1%  
  Utils: 866 +3.67 +0.4%  
  Nasdaq: 8,090 -67.31 -0.8%  
  S&P 500: 2,986 -11.75 -0.4%  
YTD
 +14.8%  
 +14.6%  
 +21.5%  
 +21.9%  
 +19.1%  
  Targets    Overview: 10/14/2019  
  Up arrow27,600 or 26,000 by 11/01/2019
  Up arrow10,880 or 9,700 by 11/01/2019
  Up arrow900 or 845 by 11/01/2019
  Up arrow8,225 or 7,700 by 11/01/2019
  Up arrow3,050 or 2,900 by 11/01/2019

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

This article discusses how long you need to hold onto a stock to make a profit, based on the performance of a market index.

 

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To make money, how long should you hold onto a stock? I'll give you the probabilities in a moment, but here's how I did it. I downloaded the daily, weekly, and monthly price data from yahoo finance using the S&P 500 index and then went to work. The data ranges from January 3, 1950 to April 13, 2010. For the computation, I used overlapping periods. For one year, as an example, I determined whether price closed higher from April 1, 2010 to May 1, 2009. Then I used the next month, March 1, 2010 to April 1, 2009, and so on. I summed the number of up closes compared to the number of samples and found the percentage.

In other words, I counted the number of times price closed higher for each period. The table below shows what I found.


Period
Percentage
Up Closes

Period
Percentage
Up Closes
Daily53%5 Years83%
Weekly56%6 Years86%
Monthly59%7 Years90%
1 Year71%8 Years91%
2 Years79%9 Years92%
3 Years83%10 Years92%
4 Years84%  

For example, if you bought the S&P 500 index and sold it a day later, you would have a 53% chance of making money -- all else being equal. If you hold onto the index for a week, the probability of a gain rises to 56%. Hold for 5 years, and the probability rises to 83%.

If you are having problems making money in this market, then consider holding longer. Or just buy low and sell high.

-- Thomas Bulkowski

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Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. Menu: a list of dishes the restaurant has just run out of.