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Written by and copyright © 2005-2018 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.
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 |
| Daily | 53% | 5 Years | 83% |
| Weekly | 56% | 6 Years | 86% |
| Monthly | 59% | 7 Years | 90% |
| 1 Year | 71% | 8 Years | 91% |
| 2 Years | 79% | 9 Years | 92% |
| 3 Years | 83% | 10 Years | 92% |
| 4 Years | 84% | | |
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
Written by and copyright © 2005-2018 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.
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