Over the last few years the market has been up and down, but overall it seems to have done very little. So, does buy and hold still work? Does buying into a diversified group of stocks still benefit you in any way?

The answer is yes. Or at least there is no evidence to suggest that it doesn’t. In fact all the evidence seems to still suggest that buying stock in a strong company and holding onto it for the long term is still a great way to invest, and here is why.

1. There Have Been Lots of Flat Times

People seems to be pretty eager to say something like, “we have been trending sideways for 5 years, looks like buy and hold is dead” Which if you look at the history of the stock market there have been plenty of times when stocks have been trending sideways for many years on end.

The investors who made money during sideways trends where those who simply looked for good investments and hung onto them until the market finally broke out of its sideways trend and went up.

2. History is a Good Indicator

Over the long term the major indexes such as the Dow Jones and the S&P have gone up and they continue to go up. In fact, aside from buying at the top of the great depression if you would have invested into strong stocks and held them for 20 years during any point in the past it would have been profitable. History repeats itself more often than not.

3. Some Stocks Pay Dividends

If you do take a look at the long term charts of the major indexes you still do not see the whole story. Many stocks also pay out a consistent cash flow to their investors in the form of dividends. These can make stocks a better investment than CDs and Bonds even in flat markets.

The stock market has been a pretty profitable way to make money over the long term in the past. But who knows what will happen in the future. In the end you always take risks by investing into stocks, but those risks would have worked out in the past.

For more on the Dow Jones Historical Closing Statistics and it’s returns or for more information on how the stock market has done over the long term visit this Stock Market History page.