VT Markets: The Psychology of the "Hold” Strategy - Why Doing Nothing Can Be the Winning Investment Approach

In the fast-paced world of investing, the temptation to chase quick gains or to flee sudden losses often drives investors to overreact. However, market evidence shows that the most effective approach is often the simplest one: holding high-quality assets over the long term. This strategy does not mean laziness or inaction, but rather disciplined patience, according to an article by the brokerage firm VT Markets, published yesterday by Finance Magnates.

• A recent market downturn in which panic selling proved to be counterproductive

The year 2025 illustrated the dangers of emotional trading. In April, the S&P 500 fell sharply amid escalating trade tensions triggered by announcements of tariffs the Trump administration intended to implement, which fueled fears of a global economic slowdown. Investors panicked, pulled billions out of equities, and sold at market lows, the article notes.

However, the rebound was swift. Favorable diplomatic developments and solid economic indicators-including strong consumer spending and earnings boosted by artificial intelligence-powered a rapid recovery. By year-end, the S&P 500 had posted a gain of about 17%, closing near record levels after one of the best three-year periods in its recent history.

Sharp rallies in so-called "meme” stocks also punished active traders. Shares such as Beyond Meat surged spectacularly on the back of social media enthusiasm, only to collapse after the release of financial results, leaving latecomers with losses. Similar volatility affected other viral names, underscoring that hype-driven trading often means buying high and selling low, the article adds.

According to VT Markets, these episodes highlight an essential lesson: short-term volatility is normal, but overreactions magnify losses. Those who held their positions through the turbulence of 2025 benefited from the upswing, while investors who acted in panic missed it.

• The wisdom of Warren Buffett remains valid: the market transfers wealth from the impatient to the patient

Historical performance supports a long-term holding strategy. Since 1950, the S&P 500 has delivered solid annual returns which, compounded through dividends, have turned long-held investments into significant wealth, despite stock market crises and recessions, according to an article published by Finance Magnates.

Over the decades, markets have recovered and continued to grow. Long-term investment in major stock indices outperforms most active strategies, as missing the best days of market gains can severely damage overall returns. Studies show that frequent trading involves commissions, taxes, and poor market-timing decisions that erode profits, write analysts at VT Markets.

Active traders rarely manage to beat benchmarks, and data indicate that shorter holding periods are associated with higher costs and weaker performance. The wisdom of Warren Buffett remains valid: the market transfers wealth from the impatient to the patient. Long-term investors benefit from the power of compounding, while traders often end up with inferior returns, the report concludes.

• Why do people find it difficult to "stay put” in financial investments?

Despite compelling evidence, many investors struggle to maintain their positions, and psychology explains why, the article notes.

Loss aversion causes downturns to be felt twice as painfully as gains are perceived as satisfying, prompting investors to sell during corrections even when fundamentals remain solid. FOMO (fear of missing out) pushes investors to chase rallies, buying at market peaks just before corrections, according to VT Markets.

Overconfidence leads investors to believe they can outperform the market, while the tendency to overemphasize recent events results in disproportionate weight being placed on the latest developments. Emotional reactions impair judgment and the quality of investment decisions. These evolutionary traits were useful for survival, but they complicate the investment process; overcoming them requires recognizing behavioral biases and trusting data rather than instincts, the article explains.

The irony of the long-term holding strategy is that it requires the greatest discipline. From the volatility of 2025 to long-term historical data, patience proves to be rewarding, according to the report published by Finance Magnates.