Buy and Hold

• Investors who buy stocks without trading aren't concerned with day-to-day price movements. They believe the economy will grow over time and that they'll ultimately be more successful if they avoid selling during cyclical downturns. The disadvantage of this strategy is that if an investor buys stock during an extended bear market, she may have to wait years to break even on the initial investment.
  
  

Stop-Loss Order

• Even long-term investors who don't plan to trade stock should consider placing stop-loss orders on the stock they own. A stop-loss order automatically sells a stock if it ever falls below a certain price, which can protect the investor against suffering dramatic, unpredictable losses. The stop-loss order can actually function as a type of insurance that limits risk for people who aren't interested in trading stock they've bought.
  
  

Mutual Funds

• Mutual funds are companies that pool money from many investors to buy shares of different stocks. Mutual funds can be purchased just as you would purchase any individual stock; however, they often have active portfolio managers who are constantly evaluating which stocks should be bought and sold in the fund. Therefore, investors who buy stocks through mutual funds are less likely to have to do any trading.
  
  

Warning

• Although 2008 was an admittedly tough year for stocks, investors who bought shares of target-date retirement funds designed for people planning to retire in 2010 lost an average of near 24 percent of their wealth that year, according to the Securities and Exchange Commission. Losses for these long-term investors ranged from about 9 percent to a whopping 41 percent when the market fell into a severe downward spiral.