A buy and hold approach has a number of advantages over actively buying and selling investments.

More Choices: Buyers have more choices about what to buy than sellers have about who to sell to. Sellers are often under more pressure to do a deal than buyers are.

Negotiating Power: Due to the above difference in choices, buyers often have more power in privately negotiated transactions than sellers do. Buyers can usually hold out for a good deal. Sellers may not have that luxury.

Lower Transaction Costs: Every transaction (buy or sell) involves transaction costs. Trading commissions and bid/ask spreads apply to exchange traded investments like stocks. Legal fees and due diligence apply to private transactions. Buy and hold means far fewer transactions. It adds up.

Favorable tax treatment: Gains on assets held at least a year are subject to long-term capital gains taxes, instead of ordinary income tax rates on short-term capital gains. For investors in high tax brackets, this is a huge difference. Compounding that difference over 40 years means an investor in the top tax bracket who pays long-term capital gains tax on his gains every year will have about twice the total at the end than an investor who pays ordinary income tax on his gains every year.

Deferred Gains: This is perhaps the biggest benefit. Capital gains taxes are not incurred until the gain is “realized” by selling the asset. If this is 50 years after you bought it, that’s a long time to continue earning on what otherwise would have been siphoned off to the IRS. In other words, buying and holding can create a Roth IRA effect for your whole portfolio, not just the few thousand a year you may be allowed to contribute to a Roth IRA. And if philanthropy is your goal down the line, capital gains taxes can be avoided entirely by donating appreciated stock.

Fewer Decisions to Make: If an investor buys and holds for ten years, she has to make one good decisions over that ten years – buy the right thing. If she buys and sells once per year, she has to make twenty decisions over that time period that are as good, on average, as the one. That’s much harder. And that’s many more opportunities to make a big mistake.

Higher Buying Standards: Knowing you plan to keep what you buy for a long, long time is good incentive to be thoroughly selective up front. Telling yourself you can sell it if it doesn’t work out can be an excuse to rationalize a deal that shouldn’t be done. And if you are buying and holding, the number of winners you need to find each year is much lower, so you can afford to be picky.

A Bias Toward Saving: The purpose of investing is to increase the number of pennies in the piggy back. Buying and holding means your savings has to stay invested and can’t be spent.

Credible Reputation: People trust the decisions of an investor who sticks with them for a long time more than those of someone who changes the plan frequently. Many business owners prefer to sell their business to someone who will keep it stable and intact, not flip it. These translate to big advantages when it comes to raising capital or getting a first look at an acquisition.

The biggest disadvantage to buy and hold investing? It’s boring. The returns may be higher, but the adrenaline level is much lower.