By: DanielXX It is my belief that if the retail investor does his research properly and bases his buying decisions on long-term business fundamentals coupled with a reasonable valuation, his downside is limited and he can expect the stock to eventually rise, whether on market realisation of the business potential, or on the margins hitting a sweet spot of the business cycle, or on management/fund buyouts reflecting insider/institutional awareness of the intrinsic value of the business. The key word is "eventually", because the time the investor has to wait for the stock to rise is unknown. But my point remains --- the patient investor will eventually see the stock gain some buying interest. When that happens, another aspect of time becomes important for the investor: how long will the stock enjoy its place in the sun? Will it be just a short pump-and-dump operation by the big holders, or could the stock become one of those rare Cinderella stories and live happily forever? There is a new branch of finance, known as behavioural finance, which essentially recognises the "humanness" of market participants that adversely affects their decision-making (as opposed to standard finance that assumes a "rational" investor). Behavioural finance sheds some light on human tendencies when faced with the above scenario. People tend to be overly-optimistic and have a fear of regret (ie. the stock soars after they sell) which leads them to hold rather than make any active decision to sell. How To Make Money In Stocks Series How To Make Money In Stocks Part 1: Back to the Basics How To Make Money In Stocks Part 2: The Time Horizon Premium How To Make Money In Stocks Part 3: The Illiquidity Premium How To Make Money In Stocks Part 4: Keeping It Simple