Capital Gains Treatment

This is how Uncle Sam gonna tax that asset. One of the two flavors anyway. In this case, that asset is an equity and any profit made from selling it (i.e. "capital gain") will be taxed based on how long the investor held the stock. Less than a one-year holding period results in "short-term capital gains" and profits will be treated to a higher tax rate (up to 35% federal, plus more on the state level...based on the investor's tax bracket).

Selling a stock that was held for more than one year after the purchase date will result in a "long-term capital gains" tax (maximum of 20%, depending on tax bracket, plus more from the individual state). So while "buy and hold" is a sound investment strategy, "buy and hold for at least one year" is a better one, at least for tax purposes.