What Is HODL Investing?

"HODL" is a new investing term most often associated with cryptocurrencies. You may have come across it while perusing Reddit threads.

It started out as a misspelling of "hold." But HODL has also come to serve as an acronym for "hold on for dear life" among crypto investors.

In essence, HODL means buying Bitcoin or another cryptocurrency and holding it through market volatility.

How Did HODL Start?

As you might imagine, HODL started out like a joke.

It all began with a drunken post on the Bitcointalk forum back in 2013. That was a monumental year for Bitcoin – the currency rose more than tenfold from April to December.

On December 18, forum user GameKyuubi posted: "I AM HODLING," followed by a rant about why he was holding onto his Bitcoin position despite forecasts that Bitcoin's value was about to fall:

"In a zero-sum game such as this, traders can only take your money if you sell."
Almost instantly, HODL became a meme phenomenon.

What Is the HODL Strategy?

After the initial jollies of the HODL meme wore off, many crypto investors began to apply "hold on for dear life" to the sort-of word and adopted this as their mantra.

HODL investors buy and hold crypto for the long term, regardless of what the market does. They disregard even large price swings.

Why?

Simply put, they believe that cryptocurrencies will one day replace central bank-issued money as we know it and become the basis of the global economy. By holding large crypto positions starting now, they'll be ahead of the game.
Of course, if this ever happens, it will be years in the future. So if you're a crypto HODLer, be prepared to hang on for the very long term.

Applying HODL to Stocks

Of course, you can also HODL with stock investing. And while a number of Reddit-based investors have applied this philosophy to meme stocks like GameStop (GME) and AMC Entertainment (AMC), it's not really a new strategy.

Many investors buy dividend-paying stocks and hold onto these stocks for an additional source of income. That's because dividend stocks hand you regular payments just for being a shareholder.

Now, unlike cryptocurrencies, dividend-paying stocks tend to have values that don't fluctuate much. Think Johnson & Johnson (JNJ) and Coca-Cola (KO). These seem like pretty boring stocks. But the investors who have collected passive-income checks from them every quarter for decades would beg to differ.