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So I’m home for the holidays and the last thing I want to do is read or view any financial or investment related media. The markets can get by without my attention for a few days! In fact, I firmly believe in Warren Buffett’s assertion that you should buy a stock only if you can not worry about it for 10 years; even if the stock markets close for 10 years!

I love spending time with family and friends and inevitably my discussion will lead me to talk about investment related topics. My mother is a self-taught investor and we often discuss about little things that she wants to understand, for and from her trading experiences. One interesting topic came up: When should you hold onto a stock?

Now some people may not agree with me, and thank goodness for that! I’ll explain - its only rational for me to hold a stock if the stock can reward you for holding it. In other words, the stock should give you dividends while you own it! Let’s examine this closer!

If I were to approached to own a piece of a business, maybe the ice-cream store down the street, I would hope to share in the profit! Of course, I may be able to flip my ownership portion for higher value later, but while it is in operation, I would like to see some of the cashflow go into my pockets, right?

Holding any stock that does not reward you with dividends reduces the investment thesis to a mere bet; a hope that the stock will appreciate over time. Why then would I hold the stock securities when I can hold the options?

A stock option is also a bet - one that costs much less as well! Yes, options expire but there are many long-term options available (LEAPs). Yes, you don’t get to vote your shares at annual meetings but how useful are those votes for individual investors anyways? Whenever you can find options for the stock you want, you might want to consider the options instead if the stock doesn’t reward you for ownership.

A word of caution, options can be complex type of security. Make sure you understand about options clearly before considering them. Why am I glad that most people will not agree with me? The stocks still need to be bought! Companies need to raise money through stock issues. The marketplace must continue to function normally before options can even exist.