Final answer:
Fees and taxes influence the cost and returns of investment in assets, possibly deterring buying or prompting selling. Market trends affect asset values and investor behavior; positive trends encourage buying and holding, while negative trends could lead to selling. Tangible assets like housing are subject to these factors, with market trends impacting potential returns and liquidity.
Step-by-step explanation:
Expenses such as fees and taxes significantly impact the decisions to buy, sell, or hold assets by affecting the overall cost and profitability of investments. When buying assets, upfront fees and ongoing taxes can reduce the net gains, making it less attractive to invest.
If these expenses are high, they may deter investors from buying or may prompt them to sell assets sooner to avoid higher taxes or fees associated with holding the assets long-term.
Market trends also play a critical role in these decisions. Positive market trends can lead to higher asset values, increasing the potential for capital gains and encouraging buying and holding. Conversely, negative trends can decrease asset values, prompting investors to sell to limit losses. During boom cycles, investors may be encouraged to buy, but during busts, the trend may shift towards selling.
In the case of tangible assets, such as housing, market trends will affect the likelihood of capital gains and the potential liquidity of the investment. For instance, during a housing market boom, an investor might be more inclined to hold a property for longer to maximize capital gains. Conversely, in a downturn, the same investor might wish to sell quickly, but the low liquidity in a bear market could make this challenging.