CNBC’s Jim Cramer said one of the keys to having a successful stock portfolio is to always do the research.
To Cramer, “buy and homework” holds a lot more weight than “buy and hold,” which can sometimes blow up in investors’ faces. He added that “buy and hold” isn’t really a strategy anyway – “it’s just lazy.”
“Owning stocks without doing the proper research, frankly, is lunacy,” Cramer said. “The truth is, if you can’t devote a couple of hours per week to your portfolio, you really shouldn’t be messing around with individual stocks.”
Cramer said investors should gain as much knowledge about their portfolios as possible by listening to conference calls, going to the company’s website and reading research reports and news articles. Because of the internet, investors now have a wealth of information readily available.
“You aren’t up there begging at the Goldman Sachs library for some microfiche statement from three months ago, as I did four decades ago right down the block here,” Cramer said. You have everything right at your fingertips.”
In addition to research, Cramer stressed that investors make sure their portfolio is diverse. Even if one sector is doing extremely well in the moment, Cramer explained that can change on a dime. If your portfolio is diverse, it’s less likely you’ll get wiped out if one sector starts to struggle, he said.
“Whether you’re an amateur or a professional, you always need to do your homework and keep your portfolio diversified — this is the kind of routine maintenance that protects you from monster losses down the line,” Cramer said. “Remember, if you can keep your losses to a minimum and let your gains run, you’ll almost always come out ahead.”
