Buy And Homework

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DEFINITION of 'Buy And Homework'

A buzz word coined by Jim Cramer based on the idea that "buy and hold" is a losing strategy. Cramer's buy-and-homework strategy is to spend at least one hour a week researching each stock in your portfolio.

The research the buy-and-homework strategy calls for can include listening to conference calls, knowing what analysts are looking for, reading the news stories and reading financial statements. Cramer often points out that everything is available easily and for free on the web.

INVESTOPEDIA EXPLAINS 'Buy And Homework'

There are two main arguments that investors use against this strategy: people don't have the time, and if you hold on long enough, the stock will come back.

Cramer's argument for the first excuse is that if an investor does not have the time to spend researching each stock in their portfolio for at least one hour per week, they can hand off their portfolio to a professional manager (e.g., through a mutual fund).

The latter is even easier for Cramer to refute – just to look at a stock like Enron.

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