Buy And Homework

AAA

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.

RELATED TERMS
  1. Jim Cramer

    Former hedge fund manager, columnist and author as well as host ...
  2. Cramer Bounce

    The sudden overnight appreciation of a stock's price after it ...
  3. Condensed Financials

    A summary form of a company's earnings statement, balance sheet ...
  4. Transparency

    The extent to which investors have ready access to any required ...
  5. Analyst

    A financial professional who has expertise in evaluating investments ...
  6. Conference Call

    An event during which investors can call in to hear a company's ...
Related Articles
  1. How do I take qualitative factors into ...
    Investing

    How do I take qualitative factors into ...

  2. 12 Things You Need To Know About Financial ...
    Investing Basics

    12 Things You Need To Know About Financial ...

  3. Mad Money ... Mad Market?
    Active Trading Fundamentals

    Mad Money ... Mad Market?

  4. Sneaky Subsidiary Tricks Can Cloud Financials
    Investing Basics

    Sneaky Subsidiary Tricks Can Cloud Financials

comments powered by Disqus
Hot Definitions
  1. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  2. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  3. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  4. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  5. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
  6. Direct Participation Program - DPP

    A business venture designed to let investors participate directly in the cash flow and tax benefits of the underlying investment. ...
Trading Center