Buy And Homework
Categories: Trading, Managed Funds, Stocks
Buy and Homework is a buzzy term created by Jim Cramer. It decribes his theory that an investor should buy, and then spend an hour each week studying each stock in their portfolio, rather than the old "Buy and Hold" method that advised to buy and then, well, just hold the stock.
The "homework" piece includes reading news stories, financial forecasts, etc...basically learning what analysts look at. The main complaint on this theory is that people don't have the time to do this. Cramer counters that, if that's the case, a portfolio manager can take over. The other argument against it is that if a person just holds their stock long enough, it'll come around evenutally...but after the Recession of 2008, we've seen enough businesses collapse to know that not every stock recovers.
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Finance allah shmoop what is a buy and hold strategy
Your broker hates this You buy one stock and hold
it for twenty five years How is she ever going
to pay for her beach house when you pay her
no commissions Well that's her problem If you buy and
hold the right stock you'll have crushed it Making serious
bank had you bought ten grand worth of amazon after
it was cut in half following a typo wouldn't be
worth over ten million bucks today Shop around find another
next year by it Hold it live it so that
maybe in the course of three decades you've bought now
thirty stocks and you never sell or pay taxes well
it's that strategy in part that made warren buffett the
richest man in america and he's been up there for
a long time He picks one stock holds of forever
and just counts his dough and note When you buy
and hold the stock you don't realize a gain on
your taxes You keep everything it's very important when you
calculate financial returns That's nice work if you have the
brain and guts to put all your eggs in just
a small handful of baskets Picking the right stocks that
really work You gotta watch your step though When you
do that you know when i wind up with you
know egg on your face like the rest of us