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Dow Jones S&P 500 NASDAQ 10-Year Note
10,328.89 1,102.47 2,211.69 35.46
Oil *
73.88
UP
20.63
UP
6.40
UP
31.64
UP
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10 Yr
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SPDR Gold
108.95
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+0.58%
+1.45%
+1.69%
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RealMoney.com : James J. Cramer


Spend More Time on Your Homework

By James J. Cramer

12/28/2001 09:15 AM EST

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Click here for the latest from James J. Cramer

Homework's a drag. I see it every night with my kids. They don't want to do it. They don't want to do it even if it is a subject they like.

Same thing with stocks. If we can avoid doing homework, and we can do well, then we feel golden. That's how many people felt in the years between 1996 and 2000; the time-consuming nature of homework kept us from getting into stocks until it was too late, while they made big moves.

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Accounting for the Fall of Homestore

In fact, I can remember moments at my hedge fund where I would miss huge moves because I insisted on checking something out before buying it. I recall failing to capitalize on Viant (VIAN:Nasdaq - news - commentary - research - analysis) for 30 or so points while I checked to see if the customers liked Viant's work -- how old fashioned!

Same thing happened with Kana (KANAD:Nasdaq - news - commentary - research - analysis) and E.Piphany (EPNY:Nasdaq - news - commentary - research - analysis). My insistence on finding out if the products were any good caused us to miss fantastic opportunities.

But that was then, this is now. Now you don't have to worry about those kinds of explosive moves. We are back in the era where only speculative junk moves up like that, stuff you don't want anyway. You could argue that these others were speculative junk stories, too. However, speculative junk typically doesn't have a year's staying power as all of these stocks had.

The lessons learned from that era must be unlearned now. The days when homework penalizes you are gone. I keep thinking of this Homestore.com (HOMS:Nasdaq - news - commentary - research - analysis) that I screwed up on. If I simply had been reading the industry trade press, Realty Times, particularly articles by Blanche Times, associate editor of Realty Times and the publisher of AgentNews, I would have known what a disaster was looming. Instead, I did what you reasonably could do during the late 1990s: I read all of the analyst reports and thought I could reach an appropriate conclusion.

Many of you have been emailing me to ask if the homework that needs to be done before you can buy stocks can be done by individuals. The answer is that, as with good schoolage kids, there is always more homework that can be done to insure you will do well. But there is also a basic amount that allows you to be informed, and that, after all, is all that anyone is.

The question is whether you have the time or inclination to do that homework. However, even if you don't and you choose to give your money to others, you still have to be an informed client. There is no scenario in which you do nothing with your money and are OK. You have to do homework regardless of what you do. It is, in that sense, just like school.

What a crime that so many people got involved with stocks during an era when homework kept you from making big money. Some of me believes that a whole generation of investors that came of age during that reckless time will have to drop out before we can have stocks make such big moves again. Instead, we will be dealing with lower gains and lower expectations. That's OK, however; it means that most people won't have time to do that homework and won't have the rigor to do it well.

Which, not ironically, is how the business of buying stocks used to be before the crazy era began. It was, as my wife would tell me, fun for only a handful of geeks like me, who truly didn't mind homework when he was growing up and loves it when it comes to stocks.

That's OK. I am more than willing to do the homework for you. But remember, just like in school, if you really want to learn, you have to do some studying yourself. Consider RealMoney a very big -- and I think very good -- study aid.


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Dow Jones S&P 500 NASDAQ 10-Year Note
10,328.89 1,102.47 2,211.69 35.46
Oil *
73.88
UP
20.63
UP
6.40
UP
31.64
UP
0.59
10 Yr
3.55%
SPDR Gold
108.95
+0.20%
+0.58%
+1.45%
+1.69%
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James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. Check out Cramer's Personal Portfolio, and to find out what trades he'll make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to jjcletters@realmoney.com.
Read our conflicts and disclosure policy.
Order reprints of RealMoney.com articles. Top


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Sorry, the page you requested could not be found

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TheStreet Directory

Dow Jones S&P 500 NASDAQ 10-Year Note
10,328.89 1,102.47 2,211.69 35.46
Oil *
73.88
UP
20.63
UP
6.40
UP
31.64
UP
0.59
10 Yr
3.55%
SPDR Gold
108.95
+0.20%
+0.58%
+1.45%
+1.69%
Data delayed 20 minutes

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Latest Headlines