Sneak Preview: Home Lightning Round

But let's get back to the Lightning Round. In the regular version you get a computer. You get the Internet. In that fifteen seconds, you're allowed to hit up Yahoo! Finance, MSN Money or TheStreet.com and look up anything you want. You can look up the stock. I have a whole desk full of computers in front of me when I do the "Lightning Round." You get to use the same resources. Believe me, with fifteen seconds, if you know nothing about the stock or the sector it's in, you won't be able to figure out if the stock is a buy or a sell just by looking at its page on Yahoo! Finance. You won't even be able to get a good handle on what the company does.

You can use the computer, but you can't rely on it. Maybe there's a piece of information you weren't aware of that will help sway your decision, like the price-to-book value of a bank, or the stock's dividend yield, but that's about all you'll have time to pull off of the Web in fifteen seconds. I have even less time than you do, and I have that crazy music blaring in my ears, so even though you can use the computer in the easier version of the home game, it's there only to help broaden your analysis, to give it a little extra detail. The computer can't make your decision for you, and it can't give you enough information to compensate for the fact that you don't know a stock. It's not a crutch, just a very weak cane.

In the advanced version of the Lightning Round Home Game, you get no computer. You're out there without a rope, without a lifeline, without any external source of information that can give you good data points. It's harder, but it's still something you can pull off if you follow my advice. That's the only difference between the regular and the advanced home games. Now I'll tell you how you can excel at both.

First, for everyone who doesn't feel up to the task: being able to do your own Lightning Round is a great way to become familiar with stocks; it's one of the best ways to learn how to do good sector-based analysis, but it's by no means essential to becoming a good investor. This method isn't for everyone. It's very time-consuming--it takes way more than that one hour per week per stock of homework you're supposed to be doing. But if you really want to take control of your finances, if you really want to free yourself from brokers and investment advisers, then please don't just treat this chapter as a game.

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