Sneak Preview: Home Lightning Round

There are three easy steps to preparing yourself for a Lightning Round. First you must know what all the sectors are. This isn't as easy as it looks because there are a lot of different ways to slice up the economy. You'll want to make a list of every sector and the subsectors that each one is composed of. If this seems daunting, I'll show you how it's done.

Let me give you a brief example of the difference between a sector and a subsector or industry. One sector, broadly speaking, is technology. Within the tech sector, you can find a bunch of different subsectors: the Internet, semiconductors, PCs, device makers (think cell phones), and software, to name a few. You can break these subsectors down further -- software, for example, really begs to be divided further -- but at some point you have to draw the line or you'll end up having to form an opinion about every single stock.

The whole point of the Lightning Round is that you need to have only a small number of opinions about sectors and subsectors. So for the most part, I would err on the side of not cutting things up into too many different industries, because that just creates more work for you. At a certain point, that work stops paying off. But don't get too caught up in this now; I'll walk you through all three steps in detail after I outline the process.