During pre-COVID19 times, I would travel overseas for work. After a long day, I typically return to my hotel room, switch on the television, tune in to CNBC and catch up on business news. One particular programme that I enjoy is "Mad Money" hosted by former hedge fund manager Jim Cramer.
If you have never heard of Jim Cramer and his rags-to-riches story, you can read it [here]. So I was surfing the CNBC website the other day, and I found a video of Cramer going through his Lightning Round.
Lightning Round is the segment where the audience calls in and asks for Cramer's view on a certain stock. The quick pace at which Cramer exhorts a company he likes - and slams a company he doesn't - makes for an entertaining watch.
I often wonder though - how does Jim Cramer stay on top of the latest developments for so many U.S. listed companies?
The way I see it, the host of Mad Money doesn't need to know every company in depth. Instead, he only needs to remember tiny bits of details, so that he can provide a witty 10-second opinion of each stock.
After all, Jim Cramer is an entertainer, who happens to have some financial background and a flair for presentation.
But is that the correct attitude a serious investor should adopt?
The fundamental analyst will vehemently disagree. One should study financial reports carefully, so as to understand the profitability and future earnings potential of each company.
Likewise, the market technician will shake a fist in objection too. One should examine price charts and scrutinise the indicators, so as to spot the right time to buy and sell.
On this topic, both camps should find common ground, that it is more important to KNOW A LOT ON A LITTLE (range of subject matter) than to know a little on a lot.
So my friends, let me pose you this question:
How many stocks do you have on your watchlist, and how well do you know each company?
I'd be honest to admit - I only track certain metrics for each company on my list. If I were to sit for a Buffett-esque style of FA examination, I will surely fail with a Capital "F".
Similarly, while I know how a candlestick looks like, the chartist will flinch in horror at my lack of knowledge in price formations and TA indicators. (To me, MACD sounds more like fast food than something to trade on.)
But you know what? After years of investing in the stock market, I realised NOT knowing price patterns, and paying attention to ONLY a few key fundamental data points suits me just fine.
Call me a 80-20 investor. I put in the most needed 20 percent effort, so as to achieve the most crucial 80 percent impact on my portfolio.
And I do my best to trim my list to a maximum of 20 companies, although lately, I have breached this personal rule in favour of TalkMed Group.
I have seen financial bloggers with 30 companies and more in their portfolios, not unlike a mini version of Fidelity's Magellan Fund, which was said to own close to 1,400 stocks at one point in time.
And I have seen other financial bloggers hold as few as 5 stocks in their portfolios, not unlike some activist hedge funds.
The truth is, there is no single holy grail in investing. There is no one-size-fits-all formula too. You have to decide for yourself how much time and effort to devote on tracking the companies in your portfolio.
The important thing is that you must do your own homework. Do NOT follow others blindly into a stock (like the GameStop saga on Reddit). Or buy on the words of a stock show host. You might just be the last person holding the hot potato before it crashes.
If you have never heard of Jim Cramer and his rags-to-riches story, you can read it [here]. So I was surfing the CNBC website the other day, and I found a video of Cramer going through his Lightning Round.
Lightning Round is the segment where the audience calls in and asks for Cramer's view on a certain stock. The quick pace at which Cramer exhorts a company he likes - and slams a company he doesn't - makes for an entertaining watch.
I often wonder though - how does Jim Cramer stay on top of the latest developments for so many U.S. listed companies?
The way I see it, the host of Mad Money doesn't need to know every company in depth. Instead, he only needs to remember tiny bits of details, so that he can provide a witty 10-second opinion of each stock.
After all, Jim Cramer is an entertainer, who happens to have some financial background and a flair for presentation.
But is that the correct attitude a serious investor should adopt?
The fundamental analyst will vehemently disagree. One should study financial reports carefully, so as to understand the profitability and future earnings potential of each company.
Likewise, the market technician will shake a fist in objection too. One should examine price charts and scrutinise the indicators, so as to spot the right time to buy and sell.
On this topic, both camps should find common ground, that it is more important to KNOW A LOT ON A LITTLE (range of subject matter) than to know a little on a lot.
So my friends, let me pose you this question:
How many stocks do you have on your watchlist, and how well do you know each company?
I'd be honest to admit - I only track certain metrics for each company on my list. If I were to sit for a Buffett-esque style of FA examination, I will surely fail with a Capital "F".
Similarly, while I know how a candlestick looks like, the chartist will flinch in horror at my lack of knowledge in price formations and TA indicators. (To me, MACD sounds more like fast food than something to trade on.)
But you know what? After years of investing in the stock market, I realised NOT knowing price patterns, and paying attention to ONLY a few key fundamental data points suits me just fine.
Call me a 80-20 investor. I put in the most needed 20 percent effort, so as to achieve the most crucial 80 percent impact on my portfolio.
And I do my best to trim my list to a maximum of 20 companies, although lately, I have breached this personal rule in favour of TalkMed Group.
I have seen financial bloggers with 30 companies and more in their portfolios, not unlike a mini version of Fidelity's Magellan Fund, which was said to own close to 1,400 stocks at one point in time.
And I have seen other financial bloggers hold as few as 5 stocks in their portfolios, not unlike some activist hedge funds.
The truth is, there is no single holy grail in investing. There is no one-size-fits-all formula too. You have to decide for yourself how much time and effort to devote on tracking the companies in your portfolio.
The important thing is that you must do your own homework. Do NOT follow others blindly into a stock (like the GameStop saga on Reddit). Or buy on the words of a stock show host. You might just be the last person holding the hot potato before it crashes.
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