Jim Cramer's Investment Philosophy

Jim Cramer's investment philosophy evolved from his years running a hedge fund and his two decades educating individual investors on television.

His core belief: 'Buy and homework, not buy and hold.' Cramer argues that passive investing is fine for most people, but active investors who do their homework can beat the market. The key is treating stock picking like a second job — reading 10-Ks, listening to conference calls, understanding the competitive landscape.

His rules include: always do your homework, never buy all at once (use a 'buy in stages' approach), diversification is the only free lunch, and never invest money you'll need within five years. He coined the phrase 'There's always a bull market somewhere' to remind investors that even in downturns, opportunities exist.

Cramer's hedge fund track record — 24% annual returns over 14 years — proved his approach worked at the institutional level. His television career then proved his ability to translate that expertise for everyday Americans.