When CNBC’s Jim Cramer first started working at Goldman Sachs in 1984, he used to get calls from his mother, who loved the stock market and would ask him for quotes on her favorite stocks. She chose to invest by buying what she knew and staying on top of it.
She liked to shop at Giant Food, a progressive supermarket chain at the time, so she bought the stock. The process of homework back then was to like an idea through personal experience, read up on it with the best research, and then match those insights with other firms.
Back then, the “Mad Money” host also learned that sometimes Wall Street research can be very wrong, so it is good to have a healthy dose of skepticism.
“I want to show you that it isn’t reckless to try to pick individual stocks, and those who say it is just don’t understand the process of first-hand experience, married with research and buttressed by skepticism. It all increases the odds of successful individual stock investing while minimizing the risks of single-stock ownership,” Cramer said.
When Cramer decided to leave Goldman Sachs after four years and open his own hedge fund, the first stock he bought was Heinz. He owned the stock because it represented a call on great management that could deliver earnings through thick and thin.