Diversification?

Yesterday I worked at our office in Phoenix. I left shortly after the close and decided that instead of listening to CNBC in the car I would listen to the Diamondbacks game.

The game ended right around the time the Cramer Show started, so I bit my lip and listened. He did one segment that has the potential to really be helpful called Am I Diversified? Callers tell Jim their top five holdings (I guess by position size?) and Jim quickly renders an opinion enforced with several sound effects.

He commented that he didn't know what the callers had until about two minutes before the segment started. Most of the callers clearly did not have very diversified portfolios and Jim let them know. One guy had five energy stocks, another had two of his five in gaming. Despite what Jim said, assessing whether five names give decent diversification is quite easy. If you only have five names you need to have five sectors represented, four at an absolute minimum. Hello, how hard is that?

That being said a lot of people need the help and I think it is a good thing that he is trying to help with this.