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Cramer Finds A Way To Explain Stock Diversification With Fantasy Football

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Cramer Finds A Way To Explain Stock Diversification With Fantasy Football

What does fantasy football have to do with stock picking? Quite a lot actually, CNBC's Jim Cramer explained during his daily "Mad Money" show. A strong fantasy football team should be built in the same fashion of a stock portfolio.

The Perfect Lineup

Key to any fantasy football team would be to include three top-notch wide receivers — or in stock market terms, a stock that everyone wants on their team and will be "drafted" first. In this case, the market equivalent would be members of the "FANG" groupFacebook Inc (NASDAQ: FB), Amazon.com, Inc. (NASDAQ: AMZN), Netflix, Inc. (NASDAQ: NFLX) and Google/Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL).

Once the "FANG" stocks are selected, investors should look towards the bench for stocks (or players) with "mojo" such as a NVIDIA Corporation (NASDAQ: NVDA) or Tesla Inc (NASDAQ: TSLA).

Up next is a quarterback, Cramer continued. And in the stock market universe there is one all-star QB: Apple Inc. (NASDAQ: AAPL).

The tight-end players are counted on to block and catch and a strong Dow component like United Technologies Corporation (NYSE: UTX) or 3M Co (NYSE: MMM) can be counted on to get the job done.

And then there is the need for defense on a football team — the equivalent in the stock market universe being, quite literally, defense stocks like Lockheed Martin Corporation (NYSE: LMT).

Finally, every team needs a reliable kicker which is in the stock market universe would refer to a steady company that won't let you down during high selling pressure — much like a UnitedHealth Group Inc (NYSE: UNH) or The Coca-Cola Co (NYSE: KO).

"I could go on and on, but let me suggest that before you even buy a stock, you see if you have too many draft picks from one position, especially wide receiver," Cramer concluded. "You could get days like last Thursday where you're totally trashed and put up no points and that's enough to drive you out of fantasy football, or even the actual portfolio league of stocks, anytime."

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