Sneak Preview: Don't Sweat the Quarter

Editor's note: This is a special sneak preview of Jim Cramer's just-released book, Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer). Look for more sneak previews every day, and get your free copy with your annual subscription to Action Alerts PLUS; click here for details. Catch Cramer in person at his last book signing event: Saturday, Jan. 12, at 1 p.m. in Westbury, Long Island's Costco.

Missed the first sneak previews? Read the book intro and the rules of getting and staying rich: Rule 1, Rule 2, Rule 3, Rule 4 and Rule 5. Know what pros do right and amateurs do wrong: Part 1, Part 2, Part 3, Part 4 and Part 5. Learn the five mini-bull markets that will stampede for years, starting with aerospace and defense, agriculture, oil and oil service, minerals and mining and infrastructure.

2. Pros learn to start living and stop worrying about the quarterly report. Don't base buys on quarters -- avoid them. And don't buy during earnings season. That's too hard. "Jim," the queries always begin, "do you like Intel(INTC) ahead of the quarter tomorrow?" To which I say now, because I am no longer a hedge fund manager, "I think I like Intel every day but the day before the quarter." The pressure nonprofessionals put themselves under trying to trade quarterly reports is unbelievable. They take these totally unfathomable moments to put the gun to their head and pull the trigger.

You should know some things that have happened in the past decade. Every company tries to report at pretty much the same time.

Cramer: How to Avoid Being Poor

Because of Regulation Fair Disclosure, no one can contact a company during the quarter to see how it is doing, which was formerly standard practice and was part of an investor's homework. This regulation made being an amateur an impossible hurdle to overcome. We are all equal now in the eyes of the law, so you can't get an edge.

That means you have to listen to the conference call, match the expectations -- what analysts were looking for -- with what the company did, and then make a judgment. There are hundreds of people listening to these calls or to their replays and playing out this exercise. Then the analyst community scrutinizes the quarters and pronounces judgment. All this is happening at lightning speed because there are usually a dozen companies' calls that people might be interested in all taking place at the same time.

I don't care how dedicated you are, how smart you are, how plugged in you are -- this kind of rapid- fire moment does not lend itself to smart thinking. And you know what? It can be proved.