If you try to hit a home run during earnings season, you're likely to strike out, Jim Cramer cautioned his Mad Money viewers Monday. There are 12 treacherous weeks every year and they're called earnings seasons, Cramer explained. During this time, there's simply too much information to process, which makes it potentially devastating for traders. If you must trade, Cramer offered up his five rules to stay safe.
First, Cramer said, earnings season demands your full attention. With so much information being dispersed all at once, you can't afford to miss key details. Second: Cramer said investors must listen to the company's conference call. You should never trade on headlines alone without first learning the context behind them.
Cramer's third rule for earnings: Look at what happened after past quarters. Some companies' shares rise ahead of earnings like clockwork, only to decline no matter how good the results are. If you're aware of these patterns, you won't get burned by them.
Fourth, Cramer cautioned not to paint all companies with the same brush. Just because one company disappointed, that doesn't preclude others from showing their individuality and outperforming their peers.
Finally, remember the power of the market. In days past, earnings were everything. But in today's market of ETFs and index funds, if the market is heading higher, even a company with terrible earnings may rise along with it.
Earnings season is a time to be defensive, Cramer concluded. Stay focused. Do your homework. And play it safe.
Cramer and the AAP team have the complete rundown for earnings, including banking giants Citigroup (C - Get Report) , JP Morgan (JPM - Get Report) , and Goldman Sachs (GS - Get Report) . Take advantage of our Prime Time sale. Save 45% when you sign up now for Cramer's Investment Club, Action Alerts PLUS.
Executive Decision: VMware
For his "Executive Decision" segment, Cramer sat down with Sanjay Poonen, COO of VMware (VMW - Get Report) , the virtualization and data center software provider that reported strong results six weeks ago, only to see share plunge from $200 a share to just $160 after the company failed to raise guidance.
Poonen said we're currently in the "golden age of software" and the future remains bright for companies like VMware. He said when it comes to the data center, VMware is in a unique position to work with everything, including vendors like Dell (DELL) , Hewlett Packard Enterprise (HPE - Get Report) , Lenovo and more. When it comes to the cloud, they partner with Amazon Web Services (AMZN - Get Report) , Microsoft Azure ( MSFT) , Google (GOOGL - Get Report) and Alibaba (BABA - Get Report) .
Poonen added that IBM (IBM - Get Report) is also a terrific partner for the company, and while they do compete with a small part of RedHat, overall, IBM and their 2000 customers all remains great customers of VMware.
When asked about the government ban on the Chinese company Huawei, Poonen said they will of course abide by the government's wishes, but he noted that tariffs and trade issues have so far not affected their business.
On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.
Shopping for a Slowdown
If the bears are right and the global economy is slowing, which stocks should investors add to their shopping lists? Cramer offered up six names he said have proven track records in times of weakness.
First up was Estee Lauder (EL - Get Report) , the beloved makeup brand that's perfect for the selfie generation. Second was Starbucks (SBUX - Get Report) , a stock that's rallied from the $50s into the $90s as the company continue to improve its throughput with technology.
Next on Cramer's slowdown shopping list were Nike (NKE - Get Report) and Procter & Gamble (PG - Get Report) , two long-time Cramer favorites and staples in times of weakness. Finally, Cramer recommended McDonald's (MCD - Get Report) , another restaurant turnaround that continues to improve itself. McDonald's has easy comparisons ahead Cramer said, which makes it a winner going into the back half of 2019.
In a special interview, Cramer spoke with CNBC colleague and co-host Carl Quintanilla, who is taking a close look at the e-cigarette industry, and the resulting vaping epidemic, in "Vaporized: America's E-Cigarette Addiction," scheduled to premiere Monday night at 10 p.m. Eastern on CNBC.
Quintanilla said the e-cigarette industry, led by Juul Labs, has a lot of explaining to do for its past marketing efforts which led to a 78% increase in usage among high school students last year alone. He said Juul's lackluster apology for any damage it may have caused was far from adequate.
Quintanilla added that we still don't fully understand the long-term health effects of vaping on humans, and Juul, and others, haven't completed FDA-sanctions clinical trials to prove their claims that vaping is "better for you" than traditional cigarettes.
According to recent data, nearly 21% of high school students have now tried vaping.
Focus on the Long Term
In his "No-Huddle Offense" segment, Cramer reminded viewers that seven months ago, the bears were fretting about the inverted yield curve, advising folks to sell their stocks and head for the hills. Those predictions turned out to be dead wrong, and the Federal Reserve reversed course and is now poised to cut, not raise, interest rates.
So now when those same bears, which are never held accountable, are advising investors to sell over expected weak earnings, should you listen?
Cramer said he's learned over the years never to fight the Fed, and never to fight the tape, both of which are in favor of the bulls right now. While he doesn't expect every company to report strong earnings this quarter, investors are likely to overlook any short-term weakness and focus instead on the long-term outlook as things are looking pretty good going into the second half of 2019.
Cramer was bearish on General Motors (GM - Get Report) , DuPont (DD - Get Report) , Kraft Heinz (KHC - Get Report) , Maxar Technologies (MAXR - Get Report) , Tenneco (TEN - Get Report) and Spirit AeroSystems (SPR - Get Report) .
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