With earnings season once again upon us, it's tempting to try to make trades around different companies' quarterly reports. But don't -- most the time, it just won't pay off, Jim Cramer says.
That's according to his "5 Rules for Trading Stocks During Earnings Season," which Cramer unveiled in an exclusive video-conference call with members of his Action Alerts PLUS club for investors.
Rule No. 2, Cramer advised, is "Don't Try to Game Each and Every Earnings Report."
Cramer said the clerk "never misses Mad Money, [and he] asked me what stock he should buy."
While Cramer said he avoids such recommendations, he told the clerk that he likes Amazon for the long term.
"As soon as I said it I regretted it, because we are in earnings season beginning today and I like Amazon every day other than the two weeks leading up to when it reports," Cramer said. "That's because nothing drives this stock more wild than earnings, and the reports are usually full of sound and fury but signifying nothing because this has been one amazing stock."
Cramer said earnings season simply puts too much pressure on investors. He warned that reading too much into any particular number could lead to a missed opportunity or a bad pick.
The "cacophony of numbers" almost always forces investors to do a poor job, he said.
"It's almost impossible to get these quarters right," Cramer said. "The worst question isn't what the boy asked me. It's: 'Would you buy Amazon ahead of the quarter?'
"Don't try to make any big decisions in and around earnings to game what a quarter will be," he said. "If you have wait -- wait, even if the stock goes higher without you. There's another bus. There's another train. It isn't worth the pain."