RealMoney Radio Mailbag: Upbeat Earnings, Falling Stocks

A listener learns why Cramer says stocks can sink on good news.
Author:
Publish date:

Editor's note: The following are questions received from listeners of "RealMoney Radio." To send Cramer a question about topics from his radio show, click here. Listen to Cramer's latest radio show by clicking here.

Jim, why do stocks sometimes sell off after earnings, even if the numbers are good?-- Benjamin from Maryland

Jim Cramer

: It's all about expectations. If analysts and investors are very bullish on a stock, and that stock has been rising, the earnings and guidance have to be perfect for the stock to keep going up.

Conversely, you will often see companies disappoint but go up when expectations are very low simply because things aren't as awful as people thought.

To be a good trader, is it important to get a lot of sleep at night?-- Jonathan from Boston

Jim Cramer

: Any active trader should make a practice of getting to bed at a decent hour. Given how fast markets can move, it is important to have all your wits about you.

In fact, I'm tempted to make showing up on time and being fully awake my unofficial 11th Commandment of Trading.

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by

clicking here

.