Rule No. 22: Wait 30 Days After Warnings - TheStreet

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    Pigs Get Slaughtered It's OK to Pay the Taxes Don't Buy All at Once Buy Damaged Stocks Diversify to Control Risk Do Your Homework Don't Panic Buy Best-of-Breed Defend Some Stocks Don't Bet on Bad Stocks Don't Own Too Many Names Cash Is for Winners No Woulda, Shoulda, Couldas Expect Corrections Watch Bonds Don't Subsidize Losers Check Hope at the Door Be Flexible Quit When Execs Do Patience Is a Virtue Be a TV Critic

Few rules have saved me more than the 30-day preannouncement rule.


Tibco Software


preannounces a bad quarter, do you rush to buy it? Are you someone who put money to work in


(WAT) - Get Report

right after that

vicious preannouncement the other day?

If you are, this rule is for you:

Always wait 30 days after an earnings preannouncement before you buy.

I designed it because I recognize how compelling some of these price adjustments are, but they often are

not deep enough

to make the stocks ultimately attractive.

Here's why. When a company preannounces a bad quarter, it isn't just looking at the past. It is looking at its order book, its future. Believe me, if there were any hope that the company wouldn't have to preannounce -- hope in the form that maybe something could get


, not


in the next 30 days -- the company would wait.

Preannouncements signal


weakness. That's why I like to wait 30 days to see if anything has gotten better before I pull the trigger to buy.

Sure, I will miss some great opportunities. Most of the time, though, after 30 days, I find that there is more woe and another leg down! If there isn't, then I might miss a point or even 2, but I will be on terra firma. That's the only thing you want to be stepping on in any market, including this one.

James J. Cramer is a director and co-founder of He contributes daily market commentary for's sites and serves as an adviser to the company's CEO. Outside contributing columnists for and, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS by

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