Jim Cramer says that smart investors should completely avoid the "crazy" after-hours stock market -- Rule No. 5 of his "5 Rules for Today's Stock Market."
"I can't resist -- I have to talk about the lunacy of after-hours trading," Cramer said in unveiling his rules during a video-conference call with members of his Action Alerts PLUS club for investors.
When PANW released results after the bell, its earnings statement included what seemed like weak guidance for the coming quarter and the year as a whole -- initially sending the stock down from $200 to $180 in after-hours action.
Cramer, whose charitable trust owns PANW and who'd recommended the stock to Action Alerts PLUS members, called that "an incredible plunge -- especially because there wasn't any reason given. So, we had to believe that something had gone very wrong."
"I felt sick to my stomach waiting to hear what [CEO] Nikesh Arora would say that could explain the plunge," he said. "I felt like a total idiot ... and I was kicking myself again, especially because we had recently bought some stock back in the $190s," he said.
But Cramer said that as Arora spoke at PANW's post-earnings conference call, the stock recouped its losses in the after-hours market and actually started making some gains.
"As Nikesh went on in what as a very long call, things got better and better and better again," he said. "By the time the call was over, Palo Alto's stock had traveled from $180 back to $200 and then to $217."
"It was all crazy," Cramer said. "If you didn't know any better, you would have seen the stock up and just figured: "'Hey, Glad I owned some.'"
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