Jim Cramer has some rules for earnings season that every investor needs to know.
Cramer broke them down the rules on his exclusive Action Alerts Plus members-only call.
One of the rules? You have to do the work in order to own the stock.
Here's what Cramer said:
If you are going to be involved in owning stocks you do have to do a monster amount of work going into earnings season to be sure that a company is doing as well as you thought. If you were in my office during this period, I am frequently screaming "give me a breakdown of what everyone's looking for, top and bottom line and gross margins." I am in essence trying to see if the company lived up to expectations on sales, earnings, and how much it is making from each sale, to see if it is expanding. I like gross margin data because I hate competition -it destroys profitability and if you can see how gross margins are going you can find out what the future looks like.
Want to learn about Jim Cramer's other rules for earnings season? You can find out more by going here.