Jim Cramer explains why investors should wait out ‘sloppy’ post-earnings trading

CNBC's Jim Cramer advised investors not to trade when stocks react immediately to earnings reports, as some of these moves are not necessarily warranted.
"This is just the sloppy way that Wall Street reconsiders the price of a stock when compared to its peers and some parsed headlines during earnings season," he said. "If you're not a professional, you should not be involved in this process."

CNBC's Jim Cramer critiqued the market action Tuesday and advised investors not to trade when stocks react immediately to earnings reports, as some of these moves are not necessarily warranted.

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"This is just the sloppy way that Wall Street reconsiders the price of a stock when compared to its peers and some parsed headlines during earnings season," he said. "If you're not a professional, you should not be involved in this process."

Stocks traded "all over the map," Cramer said, as investors began to digest earnings reports, with the Dow Jones Industrial Average shedding 0.75%, the S&P 500 dipping 0.76% and the Nasdaq Composite slipping 1.01%. He said the action occurred as a part of the "quarterly re-pricing process" of earnings season.

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Cramer said it's unwise to extrapolate too much information from one company's earnings and apply that information to the rest of the industry and customers in general. He pointed to ASML, a Dutch semiconductor company that saw shares plunge more than 16% after it posted discouraging earnings a day earlier than expected. The panic from this report spread across the chipmaking world, even though some of these companies should be distinguished from one another, Cramer said.

While he's against painting with broad strokes when it comes to earnings season, Cramer said he's not suggesting that there aren't important benchmarks and details worth paying attention to. Instead, he said, during the first stretch of trading after earnings, there's "action based on who knows what."

"There are so many people playing with so much money — professionals who pay people fortunes to figure this stuff out — let them fight to set the price," Cramer said. "For regular investors like you, trying to trade that initial post-earnings action is just an easy way to lose money four times a year, like clockwork."