The definition of insanity is doing the same thing over and over again and expecting different results.
Pre-market trading is the definition of insanity.
I am seeing some incredibly stupid action this quarter, action that I thought we made very clear is just a total mugs game.
Much of it occurs when someone jumps the gun, deciding that the headlines must be traded without any knowledge of what is underneath them.
That's how you could sell the stock of trucking giant JB Hunt (JBHT) down three when it ultimately ramps six, a nine point swing for those dumb enough to sell or smart enough to buy.
I get the confusion. The headlines, which are so fast I bet they are written by machine, used an algorithm which determined that the company had slashed estimates because of weakness.
That could not have been more wrong. While the company mentioned that it was disappointed about some line items it presented, in the call, a story of strong growth despite negative conditions.
In other words, it was like Union Pacific (UNP) , where people sold the stock down off of the weakness at CSX (CSX) and then Union Pacific said, despite what CSX may be seeing, Union Pacific is still doing well and can do better if we get some good trade policy.
This morning we read a headline set of numbers from Honeywell (HON) that indicated there was serious weakness, a huge swing from up to down in their Safety and Productive Solutions, which makes automation for warehouses - think Amazon (AMZN) .
That's on top of the stock being down the most since the Powell Bear Market's Christmas eve nadir, in part because of a bogus read-through of some news about weakness at aerospace sideshow Textron (TXT) .
Holy cow, what an opportunity because as people were banging the stock down, CEO Darius Adamczyk was explaining how much stronger than expected Honeywell's aerospace is, which happens to be three times the size of the division with weakness. Bingo! You get a snap back of major league proportions. Or you have egg all over your face because you couldn't wait 45 minutes, you darned fool.
Or then there are the quick draw folks who go by cohort and not by company, another easy way to lose money before the market even opens. This morning Advanced Micro Devices (AMD) caught a rare downgrade from Mizuho. It is true that the stock's doubled and that PC sales could flag. But that instantly led to a bang down of the stock of a gigantic semiconductor equipment, Lam Research (LRCX) . At the same time that these chowder heads were making mincemeat of Lam, another outfit, ASML (ASML) , which makes equipment similar to Lam's, was making a bold call that the bottom is in for the semiconductor equipment companies.
Boom! The traders who either didn't listen to ASLM's call or didn't even know it existed sold a stock down two when they could have made five easy points if they had bought the stock. Again, though, that would have taken patience, it would have taken homework, it would have taken knowing the definition of insanity.
It's too bad we can't inject cartoons into a Wikipedia entry for stupid traders because we could have used any of these examples, and I have a ton of them, to demonstrate how you do not get a different answer is you don't do the homework and listen to the call.
Looks like I still have work to do on the topic. I gotta take these ignorant folks to school.
(Honeywell, Amazon and Lam Research are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells HON, AMZN or LRCX? Learn more now.)
