Jim Cramer - Don't Listen to the Press

For the latest Jim Cramer, go to http://JimCramerPicks.com - This market is full of misdirection. If you pay attention to what the people on television tell you, then you will get burned. When a company reports earnings and it is higher than analysts predicted, then all the newspapers will declare an upside surprise. But sometimes the upside surprise can come from the wrong reasons. In this case, the stock can actually fall. This can make the market seem really arbitrary. Sometimes they can lower guidance, and that can be more important than the past results. A high quality upside surprise is generated by higher than expected sales. This can signal that the industry is improving. It could also mean that the company is taking market share from its competitors. This is a definite reason to buy. It is rare for a stock to go down from a surprise like this. Look at Apple's run despite the weak economy. There are also low quality earnings beats. This is based solely on the bottom line, rather than the top line. It could have been based on stock buybacks or lower taxes due to legal accounting tricks. This is merely sleight of hand that doesn't represent true growth. Any large enough company with competent management can almost always ensure that earnings can beat the analyst estimates with techniques like this. It isn't anything special. Now you won't make the same mistake that the press does and misinterpret these earnings reports.