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Cramer: Two Insane Mistakes Costing Pros

Wednesday, 19 Jun 2013 | 6:53 PM ET
No Huddle Offense: Ripped From the Headlines?
Wednesday, 19 Jun 2013 | 6:58 PM ET
Mad Money host Jim Cramer shares his final thoughts of the day.

(Click for video linked to a searchable transcript of this Mad Money segment)

Cramer is absolutely shocked by the mistakes Wall Street pros are making right now. He doesn't want you to make them too.

"It's plain stupid to trade off headlines before the full story is out," said the Mad Money host.

Seems pretty simple – yet Cramer said it happened twice on Wednesday and in both instances, investors lost money.

Federal Express

In this circumstance pros sold Federal Express on headlines that read 'FedEx Profits Plummet' and 'People in No Rush to Send Packages.' "As money manager pored over the release and saw the headlines they just dumped the stock," Cramer said.

Largely, sellers were spooked by new information which showed that FedEx was cutting its capacity between the United States and Asia.

"Then, came the earnings call and FedEx painted a very different picture," Cramer said. "They were the most bullish that I have heard them be in a very long time."

Ultimately, FedEx forecast earnings growth of 7 percent to 13 percent and said daily volume grew 10 percent in the fourth quarter driven by market share gains and growth in e-commerce.

"As you might imagine, after the call, the stock took off," Cramer said, trading well over 2% higher. Money managers who sold the headlines were crying in their coffee by mid-morning.

Troels Graugaard | E+ | Getty Images

Tesla

"The second bout of insane trading happened with Tesla," Cramer said, "It was triggered by a headline that said Tesla was issuing a recall of the Model S."

Money managers sold immediately, with skeptics calling the viability of the whole enterprise into question.

However, as the story unfolded, pros quickly learned the recall wasn't nearly that damaging. Specifically, Tesla recalled 1,228 of its 2013 Model S cars manufactured between May 10 and June 8 because of a defect in the mounting bracket of the rear seat.

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There was no imminent danger; the defect only presented safety issues in the event of a crash.

"Once more information came out, buyers stepped in and Tesla climbed well over 1%," Cramer said.

In both cases, selling the headlines left money managers out in the cold.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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