Cramer: Stupid decisions ruining your portfolio

Cramer: Snap judgments, stupid decisions

In the last 24 hours Jim Cramer has seen so many stupid decisions, that he couldn't keep quiet anymore. He has to say something, not only because it's driving him crazy, but because he wants investors to understand how to do things the right way.

In Cramer's perspective buying and selling stocks correctly means tedious homework, not just making false assumptions based on reading a few headlines.

"Making snap judgments are a great way to lose money, yet people keep doing it. This market is littered with snap judgments gone awry, and it's beginning to drive me crazy, or at least crazier," the "Mad Money" host said. (Tweet This)

Recently Cramer introduced the Sonny Corleone decree in honor of those who trade S&P 500 futures, flit in and out of stocks based on silly news reports and don't do their homework. Cramer called it this referring to the classic "Godfather Part II" scene when Sonny learned that Michael had joined the Marines in WWII and said, "Did you go to college to get stupid? You are really stupid."

On this same note, Cramer has therefore officially created the Andy Dufresne corollary, in honor of those who trade a company stock before actually listening to the company's conference call to find out the details.

The corollary was selected based on the movie "The Shawshank Redemption" when falsely imprisoned Dufresne speaks to Warden Norton about how he obviously needs a new trial following a man revealing that he had killed Dufresne's wife. The Warden disagreed, stating "how can you be so obtuse?" Yet, the Warden was so obtuse that Andy asked "is it deliberate?"

Based on the ridiculous actions that Cramer has seen on Advance Auto Parts, Cimarex, CVS, Dollar Tree and Shake Shack—he also wonders how the obtuse can be so obtuse.

Tim Robbins in a scene from 'The Shawshank Redemption.'
Castle Rock Entertainment | Getty Images

To singularly review some of the stupidity Cramer saw, he elaborated further on each stock.

Advance Auto Parts is in one of Cramer's favorite sectors right now—the car parts business. He loves this business because the average car on the road is about 12 years old, and they need to be fixed regularly. The company reported on Thursday morning, and immediately it was determined by headline writers that it was a huge miss.

Shame on the investors who took action without doing the research! Were they deliberately trying to lose money?

On the Advance Auto Parts conference call, management explained that there were some integration issues lingering from its acquisition of Carquest last year. One look at the information regarding one of the most difficult mergers, and Cramer realized that AAP was a buy not a sell. Others realized it too, and the stock eventually rebounded by the close.

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Then there was Shake Shack, which Cramer has been saying is a cult stock. Cult stocks tend to be heavily shorted, and clearly the shorts panicked at the drop of a chicken sandwich. On Thursday morning investors found out that this hamburger joint might open a chicken division, and the shorts ran for cover and gobbled up the stock.

This seemed like a completely obtuse reaction in Cramer's opinion, because until more stock is put up for sale, Shake Shack will keep trading higher.

"So, go head, trade off the headlines. Make snap judgments. But these instances, all within the last 24 hours, should convince you that you might as well be deliberately burning money," Cramer said. (Tweet This)

So don't be like Warden Norton. Otherwise Cramer fears you may end up shooting yourself, when you could be sipping a beer on your boat under the sun at the beach.

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