Cramer says investors should not rush to buy or sell outside of regular trading hours. Here’s why

CNBC’s Jim Cramer on Thursday cautioned investors against rushing to empty or beef up their portfolios based on movements outside of normal US trading hours.

“Don’t pay attention to what the futures [are] doing. Pay attention to what you like,” Cramer said on “Squawk Box,” before stocks opened higher Thursday. “We have a lot of stocks that, literally, you can get them for far lower than they should [be] because the machines are obliterating them.”

The “Mad Money” host has previously ridiculed those he calls “pajama traders” for influencing premarket sentiment as they trade futures contracts, often based on headlines and algorithms. His comments Thursday came as US equity futures pointed to a positive open at the 9:30 am ET opening bell. However, futures had been down sharply at one point in overnight trading.

“Why are people so desperate to sell at 1 am? What do they know?” Cramer asked rhetorically. “The answer is nothing,” he contended.

The stock market’s recent volatility comes as Wall Street closely monitors the Federal Reserve, which is in the process of pulling back some of the highly accommodative monetary policy supporting it implemented nearly two years ago at the start of the Covid pandemic.

On Wednesday, the US central bank signaled an interest rate increase is likely coming in March amid already unstable markets and surging inflation. The Dow Jones Industrial Average closed around 130 points lower on Wednesday following Fed chief Jerome Powell’s comments on the Fed’s January meeting after it had been in the green earlier in the day.

The 30-stock Dow rose 0.7% on midday Thursday on the heels of a fourth-quarter US GDP report that exceeded analyst expectations. The S&P 500 increased 0.4%, and the technology-focused Nasdaq Composite slipped 0.1%.

Once again criticizing what he calls robot-generated headlines, Cramer said Thursday he believes any market hysteria over the Fed’s actions should be taken with a grain of salt because some of the trading action is being conducted by algorithmic traders who are “not distinguishing between good and bad” stocks.

“They’re just selling everything,” Cramer said, urging people to “not pay up” for their favored companies at this moment.

“I think there’s a lot of people who are trying to buy something well above where the sellers are willing to sell because they’re automatic,” Cramer said. “The sell programs are overrunning the buy.”

“It doesn’t mean that stocks are bad; it just means you should be a little bit more prudent and don’t bid so close,” he continued.

Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.