Cramer's 'Mad Money' Recap: Profit From the Panic

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People can look at the volatility in the stock market and tear their hair out, or they can learn how to profit on days like today, Jim Cramer told viewers of his "Mad Money" TV show Thursday.

It's a two-step program, Cramer said. The first step consists of learning how not to lose money. The second step is discovering how to make money off the panic.

As market-players see stocks go down, they begin to believe people are selling because something must be wrong. But that is not true, Cramer clarified. Stocks this morning were on sale and selling at a discount not because they were necessarily bad but because people panicked and thought it was time to sell, he said.

Instead of joining the panic, take advantage of the now-cheaper stocks, Cramer advised. When Heinz (HNZ Quote) was down 71 cents this morning, people thought maybe there was something wrong with the ketchup, he said. But investors were just "scared and wanted to unload anything."

Many people believe that any stock going down deserves to, but that is not true, Cramer explained. He has made the mistake of panicking in the past and wants viewers to learn from that. "I never made a dime by panicking," Cramer said.