Cramer's 'Mad Money' Recap: Navigating a Brutal Market

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"Don't ask why the markets collapsed today," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

"The 'why' doesn't matter," he explained. The market's current pattern -- its rhythm -- has been short, sharp rallies followed by lots of selling by those who think we're headed toward a recession. Cramer said this is the pattern the market is in, and it will most likely continue.

"Trying to figure out why the markets fall is kind of like 'Pin The Tail On The Donkey,' " Cramer said. But ultimately, it just doesn't matter. "You can't go up 1,000 points in two or three weeks and expect to hold those gains," Cramer explained. "The markets just can't go up that much without big pullbacks. "

Cramer recommended sticking to his playbook and taking profits on any stock that is up. He also suggested picking entry points for some new stocks that pay good dividends and offer protection while waiting for the next upward turn.

Cramer said the new leadership stocks will be the banks, retailers and brokers. "These stocks will stop falling eventually."

They include such stocks as Bank of America (BAC - Cramer's Take - Stockpickr), Washington Mutual (WM - Cramer's Take - Stockpickr), VF Corp. (VFC - Cramer's Take - Stockpickr) and Nordstrom (JWN - Cramer's Take - Stockpickr).

Cramer was not surprised these stocks were hit hard Tuesday because all of them recently experienced big moves.

When will the bottom finally come? Cramer says that will happen only when there is finally some price appreciation in the residential real estate market and the bottom of the subprime mess is reached. Until then, he said, be prepared for more days like Tuesday.

A Breath of Fresh Air

Cramer said investors who are tired of U.S. recession fears should look no further than Brazil for a breath of fresh air. Cramer has liked Brazil for some time and says it's one of the best places to invest in the world. Brazil, he said, is flush with growth and natural resources.

According to Cramer, one Brazilian stock that investors should consider is Companhia Vale do Rio Doce (RIO - Cramer's Take - Stockpickr), the world's No. 1 producer of iron ore and the second largest producer of nickel.

CVRD is up 10% since Cramer's last recommendation in January. Cramer said he would buy CVRD after Goldman Sachs upgraded the stock, and especially after the stock shed $1.62 a share in Tuesday's selloff.

Global demand for iron and nickel is on the rise, Cramer explained, and CVRD expects iron prices to increase 62% in the coming year. Cramer said investors should ignore fears of a global recession because these fears have already been baked into the stock price.

A Lot More to Do

Cramer sat down with Duncan Niederauer, Chairman and CEO of NYSE Euronext , (NYX - Cramer's Take - Stockpickr), a stock that he also owns for his Action Alerts PLUS portfolio, to discuss the company's disappointing quarterly earnings.

Cramer's been a long-time fan of NYX, but admitted that he "let viewers down" with this recommendation.

Niederauer was only CEO for one third of the current quarter, but he took responsibility for the company's disappointing results. Asked why expenses haven't fallen faster, Niederauer said for 2007, expenses were down 7% while revenue were up 21% and earnings were up 41%. But he stated that 7% is not enough when it comes to cutting expenses.

Looking into the future, Niederauer said its merger with the American Stock Exchange will be good for the markets and cannot be blocked, despite recent reports to the contrary. He said he would not rule out additional acquisitions if they make sense for the company.

Cramer asked Niederauer why his stock doesn't trade better and asked if a buyback or dividend boost would help the shares. Niederauer said he is not happy where the stock is and is looking into options, including possibility splitting the stock to increase liquidity. "I'm prepared to make the tough decisions," he said.