Cramer's 'Mad Money' Recap: Behind the Relentless Selling

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Even on a day when the Dow Jones Industrial Average surged 494 points, Jim Cramer told viewers of his "Mad Money" TV show that he's trying to get to the bottom of what's behind the relentless selling in the markets.

He called the markets a "true financial Armageddon" where all asset classes, except Treasuries, are declining at an alarming rate, mirroring what happened during the Great Depression.

Cramer said stocks are taking the brunt of the decline because they're the most liquid asset class out there. He explained that in large portfolios, investments will span a range of asset classes, including stocks, bonds, commodities, currencies, and real estate. When these large funds need to raise cash, they turn to stocks.

In a lesser crisis, Cramer said large funds may have opted to sell bonds instead of stocks. But with bonds currently trading in such an illiquid state, funds are forced to sell equities, putting all of the burden on stocks, regardless of the underlying fundamentals.

Further compounding the problem, Cramer said there's a tremendous desire for mid-cap turned small-cap companies to take themselves private, but here too, with credit markets tight there is just no money available to do so.

Cramer said until the credit markets loosen, the forced selling stops and companies are able to take themselves private to escape the carnage, the market will not see a bottom.

He continued to advise investors to buy in small increments on the way down and sell into strength, like today, to raise cash.

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