Cramer's 'Mad Money' Recap: Making Sense of the Selloff (Final)

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NEW YORK (TheStreet) -- "There's money to be made in this panic," a calm and subdued Jim Cramer told the viewers of his "Mad Money" TV show Thursday.

He reminded viewers that no one ever made a dime while panicking, and that just because everything is down, it doesn't mean it should be.

Cramer acknowledged that big down days like today scare a lot of people, but he challenged them to ask themselves, "Did we deserve to go down today?" He said just as oil shouldn't have traded at $147 a barrel in 2008, only to trade at $38 a barrel just days later, not all stocks today deserved the beating they received.

Cramer explained today's brutal market action by telling viewers that thanks to the proliferation of global futures markets and ETFs, stocks are now lumped into baskets, and often trade together even though they shouldn't.

He said long gone are the days of fundamental securities analysis, which valued companies individually based on their own merits. Instead, today's markets simply trade the S&P500 ETF, and every stock in the average takes the hit.

Cramer also explained that this trend is exasperated by large hedge funds, which trade ETFs and futures for the liquidity they offer. And with so many fund managers thinking the same, Cramer said the herd mentality of selling everything and stockpiling cash is palpable.

What's the only option for investors once the herd gets moving? "Let it play out," said Cramer.

He told viewers to remain vigilant and look for bargains. Cramer said companies like Altria (MO), Visa (V) and Cisco (CSCO), three stocks which he owns for his charitable trust, Action Alerts PLUS, didn't deserve the carnage they received today, and that makes them cheap once the panic has passed.