'Mad Money' Recap: Stocks Still Rule (Final)

Growth Stocks

There's even more to love about the markets, said Cramer. When it comes to turbocharged profits, growth stocks are the only way to play. But what should investors look for? Cramer said there are three ingredients.

First, high-flying growth stocks need a strong secular growth story, meaning their earnings aren't tied the economy, he said. Even during a slowdown, he said, these secular trends transcend the larger economy.

Second, investors should be looking for accelerating revenue growth. Cramer said while growth is great, accelerating growth shows investors that business is snowballing, and money managers will pay through the nose for this type of growth.

Finally, growth stocks need to have rising earnings estimates. He explained that when Wall Street analysts keep raising their targets for a company, it's like rocket fuel for stocks.

Cramer said as long as these three components are in place, share price doesn't matter. He said the only way to tell if a stock gets too expensive is with its price earnings multiple. The ceiling, he said, is a P/E ratio that's twice the company's growth rate.

Prudent Steps

Cramer had a few final tips for investors before rekindling their love affair with the markets. First, always keep 5% to 10% of your portfolio in cash. Think of your portfolio like a tank of gasoline. "When you're running on empty, you don't have too many options," he said.

Next, if the market really stinks, buy in increments on the way down. Cramer said the market never provides an "all clear" signal when it hits bottom, so buying in increments is a great way to hedge your bets.

And speaking of bottoms, Cramer said in order to truly hit a bottom, you need wholesale capitulation. People have to give up, he said, and sentiment needs to be incredibly negative. The greatest clue to tell when a stock has hit bottom? When bad news no longer sends shares tumbling.

"All of these things are what make the markets worthwhile," said Cramer, which is why he never stops urging people to stay in the game.

--Written by Scott Rutt in Washington, D.C.

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