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For a long time, volatility was held in check. But Jim Cramer told "Mad Money" viewers Tuesday that volatility now rules.

"This means that when things are bad, you're more likely to get creamed ... and when things are good, you're more likely to make more money than you thought," Cramer said.

He gave listeners a primer on how to handle the next big selloff because he said we're bound to get more of these big ups and downs. And he said one thing that could protect viewers from the downside is to own stocks with an effective buyback, meaning companies that buy their own stock as prices fall.

No matter how bad the market or how rough the selloff, these companies buy back stock and cushion the fall, he said.

His top buybacks were:

Image placeholder title

He said that these are the companies with the strongest buybacks, and then winnowed it down to his top five, beginning with Nokia. Not only has the company bought back 1.4 billion euros' worth of stock, it is taking more market share worldwide in fast-growing markets like China.

His No. 4 pick was a "media tie" between CBS and News Corp. While Cramer believes Rupert Murdoch has been given too much credit for the MySpace acquisition, he said that the company is not given enough credit for its great programming.

As for CBS, the company just

sold its theme parks, a move that helped to streamline its business.

"CBS throws off cash like it's an ATM," Cramer said, adding that he believes it will use its theme-park money to keep a floor under its stock.

No. 3 was a tie between Bank of America and Citigroup because both banks have great management, tons of excess cash and good dividends.

At No. 2 was Chevron, an oil company with a 3.6% dividend and a management team he believes is committed to helping shareholders. Moreover, he said that the stock has more upside than competitor

Exxon Mobil

(XOM) - Get Report


His No. 1 pick was Sears, in large part because he believes its chief executive, Eddie Lampert, cares only about the bottom line and that "he is there with a truck buying back your stock."

He gave an honorable mention to Pepsi and Johnson & Johnson. Even though both companies love buying back stock, both have limited upside potential because of "endless cola wars" and the fact that "drug stocks are hated."

Abreast of the Market

"Bird flu ... I'm declaring it dead," Cramer said, adding that it's time to buy some chicken.

He said that there's been a shootout in the chicken world and that

Sanderson Farms

(SAFM) - Get Report

won the battle because it won the game of chicken among producers.

The company increased production even as the competition cut back in part because of bird flu fears. So now with supply lessened and prices going higher, he said, the company should reap the benefits.

He said that there are two chicken markets, with large birds hitting supermarket shelves and small birds going straight to fast food restaurants.

The cutback in production shouldn't affect the fast food market, but it has created an opening in the supermarket stream, Cramer said. And he believes that Sanderson is positioned to take market share in the stuff that goes to our supermarket shelves.

The Unknown Sears

Herb Greenberg,


contributor and senior


columnist, came on the show to challenge Cramer on his love affair with Sears.

"The earnings quality is unknown," Greenberg said, noting that the company's 10-Q filing was not released with its earnings. Even if you look at the metrics and the debt-buybacks, the company's earnings potential is still unknown, he added.

But Cramer disagreed, saying that cash is going up and that the company is buying back stock. Moreover, he said that Wall Street was shocked by the margin expansion at Sears.

He brushed aside Greenberg's concerns that it is unclear whether Sears is a retailer, a balance-sheet company or an asset play, saying that as long as the stock goes higher, there's no need to worry.

But Greenberg said he remained worried about the company's earnings potential, which is still an unknown, adding that the stock price will slide if cracks emerge in the earnings story.

Both men agreed that it's best to stay away from

United Online


, a dial-up Internet company that has a 6% yield.

People are in the stock for the yield, Greenberg said, adding that the company has refused to "swallow the bitter pill" and admit that its core business has issues.



, on the other hand, said that there were problems with dial-up. It saw its stock go down, but then got on with the business of making improvements.

One company did the right thing and the other didn't, he added.

On the Defensive

Defense companies


(DCP) - Get Report


CACI International

(CAI) - Get Report

have received a lot of press, and while they may be in the same business, Cramer said that one could shoot down investors.

He said that DynCorp isn't a bad company just because its employees have been accused of human rights violations, but also because it has a bad balance sheet and its customers have reportedly accused it of doing shoddy work.

On the other hand, there is chatter that CACI might be bought by

BAE Systems

, and that it has solid financials.

Moreover, he said that Donald Rumsfeld likes CACI, and that if he wins the battle with his detractors, it will be good for the company.

Lightning Round

Cramer was bullish on

(BIDU) - Get Report





Con Edison

(ED) - Get Report


VeriFone Holdings






Freeport-McMoRan Copper & Gold

(FCX) - Get Report


Kinder Morgan

(KMI) - Get Report


BE Aerospace







(FNSR) - Get Report





Crystallex International



Cramer was bearish on

Alliant Energy

(LNT) - Get Report


Dynamic Materials

(BOOM) - Get Report


Suntech Power Holdings



Sirius Satellite Radio

(SIRI) - Get Report


MDU Resources

(MDU) - Get Report





Allegheny Technologies

(ATI) - Get Report


For more of Cramer's insights during the most recent Lightning Round, click here


Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by

clicking here


At the time of publication, Cramer was long Sears Holdings and Yahoo!.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.