"The selloff is, at last, hitting the emotional stage," Jim Cramer told his "Mad Money" viewers on Wednesday evening.
While it's painful to do so, investors need the negativity to play out so they can get better opportunities in the form of lower stock prices. Remember, Cramer said, the market doesn't bottom until pessimism peaks.
So what are some signs that investors are starting to get too emotional?
Take the action we saw in Johnson & Johnson (JNJ) - Get Report . J&J fell 4% as it heads to court over its role in the opioid crisis. Other companies did far, far worse and were slapped with fines of $270 million and $85 million, he pointed out. J&J though lost $15 billion in market cap.
That doesn't seem very rational, which is why Cramer said the Action Alerts PLUS portfolio started buying back some of the stock it sold at higher prices.
Then there's Workday (WDAY) - Get Report . Cramer talked to the CEO on Tuesday evening's "Mad Money" show following what was a "fantastic" quarter, he said. Yet the stock fell 4.5%. While it's true Workday had rallied too much into the quarter, it's discouraging for investors when stocks can't rally on great results.
We can't forget about retail. Abercrombie & Fitch (ANF) - Get Report and Canada Goose (GOOS) - Get Report fell 27% and 30%, respectively. Capri Holdings (CPRI) - Get Report fell 9.9% and Dick's Sporting Goods (DKS) - Get Report fell 5.9%. It's a tough market right now and investors are selling first and asking questions later, he noted.
The talk on Twitter (TWTR) - Get Report is starting to turn vengeful and even the safe go-to consumer staple stocks aren't holding up. General Mills (GIS) - Get Report got slugged by 5% on the day after a downgrade from Goldman Sachs, despite the stock being the second-best performer behind PepsiCo (PEP) - Get Report , Cramer noted.
So what's the bottom line? We need to see peak negatively to get the best deals. But starting to nibble on the current decline isn't a bad idea. Just keep more cash ready to go, Cramer said.
Long-term bond yields continue to fall, driving investors' worries that a slowdown and possible recession could be on the way. The 10-year Treasury yield is now down to 2.26%, its lowest level since September 2017.
One argument could be the lack of a solid risk-free investment. Developed countries in Europe and Asia have lower-yield, higher-risk bonds compared to U.S. Treasuries, which is viewed by many as the safest investment.
The demand for Treasuries keeps a bid under the bonds -- and the dollar -- and helps to drive down yields. That's a good explanation, Cramer said, but many investors aren't buying it. Instead, investors are worried about the future. That can hurt confidence, both for businesses and consumers, which hurts spending and borrowing.
That type of thinking can hurt the economy if enough people buy into it, and that's just what they're doing. Investors are slowly but surely letting the bond market talk them into a recession and while the action in the bond market could encourage a rate cut from the Fed, it won't happen until things worsen first. With that in mind, the stock market can continue lower until the decline in the rates slows, Cramer reasoned.
Executive Decision: PVH
On the show's "Executive Decision" segment, Cramer said down with Manny Chirico, chairman and CEO of PVH Corp (PVH) - Get Report . The company reported good earnings, but gave investors surprisingly downbeat guidance, Cramer said. What's going on?
Coming out of the first quarter and going through the second quarter, the environment is challenging right now, Chirico explained. Channel distributors - like Macy's (M) - Get Report and J.C. Penney (JCP) - Get Report - are struggling and that's hurting the company's bricks-and-mortar results. However, online sales remain robust for PVH brands.
Currency conversion is hurting the company too, even as international demand for PVH products remains pretty strong, he added. But there's a silver lining, which is that the company essentially left its full-year outlook unchanged.
Last year, there was a ton of momentum, particularly in the U.S., coming out of the first quarter after the tax cuts went through. That put the retail sector up against some really tough year-over-year comps this year, Chirico explained, and those comps should get easier in the second half.
"There's no walking away from the fact that the consumer is feeling more pressure right now, here and in China," he added, "and you can't walk away from the fact that the trade disputes and the issues are now creating a bit of hangover with the consumer."
The bottom line is that retail and consumers are under a bit of pressure right now and we just have to get through it, Chirico reasoned.
Executive Decision II: Logitech
Shares of Logitech (LOGI) - Get Report have fallen about 14% over the last last month and are down notably from the highs in August. This is a great company with strong secular growth that just reported a "fabulous" quarter, Cramer said.
To find out what's going on, he sat down with Bracken Darrell, president and CEO of Logitech, on the show's second "Executive Decision" segment.
The company has several secular growth drivers, the first being gaming, Darrell said. While gaming can have its ups and downs in the short term, it will continue growing over the long term.
The other is video, which continues to see strong growth. People see the excitement around Microsoft (MSFT) - Get Report and Zoom Video (ZM) - Get Report , but don't forget about what company is needed for video and audio equipment. In other words, Logitech is complimentary with these companies, not a competitor, and is benefiting from the uptick in video conferencing.
It's also benefiting from the continue digitalization effort. Be it on YouTube, Instagram, podcasting or streaming, Darrell said.
Shifting to the trade wars, Darrell acknowledged that the company is starting to be affected and can see further impact down the road if tensions escalate. In that case, Logitech is looking to move its Chinese production when it's economical. It's also considering passing on some of those costs if and when it can on certain products, he said.
In the Lightning Round, Cramer was bullish on Lowe's (LOW) - Get Report , Bluebird Bio (BLUE) - Get Report , Intuitive Surgical (ISRG) - Get Report , Micron (MU) - Get Report and Papa John's (PZZA) - Get Report .
Executive Decision III
Earlier in the month, the company smashed earnings expectations despite a modest revenue beat where sales fell 50 basis points year-over-year. How did that happen? Richenhagen explained that the company has targeted improved profitability.
Management is aiming for 8% profit margins this year and 10% next year, and this is a big focus moving forward. It's what allowed for such a strong quarter earlier this month. Additionally, the company is looking to become more independent in order to distance itself from the increasingly volatile and political environment.
Finally, Agco continues to spread out globally, looking to diversify exposure to any one region or country, Richenhagen explained.
He's optimistic that a trade deal will eventually get done between the U.S. and China.
Johnson & Johnson, CVS and Microsoft are components of the Action Alerts Plus portfolio. To find out more about how you can profit from Jim Cramer and the AAP team's investing ideas, please click here now.
Cramer and the AAP team are looking at opportunities for growth in their portfolio. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.
On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.
Introducing TheStreet Courses: Financial titans Jim Cramer and Robert Powell are bringing their market savvy and investing strategies to you. Learn how to create tax-efficient income, avoid top mistakes, reduce risk and more. With our courses, you will have the tools and knowledge needed to achieve your financial goals. Learn more about TheStreet Courses on investing and personal finance here.
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.
At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.