Why is this selloff happening? Why do people talk about a meltdown opening? Two quick reasons: One is the natural irony in traders -- the O. Henry in them -- which says the ultimate Value Guy gave up his battle with the Momentum Hounds, so it must be the top in momentum and the bottom in value! That's the current dibs on the great Julian Robertson's legacy. Remember, I don't invest on irony. I invest on fundamentals.

The other more accurate reason for the decline is margin, because the stocks that are going down the hardest are the ones individuals borrowed lots of brokerage money to buy, and the brokerages don't want to lose that money to a declining market. So they sell the stocks out underneath you.

How brutal can this process be? How about this little confessional I got last night from a manager of a brokerage firm about my recent tirade against margin:

I am the bad guy when the clearing corporation calls me with a list of victims in the a.m. as they will today. I will tell people that they must pony up the dough by 3 p.m. ... The list of Nasdaq names that must be sold will be massive Thursday because a lot of stocks that have higher than 50% margin requirements got bashed yesterday ... The opening here will be ugly, as well as every other retail trading office/desk.

In other words, margin clerks are telling individuals that stocks bought on credit have declined so much that they have to put up more collateral. The betting is that these people won't have it. So the close-outs will be swift.

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That's how you really get the dislocations. We know from the last two times this happened that the selloff is swift, brutal and ultimately an over-reaction.

That's what we will see today.

Be ready for this unnatural selling. You have to buy them when you can, not when you have to..

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.