The drop in the U.S. market has had a ripple effect so vicious as to cause tremendous confusion worldwide, Jim Cramer told his
"RealMoney" radio show listeners Monday.
Even stocks in the big emerging markets of Brazil, Russia, India and China - the BRIC countries -- have felt the pain, said Cramer; but he said that if listeners divide the emerging markets into two parts they'll have a better shot of avoiding huge losses.
He said that the first group is Latin America, including Brazil, Argentina, Chile and Columbia, which has been an unbelievable place to invest for the last two years.
While he was once bullish on the region, he now believes that things have "gone awry" in places like Peru, Ecuador, Venezuela and, even to a certain extent, in Brazil, because political risks are heating up as the region takes on a more socialist tone.
But areas in Asia including Korea, India, China and Japan are also feeling the troubles that U.S. stocks are feeling, even though there is far less political risk there.
So, Cramer said to stick with this part of the emerging market map, and to wait until June before deciding whether Latin America is stable enough to invest in. In Asia, he said that he would take a look at
, a big Indian automaker.
He cautioned investors to be careful in emerging markets, no matter where they may be on the globe, because this is a very anti-speculative time for investors.
Emerging markets are speculative places to invest, he said, adding that the
is creating an anti-speculative world by raising interest rates and making it more expensive to borrow money.
The Fed crushed speculation in 2000 and 2001, and took everyone down, he said, adding that the only way to avoid getting hurt in this environment is to be diversified.
If you have a food and drug stock, a mineral and mining sock, a machinery play and an aerospace or defense stock, you will be hurt less than other people, he said. His own
Action Alerts PLUS portfolio, which he runs to make money for charity, is an example of a diversified portfolio. This is why he said it was less hurt than many others when commodities and mineral stocks sank last week.
No one has ever benefited in the stock market from panicking and throwing everything away, he said, telling listeners to benefit from his experience and to stay calm.
The panickers are in control of stocks now, but that doesn't mean that the market is dead, he said. He believes that one reason the selloff has been so sharp is due to the fact that people who borrowed money to buy stocks had to abruptly bail as their losses became more serious.
Borrowing money to buy a house is OK, he said, but borrowing to buy stocks is "the height of foolishness."
He added that oil stocks are likely looking for a bottom in this environment, and that he would be interested in a company like
, because it is down 15% and has a 3.75% yield. It joins
as a company that he believes is interesting and probably a good buy at these levels.
However, Cramer said not to be aggressive in one's buying, because you can never be sure whether a market has bottomed. He said that he would carefully choose a stock, and then begin building a position in small increments.
To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.
James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by
clicking here. Listen to Cramer's RealMoney Radio show on your computer; just click
here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click
here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click
here to get his second book, "You Got Screwed!" and click
here to order Cramer's autobiography, "Confessions of a Street Addict."