Jim Cramer told his "Mad Money" viewers Thursday night that smart investors were buying stocks -- not selling them -- after the terrorist bombings in London.

"We aren't mercenaries, we are realists," he said. "When it appears terrorism won't affect stocks, we buy," Cramer said.

And that's exactly what happened Thursday. After early-morning selling, the stock market turned around and finished positive on the day.

Cramer said today's early-morning selloff gave investors a chance to buy defensive stocks and techs. And when the banks reversed in the afternoon and headed higher, Cramer said that was the time to sell.

"No one ever made a dime by panicking," Cramer said. He said the market is more affected by business cycles than terrorism.

"Our hearts are not black," Cramer said, saying he was a realist.

Cramer told a caller that travel and leisure stocks are the weak links after terrorist events. If you have gains, or even losses in some of these names, it is time to ring the register, he said.

Cramer said the run in the oil stocks meant it was time to take profits on some. Why not sell all of the oil stocks? Because the mutual funds are going to come in and drive the stocks even higher, he said.

In his pick of the week, Cramer tapped Medco ( MHS), which got hammered on news that UnitedHealth Group ( UNH) bought PacifiCare ( PHS). But that reaction was misguided, Cramer said. Medco does a lot of fulfillment work for UnitedHealth and that's where PacifiCare does a lot of business as well, so the thinking is that Medco will eventually start losing business. Wrong, said Cramer. He would be a buyer of Medco here.

Cramer has been negative on the banks lately. Guest Tom Brown of Bankstocks.com said he would be a buyer of Commerce Bank ( CBH) and a seller of Bank of America ( BAC).

As for Bank of America's purchase of MBNA ( KRB), Brown said that Bank of America bought one of the weaker credit card companies in the space.

But Cramer said: "The banks were a much loved group, but no more." It's time to sell, he said.

As for the security stocks that rallied on the London bombings, Cramer said he would be selling the entire group. Short term, the stocks do well, but long term they are losers. Cramer said he would sell stocks like Ipix ( IPIX), Digital Recorders ( TBUS) and Magal Security Systems ( MAGS - Get Report).

Bullish

In an extended "Lightning Round," Cramer was bullish on: United Technologies ( UTX), Intel ( INTC - Get Report), Time Warner ( TWX), Sirius Satellite Radio ( SIRI), Brush Engineered Materials ( BW), Donaldson ( DCI), Intuitive Surgical ( ISRG), Kohl's ( KSS - Get Report), Countrywide Financial ( CFC) and World Airways ( WLDA).

He also was bullish on Marathon Oil ( MRO), Gold Kist ( GKIS), Quality Systems ( QSII), Tesoro ( TSO), Canadian Natural Resources ( CNQ), Annaly Mortgage ( NLY), F5 Networks ( FFIV), K Swiss ( KSWS), Grey Wolf ( GW), Millennium Pharmaceuticals ( MLNM), Coach ( COH), Masco ( MAS), Getty Images ( GYI), Texas Instruments ( TXN), Newfield Exploration ( NFX), Cherokee ( CHKE), Motorola ( MOT), E*Trade ( ET - Get Report), BEA Systems ( BEAS), Tibco Software ( TIBX), Dress Barn ( DBRN), Superior Industries ( SUP), Martha Stewart ( MSO), General Mills ( GIS) and Garmin ( GRMN).

Bearish

Cramer was bearish on: Orchid Cellmark ( ORCH), DHB Industries ( DHB), Pfizer ( PFE), Ameritrade ( AMTD), Elan ( ELN), Digi International ( DGII), Boston Beer ( SAM), Kos Pharmaceuticals ( KOSP), LCA-Vision ( LCAV), Friedman Billings Ramsey ( FBR), C-Cor ( CCBL), Nokia ( NOK - Get Report), Crucell ( CRXL), J.P. Morgan Chase ( JPM - Get Report) and Merck ( MRK - Get Report).

Finally, Cramer interviewed the chief executive from Implant Sciences ( IMX). Cramer wondered how the company would make it through the year, because it has only about $2.5 million in cash.

Cramer asked if the company would have to do an equity deal later in the year.

Anthony Armini, CEO, said it would get a loan package instead. At the end of the segment, Cramer said that he would be a seller of the stock if he were still running his old hedge fund.

At the time of publication, Cramer was long Commerce Bancorp, General Mills, Halliburton, Intel, J.P. Morgan, Motorola and UnitedHealth Group.

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."