Cramer's 'Mad Money' Recap: Forgiving Market (Final)

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NEW YORK ( TheStreet) -- "The bad news doesn't matter, it's how we react to in that matters," Jim Cramer told his "Mad Money" TV show viewers Thursday.

Cramer said that in 2011 all bad news was punished, but in 2012, all is forgiven. And that simple change, he said, makes all the difference.

Cramer said the reactions to news of individual stocks is what defines a market. He said it would seem obvious that if a company reports good news, its shares should go higher, but in 2011 that was simply not the case. Back then, good news didn't matter and stocks sank lower no matter how good the news. In today's market however, all of that has changed.

Cramer cited Gap Stores ( GPS), which reported a big turn in same-tore sales. THat news sent the stock up big, even though it had already run up in anticipation of the release. Even a company like Liz Claiborne ( LIZ), which reported a miss on both earnings and revenues, still saw its shares rise.

The trend doesn't stop at retail, noted Cramer. He said that Finisar ( FNSR) rebounded after offering investors a bleak outlook to finish in the bull camp by the end of the day. Investors used the momentary weakness in Wynn Resorts ( WYNN) as a buying opportunity, sending those shares up 3% by the close.

While some skeptics cite multiple expansion as evidence of a bubble in the markets, Cramer said that multiple expansion based on positive news and rising earnings is not a bubble, it's the fuel for a sustainable rally. He said times like these make investing actually enjoyable again, as investors can predict good news and be instantly rewarded for doing so.

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