Cramer's 'Mad Money' Recap: The Worse It Gets, the Better

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NEW YORK ( TheStreet) -- The worse it gets, the better, Jim Cramer told his "Mad Money" viewers Monday. He explained that he doesn't want to flee this market, and you shouldn't either.

Cramer reminded viewers that stocks react to the future, not the past or even the present. That's why after so much bad news in the global economy he's confident the world's governments will have no choice but to spring into action soon to save us. He cited China, the U.S. and Europe as three examples.

China used to be the world's economic engine, explained Cramer, but now that economy has run off the rails. That's not an overly bad thing, however, because much of what ails China is self-inflicted after the government hit the brakes to stem runaway inflation. Things in China have been slowing incrementally, added Cramer, and are finally low enough that the Chinese might be adding fuel to their economic fire soon enough.

Here at home, Cramer said the American economy continues to slow. As much as the Federal Reserve has helped us along, it's up to Congress to provide us with a federal budget that makes sense. "The Fed can't do it all," said Cramer, but that doesn't mean the U.S. economy doesn't have a lot going for it including strength in housing, autos and even a strong back-to-school retail season.

Europe remains the wild card, said Cramer. The continent has pledged that it will unite to save the Spanish banking system, but leaders there still must take bold action -- something they've been reluctant to do throughout the crisis. Cramer said investors can use Banco Santander ( SAN) as a gauge for how likely a resolution in Europe really is.

But with two of the three economic hot spots on the mend, Cramer said there might be a time soon when markets are feeling a whole lot better -- something that was foreshadowed in today's market rally.

Executive Decision

In the "Executive Decision" segment, Cramer spoke with Richard Heckmann, chairman and CEO of Heckmann ( HEK), a company that took control of its own destiny Tuesday by announcing the acquisition of the privately held Power Fuels, thus reversing a 59% slide in the company's stock so far this year.

Heckmann said that while investors may have lost confidence in what his company has been doing, he hasn't, which is why he was able to transform Heckmann Corp into the nation's largest provider of water for shale drilling operators, thanks to the acquisition.

The combined company will now operate on a national footprint in all of the country's major shale fields, said Heckmann, providing transportation, treatment and recycling for water used in shale operations. All of the country's major drillers are now customers of Heckmann.

Heckmann explained that while Power Fuels is a larger company than Heckman, both entities wanted to operate on a national level, making the marriage a perfect fit. He said both companies are environmentally responsible and will continue to be careful in doing the right thing for the environment. "There's no magic in what we do," said Heckmann, it only takes hard work and a commitment to do it right.

Cramer congratulated Heckmann on a job well done and on doing right by shareholders with a terrific acquisition and road map for the future.

Avoid Facebook

Shares of Facebook ( FB) are indeed worth something, Cramer told viewers, but probably nowhere near where they trade today. That's why he reiterated that investors need to stay away until everyone who needs to sell the failed initial public offering gets an opportunity to get out.

Cramer said he's not here to blame the company for its IPO disaster, nor to praise its CEO, Mark Zuckerberg, for announcing that he won't sell any of his shares for at least 12 months. Instead, Cramer chose to focus on the why behind Facebook's sudden change of fortunes, the transition from a desktop-based Internet to a mobile one.

What's happening in today's Internet is not unlike how the desktop Internet unseated print media as the primary means by which Americans got their news. In the beginning, the lower cost structure of the Web allowed companies like Cramer's TheStreet ( TST) to provide more, better and faster reporting than newspapers could, which drove eyeballs and tons of ad dollars. "It worked for a while," said Cramer, until the print industry moved to a hybrid model with both print and digital distribution.

Today, the same is happening to the desktop. More and more consumers browse on phones and tablets, ignoring just about every ad in the process. Cramer said Facebook surely knew this transition was coming but likely underestimated just how fast it would happen. He said company executives chose to raise money at all costs during its IPO, which set up the drastic decline that's now in progress.

Facebook has declining fundamentals, said Cramer, and with more share lockups set to expire soon, there's no telling just how low shares can fall. Just as Amazon.com ( AMZN) hurt brick and mortar retail and Apple's ( AAPL) iTunes crushed CD sales, so, too, will the mobile Internet hurt the desktop advertising model.

Facebook will eventually figure out how to monetize mobile, Cramer concluded, but until they do, the stock is far too risky to touch.

Lightning Round

Here's what Cramer had to say about callers' stocks during the "Lightning Round":

Chipotle Mexican Grill ( CMG): "This hit my downside target and I would try some CMG here."

Sprint Nextel ( S): "I want to buy Sprint right here."

NovaGold Resources ( NG): "I like the SPDR Gold Shares ( GLD) but not NovaGold."

Roundy's Supermarket ( RNDY): "I'm not happy with how this stock acts, nor with its quarter. This has been a disappointment."

Exelon ( EXC): "It's been terrible but it's OK. They're overdoing the negativity."

American Tower ( AMT): "I want to buy this stock. This is the way to play worldwide 4G service."

A Pleasant Sunrise

In a second "Executive Decision" segment, Cramer sat down with Mark Ordan, CEO of Sunrise Senior Living ( SRZ), a stock that just four years ago traded at just 27 cents a share and teetered on bankruptcy. However, recent shareholders have seen a 112% return on their investments in Sunrise thanks to the Aug 22. announcement that Health Care REIT ( HCN) would be acquiring the company.

Ordan said a successful turnaround needs to have something at the core that management can latch onto and build on. In the case of Sunrise, he said the company had an unassailable brand, demographic trends in its favor and staying power to see through the tough times. Asked how Ordan was able to clean up the company's horrific balance sheet, he said Sunrise stakeholders all wanted to work to rebuild the company, which allowed them to chip away at the debt little by little.

When asked what investors should look for in a turnaround, Ordan said they must look closely at the management team. Are they willing to fight their way through or are they looking to move on to the next thing?

Finally, when asked about health-care trends for seniors, Ordan explained that Americans are living longer but with more illnesses than ever before -- which is why Sunrise has such a strong future. He said his company provides an essential need, a place for seniors to call home.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer answered the tough question, "Why own stocks at all in September, historically a down month for the markets?"

Cramer said that while he'll never stand in the way of investors wanting to take profits, there are lots of examples of not selling all your stocks and going home.

First is Heckmann, mentioned earlier. That stock was up 37% Tuesday alone. There's also Medicis Pharmaceuticals ( MRX), another stock up 38% Tuesday after the company announced it's selling itself.

Cramer said he's still a believer in Bristol-Myers Squibb ( BMY) and also Mellanox Technologies ( MLNX), still an undiscovered stock that's already up 260% for the year.

Finally, there's Medivation ( MDVN), another pharma play that's up 135% for the year, and over 4% alone on Tuesday on positive news.

These are just a few needles in the haystack, said Cramer. Investors will give up too much if they sell everything. Don't give up.

--Written by Scott Rutt in Washington, D.C.

To email Scott about this article, click here: Scott Rutt

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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL and BMY.

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