Cramer's 'Mad Money' Recap: Don't Panic!

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NEW YORK ( TheStreet) -- There's always a better time to sell than into a market panic, Jim Cramer reminded "Mad Money" viewers Monday as he commented on the market's huge losses, the worst day in nearly three months.

Cramer said that even if your outlook on the markets is negative, never ever sell stocks in the middle of a big move to the downside. Why? Because selloffs like those seen last week are always overdone to the downside, said Cramer, and within a few days there will be a rally, a moment of strength, where investors can lighten their loads and sell at far better prices.

Cramer recalled learning this lesson the hard way back in his hedge fund days. He said the markets are largely controlled by traders, those who can get in and out of the market quickly. So even if there are "experts" on TV saying to sell everything, that advice likely doesn't apply to the individual investor with longer-term investment goals.

So while this most recent weakness was caused by a misreading of the Federal Reserve minutes last week and further fueled by weakness in Europe, Cramer said it would be foolish to sell down here and raise cash. Use moments of strength like we saw this morning and sell into strength.

Cramer said the goal is to always buy at a good price and sell at a better one, which is why selling when the market is down over 200 points is never the right move.

Living at the High End

The rich are different from you and me, as F. Scott Fitzgerald wrote, and that's why companies that cater to the rich have stocks that are different, too. To that end, Cramer introduced his "Great Gatsby" index of luxury stocks. He said the list is not necessarily a list of stocks to go out and buy right now, but a way to measure the buying power of the high-end consumer.

Among the list of retailers in Cramer's Gatsby index are Nordstrom ( JWN), Ralph Lauren ( RL), Michael Kors ( KORS) and Lululemon Athletica ( LULU).

On its conference call, Nordstrom said it sees no slowing in the spending of its customers, which is why it was able to deliver a six-cent-a-share earnings beat on strong same-store sales, with positive guidance to boot. Cramer said Nordstrom is expanding into Canada as well as beefing up its Web and mobile businesses to help further bolster sales.

Ralph Lauren is another terrific high-end brand, Cramer said, a company that delivered a 22-cent-a-share earnings beat. Coach ( COH) may have fallen behind with its fashions, but not so with Ralph Lauren.

When it comes to growth, Lululemon is one company that tops the list, said Cramer. This company also delivered strong earnings and, with only 130 stores, has plenty of room to expand.

Finally there's high-end accessory retailer Michael Kors. Kors delivered a 23-cent-a-share earnings beat on better-than-expected revenue. Is Kors the new face of luxury? Cramer said he thinks so because Kors continues to surprise to the upside quarter after quarter.

More Riches

Continuing with his "Great Gatsby" index of luxury stocks, Cramer added a grocer, a restaurant and coffee chain with Whole Foods ( WFM), Panera Bread ( PNRA) and Starbucks ( SBUX), which he owns for his charitable trust, Action Alerts PLUS .

Cramer said that with 1,652 cafes, Panera is the high-end sandwich, soup and salad chain to beat. The company's restaurants enjoy tremendous customer loyalty, which means Panera can pass on rising food costs easily. Panera is growing earnings per share at 27% and the company plans on open 8% more stores this year.

Then there's Starbucks, a company that's expanding all over the world, especially in China, where it plans to become the preeminent aspirational coffee house. Growth trends remain strong as Starbucks, said Cramer, which is why his trust continues to own it.

Finally, Cramer said he remains a fan of Whole Foods, even though the stock has been crushed of late amid fears of slowing growth. Not so, said Cramer -- don't write off this healthy-eating giant. He said Whole Foods didn't cut guidance and growth should be returning to full steam soon.

Lightning Round

In the Lightning Round, Cramer was bullish on Travelers Companies ( TRV), American International Group ( AIG), Alcan ( AL), Southwest Airlines ( LUV), Principal Financial Group ( PFG), MetLife ( MET), H&E Equip Services ( HEES) and Manitowoc ( MTW).

Cramer was bearish on Corrections Corp of America ( CXW), EMC ( EMC) and Aflac ( AFL).

What's Up With Gas Prices?

With U.S. oil and natural gas production increasing by the day, why are gas prices at the pump still so high? Cramer said it has nothing to do with price gouging or speculating but a whole lot to do with a totally mismanaged energy policy.

Cramer explained that the U.S. actually has plenty of domestic oil and gas, but those resources are simply in all the wrong places and our refiners aren't matched up to handle it. There's a ton of oil stuck in our oil shale regions, he said, but there aren't any pipelines to get that oil to the refiners.

Then there are issue with the refiners themselves. Many converted their facilities to process heavier crude from the Canadian oil sands. Unfortunately, the Keystone XL pipeline has been held up in Washington, leaving these refineries with little oil to refine.

East Coast refineries that are able to process the lighter crude being produced by our oil shales can't do so because, again, there are no pipelines to move the crude east. Shipping might be a possibility, but an arcane law known as the Jones law prohibits crude from being transported on non-U.S. ships by non-U.S. crews. That's a big problem, said Cramer, as just about all tankers are made outside the U.S.

Just seven years ago the U.S. imported three million barrels a day of crude oil, noted Cramer, but today it exports one million barrels of refined petroleum a day. Why? Because prices are set on a global stage and it's more profitable to take U.S. gas and ship it elsewhere, especially given that -- you guessed it -- there are no pipelines to move refined gas to where it needs to be.

Cramer said all of these problems could be fixed with help from Washington, but without it things will continue to move at a snail's pace. Rail lines are being built to take the place of stalled pipelines, for example, but now additional tanker cars are needed. Using natural gas as a surface fuel would also help, said Cramer, but President Obama is unlikely to endorse natural gas anytime soon.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer opined on the looming government sequestration -- the massive budget cuts -- that now is only days away. He said he's going with what the defense stocks are telling him, and that's that sequestration isn't all that bad.

Cramer said the real impact of sequestration is likely to be only $44 billion, not the $80 billion plus the scaremongers are pitching. With so many government programs in need of being shut down, wouldn't $44 billion be a good thing, he asked?

Cramer once again pitched the idea of requiring hedge funds to pay ordinary income taxes as one quick way to increase revenue at the U.S. Treasury. But, alas, the hedge fund lobby, like that of the defense industry, is too strong to allow cuts to be made.

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

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

Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC
At the time of publication, Cramer's Action Alerts PLUS had a position in SBUX.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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