Jim Cramer's 'Mad Money' Recap: Use the Volatility to Make More Money

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NEW YORK ( TheStreet) -- The market's volatility may be annoying but smart investors should be using the market's ups and downs to make money, Jim Cramer said on  Mad Money Monday.

The markets are clearly not being driven by the fundamentals but by the whims of hedge fund managers trying to make sense of the of the world's topsy-turvy economies, he added. But right here at home good things are happened, as today's uptick in consumer spending proved.

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Indeed, the U.S. consumer is taking advantage of lower gas prices to spend more and dine out more, which is why Cramer continues to recommend buying retail, restaurants and apparel stocks.

But beyond those sectors, good things also happened, Cramer continued, as the 24% gain in Athlon Energy (ATHL) and the 21% gain in Tibco Software (TIBX) proved. Cramer called these mergers and acquisitions "wealth-creating moves" that won't be the last we'll see in this market.

Cramer noted the old adage of "buy low and sell high," telling viewers to lighten up on their holdings the next time the market soars so they can buy them back at lower prices during the next inevitable selloff.

Why So Few LBOs?

With Tibco Software announcing that it's being taken private in a leveraged buyout deal, Cramer said it's worth noting just how rare leveraged buyouts have become.

Overall, mergers and acquisitions are up 20% so far this year, Cramer noted, yet LBOs have only seen a 6% rise despite the fact that private equity firms are sitting on mountains of cash and can borrow even more at very cheap rates.

Why the disparity? Cramer said it's because in the private equity business model firms make acquisitions, slash costs and improve operations, then sell the new leaner and meaner companies back to the public markets in initial public offerings. But with so many companies having already cut costs to stay alive, there aren't many good takeover candidates for private equity to buy.

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That means public companies have the advantage, as any company they buy can instantly cut costs by exploiting the synergies that private equity can't. Cramer said it's more likely we'll see hybrid deals as we saw last year with Heinz. In that deal, private equity teamed up with Warren Buffett's Berkshire Hathaway (BRK.B) to get the deal done, making it the best of both worlds.

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