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NEW YORK ( TheStreet) -- Can individual investors make money in a clueless market that seems change its mind by the hour? That was the question Jim Cramer pondered on Mad Money Monday.
Cramer explained that in order to investors to truly understand what's going on with the markets, they need to first understand one thing: Hedge funds trump everything. Cramer said hedge funds now manage so much money that when their computer-guided algorithms decide to make a trade, the markets follow.
Right now, the hedge fund super-computers are trading around a single concept -- when oil prices fall, sell everything. The thinking is that falling oil prices mean a slowing economy and an uptick in unemployment, Cramer explained.
But oil prices are not only determined by demand. It's just possible that lower oil prices are a result of excess supply from the U.S., Saudi Arabia and others. That's why every time the markets sell off, a second cohort of investors, the bulls, steps up to the plate and buys stocks like the airlines and the consumer packaged goods, both of which profit from cheaper oil.
Cramer said he's siding with the bulls and, along with the airlines and packaged goods stocks, thinks that restaurants like Chipotle Mexican Grill (CMG - Get Report) are a good deal, as are the biotechs and social media names.
Cramer said picking stocks based on algorithms is insane. Investors need to use their brains and pick stocks that can outperform the averages over the long term. Use common sense, he concluded, and you'll be able to profit from the hedge fund volatility.
Executive Decision: David Pyott
For his "Executive Decision" segment, Cramer sat down with David Pyott, chairman and CEO of Allergan (AGN - Get Report) , which today delivered a 2-cents-a-share earnings beat amid a hostile takeover attempt from Valeant Pharmaceuticals (VRX) .
Pyott noted that this quarter, which saw sales growth of 17%, was the best quarter in the company's 64-year history. He said sales for all Allergan's products, from Botox to eye care, are increasing.
When asked about the Valeant bid, Pyott said it's ironic that Valeant is attempting to buy Allergan with its own balance sheet. He explained that Allergan has been very disciplined with its capital and that's how it came to have $4 billion in cash on its books.
But while Valeant claims that it knows best what to do with Allergan's $4 billion, Pyott said analysts feel his company is worth $210 a share and most reasonable price-earning multiples agree. Allergan, he concluded, is easily worth over $200 a share as a standalone company and doesn't need Valeant to bring out value.
Cramer said he agreed, saying Pyott has done a fabulous job creating value for shareholders.
Cramer on Crude
Is Brent crude really headed to $80 a barrel as the analysts at Goldman Sachs are predicting? Not so fast, Cramer said -- he's more than a little skeptical given Goldman's past track record on predicting oil prices.
Cramer said it was just last year when the same Goldman analysts were predicting oil prices would see $150 a barrel amid skyrocketing global demand that was outstripping supply. Today, just a year later, the firm now thinks that same supply is more than enough.
Cramer said he's also suspicious on the timing of Goldman's calls because oil prices are already off 30% from their highs and most oil stocks are down 20% or more. Why choose to sound the alarm now?
While Cramer agreed that ample supplies of oil are helping to drive prices lower, Goldman's call suggesting that price can still plummet from these levels certainly raises more questions than it answers.
Executive Decision: Steve Spinner
In his second "Executive Decision" segment, Cramer sat down with Steve Spinner, president and CEO of United Natural Foods (UNFI - Get Report) , a distributor helping to supply the organic and natural food movement.
Spinner noted that every year more and more consumers are demanding more natural and organic foods, which is why United Natural is increasing its capacity to meet those growing demands. He said that by 2016 most of his company's new distribution centers spending will be complete, adding to his company's bottom line.
United Natural is expanding beyond just the basic organic items, Spinner added, noting that recent acquisitions add items like organic produce as well as specialty meats and cheeses to his company's offerings. United Natural now offers over 35,000 stock keeping units, or SKUs.
When asked about the types of consumers who buy organic foods, Spinner said that while Millenials grew up organic, the movement has only just started to reach what he called crossover consumers, who may buy only a few organic items.
Cramer said that United Natural Foods is trading at a discount given its business opportunities.
Executive Decision: Kevin Lobo
In a third "Executive Decision" segment, Cramer sat down with Kevin Lobo, chairman, president and CEO of medical equipment maker Stryker (SYK - Get Report) , which just posted a 1-cent-a-share earnings beat, sending shares just off their 52-week highs.
Lobo said Stryker is seeing strong demand for its joint replacement products, thanks in part to its five recent acquisitions that have helped it strengthen the company's position in orthopedic, specialty and neurological surgical procedures.
When asked about the orthopedic products for which Stryker is best known, Lobo said some procedures, such as knee replacement, are deferrable procedures that tend to increase as the economy improves.
Lobo also commented on Stryker's recent acquisition of Mako Surgical (MAKO) . He said surgical robots tend to be a polarizing issue for people but will be a game changer over the long run. He said knee replacements will be the sweet spots for robots over time.
Cramer said Stryker has been a long-term favorite on "Mad Money" and he sees no reason to change now.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt