Investors are always enamored by growth, and sometimes they are willing to pay anything for it. However, in Jim Cramer's opinion—beauty is only growth deep, and that's how the averages plunged on Tuesday.
"Anything more substantive than that, anything that represents, say, value, quickly takes on the appearance of being worthless," the "Mad Money" host said.
After the bell, Apple reported, and Cramer still thinks the stock is incredibly cheap, trading at just 13 times earnings. But that is because investors are always worried that iPhone sales will be slower than expected, and on Tuesday they actually were slower.
The wave of investor shock took down any stock related to Apple, such as Avago and Skyworks. How low can it go?
"Tug of war. I say own it, don't trade it; the stock's too cheap to sell, but be ready for some downgrades based on a 3 million iPhone shortfall," Cramer said.
However, snap judgments always lead to bad decisions in Cramer's opinion, and he saw them all over the place on Tuesday. Chipotle saw its stock plummet 8 percent after the close because of a story headline and then jump back up after the company explained that things had actually gotten better during the quarter.
"Attention, morons who sold this stock down 40 [basis points]: please stop trading on the Chipotle headline numbers already," Cramer said.
Read More Cramer: Apple is ready for a downgrade
Based on the fact that Fed Chief Janet Yellen has made no secret about the fact that she wants to raise interest rates later this year, Cramer decided to help investors immunize their portfolios from a rate hike by giving a list of companies that thrive when rates go higher.
Traditionally, when rates go up, Cramer likes to buy the banks. Especially the big money ones like Bank of America, Citigroup, JPMorgan and Wells Fargo. However, for ages they has been troubled by legal issues with the Justice Department, and various other issues have made this group unpredictable from quarter to quarter.
Until now. Most of the major banks have now reported, and Cramer thought their second-quarter results were pretty good. Thus, he believes that they could do a heck of a lot better once the Fed tightens.
"If that is the case, then you really need to own a bank stock," Cramer said.
After a hideous day on the market on Tuesday, Cramer thought it would make sense to take a look at the sectors that bounced back the hardest after the last selloff.
That is why he decided to turn to the charts and take a closer look at retail, which has held up very well lately. And to strengthen Cramer's case for retail, the technicals have been very strong, with money accumulating in major positions ahead of the next move higher.
For insight, Cramer spoke with Bob Lang, a technician who is the founder and senior strategist at ExplosiveOptions.net and a colleague of Cramer's at RealMoney.com.
What caught Lang's eye the most was that the retail ETF, called RTH, only dropped about 4 percent in last month's big selloff, and has since rebounded like crazy.
"However, as much as Lang likes the retail group in general, he still thinks you need to be selective in order to pick the biggest winners," the "Mad Money" host said.
Based on the charts, Lang thinks Nordstrom, Restoration Hardware and Tiffany could be hot retail tickets that are headed higher.
Cramer also felt it was time to address a big elephant in the room—Netflix. Considered one of the greatest growth stocks of our era and leader of the S&P 500 for the year. So how the heck did so many investors miss out on the opportunity it presented?
"The puzzling thing, for me, is that even though Netflix was one of the most obvious stories out there, with a beloved product that represents one of the greatest bargains of all time, somehow tons of investors convinced themselves not to own this amazing stock," the "Mad Money" host said.
Cramer thinks the issue comes down to two big reasons. First was valuation, as based on traditional metrics the stock has appeared to be ridiculously overvalued. But as Cramer has always said, you can't use a traditional valuation analysis to understand Netflix.
The second reason is investors' excessive focus on the company's quarter to quarter performance. Cramer reminded investors that this will always be a long-term story, yet the stock has been a real wild trader that skyrockets on positive earnings and plummets when the company disappoints. So if you were only looking at the next quarter, you could have missed the 3 year run in Netflix.
Cramer also watched one breakdown after another of high quality oil stocks and master limited partnerships, and was completely boggled. How could he have been so wrong about oil stocks?
"I wonder how I could have been so wrong because these stocks are now so far below where they were when oil was trading in the low $40s, and the oil companies were fighting for their lives," the "Mad Money" host said.
Ultimately, Cramer thinks that the relative valuations of these companies versus the price of oil or interest rates mean nothing.
He has searched high and low to figure out how he could have been so wrong and reached two conclusions:
No. 1 Oil is going dramatically lower, or
No. 2 This has nothing to do with the fundamentals of the companies, and there is a gigantic liquidation going on by hedge funds..
"Take your pick. Right now, though, it doesn't matter. When it comes to oil if you are long, you are wrong," Cramer said.
Read More Cramer: Why I was so wrong about oil
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
Chevron Corp: "Chevron I think is okay, the dividend, I think you would sell the stock here. It's having a little bit of a bounce. I would sell it into the bounce. There are better, higher quality oil companies that are down much more."
YRC Worldwide: "No, not with United Parcel under pressure. I think United Parcel has a much better situation, that's what I would go with."