Jim Cramer has a message for CEOs and shareholders about the market on Thursday; it doesn't matter how well a company is doing, or how much it beat estimates. Good news won't stop stocks from going down.
"With a few exceptions that are worth being constructive about, we have a first class bear market going and as I tell CEOs all the time, you need to stop taking the losses personally," the "Mad Money" host said.
Cramer thinks this market stinks, and it will keep sinking until it gets so low that the weak hands who keep expecting something better surrender their selling.
Positive action within companies simply won't have a notable impact on the market, so investors should stop being frustrated. Cramer went down the list of a few examples.
First are the horrendous problems of Volkswagen, which are spilling over to hurt all automakers. But what is bad for the goose is good for the gander, meaning every other auto company in the world could benefit.
Just because Volkswagen has some serious problems on its hands does not mean that people will stop buying cars; it means they may stop buying Volkswagens, which is more business for every other company in the industry.
"It is nuts to think that people will stop buying cars because VW rigged the emissions tests. Yet, nobody cares right now. At some point they will, just not now," Cramer said. (Tweet this)
Caterpillar, a large stock in the Dow Jones industrial average, sent shock waves through the market Thursday when it announced a shortfall of $1 billion in sales on a $49 billion basis. Additionally, it announced layoffs of as many as 10,000 workers as a result of the shortfall and weakness in various end markets.
The "Mad Money" host thought that Caterpillar was bizarrely honest about things. It pointed out twice in its release that this is the third consecutive year of sales going down, and at this pace it could be the first time in its 90-year history that it had declining sales four years in a row.
"That is an astonishing fact given that Caterpillar has been through a heck of a lot of downturns, not to mention the Great Recession and the Great Depression," Cramer said.
Historically, Cramer would have recommended investors to buy into the weakness. However, he still thinks that the company's revenue forecast is still way too optimistic given the horrendous backdrop.
"Even though the stock is down 28 percent year-to-date with a plus-4 percent yield, CAT remains a sell, despite the fact that the company still produces the best big machines on Earth," Cramer said.
However just because it is a bear market right now, does not mean Cramer cannot be constructive about individual stocks that can work in a difficult environment. In fact, these are the stocks that will soar once the smoke clears.
That is why Cramer took a closer look at Eli Lilly, which has been a Wall Street punching bag for years. It continually promised that it could develop something revolutionary in the pharmaceutical works but never really delivered.
That was until Thursday, when the stock shot up 6.5 percent in a single session from positive diabetes data. The stock is now up 23 percent, year-to-date.
"I'm thinking Eli Lilly might be exactly the kind of recession proof stock that you should buy into weakness right now," Cramer said.
Sometimes, one of the few things that can get a stock roaring is when an activist investor decides to get involved with a company. But Cramer says to watch out, because activism is not always a good thing.
Cramer shared the cautionary tale of Timken, which was wrecked by activists who simply didn't know what they were doing.
"It is important to remember that activism does not always lead to positive results. In fact, sometimes these activist investors turn out to be dead wrong and their meddling actually destroys value," the "Mad Money" host said.
Timken was a classic cyclic stock, a maker of high-performance and alloy steel as well as various mechanical components. In 2011, business began to slow due to the worldwide economic uncertainty of the time, and the stock started to trade sideways.
In late 2012, activists pounced on the company. Both Relational Investors and the California state teacher's retirement fund took Timken under siege. They wanted Timken to break itself up into two separate companies: one for highly engineered mechanical components and one that would be more of a commodity steel maker.
The worst part is that the activists from Relational Investors who pushed for the breakup didn't even stick around. They sold a large chunk of their Timken position in the second quarter of 2014, right before the breakup, and the rest in the third quarter into the spike after the spinoff.
"Just because activist investors get involved with a particular company, that does not necessarily mean they will create value," Cramer said.
Opko Health is another stock that has taken a beating recently. The $5.2 billion biotech company that has a major sideline in making diagnostic tests roared up more than 90 percent in the beginning of June from the strength of its diagnostic and pharmaceutical business.
However, in the past few months the stock has lost more than half of its value. Cramer attributed the loss to June 3rd when Opko announced it was acquiring the full service clinical laboratory company Bio-Reference Laboratories for $1.47 in all stock. Wall Street hated the deal, and the stock sank 15 percent he day it was announced.
To hear the story straight from the source, Cramer spoke with Opko Health's chairman and CEO, Dr. Phillip Frost.
"In all my years of being in the pharmaceutical business this is probably the best and most interesting acquisition I've ever made," Frost said.
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
Cypress Semiconductor: "The stock has been killed, the yield is fine. What can I say? It is in a bear market, and it is a cheap stock. I can't back away from it now with that yield."
Blue Buffalo Pet Products: "We looked at it and we thought it was expensive versus its growth rate, and that has been proven by the fact that the stock keeps going lower."