Cramer advises patience, not panic, saying don't dump stocks in this sell-off

  • Jim Cramer cautions against dumping stocks in a panic, saying it's a big mistake when the market is only down a couple percentage points.
  • "The panic is so ripe that it is no longer a strategy," Cramer says.
  • The Dow dropped more than 400 points midmorning Tuesday, while the S&P 500 plunged 2.2 percent.

CNBC's Jim Cramer cautioned investors on Tuesday against dumping their stocks in a panic, saying it's a big mistake when the market is only down a couple percentage points.

He spoke as stocks were tanking on Tuesday. The Dow Jones Industrial Average was down more than 400 points, or around 1.7 percent. The S&P 500 was down 2 percent as the industrials and tech sectors underperformed.

Dow components Caterpillar and 3M were getting slammed Tuesday after reporting disappointing quarterly earnings results.

"The panic is so ripe that it is no longer a strategy," Cramer said on "Squawk on the Street." "I'm offering right now a 'cool yourself' [strategy.] ... I don't want to be a seller down 2 percent."

"If you sell down 2 percent, you better have a darn good reason," said Cramer, host of "Mad Money." He added Tuesday's session appears to be a "garden variety" sell-off.

The markets fell Monday in part on worries about a deluge of corporate earnings reports coming this week.

The S&P 500 has dropped for four sessions in a row, and 11 of the past 13 sessions, while the Dow and Nasdaq are on pace for their worst month since January 2016 — all through Monday's close.

Cramer has previously advised that sell-offs that occur during earnings season often provide great opportunities for investors to build positions in top-notch stocks.

On Tuesday, Cramer said he would only sell if it appeared the market was going to down roughly 3 or 4 percent.

— CNBC's Elizabeth Gurdus contributed to this report.