satisfaction by j.d. power. (natalie) ooooh, i like your style. (vo) so do we, business pro. so do we. go national. go like a pro. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends, just trying to save a little money. my job is not just to entertain but to teach and coach you how the market works. so call me at 1-800-743-cnbc. today may have marked the beginning of a possible reversal as many of the stocks that had the most hideous moves down in the morning, experience what seemed like a whoosh. being the big sellers seemed to finish selling. dow one point down 95 points before rebounding to close down

41 was up just a few minutes left. s&p dropped .49%, again, much worse, nasdaq was ugly at one point but sunk only 1.08%. i count as possible not probable. because apple didn't shoot the lights out after the close, which will cause some serious hand wringing at the opening bell because it is a bell weather. yep, apple didn't sell enough iphones, didn't make enough off each one. and even though the number that was reported was terrific, the guidance was distinctly subpar and most surely weigh on the market tomorrow. we can evaluate this market on case by case, stock by stock, with more to follow tomorrow stemming from that apple report. we have to get deep into the weeds to figure out what's ailing this darn thing. why we've been engulfed in the huge wave of pessimism and confusion in the last three weeks of 2014. so let's begin with approximate cause. let's begin with the employment

report we got back on the 10th. that's what changed everything, people. when i was writing "get rich carefully," i spent a huge amount of time analyzing what precipitates sea changes in the market. one predictor, the only forward-looking noncoincidental piece of data is the labor department's nonfarm payroll report. the stench of that last number hangs over our markets for many, many weeks after. in short, sets the tone. in a very weak figure like that last one signals the possibility, yes, you have the whisper of a recession. and that recession's possibility has been in the air since the reports came out. so worry number one, the jobs number is called into question the durability of our country's recovery. the strength of the autos, which were the bedrock of this recovery until we heard the ceo of auto nation say that auto inventories are beginning to back up. that's a new and negative development. called into question the housing related stocks and done with the commercial construction stocks

where the architectural billings index has, indeed turned down. slashed us real bad. as it's the most important group for the economy's next leg up because commercial construction puts so many people to work. and then there's the most glaring breakdown since the employment number, retail. >> the house of pain. >> surveying the post holiday landscape, we find that only three retailers, costco, macy's and starbucks delivered consistent 5% plus u.s. comps, meaning how they did last year. most retailers reported horrendous same-store sales. this is a crucial group coming off a crucial quarter. and unfortunately, it's been confirming the negative tone set by the employment weakness. heck, the apple stores probably did. i mean, you know, whatever was in the mall, people. now there's cross currents playing havoc with retail. going into the holidays, there was the presumption the consumers weren't on the ropes, only spending money on the hard goods. but the shocking numbers from gamestop and best buy ended that. we started blaming the weakness on the government shutdown, the

miserable weather, we'll talk later on from ethan allen about these variables. but, you know, they were all kind of swept away when howard schultz took our breath away, the ceo of starbucks and came out and said these cyclical one off concerns were not the cause of retail weakness. he says we're witnessing a seismic secular shift away from mall traffic and migration to online shopping, which explains why only starbucks, macy's and costco did well. macy's has the best web presence and costco has the lowest prices because of the club status. coming into the 2014 after the labor report and realize, one, we lost autos. two, the housing-related stocks not working. three, commercial construction, big question mark. and retail, not a question mark, just bad. a huge chunk of what worked in 2013 now has been eliminated. the big portfolio managers rapidly switched directions after that labor report and headed to tech, financials and the industrials. and if you want to know why we got hit hard on thursday and friday, two of these new leadership groups slammed into a

wall, the financials and industrials. the techs added to the freight today, first because of rumors of incredible weakness, and then after hours from a disappointing number from seagate goes into pcs. the industrials skewed toward global growth including china. despite reporting decent revenue growth since the quarter began, the now well publicized problems of the chinese banking system seem to trump the narrative of worldwide growth. this is a sudden change. right now, trumping the european comeback which is a real one lost in the shuffles that are american industrial strength is still very much on course as represented by the surge and transports based on the real positive data from the rails and, of course, caterpillar. the worries about autos, housing and retail point to those going off course shortly, at least that's the perception. without china, the industrials thesis seem naked and weak. and i hasten that with the terrific report from caterpillar this morning which catapulted

the stock $5 was more of a u.s. success story and not a chinese one. and the possibility of solving a potential bank blow-up in china didn't soothe those naysayers either. just wait until they see the lunar new year's slowdown. not kidding. how about the financials? they looked good going into the quarter and good coming out with low loan losses, what the banks make off your deposit. but the sudden worries about china have caused a flight to quality into u.s. treasuries which has driven our interest rates down. remember, the bond prices go up, rates go down, to levels that could return the banks to this awful net interest margin shrinkage that nobody likes. tech was the lone standout until today. and even european tech is gaining strength as we heard last week from avnet, not that you would have heard other than on the set here. the good news is being ignored because of the beast that is china and the sudden worry about apple. on top of all of these woes that

we've been articulating, there's twin blind sides from argentina and turkey. and the emerging markets get from the next leg of the decline. the perception at this point these aren't canaries in the coal mine, but coal miners are dropping like fly. turkey used to be a secular growth oriented state but now a little more backwards state that embraces religion over growth. meanwhile, argentina is going the way of venezuela. what's amazing is their currency's held up at all going into the transitions because they've been going on for months -- not that they just created last week. of course, now we have to watch the real because brazil has a lot more people than argentina. now we have a world where most money managers are out of position at a moment when consumer spending may be stalled, rates are dropping quickly, and the thesis that worked coming into the year have been rocked. making things worse is the fact before the declines of the last three days, we haven't had a big

pullback in ages which produced too much euphoria. hence why people don't know where to turn. they're just fleeing en masse out of fear. there's a pattern to all of these selloffs. the initial shock wave, everything gets crushed, take your cue from the bonds. right now, saying go back into the bond market equivalent recession stocks that have gotten out of favor. they're saying select special situations where companies are self helping with breakups, huge buybacks or mergers. i've got a real good one coming up later in the show or where activists are playing a role. the bonds are saying we could be in for recession, so invest accordingly. and bad news, it just now seems like bad news, no silver or fed linings i see here. i don't think we're going into recession. a flight to quality in bonds could be misleading. powerful but misleading. after a period of treasuries going higher, you can revert to more normal investing based on earnings expectations as we go through this selloff.

still, though, the bottom line for the moment is that the panic's not going to produce long-term positive results for you. you simply have to wait for big money to reposition and take advantage of the wreckage of the repositioning, a lot of collateral damage. betting that the international woes are fleeting, u.s. strength is in pause mode, the pent up demand can drive things and some of the consumer weakness is, indeed, one off and not all cyclical or secular. that's where i come out. so examine the pullbacks of stocks that reported great numbers and good guidance. take a hard look at apple, we're going to do more work on that. but you have to have conviction we're in reset mode and nothing else. accept that the stocks that were working may give up this year's gains if they haven't already. and most of us, remember, stocks are simply rotating in business as usual fashion. something we haven't seen in a long time, been out of business. and even though i rate as a garden variety selloff, it doesn't mean that you won't have pain while your portfolio gets trimmed. can we go to michael in california, please, michael? >> boo-yah, jim. mike here from paradise, california.

and i got 3d, jim, and what's going on with 3d? >> well, it's funny, i was speaking with my friend on his show this morning and he mentioned to me, look, the people who bought the 3ds forget how long they've been up. and i couldn't have been more articulate about it. the truth is 3d is up huge. and while the earnings are okay, they're the same as i was looking for in 2012. so i think the stock's overdone to the upside and now has to overcorrect to the downside. sorry, that is the pattern. can i speak to joe in pennsylvania? joe? >> caller: hey, jim, how are you? >> all right. how are you, joe? >> caller: good. just wanted to get your opinion on noble energy, nbo. >> yeah, noble energy. look, this has been a horrendous stock and stephanie link and i have been going back and forth back and forth, able to sell some at higher levels. fortunately noble did cash an upgrade after the bell. i actually am trying to take a two, three-year perspective, as silly as that sounds. as always, please do not panic, this is not a time to panic

because the big money is repositioning. it's a reset mode. always a lot of pain in the reset mode. those who don't take pain will, of course, never get any gain. "mad money" will be right back. coming up -- the best medicine, biotech nursed a healthy 60% return last year, but the sector's now getting slammed in this market wide selloff. don't miss cramer's two bargain buys that could soon have a swift recovery. and later -- meal deal, food giant sysco soared in december after announcing a proposal to merge with its biggest competitor. but should you take a bite before regulators give their seal of approval? cramer's chewing it over. plus -- no place like home? the housing market showing new signs of life. but is it enough to help ethan allen decorate your portfolio? or is the consumer too strained to splurge on new furniture? cramer's pulling up a chair with the ceo. all coming up on "mad money."

don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.

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when the market really gets obliterated like we've seen over the last few sessions, then pretty much everything gets sent lower. like it or not, really, it makes sense. right now we're in the grip of a crisis that started with the emerging markets keeling over and intensified with worries about a bank failure in china. what stocks have been rolling over especially today? how about the biotechs? a group that is next to nothing to do with the emerging markets, right? or china in particular. no, the biotechs have been getting killed for one simple reason, they're up huge into the crisis. last week, rallied an astounding

66%, and the stocks have been up the most end up getting hit the hardest. it's the way it works, even if they don't deserve it. but we know deserves has nothing to do with it. if you're worried about a slowing global economy, then biotechs are the kind of stocks that can thrive in that kind of environment. and that is the precipitant of this decline. but here's the rub. they have a ton of momentum speculators in the shareholder base. notice, not investors. and those momentum players need to be taken out and shot before we get a bottom, and that's what's been going on in the nasdaq. in "get rich carefully," i call out biotech, the kind of stocks you can fall back on and moments when the market's getting clobbered. that's kind of where we are right now. i'm telling you about the four horse men that embody this trend, that celgene, regeneron, we've got to give these a rest. but these four stocks all have magnificent years in 2013, terrific runs this january, until the market fell off a cliff last week, too early to buy.

the last three sessions, though, practically seen the four horsemen sent to the glue factory. nothing's changed for the underlying companies as much as we want to think they have. after the current squall of selling, i bet the stocks bounce back. the hideous decline we're seeing is creating some pretty fabulous entry points as they go down. you know i'm a fan of the four horsemen and you have my blessing to buy anything of them in the weakness right here. don't buy all at once. but tonight, i want you to focus on a smaller pair of biotechs that were among the best performers in the space for 2013 because with the current selloff, you're finally, finally getting a chance to buy these two names prices a lot more reasonable than they've been. first break in the action they've had, isis pharmaceuticals and jazz. these two companies were $5 billion and $8 billion respectively fall somewhere between your typical one-drug wonder super biotech and the four horsemen of more established biotech. last year, frankly, they blew me away. listen to this, isis rallied in

2013. and as of last wednesday before the hideous selloff, it had a run-up in january. now, in the last three sessions, isis has been clobbered falling $5 or 5.9% down to $47. it's still got more to go, probably. the same thing happened with jazz, climbed 128% in 2013 and another 25% in the first few weeks of january before being crushed, obliterated. lost a quick 17% or 11%, dropping 142%. however, remember, these are still above where they started. so we know we got some more decline. that's okay because at these levels, they're finally working off the froth. if they keep going lower, you'll get those entry points. let me tell you why, though. the one chew there, first isis this company's a game changer when it comes to treating genetic diseases. works by the rna, not the dna. here's basic biology 101. if you think of your dna as the blueprint that tells every cell in your body what to do, your rna is the subject that reads

those blueprints. the contractor. for example, you have some kind of genetic condition where part of your dna -- stopping your rna so it can't deliver the bad instructions or they can alter your rna so it ends up delivering totally different healthier instructions. isis can change a whole host of diseases than what we see from the traditional drugs. that's how isis can have multiple drugs in the pipeline. and we're talking orphan drugs here for rare conditions. we adore orphan drugs here on "mad money." but because these orphans get extended patent protection and companies like isis can charge a fortune for them since the insurance companies tend to pay. right now, isis has 28 -- how do you get to be a hot stock list? 28 drug candidates in the pipeline, that includes a phase 3 trial for a drug that treats ttr that causes progressive

dysfunction in heart tissue and the peripheral nervous system, that affects 50,000 people worldwide. we should get data on that later this year. they're working on a spinal muscular atrophy. this is a huge and horrible problem. and could potentially generate $4 billion in peak sales if that gets approved. we'll get phase 2 data. plus, the company has a number of cancer treatments in phase 2 and phase 3, and this is a sample of what isis has in the pipeline. and not just some super speculative biotech with no products a year ago. the fda approved kynamera. but the real story here is the platform that they have built. protected by over 1,500 patents brought in partnerships with major players. players like glaxosmithkline, sanofi and biogen. i find this getting attractive. chartists say it's broken. all right. how about jazz pharma?

a more established player, period of timable, the stock trading at an amazing 17 times next year's earnings despite having a 19% long-term growth rate. right now, jazz gets roughly 70% of the sales from an orphan drug for a rare type of narcolepsy that can sell for as much as $97,000 a year. this is patented, protected unbelievably. doesn't expire until 2019. on of that is sleep apnea drugs in the pipe. also a drug for acute lymphoblastic leukemia. the body rejects transplanted tissue, this one in phase 3, could be a big deal. last but not least, in december, jazz bought gentium for post stem cell transplant patients. this has been approved in europe, should be launched over here sometime this quarter. thing about jazz here, it's being viewed as a takeover candidate. remember how parago bought elan boy, that stock went up even

though people didn't believe in it other than "mad money." the lower the stock goes, the more i like it. counterintuitive for momentum players, not for "mad money." here's the bottom line. as the stocks get slammed in this selloff, they only become more attractive. i think that's especially true for two that have not gone down in ages. smaller fish jazz and isis. and you're on the verge of your first good entry point. you want 100 shares, $25 may be an order when it drifts down tomorrow and then you buy some on the way down as we're seeing across the board high multiple momentum stocks getting hammered and these are two of the best. after the break, i'll try to make you more money. coming up -- meal deal, food giant sysco soared in december after announcing a proposal to merge with its biggest competitor. but should you take a bite before regulators give their seal of approval? cramer's chewing it over.

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i've got an idea for you. a stock that deserves to be trading much higher than where it is right now. that's sysco with symbol syy. not to be confused with cisco. why sysco? here's a company that's the largest wholesaler, supplier of food and restaurant supplies to restaurants in america. why the heck am i recommending this stock in a moment when the earnings for most restaurant stocks save for brinker, you know that as chili's have been tepid across the board? sysco gets 60% from restaurant sales, another 40% from hospitals, colleges, universities. shouldn't we be waiting for the restaurant business to pick up before we buy sysco? head scratcher? no. here's the thing, i'm not recommending the stock because i think business is about to start booming organically. i'm recommending sysco because the company did something smart last month. it embraced what i called the shawshank redemption theorem. comes down to a simple choice.

get busy living, or get busy dying. back in early december, sysco made the choice to get busy living. the company announced it's acquiring u.s. foods, the number two domestic food service distributor for $3.5 billion and the assumption of $4.7 billion a day. and i think this is a smart deal for sysco. the market agreed with me at the time, sysco stocks soared on the news. sysco shot up from $34 to open at $43, and magnificent 20% move in hours. then over the course of the trading day, sysco settled down, pretty phenomenal. remember, typically when you get a takeover, the stock of the acquirer goes lower not higher, even when the target's privately held like u.s. foods. but in get rich carefully, i highlight as one of my seven long-term themes. these are companies that do big deals in order to dominate their industries. if this current selloff is signaling we could potentially enter a lower growth environment, you want to own stocks of companies that have

taken matters into their own hands by consolidating their industries. i mentioned a number of stories in the new book. one way you can tell we're seeing this kind of transaction is when the stock of the acquirer jumps on the new deal. that's what we saw when pvh bought tommy hilfiger and warnaco in 2012. hey, how about when they announced they were taking over. all companies decided they'd rather get busy living than get busy dying. and now with the u.s. foods purchase, sysco has joined the club. now the stock is only $1.5 above where it was trading before anyone knew about the deal. it's like you're getting this u.s. foods transaction that everyone was crazy about for free because of the downturn in the market. to me, that's nuts. but it's the kind of craziness you want to take advantage of because this stock belongs at a higher level. this deal combines the number one foods player, sysco, with the number two, u.s. foods. right now, sysco has 18% of the food market, and u.s. foods has

9%. after the deal, sysco will control 27% of the market. while it's not an oligopoly it represents massive consolidation we adore here on "mad money." they're taking out their competitor of scale. that's good news. lately sysco's gross margin after the cost of sales has been under pressure as the company's been aggressive in order to take market share. sysco will remove an enormous amount of pricing pressure, which means the gross margin can be able to improve. this isn't a perfect story. at the moment, there's concerns that the federal trade commission might actually block the deal over antitrust concerns. you know what, i have a little trepidation, i'm not totally worried. the combined company with a market share of 27%. that's not really a monopoly. at worst, they might force sysco to divest assets. but if they have to do, i think it'll be worth it. we saw that with the airline deal. still worth it. this merger could have $700 million to $800 million in

upfront expenses. u.s. foods has some operational issues. however, sysco, which is a good operator will be able to whip u.s. foods into line. as for the upfront costs, okay, sysco's talking about generating synergies in the range of $600 million a year from this deal, mostly because they'll be able to rationalize their distribution. you've seen the big trucks, put them in one and they'll be cutting overhead. i actually believe $600 million number could be conservative. and even if it's not, i think it's worth it for sysco to make a one-time payment. the big thing here is with this deal, sysco's transforming the domestic food service industry. if you're a major restaurant chain, you want to do a deal, sysco will be your only choice. oh, and as much as i like the fact that sysco's taking its fate into its own hands, it's worth pointing out the company's doing just fine on its own. when they reported in november, they beat earnings estimates by 14 cents.

nothing to write home about, nothing to be selling for. the restaurant companies spoke at the icr consumer conference earlier this month, most of them were pretty upbeat in spite of the lower december. that's good for sysco again because of the 60% done with restaurants. here's the bottom line, we like it when a company takes control of its destiny by consolidating the industry it's in. we like it so much, i devoted a section of "get rich carefully." that's why sysco would have been in the book had it done it beforehand. and while the market initially acknowledged the excellence of the deal, it's pulled back now to a level where i think, 1.5 point above where it was before we knew about the acquisition, i think it's exactly the kind of stock you can buy tomorrow in this environment. had to give you something for tomorrow. tom in colorado. tom? >> caller: b-b-b-boo-yah from bobco country. >> i like number 18, but i also like this guy coleman who plays for duracell. >> caller: i like pot roast, too.

my question, jim, is whole foods. i've owned it for a long time and i'm still a big believer. do you think the stock can rebound? >> i think you have to look at whole foods in two ways. one is it's the dominant player. two, while it's exerting its dominance, not necessarily going to make as much money as you'd like because it's got sprouts nipping the heels, farm -- it's got that fareway, even. everyone's coming after them. can we let them defeat that competition and then win? i need to go to tim right now in california. not even a second. tim? >> caller: hey, jim, how you doing? >> well, i don't know, man, i feel a little like pot roast. what's up? >> caller: well, i've got a quick question for you on united natural foods. their ticker symbol is unfi. i was wondering what your thoughts were. >> i think that secular trend of unfi, the vitamin company, gnc, and, of course, hain, good places to be. this market is going to give you

adjective. we're trying to take long-term themes and harness and profit from them. looks like for me, it's the right kind of stock. and, remember, it's not csco, it's syy. stay with cramer.

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it is indeed time, it is time for the "lightning round" on cramer's "mad money." you say the name of the stock, i say whether to buy or sell. play until this sound -- then the "lightning round" is over. are you ready ske-daddy? we'll start with mike in new jersey.

mike? >> caller: whoo! boo-yah, what's happening, jim? >> you know, dealing with the selloff. how about you. >> caller: pretty good, actually. i'm rather enjoying the selloff, waiting for a good pullback. >> i like that! you're the one i'm looking for! the viewer i want. what's going on? >> caller: i appreciate that. i'm dressed up like warren buffett. i want to know about -- >> i've got to tell you, looks like there's a turn there. it's not my favorite, obviously. but, you know, i recognize a turn. they get it, you should buy it. i'm not going to back down now. can i go to abilena in california? >> caller: hi. >> yeah. you're up. >> caller: i just want to know if chevron is -- >> oh, chevron's good. i mean, look, chevron going to shoot the lights out? no. good solid balance sheet, good management. it'll go up over time. let's go to ugyen in new york. >> caller: hi, jim. thanks for having me on the show.

>> absolutely. >> caller: actually, you know, i was interested in the biotech stock -- >> too speculative for this guy. too hot to the touch. i've got to say move on. i need to go to sharon in maryland. sharon? >> caller: hi. >> hi. >> caller: i need to know about nokia. >> nokia's fine. the last quarter wasn't exactly perfect, frankly. getting the pullback, but it's a long awaited pullback and i'm actually a buyer of nokia. by the way, alcatel, i like that, too. roger in florida, please, roger? >> caller: boo-yah, jim. roger from naples, florida. i've got a new one for you lgi homes. >> yeah, i'd rather buy a home in florida than the home builders. there's somebody on @jimcramer on twitter said the home builders killed us. i can't reach in and choke that person because that's not the way twitter works. it's no the 3d like that. glenn in new jersey. >> caller: boo-yah, cramer. >> what's happening?

>> caller: hey, not much. listen, i'm interested in krispy kreme donuts. >> so am i, and that's why i'd like james morgan to come back on the show because i thought that last quarter was a nonstarter. and i didn't like it, and that changed my mind. a bad quarter on top of what i thought was a decent quarter makes me pause before i like. i need more info, so do you. aiden in minnesota. aiden? >> caller: yes, sir. how are you? >> fine, how about you? >> caller: great. trying to stay warm here, honestly. >> true. go ahead. >> caller: i had a question about this company called amt, american -- >> american tower, cci and sba have all been under pressure. i believe these are opportunities. amt if i could get it back to $75, $76, my level. and that, ladies and gentlemen, is the conclusion of the "lightning round." >> the "lightning round" is

sponsored by td ameritrade. >> coming up -- no place like home? the housing market's showing new signs of life. but is it enough to help ethan allen decorate your portfolio? or is the consumer too strained to splurge on new furniture? cramer's pulling up a chair with the ceo. ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. i worked a patrol unit for 17 years in the city of baltimore. when i first started experiencing the pain, it's, it's hard to describe because you have a numbness...

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all through the second half of last year, we notice that apparel wasn't selling well. but the consumer was simply spending her money on different things. more hard goods, home-related products. how many are questioning whether that thesis now still holds water? take ethan allen, interiors, eth, the network of roughly 300 design centers that serve pretty much all of your home decor, design and furniture needs. on the one hand, it's been pancaked over the last few weeks falling from over $30 to $25 and change today. but on the other hand, reported last wednesday and the numbers were better than feared, better than expected as the company managed to beat wall street's lowered expectations delivering 1-cent earnings beat with same-store sales up. management says they would have done better if not for the

government shutdown, the awful weather, and increased back orders of imported goods. how is the consumer really doing? and how is ethan allen weathering what many are calling a pause in the economy? let's check in with the chairman, president and ceo of ethan interiors to find out where his company's headed. welcome back to "mad money." how are you? >> good to see you. >> good to see you. >> i have not seen these in the store. please have a seat and tell us what we've got here. >> well, first of all, i'm going to make you an ethan allen retailer. so this set becomes an ethan allen design studio. >> look, i think there's one very needed. i don't see much up here. >> absolutely. >> you are now officially an ethan allen retailer. >> that means these are in stock and they can be bought right now? >> this is very important initiative, which is today you have to be relevant. relevant means that today people are, in fact, even wanting faster deliveries.

instant gratification is the name of the game. but at ethan allen, we have the opportunity of providing them, you might say faster deliveries and also custom. what i'm sitting on is an ethan allen chair that is what we call on-demand. in other words, it's in stock, and the same chair you are sitting on is made with different options, different fabrics, nail heads, so this one chair can -- is available at least 1,000 different options. >> wow. >> now, we've got both. so on-demand, on-custom, and officially launching it next week. >> that's important. because you have talked about creating urgency and traffic. those were the two terms you used in the conference call. urgency traffic. is that what this is about?

>> absolutely. you know, we -- you're examining yourself. we know this old saying if you keep on doing the same thing over and over again, it's insanity to think you're going to make a difference. other predictions were becoming more predictable. we decided that it was important for us to create what i would call promotions, events, which will create some urgency and traffic. and that's what we have done. >> you're also using direct mail to signal it? >> absolutely. in fact, i'm going to show you direct mail which is our going to go out and -- >> here we are. >> in february. next week. >> okay. >> and it's launching what we are sitting on, these two chairs. custom and on demand. so this direct mail reaches over 3 million households. and we've been sending it sort of every month it's going out. so the question of creating traffic. is it an important factor? now, of course, as you know, i stated that in conference call last week that our traffic increased in all the areas which were warm.

>> right. i thought that was really significant. because a lot of people were saying, wait a second, this cold weather is an alibi. you were the first conference call where you point-blank attacked the notion that weather didn't matter. weather mattered tremendously for your company. >> sorry. it did. our traffic was up in warm weather, but it was down in cold weathers. and it's sort of -- so in other words, if our weather was good, our traffic went up. >> now, one other thing you've always told me about traffic. if the stock market's down, traffic's down. now, let me ask you because i know you've got incredible controls and systems in your company. market was down last week, impact this weekend? >> well, this last -- this weekend was relatively good. >> really? >> the reason was this, because we created our own sense of urgency. >> okay. >> we created certain events which ended yesterday.

now previously, we will end all events at the end of the month and that's what created urgency. so i think that our traffic really has been good because of our initiatives, and certainly in those areas where the weather has been good. >> all right. we're getting many mixed pictures about housing. now, i'm a believer in the long-term pent-up demand theory, which is that there were so few households created and so many people stayed with their parents that it's only now things are getting better. are you seeing that similar demographical search that's positive the in your area? >> absolutely. however, you're going to have ups and some downs. but overall, i think the consumer confidence overall is good. >> you do? >> we do. we see consumer attitude is positive. now, having said all of that, in our industry, like everybody else, there's a lot more competition. in the last five, six years, you know, the world is different. look at our industry. >> but not amazon? >> okay. but i will tell you what's happened to our industry. five, six years back, it was

much more predictable. now, we are competing with what you might call lifestyle companies like pottery barn, like crate and barrel, restoration hardware. on the other hand, globalization and commoditization has created mass merchants, like, you have in grocery, home improvements. >> right. >> we have mass merchants, whose philosophy really is have lots of products and hopefully somebody would bite. the lifestyle companies like pottery barn and others, they are much more focused on one look. >> it's gotten more competitive. >> in our case, we provide. and we are going to, in fact, improve it. we are providing great product, great quality, great style, but both, but in a diversity of style from the new traditional to the contemporary. that's an advantage. >> well, it is. and you've got the breadth of product which is what america wants in the end. >> absolutely. >> that's the chairman,

president and ceo with a whole new initiative. the last quarter as things went along better, and yes, weather did matter. those who say it, you should take it off the equation, not the case with ethan allen, stay with cramer.

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>> when money talks, it comes to let's face it. sometimes it's just a game of -- >> the house of pain. >> pain. other times it is, indeed, a time of gain. >> house of pleasure. >> they've been joined at the hip for a long time, but over the last few months, the pain part of the equation seemed to disappear, all we have is the gain. two kinds of pain, the kind where you give up your gains and the kind where you take a loss. i know it seems ridiculous to those of you on the losing end of the stick today, but the decision to take profits is pretty much the same. if you think the stock is going down from here, you need to sell. if you think it's going to bottom soon, stay in or even buy. you need to be unemotional about this process. you don't want to make decisions based on your pain threshold, because the other shareholders are likely feeling the same exact pain as you are and they'll have pretty similar

thresholds, too, meaning all at once -- >> sell, sell, sell. >> initially you feel relieved when you do those sells. wow, at the very moment, a maximum pain you get relief, throw them away. but you're failing to recognize many others are giving up at the exact same time while still others have been waiting for you to capitulate. waiting for the juicy pullback to do some buying. and that's how opportunity knocks for the patient in stock bounce. the person who comes in longest stock with a big gain has the same amount of pain as the person who bought it. the reason i stress in all of my books you need to be selling on the way up because your pains lessen and your heads clear. you're about to have the same perspective as a buyer. that's why selling in strength is a liberator. you could always buy it back lower. let's take that fortunate person off the table. congratulations to you if you did that. what you need to do is figure out if you want to hold on through the panic, buy more or cut your loss. and you need to know what the company actually does. you need to know why it's going

down. you need to know whether it's the market bringing it down or the company itself. that may sound obvious, but do not laugh. ibm, twitter and starbucks. right now, if you're in ibm, you're faced with a decision. if the stock goes higher, sell, if it goes lower, sell, stays here, sell, bought it because of warren buffett, sell. starbucks reported a fantastic quarter on all counts. if you bought some at $80, you buy more down here. if you don't own it, you should be thinking about buying it. if you came up much lower, no reason because there's nothing wrong with starbucks. twitter is the toughest. nobody has any idea of how well it's doing. if you bought it on the way up at $70. you have to ask yourself, why did you do that? if you think twitter's going to dominate over the next ten years, fine. but if you bought it because it was hot, guess what, it's not. you have to hope it heats up again. i have no use for the word hope. hope should never be part of the equation in this business. i suggest you buy google or facebook, which were down

because of no particular reason. the decline in google was so ridiculous, takes your breath away. facebook also fell out of bed down to a good place to buy. remember apple's buyable at a certain point, too. maybe not yet, but it is cheap, lacks the growth of facebook and relative value of google. and what matters is your tolerance for pain. your pain tolerance does not just stem from your constitution, know. doesn't just stem from your fortitude. no, it stems from your knowledge. the knowledge of the situation. knowledge equals power in this business and knowledge can be the strongest painkiller there is in the stock game. if you don't have it, these days are excruciexcruciating. either learn to get knowledge about your stocks or let them take the pain. you shouldn't be owning stocks if you don't have the time or inclination to learn about what they do, what the company does. and this is from a guy that loves the process of investing. if you can't bring yourself to do the homework, it's literally not worth it. i know what you're going to do, you're going to buy high, sell low, lose too much money. stay with cramer. well another great thing about all this walking i've been doing is

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apple's cheap, what can i say? it doesn't have the pizazz that so many people want. and it's not going to have it. it's cheap. there's always a bull market somewhere, i promise to try to find it for you here on "mad money." i'm jim cramer. and i'll see you tomorrow! "american greed," a televised art auction brings masterpieces to the masses. >> i've got an opening bid at $100. >> it was like there was this whole other world taking place behind a curtain that i didn't know anything about. >> narrator: but if a rare picasso selling for $500 sounds too good to be true... >> i can't believe that these pieces are going at these prices! >> narrator: ...it probably is. >> i would be very careful about ever wanting to give my credit card up to these people. >> narrator: it's a picture-perfect scam by a real con artist. >> what could be more brazen than doing it on tv? >> once...twice...sold!