Jim Cramer discusses Monday's remarkable market comeback and the need for investment discipline

On Monday's episode of "Mad Money," host Jim Cramer discussed the day's wild market swings and explained the need for investors to remained disciplined when faced with such broad-based selling. Sign up and learn more about the CNBC Investing Club with Jim Cramer https://cnb.cx/3Ei22n4

Wall Street mounted a remarkable comeback during Monday’s session, and CNBC’s Jim Cramer believes investors who bought during the early declines should be content with that choice even if the stock market later retests its lows.

“These kinds of bottoms tend to be revisited, as the [S&P 500 has] now fallen 10% from its high, and those who bought at the lows today will scalp their gains” early in Tuesday’s session, the “Mad Money” host predicted.

“But the bottom line: If you bought into today’s weakness as I’ve been telling you to do, ... if you bought into what sure looked like a crescendo of selling, then I think you’ll end up being happy with your decision,” Cramer added.

Cramer’s comments Monday ultimately rest on what he called the concept of investment discipline.

“Sometimes, it feels like nothing works. Valuation? No. Sentiment? No. Earnings? No. When you get that feeling ... you have to buy stocks, not sell them, because it’s almost never as bad as it seems,” Cramer said.

On Monday, the Dow Jones Industrial Average was down about 1,100 points before turning around and finishing higher by 99 points. The Nasdaq Composite advanced 0.6% Monday after being down 4.9% earlier.

“At the bottom today, the sellers weren’t just afraid of the bear; they were afraid of a recession. The market goes down endlessly when there are recession worries, but it almost always overshoots,” Cramer contended.

A portion of the weakness on Wall Street is likely tied to the Federal Reserve’s two-day policy meeting that begins Tuesday and is set to conclude Wednesday, Cramer said. He contended some investors are worried that Fed Chair Jerome Powell will adopt a more hawkish stance on inflation, so they’re selling stocks to get ahead of it.

“At the time it seemed like a very rational approach, but since when is the stock market rational?” Cramer asked, rhetorically. Instead, he stressed that to navigate this kind of choppy market, investors need to know prices at which they think a stock is attractive and then pull the trigger on buying it when it reaches that level.

“That’s a form of discipline. It’s a discipline for me. It’s worked in practically every downturn except the Great Recession. It certainly worked well today,” Cramer said.

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