• CNBC’s Jim Cramer continued his discussion of last week’s massive decline and explained why it can be difficult for investors to identify and profit from a market bottom.
• “There will be more buying opportunities in the future, more crazy sell-offs, but we should remember that very often these market crashes are caused by nothing,” he said. “What happened two weeks ago was pure market mechanics – nothing to do with fundamentals – so keep that possibility in mind the next time the averages break down.”

CNBC’s Jim Cramer continued his discussion of last week’s massive decline and explained why it can be difficult for investors to identify and profit from a market bottom.

“There will be more buying opportunities in the future, more crazy sell-offs, but we should remember that very often these market crashes are caused by nothing,” he said. “What happened two weeks ago was pure market mechanics – nothing to do with fundamentals – so keep that possibility in mind the next time the averages break down.”

Stock prices recovered on Thursday, with the S&P 500 up about 8% from its intraday low during the August 5 sell-off. Stronger-than-expected consumer spending data eased investor fears of a looming recession.

The sell-off occurred in part because investors were caught off guard when the Bank of Japan raised its benchmark interest rate to the highest level since 2008, Cramer said. Many had borrowed large sums and then invested in global markets, but then tried to sell those assets when interest rates rose.

In addition, investors panicked when famed investor Warren Buffett sold billions of dollars worth of Berkshire Hathaway stock, including nearly half of his Apple stake as well as shares in Bank of America, a long-time Berkshire holding.

For Cramer, these factors proved to be “incredibly flimsy reasons to sell.” The problem with the Japanese carry trade was “an isolated incident” and not a permanent problem. He also suggested that Berkshire Hathaway’s moves may not be a cause for concern. Some investors followed Buffett and “extrapolated to the point of absurdity.”

Cramer also explained why buyers were fleeing during the sell-off. He said some were not impressed with the earnings season so far. He said while some companies are doing well, many have not raised their full-year forecasts, making their stocks less attractive to Wall Street.

“So very few stocks seemed like compelling buys at that point,” he said. “Although it turns out that the selling was based on virtually nothing, hardly anything looked like it was ‘beatable,’ so to speak, like something you’d want to buy on a dip.”

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