"I am not stupid. I don't own any oils. I don't own any oil futures. I don't own any natural gas stocks. I don't own any oil-service stocks. I saw this decline coming, and I sidestepped it. I am brilliant."

That's the litany that's going on as the quarter winds down. A whole complex, a whole segment of this market is being thrown out without any thought of value or any thought of a reversal, and it is breathtaking.

It deserves some analysis.

First, what's driving the oil and natural gas futures lower, although the latter has had a tad of a lift of late? The perception is that there is a dramatic slowing in demand. We believe that China's economy is ratcheting back so fast that they simply aren't using all of those gas guzzlers that they just bought.

Europe? Despite the fact that economic activity hasn't ceased and that parts of the Continent are robust, it's been taken as a given that oil use has been curtailed rather dramatically. We have no signs of this being the case, but with Brent at $90, down from $125, the conclusion is taken as gospel.

And then there is the United States. We have an amazing transformation going on in this country. We have found much more oil than we ever expected even two years ago. If I had told you in 2009 that North Dakota would surpass California and Alaska in oil production to become No. 2 after Texas, you would have laughed at me. The reason it hasn't passed Texas is that as great as the Bakken has been as a place for light sweet crude discovery, Texas is even better.

Yet I don't know a soul who says, "Look, one of the major reasons why our oil market has fallen so much is that we have too much of it in the pipe."

In other words, that demand, or the lack thereof, isn't nearly as important as the excess of supply.

It's not just the U.S. that might have a production glut. The Saudis have always been determined to make it so that we don't develop our oil and gas reserves. They have done it by putting pressure on prices when they reach levels that allow us to be more economic in our drilling. In the last few years, the floor on where we will still drill aggressively is about $80, because if the oil companies can't get more than that, it really isn't worth it.

When you add in that Iraq and Libya are now pumping a great deal more than we thought, we can come up with a mosaic that says it isn't the demand side that's at fault, it is the supply side.

So let's go full circle. The people who say it is demand at this point have a vested interest. They have eschewed the group or thrown it away, and we are in the waning days of the quarter when they will have to reveal their holdings. This is a quarter where if you owned these stocks, you were revealed as a stock charlatan. It doesn't matter that we could be on the verge of something big going the other way, big Chinese rate cuts and a potential growth initiative or initiatives in Europe. It's the dynamics of money management that are in play.

My take: They are way too depressed to sell. My instinct is to buy them into the end of the miserable oil and gas quarter, and that's what we are attempting to do for Action Alerts PLUS, as painful as it is, and boy is it ever painful. 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust.

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