Jim Cramer's 'Stop Trading!': Bond Insurers Bad News

Avoid bond insurers MBIA (MBI Quote - Cramer on MBI - Stock Picks) and Ambac (ABK Quote - Cramer on ABK - Stock Picks), Jim Cramer said on CNBC's "Stop Trading!" segment Thursday.

"I was worried about them for months," Cramer said. He added that he's done worrying now, because the insurers' troubles are so widely known. "When everybody knows about it ... you're done."

"I would never own those stocks," Cramer stressed, calling them "the moral hazard."

In the wake of the Fed's 50-basis-point rate cut, Cramer predicted a housing shortage.

Regarding the economic stimulus package currently making its way through Congress, Cramer quipped, "Go buy a Black & Decker (BDK Quote - Cramer on BDK - Stock Picks) power saw." He added that people should use the rebate checks offered in the package to "pay down their credit card debt."

All joking aside, Cramer said he believes people are already taking his advice. "I'm telling you what they will do" with the money, he said. "That's why Whirlpool (WHR Quote - Cramer on WHR - Stock Picks) ramped."

Cramer said that value stocks are the good bets for this environment. "Ryland's (RYL Quote - Cramer on RYL - Stock Picks) good."

Investors should stick with early-cycle picks and avoid recent momentum plays, Cramer concluded. "Energy does not do that well right now. ... China does not do that well. Whatever was momentum doesn't do well."