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After a day in which Dow Jones Industrial Average plunged 733 points for the second biggest drop in the index's history, Jim Cramer told viewers of his "Mad Money" TV show Wednesday that they need not be "as fearful this time around."
Cramer said the markets are "ever-so-slightly" better off now than they were just a week ago.
Why? He said the markets last week thought the entire banking system was going under, but they know that's not the case this week with the Treasury's rescue plan in place. This fact alone, he assured, should make today's retesting of last week's lows a little less scary.
Cramer told viewers to forget about earnings estimates, which he said can no longer be trusted, and stick with high dividend-paying stocks.
"Investing in non-dividend paying stocks is just a leap of faith," he said, noting that only the size and safety of a company's dividend matters in this volatile market.
Cramer also advised viewers not to purchase their stocks all at once. Instead he said they should follow the strategies in his book
and scale into positions over time, buying on weakness.
"A good dividend pays you to wait," said Cramer, adding that is exactly what investors need to do in a scary market where the selling isn't likely to be over.
Cramer: Where to Make Money Now
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Stretching the Dollar
In tough economic times, Cramer said the smart money is on the "trade-down" plays, companies people turn to in order to save money. But he noted in the battle of the dollar-store chains, only one can emerge victorious.
Cramer said by all accounts,
, with its better metrics, should be the obvious choice, but there's a problem: The company is just too loved by Wall Street. That's why he's recommending
as the dollar store chain to own.
Cramer believes Family Dollar, while not the better company, is the better value and the better stock. He said Family Dollar outperformed rival Dollar Tree handsomely in the last recession between 2000 and 2002. And since the company is not trumpeted on Wall Street, Cramer said there's a lot of room for analyst upgrades as the economy worsens.
Cramer said Family Dollar is improving its product mix to include more items that people need, like food, as opposed to other items they merely want. Family Dollar also now accepts food stamps and is adding credit card payments to some locations. A similar move at Dollar Tree saw an average ticket increase from $6 to $16.
Cramer also noted that Family Dollar is acting responsibly by suspending its stock repurchase program to preserve cash and reducing its inventory. He said the company last reported its earnings on Oct. 3, beating estimates by 4 cents a share.
Am I Diversified?
Cramer played "Am I Diversified" with callers to see if their portfolios can withstand the market's wrath. The first caller's portfolio included
Cramer said Flotek and Chesapeake are both in the oil patch, and one of them needs to be sold.
The second caller's top holdings included
Cramer said he loved this portfolio.
Cramer was bullish on
Enterprise Products Partners
He was bearish on
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At the time of publication, Cramer was long Altria, General Electric.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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