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"Don't write off all stocks just because the average looks bad," Jim Cramer told viewers of his "Mad Money" TV show Friday.

The old adage, "As goes January, so goes the year," might not ring true for this year, he said.

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Cramer said investors can't take their queues from the

Dow Jones Industrial Average

or

S&P 500

. He said despite the worst January on record, one-third of the S&P ended the month higher, as did one-third of the Mid-Cap Index.

Some of those names, he said, were up huge, including

Palm

(PALM)

,

Shaw Group

(SGR)

,

Morgan Stanley

(MS) - Get Report

, a stock which he owns for his charitable trust,

Action Alerts PLUS and

Research In Motion

(RIMM)

.

Cramer again advocated buying recession resistant names with high dividend yields as defensive plays against the market's volatile nature. He said names like

BP

(BP) - Get Report

,

Tupperware

(TUP) - Get Report

and

Kraft

(KFT)

still top his list.

What makes Cramer nervous? He said to keep a close eye on the "bad bank" plan. Any mention of nationalizing banks will send the market lower, he said, noting the government shouldn't be a dumping ground for bad assets, but instead a place to help bad assets.

Cramer also advocated forbearance for many of the bad loans, giving the banks a chance to cut the principle and interest without fear of federal regulators.

"This plan worked in the '80s," said Cramer, who also reiterated the need for a federal trading desk to help bring the buyers and sellers of bad assets together while helping the government turn a profit.

Cramer: How to Trade the Stimulus

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The Good, Bad, Ugly

When President Obama recently touted his economic stimulus plan, he was surrounded by 12 CEOs who backed his plan. Cramer evaluated all 12 of these companies, and divided them into what he called the good, the bad and the ugly.

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In the "ugly" group, Cramer included

Micron Technology

(MU) - Get Report

,

Jet Blue

(JBLU) - Get Report

,

Motorola

(MOT)

,

Xerox

(XRX) - Get Report

and

Eastman Kodak

(EK)

.

According to Cramer, all of these companies have a grim future ahead, with or without the stimulus package

For the "bad" group,

Applied Materials

(AMAT) - Get Report

,

Corning

(GLW) - Get Report

,

Aetna

(AET)

and

Edison International

(EIX) - Get Report

all fit the bill, he said.

For these companies, there may be hope, but probably not any time soon, he said.

And finally, in the "good" group, the only group worth owning, Cramer said

Honeywell

(HON) - Get Report

, which reported a fantastic quarter, along with

IBM

(IBM) - Get Report

and

Google

(GOOG) - Get Report

are the ones investors should consider.

Changing the Stimulus

In an exclusive interview, Cramer spoke with Kent Conrad, chairman of the Senate Budget Committee, about their shared disappointment in the Obama stimulus plan that passed the House yesterday.

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Conrad said while the package has a few good things in it, much more needs to be done to put Americans to work, as well as to fix the housing and financial sectors, without which, he said, no recovery is possible.

When asked what the right number was to fix the country's ailing infrastructure, Conrad said he'd like to see as much as $200 billion invested quickly in that area. The current package, he said, is very disappointing, especially for the steel and metals industries.

Regarding housing, Conrad advocated a $10,000 tax credit, offered for a limited time, to anyone buying a primary residence, as opposed to the $7,500 credit currently proposed for only first-time home buyers. Conrad also favored a provision that would allow banks and homeowners to reset the terms of their underwater mortgages.

Conrad also advocated legislation that provides for investigators to delve into the collapse of the financial system and closely work with the Justice Department to prosecute those responsible.

Lightning Round

Cramer was bullish on

Terra Nitrogen

(TNH)

,

Molson Coors

(TAP) - Get Report

and

Black & Decker

(BDK)

.

He was bearish on

Nuance Communications

(NUAN) - Get Report

,

Boston Beer Company

(SAM) - Get Report

,

Potash

(POT)

,

Agrium

(AGU)

,

Mosaic

(MOS) - Get Report

,

Hormel Foods

(HRL) - Get Report

,

Dow Chemical

(DOW) - Get Report

and

Time Warner

(TWX)

.

Check out the latest edition of

"Cramer's Take onTop-Searched Stocks" on Stockpickr.

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Want more Cramer? Check out Jim's rules and commandments for investing by

clicking here

.

Read more of Cramer's Mad Money Lightning Round insights

.

For "Mad Money" performance statistics and other links, check out Mad Money stats

At the time of publication, Cramer was long Morgan Stanley.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.