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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 Real Money 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

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, Dollar Tree ( DLTR), 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 Family Dollar ( FDO) as the dollar store chain to own.

Stockpickr

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 Citigroup ( C), Flotek ( FTK), Dendreon ( DNDN), Chesapeake Energy ( CHK) and Yamana Gold ( AUY).

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 Exxon Mobil ( XOM), General Electric ( GE), Dupont ( DD), Altria ( MO) and Clean Energy ( CLNE).

Cramer said he loved this portfolio.

BankingMyWay

Lightning Round

Cramer was bullish on Continental Resources ( CLR), Lockheed Martin ( LMT), Duke Energy ( DUK), Kinder Morgan ( KMP) and Enterprise Products Partners ( EPD).

He was bearish on Computer Sciences ( CSC), Annaly Mortgage ( NLY), Northrop Grumman ( NOC), Allegheny Energy ( AYE), 3M ( MMM), NuStar Energy ( NS) and Wyeth ( WYE).

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 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."

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.

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