The bank stocks always benefit from higher rates because it means they earn more money from cash deposited. But what else will work besides the banks?
Cramer said companies that have the biggest year-over-year earnings revisions, such as the U.S. industrials that do not have a lot of overseas business, are a good bet as are the high-growth stocks that aren't dependent on economic growth to do well, but can get a boost from the economy doing well. He also recommended restaurant and retail stocks that have already benefited from growth.
"Now these gains will be in fits and starts and will always be called into question from now on as the Fed tightens. But history is on the bulls' side in the early rounds of tightening, as they tend not to cool off the economy drastically even as many will fear they will," Cramer said.
Here's what it boils down to:
Cramer anticipates there will be various three-day selloffs whenever a piece of news comes out about a rate hike. On day one, all stocks will go down in a broad market selloff that is led by hedge funds and mutual funds that short the S&P 500.
In the old days, Cramer used to buy bond market equivalent stocks on day two. That should no longer be the case. Instead, Cramer foresees money will gravitate to the bank stocks and the highest growth stocks that have earnings that will go higher on interest rates.
Higher rates also mean housing stocks will get hit because mortgage money will cost more. That means homebuilders will have to hope for high employment rates, and that banks will ease terms to lend money.
People also tend to buy gold when interest rates go higher, because it will retain its purchasing power when inflation is higher. Thus, if investors think inflation is imminent, they will all flock to gold.
"There is one issue with gold that you might want to keep in mind. Gold's been in a bear market so long that many of the producers who thought gold would grow to the skies do not have the money to continue to find gold," Cramer added.
Cramer recommended the only exception to this is Randgold, or to buy the gold ETF called GLD, or gold bullion itself. But don't worry—Cramer doesn't see any inflation on the horizon yet, so there is no rush to buy gold.
Ultimately, if rates go up, Cramer says investors should move towards more economically sensitive stocks. However, it is important to recognize many international stocks may not do well because of overseas exposure and a strong dollar. In that case, gold could become the go-to play on inflation.