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Game Plan: More Bad News? Thank God.

Published: Monday, 19 Nov 2007 | 11:08 AM ET

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By: Tom Brennan
Web Editor, Mad Money

After Wells Fargo CEO John Stumpf said U.S. housing hadn’t been this bad since the Great Depression, it was hard to imagine things getting any worse. After all, that was coming from the number-one mortgage lender in the country and a bank without half the exposure to the subprime loans that hurt so many of its rivals.

But this was actually a good thing, Cramer said.

The Federal Reserve won’t act until things are dire, so that was just the doom and gloom the market needed. It’s never a question of if the Fed will intervene, it’s just a matter of when. So the bleak picture Stumpf painted might have been just enough to prod Chairman Ben Bernanke into action.

But in the meantime, clear out of Countrywide [CFC Loading... () ], Washington Mutual [WM Loading... () ], Downey Financial [DSL Loading... () ], E*Trade [ETFC Loading... () ], Standard Pacific [SPF Loading... () ], Pulte Homes [PHM Loading... () ], Centex [CTX Loading... () ], Beazer [BZH Loading... () ] or any of the mortgage lenders. If Stumpf was spot on, these stocks won’t work for a very long time, Cramer said.

Click for the rest of Friday's show

Instead, buy defensive stocks like Coca-Cola [KO Loading... () ], Altria [MO Loading... () ], Colgate-Palmolive [CL Loading... () ] and Clorox [CLX Loading... () ]. Even Avon [AVP Loading... () ] is great these days. And don't forget healthcare plays like Medco Health Solutions [MHS Loading... () ].

Hang tight, Homegamers. The worse the market gets, Cramer said, the brighter the future looks.

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Game Plan: More Bad News? Thank God.