When The Market Crashes

Now that the market dropped like a sack of potatoes, Cramer has some good advice. (Of course hindsight is 20-20, but still its good advice!)

You only have a couple of protections from the whims of a broken system:

1. A company that pays you a dividend that is equal to or better than Treasuries after taxes is a good defense.
2. Or you want a stock that has a valuation so low that you know it's a bargain -- and its management knows it's a bargain (read: it's buying back stock right here).
3. Last chance: a company that is so defensive in nature that even if there's a worldwide slowdown, it will meet expectations regardless: Coke (KO), Pepsi (PEP), Altria (MO), Kellogg (K), General Mills (GIS), Clorox (CLX) and Colgate (CL).

If you don't anything that fits one of those three criteria (I'd rather have two or three per company) you will not be OK for now. That's because we are now going to have people who just say, "Wow this is too crazy, let me out of here!"

But nobody ever made a dime panicking. This time will be no different, but only if you are shrewd about what won't hurt you and what can work in a volatile and down environment.

In India, stocks like Colgate, Johnson & Johnson, Proctor & Gamble and Unilever are called blue-chip stocks that never go out of business because they make stuff everyone needs and uses. Maybe I should stop looking at their prices everyday and finally buy some!