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Investing can be confusing. Luckily, Cramer has mapped out some road rules for all you Home Gamers trying to navigate the jungle that is Wall Street. Think of it as "Mad Money 101" –- some fundamental advice to keep in mind as you play the market. Whether you're a first time investor or a seasoned financier, it's always good to remember the basics.
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Dec.19
10:55 AM ET
Wednesday, 19 Dec 2007
Milking the Mortgage Mess

As mortgage-backed securities continue to lose value, overexposed banks are anxious to get the bad paper off their balance sheets. In their haste, though, the good as well as the bad is being sold off at fire-sale prices as a way to raise capital. It's a tough situation for the banks in trouble, but perfect for one investment fund that just came public.

Chimera Investment [CIM  Loading...      ()   ] was set up specifically to invest in these residential securities. According to Cramer, the fund "was designed to feast off of good paper that can be bought for cents on the dollar because the banks have no choice -- they have to unload this stuff."

Managed by a subsidiary of Annaly Capital Management [NLY  Loading...      ()   ], Chimera has a $460 million warchest the fund has yet to use. It's just waiting for a bottom, though, Cramer said. But Wall Street's waiting, too -- for Chimera to make its move. As a result, the stock hasn't budged since the Nov. 16 IPO, which Cramer sees as a great opportunity for investors.

But why's he so confident? Mike Farrell. The Annaly CEO is the "king of mortgages," Cramer said, adding that "he got subprime exactly right." Cramer's wager is that Chimera is Farrell's baby, and he'll put to work the same "nose for good loans" that helped his company sidestep the subprime mess.

At just under $16, "the stock's one of the best deals out there," Cramer said. Still, it's a small company, so he emphasized using limit orders, buying incrementally and waiting five days before making a move.

Questions for Cramer?

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