Mad Mail: What About the Little Guy?

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Dear Jim: Our cat loves your book too! --April (see attached)

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Dear Jim: There's an aspect to the credit crisis that I think has yet to rear its ugly head. I suspect millions of people have purchased furniture, electronics, or appliances on no-money down, no-payments till 2009, 2010, 2011, etc. deals. If many of the same people that are facing foreclosures are locked into these deals, how would a retailer or credit provider have any recourse that's worth a fraction of the paper it's written on? Is there any way to determine which companies are most exposed to this type of risk, and secondarily, how they are planning to address the defaults? --Tom

Cramer says: Look on the bright side: Wal-Mart doesn’t have this problem. Credit card companies do, though. Sell Capital One and buy WMT.

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Dear Jim: On Friday, you were ranting about builders. I’m a builder. There are two types: one like Toll Brothers who we call "paper builders" because they are corporate. But the majority of builders are small…and we are the biggest victims of this mess. We played by the rules and put our own money into down payments are at risk of losing everything. I see the injustice of the government to save the fools. No one even acknowledges people like us being the real victims. So what do you suggest for us? --Peggy

Cramer says: Sometimes it seems like the homebuilders keep going up because maybe they’ve wiped out the competition. It’s a shame, and it’s ridiculous for them to get $6 billion in tax benefits. Hang in there. The real estate should come next year.

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Dear Jim: When a bank raises outside capital the shares and all investment bank shares seem to go up dramatically. Why? Aren't the other shares of these companies now worth less because they are more diluted? --Howard

Cramer says: Yes, they are. So many investors bet against the financials that when they get their money they realize they’re going to be solvent and then they feel like they have to cover.

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Canadian Boo-yah!: Thanks for the great call on Carnival . I’ve hit a 15% gain and wonder how much more upside there is. My homework suggests these cruises are going to be booked solid from overseas travelers and the mid-high income earners in North America which should lead it to report a fantastic 2Q. I still love the stock and want to see a 50% gain before scaling back but I don’t want to be a pig. --Tri

Cramer says: You will not get a 50% gain on Carnival. Take the profits while you have them.


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