needs to keep them down because things are so much better than they were. think for a moment about all the good that an improved housing market is for the economy. when your house is more valuable, home depot tells us you will spend three times more than if you were losing value. the homeowner spends about $1,000 in a year, the homeowner spends $3,000. that's huge for companies and suppliers, sherwin williams, whirlpool, pacific masko. i can't tell you how many depend on home depot and lowe's and sears. they have a lot to gain. no wonder they have all been pulverized. they are hideously relentless in their downturns. we know the banks have taken losses, bad months become good ones. more good loans means the banks need fewer reserves. if the government relents, dividends, buybacks, that's why they got crushed today.

it's going in the wrong direction. when your house increases in value, you feel richer. call it the wealth effect. you will be able to spend more. which is in general you will be able save more, which it could be good news for the stock market. that's what we thought had been happening, the data of late says that might not be the case. if housing does better, though, you get a virtuous circle going. if the stock market goes higher, people feel wealthier and still higher stock values. it feeds on itself. we had built way too many homes in this country a few years ago, but now we have so much demand that we worked off most of that inventory. we haven't built that many in the last four years. we worked off the inventory held by banks. we've actually got a developing housing shortage in this country. something the giant nationwide home builder told us this very morning when we interviewed him on "squawk on the street." you know when you build and sell

a home, you employ many more people than the actual builders. new homes mean new orders for supplies, roofing, windows, plumbing, insulation, landscaping. more road building, more jobs for lawyers, inspectors, title people, sales people so many others. that's all unquestionable good. so what the heck is the problem here? i'll tell you the problem. it's all about, well it's all being threatened, all that great news right now being threatened because the magic elixir that made this housing market revival possible, the lowest mortgage rates at least in our lifetime, are coming to an end. that's now unquestionable. and they're coming to an end because housing has come back too far too fast, which is driving bonds down in price and therefore up in yield, therefore driving your mortgage rate higher or the initial rate you might pay much higher. just think about it. this whole move in stocks pretty much came to an end last week, last week in may.

we got a number that showed a 10% increase in the price of homes. it's been hideous ever since. for some of the people that run the federal reserve, that was a sign, a sign their job is over. fed is finished. it's done. it has caused a significant rally in using. there is no need to do any more. hey, from now on, it's self sustaining. other people who owned bonds decided to sell them before they went down. no one wants to take a loss. meantime the mortgage rates moved up so far, we seen a number in refinance and mortgage rates. rates have gone up so much that demand, initial demand is dropping. you get demand dropping, then all of those good things i talked about, all the things that go right when housing goes up, will start going in reverse. yeah, instead of you get this, the house of pain, the greatest story ever told, the return of housing is thought to be over. even though stewart miller of lennar said we are in the early innings, good reason, only we

will build a million homes, probably half as many as we need. why build these houses if interest rates are going to spike and people can't afford to buy them anymore? a legitimate question. home sales will be cut back. those still under water on their mortgages, there are 7 to 10 million people that lose hope, the homes gets throttled back. the virtuous circle up, morphs into a vicious cycle down as we saw today. buy, buy, buy, sell, sell, sell. you know what? that's fine if there is something to take housing's place or if housing were to be the spark and the fire would catch on elsewhere. what, what, what? we've got no commercial construction to speak of. look out your window. we have endless government job losses, which are only accelerating with the sequester. we have dwindling infrastructure

spending, all federal, state and local have cut their budgets. we have nothing out of washington, no new interstate highway system like ike came up in '56/'57. no new cross country pipe lines, our best hope for millions of jobs to be created in the next few years for sure. look, autos, they have been making a comeback. i got bad news there, many of our auto construction jobs are going to mexico, nafta allows imports with impunity no matter how many solid jobs are crunched. you take the housing away, you take away a lot of what was driving the stock markets higher. the other part, the bond market equivalents, utility, higher yielding food and beverage, real estate investment trust, they get crushed as you will see later in the show. why why be in those stocks that have such huge price risk and you go back to bonds now they yield more. that's the thinking of the market in general. is it any wonder the market is

going lower when so many components are going do worse, not better, if interest rates don't stabilize or come back down? i don't think so. i don't like the market. i don't like it. you see, the selling makes sense, especially given that nobody ever got hurt taking a profit, hence, i always encourage you to ring the register rather than be a greedy pig. bears make money. bulls make money, pigs, here's the bottom line. sure, it's only housing that could be slowing, sure it's only one relatively small piece of the u.s. economy. hey, who cares? but housing has been the driver of so much that's good out there. you take it away with nothing taking its place. you know what happens? take a good look at your stock screen. take a look at that ticker underneath you right now. take a look at the closing prices of the indices. yeah, that's what happens. frank in iowa. frank. >> hey, jim, we need to know about lulu lemon and this whole pants thing.

i'm looking for your prognosis on short term, medium term and long term for the stock. >> the stock has run in anticipation of what will be a better quarter. when they run up, oftentimes they go down. i would say you need refuel, let the stock come in before they report, then it can go higher. right now it is almost priced for perfection in a market that nothing is perfect. mitch if florida. >> caller: jim, i appreciate everything you do for us. a quick question, toyota, i've had great gains the last couple of months, today's news of the recall, i look at it as an opportunity to snatch up more shares. what do you think? >> i agree with you that toyota is a terrific stock. i do worry about the japanese market. yen has got to go. we got to make it so the yen has a great advantage over the dollar, meaning toyota's trucks and cars will be cheaper. i agree with you, i think toyota represents great value. i'm not worried about that recall.

josh in texas, please. >> caller: boo-yah, jim. >> how are you? >> caller: good, thank you. i want to talk about pandora and how low it will go with the apple news getting in the radio game. >> i don't want to go against a wounded apple. can be like a wounded tiger. we know those are the most dangerous, pandora, which is doing quite quell well, does have a business that can be replicated if have you have enough money to replicate it. apple has tons of money. out of house and home? when housing has been a driver of good in this market. it has been. it slows down, we get days like today. i like to use the company and say that doesn't make any sense, but it does, "mad money" will be right back. coming up, cloud care. athena health allows people to save cash by plugging into cloud computing, but the stock was brought back to earth after its recent earnings report.

is this pullback a profitable is this pullback a profitable opportunity? and later, prime time? from real estate to utility, the stocks that had been a haven for dividend investors have been getting hit by fed concerns. the recent pullback pay have you eyeing a buy. but before you make your move, find out what cramer has been eyeing in tonight's edition of "off the charts," all coming up on "mad money." ♪

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and a market that seems to get viciously slammed day after day, it might be time to picking among the rubble, oversold stocks that have been already crushed, stocks where the expectations are now low enough that they can be beaten going forward. take athena health. it's a cloud based company with a software platform that helps doctors do a better job of managing the business side of their practices.

provides electronic health records, the big business known as revenue cycle management where athena handles the billing and accounts receivable of doctors' business, getting reimbursed by medicare and medicaid can be a complicated healthsome. they come in with faster and less mistakes. this is a fast growing company that invests the bulk of its money into its growing business. it has a high flying stock. when it reported a month ago, they were less than perfect having fewer doctors than expected. who it folded from $95 to $86 in a day. it climbed today to 82.93. management gave mixed guidance for the full year partly because of the recent addition of a mobile software to check for drug interactions for particular medications. it might not be as lucrative as initially thought.

the company says the new doctor numbers will get better and this last quarter was a blip. the stock deserves to be bought down here. so let's check in with jonathan bush, who is a terrific co-founder and creator of tremendous wealth for shareholders, find out more how his company is doing, where it is headed, welcome book to "mad money." >> hello, cramer, you are amazing how you talk. thank you for having me. >> let's get right to it. i picked up today the $2.7 trillion. >> middle of the new york times, right? sorry. >> this is about the colonoscopy, the divergent prices around the country. what is athena health doing to stop this? >> first of all, you have to look at my ted talk and wonder if the new york times is pulling my phone records. it's as big a problem as how much it costs is that there is no shopping in health care. people don't have the ability to

know how much they can cost and they don't have the money to choose the cheaper one. with one of the things athena is doing with its newest service athena collarty is helping doctors form a new aco under the obama care program, you can get money paid to you by the government for saving money on a population of patients. to do that, you got to know how much everybody costs and how much they utilize before you decide where to refer a patient. the fact that the times and cms guys are just discovering that price is actually a feature in total cost is a little embarrassing. anyway, now we're all on the same page and a network that connects to everybody is going to be increasingly valuable, i hope. >> let me understand because our people at home have to know this. this is the kind of obscenity of some guys charging so much more than others that your company is trying to remedy? >> we are trying to get our guys to know, our doctors and

hospitals to choose us to know when they refer, who is the most expensive, who is the most effective, so that if they're at risk for how much that patient costs, they're going to end up saving money, not losing money. >> how do you make money doing that? >> we ask for a piece of the savings. i'm a peaceful man. i want a piece of the collections and a piece of the records and a piece of the savings and a piece of the risk. >> they call it the colt .45 a peace-maker, here's what i want to know, last quarter was a difficult quarter to understand. i don't think it was the slowdown, i want you to talk pe through some of the worries people had about the acquisition you and i talked about and i think it is terrific. if your own quarter, you talked about a schism and a fault line. i have been worked out with he hippocrates. >> we love hippocrates. we love the kinks.

we knew it would a fight, the fact that they would be paid in advance for their revenue means we have to discount revenue, 18 though we're getting it full on. that was a weird thing how we expressed the revenue. the fact is we flushed any questionable business out. we don't need it. we've got such a bright future with hippocrates. we want it to sell clean stuff. i'm not at all concerned about the fact that we took a hit to get in there and do it right. we are also spending a lot more than they ever could on r & d, infrastructure, security, stability, when you do well in health care, especially if you are a cloud-based company, i need to be more intensively protected of privacy and information that all of your clients would be if it was just their information alone. now connecting into the mothership to these 40 million patient records on athena net,

we need that extra investment. it will pay off in spades overtime. >> let me ask you this, you have a question on facebook, like other people, tell us what you nevada i got this question. want to know about athena. all this tech knowledge, it's from facebookment all of this technology is actually causing health care professionals to spend less face time with patients. are you seeing that? are we decreasing our quality of care in order to save cost? >> so, first of all, who knew that facebook would be wise? yes, facebook, you are absolutely right. medical records, especially now the federal government mandates what has to be in them, and the codes have to match with what's in them in the doctor's bill, creates reams and reams of crap that doctors don't care about for the treatment for the patient. what is needed like a cloud-service athena, we are in the background running it with the doctor. it's not emr software. you can't buy it and run it yourself. we read your factions.

we read your results. we do your do your documentation in the background. we can bury the pure open-" record-keeping stuff out of the exam room view so the doctor can truly see actually kind of a tweet on what's really important before talking to a patient. so they can actually devote their presence and attention to the bloody parent, which is the whole thing that these guys want. doctors should get more presence as a result of technology, not less. we think we've got it, we'll give you one small example, later this year at hippocrates, we are rolling out hipaa secure texting. if they want to ask a quick question to a specialist, they know about a patient they're seeing. this will prevent that patient from getting routed to a specialist. it will make things go quickly, still be secure and won't involve the passing of this 80,000 page chart back and forth between offices on a fax machine. that's one of the million things

we're doing to answer your facebook guy's question, which is absolutely spot-on. >> last question about shareholders, wells fargo reports it likes your stock. worried about gross margins. a little light. operating expenses came in big. obviously worried about doctors not signed up enough. these are transitory problems is what i'm hearing you say? >> absolutely. some of them are purposeful problems, so gross margin, when we make a lot of gross margin the first thing we do is take half of that, stick it back into the service. every year, we got to be re-invent all five of these services, take the service as it is, take some of that margin, say, doc, now our service will do this extra stuff for you at no extra cost with you so you can get more time with your patient. they like, they stay loyal. our attrition rate is less than 7 every 84. they grow near business, sense we are paid a percentage of tear revenue, that grows us as well. so part of the gross margin thing is we start, we buy these

thorny tired manual processes, we automate them over time. as we succeed, we start new ones, take on more manual processes. so you always see kind of two steps forward, one step backward on our gross margins but you will always see us staying on the edge of relevance. jonathan bush the president and ceo of athena health. thank you for coming on this show. >> it's an honor. >> thank you. you heard mr. bush, here's the thing. these are high multiple expensive stocks. they have tremendous growth. remember this is another 30% grower. if you like high growth, and you getting it at discount now. should matter to a lot of people. mad money is back after this break. coming up, prime time? from real estate to utilities, the stocks that had been a haven for dividend investors have been getting hit by fed concerns. the recent pullback may have you eyeing a buy. but before you make your move, find out what cramer has been eyeing in tonight's edition of "off the charts."

later, cramer is outraged. he has taken note of some market activities that can put home gamers at risk. tonight, he's out to protect your portfolio. stick around to find out what's making cramer so mad, all coming up on "mad money."

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>> in the midst of this brutal

pulverizing sell-off, a huge part of this decline is the bond yields rising. i have been telling you over and over again owning bonds right here is one of the most risky and reckless things you could possibly do. at the same time the people who consider bond alternatives, high yielders, like utilities, real estate investment trusts, they're pulling back hard after months of rallying almost nonstop. like i have been saying, as long as interest rates keep rising, these high yielding stocks keep getting pounded, at the lower level i think the dividends will also protect the company stocks. so, in other words, as long as interest rates go up, the stocks will go down until the yield is so big, we will use them as protection like a trampoline. we're not there yet. tonight, we're going off the carts with tim collins, my

colleague at realmoney.com, he'll be appearing at the conference. we'd love to see you there. we will look at what collins will give us as a more empirical look in the decline of the high yielding cohort, specifically utility, the real estate investment trust and the consumer staples. that's where people have been hiding. last night i had the .2, that's where people are hiding for capital preservation. even though these groups have come down hard as you see, collins is adamant, at least based on what's happening in the charts. first, let's start with the highest yielding group. that's the utility, okay? as exemplified by the utility sector spyder etf, we will use this xlu. it's a very common stock that people trade all the time. collins points out the utilities etf just completed a head and shoulders pattern that has

hammered the group. remember, head and shoulders is not about shampoo. it's one of the nastiest bearish formations in the book. thanks to this the xlu has been on a straight path lower. in short, collins thinks that this is like a falling knife. here's something bizarre he pointed out that frankly caused me to pause, collins does not want the utility etf to stabilize at these levels. in fact, he thinks that's the worst thing that can happen for man out a bull. the reason, because if xlu spends the next week and a half consolidating the 37 to 38 level, all that will do is form the right shoulder of a much bigger, much more bearish head and shoulders pattern that can send the utility index down to $33.75, roughly $3.50 lower than it is right now. that's a monumental move, people. even though the xlu has fallen 10% from its highest, colin says you need stay away from this group for the next week or two to see how it shakes out, if you get bigger head and shoulders

this is kind of like the bigger they are, the harder they fall. next up let's look at the chart of the iyr. this is the dow jones real estate etf. it captures the action in the real estate trusts we talk about so much. maybe too much. collins says this group is the most oversold of the bunch. the action here has been hideous. these are down 11% in a matter of weeks. i went through these charts this weekend, i was like, you got to be kidding. they are so hard hit. there are some signs in this chart the reits as we call them could be finding a bottom at the 67.50, 67 area. the relative strength index at the top of the chart has reached oversold levels as have the stochastics at the bottom of the chart, a way to measure if it has moved too far, too fast. but collins points out that, hmm, things can remain oversold

for a lot longer than people realize as we saw from 2007 to 2009 in march. it doesn't mean we aren't due for a bounce, despite the support lines in the cart, if you are buying the real estate trusts here, you are trying to pick a bottom. collins doesn't like that. he says, that's a loser's game. this is another falling knife. you don't try to catch those. you exercise patience. you wait for them to go lower so it doesn't get cut. collins doesn't trust it. now, why don't we do this? let's take a look at iyr's weekly chart. you can see the real estate investment trusts from this picture is very different, right? you can see, they have much further to fall. the recent drop is only a 40% retracement from the start of 2012's breakout. okay. there's the breakout started there. why does that matter? a lot of traders use the fibonacci ratios to guide the decisions.

if the iyr closes below 68 at the end of the week, that will tell the fibonacci followers this level is not holding and that could send the etf to 64, which coincides with another key retracement level. in short, these levels, they're nothing short of precarious. at best, you need to see why the iyr is standing, more biassed towards the sell. last up, maybe the best of these, the consumer staples. we are using the xlp to monitor those. the xlp, of the three high yielding sectors, you know what, this is the best. collins says these staples are the strongest group. that's not saying much. big pullback came after a failed breakout, which has become a dreaded double top formation, which if you look closely, it is right here, okay. kind of looks like a camel, a double camel butt. that's what people, when you see this, people really freak out. relative strength index at the

top. the stochastics have broken down harder than the xlp. that's because the staples aren't done going down. in the last chart in the iyr, you may be able to get a bounce. the risk reward is no good. if it closes above $45.70, collins says you might consider buying it. you have to wait for the ceiling to penetrate. on the other hand, if the xlp closes below 40 it's only a few cents above that level, now it would be worse. if it goes to 39.50, collins thinks the buyers will be running for the exits. the technicians do not like to buy low and sell high. they like to sell here, even though they might have bought here, because they think it's going to go down like this. there is a lot of air under the $40 level. no important support levels, just lots of room for the xlp to go into freefall. yeah, i saw that chart. i hated it. what about individual stocks? that's what we do on this show.

we are about trying to buy the best stocks in the etf. the best way to physical out if these are safe to buy is look at the actual yields. the real estate investment trusts the yields are moving together regardless of what we're talking about. when that's the case, you want to go with the best of breed. collins says there is huge report for ventast. stock only needs to decline 3% to get there. stock is incredible how much it's fallen. collings thinks you can buy federal realty. these i think are getting interesting. what about the utilities? if duke energy can get to a 4.27% yield, it's not from the raising of distribution, it will be because it plummets, collins says it's a buy. that's a big move for a utility. he thinks coned would support a 4.5% yield.

as hard as the utilities have fallen, the charts interpreted by tim collins are like mr. t in that third "rocky" movie, iconic. it's for more pain. collins thinks you should get more high quality stuff. i agree with him. that's still aways from where we are and i would much rather be a seller than a buyer at these levels for many of these stocks because we're just not there yet. frank in new york. frank! >> caller: yeah, jim, thanks for all you do for us guys. thanks for your integrity. >> thank you. >> caller: i'm 59, i'm retired. i bought a couple stocks over a year ago. agnc, annaly and hatteras. hts, they are probably nice dividends, should i be concerned interest rates are going down up and they're going down. >> as long as you accept the fact the dividends may have to be cut. are you getting outsized drift distributions here.

anc is yielding 19% right now. that's probably unsustainable. we would call that a red flag, meaning it can't be holding up. if you can handle the price risk that will come when they cut the dividend, you're okay. credit suisse suggested it could be happening to one of these. i think it could be happening to everyone. don in california. >> caller: hey, professor cramer. how are you? >> pretty good, how are you? >> caller: i was wondering with bond yields going up, my stock is walgreens. i have taken some off the table. it's running pretty good. should i take more off and wait for a better entry point or let it run? >> i saw this stock hold up. it reminded me of stonewall jackson. i'm not kidding. i can't believe how well, it held up. cvs held up well. i don't like to sell stocks that do well when a market is down. that the stock that goes up. don't you sell a share, it's doing too well.

nothing is always safe in this market. higher yielders have fallen. i got to tell you, they could continue to fall. i'd be a seller if we get any lift, not a buyer. we are just not there yet. stay with cramer. [ music playing ]

it is time, it is time for the lightning round! i tell you whether to buy, buy, buy, or sell, sell, sell, when you hear this sound, then the lightning round is over. are you ready, skeedaddy? phil in north carolina. >> caller: hey, jim, how are you doing? it's phil from north carolina. i want to ask you about first interstate bank. you recommended it a while ago. i did homework on it. i bought it at 16, it's 20 now. today everybody took a beating. it stood its ground. >> the kind of stock i am looking to buy here, sir. you are in good shape. that's precisely the kind of stock that does better in an improving housing market. i do not think that rates are done going up. that's good for these guys. let's go to stephen in florida. >> caller: boo-yah from the sunshine state. >> i like that, sunshine, what's up? >> caller: i was wanting to ask

you about 8 by 8 stock ticker. >> juniper said things are good. it is a little speculative. you can lose money on those little stocks. sonia in florida, please. >> caller: bbb-boo-yah from the sunshine state, home of the florida gators. >> i love the gators, the noles, the canes, atlantic, international. go ahead. what's up? fiu. we like you. >> caller: my question is in regard to amgen. i know you talked about pharmaceuticals, thank you so much. amgen has dropped since i bought it. >> this is a tough one, it has not been one of our favorites, we like regeneron, celgene, gilead, biogen. we talked about that this week at a conference i am in on friday and saturday, but this group is good to buy into weakness but amgen has not been

one of our favorites on "mad money." jeff in connecticut. >> caller: boo-yah from connecticut, jim. >> we had a guy here kyle from connecticut. he roots for the indians, i don't get that, what's up? >> caller: i was looking at ford motor company, what are you saying, buy, sell? >> i say this is a good one. my charitable trust, people will say, wait a sec, bad head and shoulders formation coming. i think ford is inexpensive, i'll buy on the way down. let's go to mark in new jersey. >> caller: boo-yah, jim, how are you doing? >> real good. how about you? >> oh, i'm doing excellent here in south jersey. >> go ahead. >> caller: okay. utilities always have a great yield, and i like great yields. what's your view on national grid? >> i think national grid is cheap. i like the utilities are getting down to my sweet spot. i think can you buy some national grid here.

it's not as high quality. same with first energy, they are trying to bottom very badly here. i bless national grid. i believe that yield is safe. i know that's taking your life in your hands these days. i saw an oil trust break down today because it did cut its distribution. i think we're okay. how about donna in texas? donna? >> you sweet honey baby. i am from houston in the energy corridor area. and i would like to ask you about clean energy, clne. >> first of all, thank you for those kind words, donna, that is a very speculative stock. i think the natural gas players are not exactly where you want to be in terms of the safety of the market. let that come in. i like the mission. it is a very speculative stock. that, ladies and gentlemen, is the conclusion of the lightning round. ors?

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>> those game of thrones people may be on to something with that red wedding. anyway, today we had a red day ourselves, it wasn't pretty. sell, sell, sell, which is why wednesday is one of my favorite days. i get to focus on the key investing rule, so don't you end up seeing red. we will take a few minutes to put your picks to the test in my favorite game, that's "am i diversified?" this is incredibly useful, because as you saw from our off the charts segment, stocks of a feather form together even if

they are different in real life. this is where you call me and tweet me at jim cramer. i tell you if your portfolio is diversified enough. let start with a tweet from @wetalk who tweets @jimcramer, of course, thank you for all the lessons, am i diversified? banc of america, facebook, toll brother, mm brothers trust and wgo, winnebago. thank you again. all right, toll brothers is housing. bank of america is a bank. facebook, my charitable trust owns it. winnebago is let's call it an auto, auto-related. mpt is a terrific real estate investment trust, a housing, a bank, social media and auto-related. that's perfect. that is diversification even as that portfolio has been hurt badly. let's go to alex in georgia.

>> caller: hey, jim, how is it going? >> real good. how are you? >> caller: it's been rough last week. so my top five holdings right now are beam, costco, home depot, salesforce.com and key bank. >> all right. let me take over from there. oh, boy, we got a problem here. first salesforce.com. listen, a bunch of guys upgraded. it is a high multiple growth stock. people don't like those, call it tech. costco, charitable trust owns that, a great retailer, beam is the liquor company, brown foreman reported good numbers. home depot, here's the problem. home depot and costco. that can't stand. we're going to make a change, have to sell home depot, no offense, he's a terrific ceo. let pick up, united health did a

big buyback today. would be a nice addition to this portfolio. stick stick with cramer. coming up, he's still mad. cramer spotted some stock market tricks he's not too fond of, especially when they can put your cash at risk and tonight, he's sounding off. don't go anywhere. what do you think about caffeine? we consume over two billion cups of coffee every week without a second thought. 5-hour energy has less caffeine than some starbucks coffees, plus it has vitamins and nutrients. it's simple... caffeine with vitamins and nutrients. it's the combination that makes it so great. before you make a decision, get the facts. try a sip and find out why so many people love 5-hour energy. the taste of delicious strawberries and creamy milk, bursting together and perfectly frozen in time.

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you got to be kidding me. that was my reaction today when i opened up the "wall street journal" and saw the story headlined one of wall street's riskiest bets returns, about the return of synthetic collateralized debt obligations or cdos.

you may not know what these piece of papers are, arcane, abstruse. they are difficult to understand financial instruments that are created to meet the demand from fund managers trying to reach for yield, always a dumb thing, in order to get a return for investors. however in the peak year 2007 when housing was about to plummet in value the journal reminds us $630 billion of cdos were created. they were at the heart of the financial fallout that led to the great recession because so many of them defaulted. the article claims investors are demanding these ricky pieces of paper, no doubt they can borrow money, buy these synthetic bonds and magnify the returns. you can slice and dice them in a regular mortgage, get a bigger yield. we wouldn't be able to have a functioning mortgage market without it. as my colleague pointed out on "squawk on the street," they are

risky bets on housing, made riskier by the amount of leverage the funds use to juice the returns. i totally get it when sophisticated investors attempt to get more reward with risks. last time around, these pieces of paper had so much risk, when housing went sour, they not only wiped out the investors, they took out companies that insured the synthetic paper, old aig, the insurers themselves include bear sterns and lehman brothers. they should ban them outright as they were the huge contributors to the near downfall of our entire financial system. the defenders will say the underlying mortgages are in much better shape than they were back then. hey, you know what, believe me, i heard the exact same argument from executives at bayer and countrywide. >> boo. >> who assured me there could not be a huge number of people defaulting on mortgages, right? they were dead wrong.

they will say there are terrific ways to get juice on return for their investors over all fixed income alternatives. these institutions will sell them to both the smart money and so-called dumb money, less sophisticated investors who don't know better and the latter will be destroyed by them like lasted time. in the interim, the sales people right now are supposed to be meeting the demand from these issuers will force feed this from everybody that can take them down. they used to call this jamming, meaning fixed income brokers jammed to unsuspecting customers with pieces of paper that seem safe were blessed foolishly by the rating agencies which were paid for by the issuers. naturally jamming allowed the sales people to make fortunes in bonuses. the reason they can jam the customers is cdos are structured products. a terrific way to rip off customers because gigantic fees are embedded into the instruments. they can jam their clients and

not worry how they fare because the fees are so big, after you sold a few you can make millions of dollars, move to another firm with no accountability for this destruction you just wrought. that's exactly what happened last time. the government has to wise up right now and stop this financial engineering before it gets out of hand all over again, but until uncle sam does something, i'm on a mission, people, a mission to shame all those who sell these pieces of paper and to warn those who might be tempted to buy them. we need to stop this travesty before we have a financial apocalypse. i would love it if the government will step in. if i can steer a few people away from these synthetic cdos, i'll consider it a job well done. stay with cramer.

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what can turn things around for the bulls? an oversold rally.

that's what the bulls have to work for. i promise to find for you right here on "mad money." i am jim cramer and i will see you tomorrow! >> the following is a paid presentation forthe wen healthy hair care system, the secret to soft, lustrous, beautiful, shining hair, by celebrity hair stylist chaz dean, brought to you by guthy-renker. what does it take to get your hair this shiny, bouncy, strong, and beautiful? the wen healthy hair care system by chaz dean. >> people ask me all the time: does wen cleansing conditioner really work? i started using wen two years o. so...you tell me. does wen really work? ♪ >> i've seen a lot of changes since i first started using wen.

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