Cramer's 'Mad Money' Recap: Time to Leave Home

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On a day like today, when the market is up nicely, step one to making mad money is to protect the assets you already have, Jim Cramer said on his "Mad Money" TV show Wednesday.

"If you don't preserve your capital, your gains won't mean a thing against your losses."

Every time the market is strong, investors have to reposition out of the banks, homebuilders and brokers and get into what's working, he said. In this market rebound, Cramer suggested people sell and take some profits.

Right now it might make economic sense for people to walk away from their homes if they borrowed money to buy the homes two years back, he said.

If the home has declined in value by 10%, the "smart, right, rational" choice is for home buyers to walk away from the loans provided they didn't put any money down.

The homebuilders can't sell all the new homes, yet they are continuing to build, Cramer said. Many of these companies, including the public ones, will go under, he predicted.

This ripple effect should also hurt the banks, which is why Cramer advises people to sell the Bank Index (BKX Quote).

Moreover, mortgage brokers look to be in the house of pain over the housing glut, he said. Also, hedge funds will lose some of the value in their securities if mortgages are not paid back, which will affect the hedge funds' ability to carry out deals, Cramer said.