"My feelings right now consist of three words: woulda, shoulda, coulda," Jim Cramer told "RealMoney" radio show listeners Friday.

What brings him to this "table of sorrow?" The news that Alcatel ( ALA) is set to buy Lucent ( LU). Cramer used to own Lucent for his ActionAlerts PLUS charitable trust.

"I gave up on Lucent some 20 cents ago," he said, which is a big deal when you once owned 30,000 shares.

In 1996, Lucent, the telephone equipment business of AT&T ( T), was spun off and immediately became a hit because its focus was wireless. This is when wireless was just starting out, Cramer said, and there was an amazing build-out so that big phone companies could adapt to wireless.

There was also deregulation that gave preference to new companies, which meant more business for Lucent, he said, and the stock flew higher.

But it bottomed out at 58 cents after the tech bust, and Cramer bought it and saw it quadruple and triple. He sold it, the stock fell, and he picked up some more.

But as the stock stagnated, Cramer grew impatient, and he eventually sold his position.

Then the company announced its M&A deal. Cramer said that the lesson learned was that he had been impatient and let go of the stock too soon.

If you only have $100 to invest, what's the best way to make some money? Is it to buy a bunch of $2 stocks and hope they rise? "That's thinking about it like a lottery ticket," Cramer said.

"Almost always these $2 stocks fail," he said. "The odds are against you."

He said that Movie Gallery ( MOVI) exemplifies this risk. USA Today ran an article saying that the CEO of Movie Gallery told investors to keep the faith in the movie rental business.

But the problem is that the company's fourth quarter was abysmal, Cramer said, adding that the stock has dropped 90% in last year.

Movie Gallery has huge debt in the form of bonds, and the bondholders are first in line to get their money back if the company goes bankrupt, Cramer said. And the stockholders probably won't get anything.

Why would the CEO do this, Cramer asked. He said it's important to look back in time to Calpine, whose CEO issued a similar statement right before the company went belly up.

Cramer pointed out that right before the company tanked, the CEO said its financial strength was excellent and that he had cut debt. "Basically he said exactly what the CEO of Movie Gallery said."

My job is to keep you out of stock where management is too optimistic, Cramer said. "It will come back to haunt them, but more importantly it will come back to haunt you if you're speculating in Movie Gallery."

Google Gets Its Diploma

It's graduation time for Google ( GOOG), Cramer said, now that the company is part of the S&P 500 index.

But what does that mean and why does it matter so much, he asked. "Most importantly, why is the company up 22 points because it got added?"

There are many indices out there, but the S&P 500 is the gold standard, he said. The index is managed by McGraw-Hill ( MHP), which owns Standard & Poor's.

Indices are like clubs that have different criteria to join.

The Dow Industrials focus on large industrial companies and is one of most closely followed indices. The Nasdaq is for newer companies and has a lot of tech and biotech.

But the S&P lists 500 companies deemed representative of American business, and now Google is in that club.

If you're a money manager, you worry about beating the returns that these indices give, particularly the S&P. And if you don't think you can beat the S&P, you mirror the S&P, he said.

That means every index fund must buy Google shares and many firms that run "closet index funds" or funds that basically match the companies in the S&P will also buy Google.

Cramer told a caller that Norfolk Southern ( NSC) is the premier railroad in the U.S. because it's the best-run of the bunch.

But the stock has moved up a great deal. "You would be considered hoggish in my world were you not to take a little off the table."

Cramer said that he would book some gains and wait for the stock to come in and buy it back.

He said that it's a stock worth owning because it has a unique relationship with its passengers, which consist of freight rather than people. This means the company can more easily pass on fuel surcharges to customers.

Plus, the company ships coal, so as oil prices rise they are called upon to transport more coal.

Cramer said that Palm ( PALM) had a monster run before it reported a great quarter, which explains why it went up about a point after the announcement. There was some profit-taking, he added.

But he believes that the company has room to run higher. "It has cash, momentum, and it's taking market share from Research In Motion ( RIMM), the maker of BlackBerry.

Interest rates may be rising and the housing sector cooling, but Cramer said there's money to be made on this trend, too.

One way is to bet on the stock market, he said. Investors put money in cash, bonds, real estate, gold and stocks; and for the last six years housing has gotten all the money. Now that the sector is cooling, that money will go to stocks, he said.

Drilling down to individual companies, Cramer said that there are some lenders that are going to still come out just fine, even though the housing market is slowing. "They will not get caught by the decline," he said.

"If you're a lender, people perceive you as someone who has gotten in trouble ... since foreclosures are up and people are walking away from condos they bought," Cramer said. "No. The lenders dump those loans on Fannie Mae ( FNM)."

Cramer suggested taking a look at Accredited Home Lenders ( LEND), the company he calls the single best lender to people in trouble. He also likes Countrywide Financial ( CFC), which he owns for ActionAlerts PLUS . He said it's the best lender in the country.

He told a caller that he is still sorry about his recommendation of Montpelier Re ( MRH), which was part of his "day of atonement show."

He said that the insurer that covers the Southeast has been one of his worst picks, in large part because he didn't believe that there would be another big hurricane after Katrina.

He said that there is some hope because a positive piece just came out saying that pessimism about the stock at $16 is overdone. He liked the article's reasoning, and believes that the stock is probably done going down.

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.

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At the time of publication, Cramer was long Countrywide Financial.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict."

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