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Cramer's Most Important Lesson In Speculating

The most important lesson in speculating, Cramer said Friday, is that you should speculate with a basket of stocks.

Last October, the "Mad Money" host spent a week highlighting eight speculative biotechnology stocks. Today, his orphan drug biotechs are up nicely with BioMarin having posted a 14 percent gain and Alexion higher by 52 percent. His hepatitis C specs also did well, including Vertex's 38 percent gain and Pharmasset being up a whopping 204 percent.

There were some losing stocks, too, however. Exact Sciences , a colon cancer diagnostics name, is down by 13 percent. Two diabetes plays, Alkermes and Amylin , are down 18 and 49 percent respectively. Eye care company Inspire Pharmaceutical fell by 21 percent.

Overall, his biotech specs are up an average of 26 percent versus the S&P, which is up only 14 percent over the same period.

"That's the most important lesson right there: when you speculate, you should speculate with a basket, especially when you're playing around with risky pharma stocks," Cramer said. "If you bought the whole basket, you trounced the market. If you just picked one, maybe it would have been Pharmasset and you'd be up 204 percent, or maybe it would have been Amylin and you'd be down 49 percent."

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