Just as people must evolve with a changing world, so must a portfolio. That means that the traditional method of diversification based on selecting stocks from each sector is not going to cut it anymore. A new world with snazzy algorithm trading machines requires new rules to play the market.
So Jim Cramer focused on how to put together a diversified portfolio using a new strategy: stocks that will shield investors in any market while producing maximum benefit.
First on his list was speculation stocks. Cramer always talks about specs, but what exactly does he mean?
These stocks present higher risk, but also offer higher reward. Something to keep you interested!
When compared with the standard fare in Cramer's other strategy — think dividend yields and growth stocks — a high-risk stock hardly seems to make sense. Speculation always seems to be that dirty little word investors are told to avoid.
"Not only is it okay for you to own those tempting, risky, broken-seeming stocks that trade in the single digits, it's a necessity, as long as you follow my rules and speculate wisely," the "Mad Money" host said.