As China's economic growth declines, some analysts say Beijing may have to spend more on infrastructure, adding to concerns about high debts.China Economyread more
John Paul Stevens, who served on the Supreme Court for nearly 35 years and became its leading liberal, has died.Politicsread more
The largest U.S. banks are scrutinizing members of the Federal Reserve for any insight into how the central bank will tinker interest rates.Banksread more
The U.S. and China restarted their trade talks, but signs are showing a comprehensive deal could be a long way off, if it happens at all.Marketsread more
"The charts, as interpreted by Carley Garner, suggest that the upside in the stock market has gotten more limited," Jim Cramer says.Mad Money with Jim Cramerread more
U.S. President Donald Trump said Tuesday that Washington and Beijing have a long way to go on trade, adding that America could place tariffs on an additional $325 billion...Asia Marketsread more
Facebook's cryptocurrency project has already been met with skepticism from policymakers around the world.Technologyread more
Stone, 66, a notorious Republican political operative who has described himself as a "dirty trickster," had previously been dressed down by the judge for his public remarks...Politicsread more
Delta is gathering more data from customers than ever in hopes of avoiding customer service problems and increasing customer satisfaction, its CFO says.At Workread more
The Biden team's second-quarter Federal Election Commission filing shows that the campaign wrote a check of just over $5,300 on June 28 to Sheehan Associates for "strategic...2020 Electionsread more
See which stocks are posting big moves after the bell on July 16.Market Insiderread more
Jim Cramer has a new strategy for diversification. He opened up his lesson book to help investors craft a portfolio filled with stock that will shield investors in any market, while producing maximum benefit.
Frankly, selecting stocks from each sector just won't cut it anymore.
First on his list were 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.
Investors need something with a little pizzazz to avoid boredom, Cramer said. High-risk, high-reward speculative stocks have a reputation of mystery, but if investors own them with the right rules and discipline, Cramer thinks they could also have huge upside potential for a portfolio, as well.
So now on to the million-dollar question: How do you pick the right speculation stocks?
Cramer said the overall goal for spec is to invest in tiny, largely unknown companies in sectors that could catch a turnaround. That way, as Wall Street warms to the company, you will benefit from the gains.
Investors can identify a spec by looking for companies that trade in the single digits. Money managers at financial institutions will not touch the single-digit stocks because they think they are too risky. Investors benefit from classic mispricing created by pessimistic money managers, Cramer said.
So, once the fundamentals of a company turn, Cramer thinks it creates an opportunity to buy stocks at a great price that the big boys will not touch.
Speculation plays tend to have a short lifespan, he added. So, the trick is to lock in profits as soon as you have them and avoid getting burned. Cramer also advised investors to cut their losses before they become too large.
The next time the word speculation enters into an investment conversation, don't cringe. Instead smile, knowing that with a little discipline this could be a great opportunity for a $3 stock to turn into a triple.
Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com.