Cramer's 'Mad Money' Recap: Stay in the Game

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Editor's note: The following is a recap of a "Mad Money" episode that originally aired Dec. 29, 2006.

You can't become a great investor by watching from the sidelines or giving up after a few losses; you have to be willing to get in the game and stay in it, Jim Cramer told viewers of his "Mad Money" TV show.

Cramer said he knows how hard it can be to keep one's head in the game, and as far as he's concerned there are three "forces" that keep people out of stocks: "boredom, bummers and brokers."

Boredom, said Cramer, is a big problem. If market players are not interested in the stocks they own, they won't pay attention and that can lead to unexpected losses. "That's a recipe for disaster," Cramer said.

But as long as people invest well and stay interested, they could make a fortune, he continued. The one cure for boredom with investing is speculation, said Cramer, who believes people need to speculate if they want to be good investors. Speculation, he explained, means trading in a "high-risk, high-reward" stock and "trying to turn a little money into a whole lot of money in not a lot of time."

Some might consider speculation to be foolhardy and "more immoral than gambling," but Cramer, who has made some of his biggest gains by speculating, believes speculation is good for investors.

"I'm telling you it's OK to speculate and make those risky investments that most of the talking heads frown on," he said. "And not only is it OK -- it's entirely necessary. It's prudent and responsible."

Usually when Cramer talks about diversification he's referring to it across sectors, but the principle is the same here. People who don't own some high-risk stocks are not really diversified, he said.