Young Ones, Go Forth and Speculate

I'm not alone in recommending that young people speculate. Cramer advocates speculation because it's fun. It keeps you interested, and as long as you're interested, you'll do the necessary homework that Cramer suggests for every stock.

But Cramer still has to be the voice of age and responsibility. If he comes out and tells everybody under the age of 25 to put all the money they have invested into speculative stocks, he'll get crucified.

I've got nothing to lose, so I'll tell you what Jim is too responsible to say: In your twenties you should speculate with way more than 20% of the money you're putting into the market. Think more along the lines of 100%.

If you have the time, the money and the inclination, then stop pretending you're 50 years old and investing responsibly to prepare for your retirement. You're not. You're in your 20s. You probably aren't earning that much money. Whatever you can afford to put into stocks is going to be pretty paltry. If you're going to invest you have a responsibility to yourself to take a few chances.

This approach is made out to be a lot more dangerous than it actually is. Clements, for example, says that even though growth stocks, which are far more reliable than the speculative ones I'm advocating, can produce great short-term returns, they don't work as well as value stocks over a longer time frame.

This is a guy who believes in buying stocks and holding them through hell or high water. Yeah, if you buy a bunch of high-risk speculative stocks and then sit on them for a decade, you're being the worst kind of idiot. So don't do that.

Buy and hold is suicide for speculators, so you'll have to manage your money a bit more actively. I don't believe that's a problem, since most people want to invest precisely because they believe buying and selling stocks is fun. As long as you only have a little money to play with, it's not worth doing if it's not fun.

As a hobby, speculation is much less expensive, irresponsible and downright dangerous than the other forms of thrill-seeking available legally and extralegally these days, and some of the time you even end up making money.

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