NEW YORK (TheStreet) -- TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, responded to Federal Reserve Chair Janet Yellen. In a Congressional hearing on Tuesday, Yellen called small-cap biotechnology stocks and small-cap social media stocks overvalued.
On CNBC's "Cramer's Stop Trading" segment, he suggested that Yellen should have Regulation T levels raised if she believes there's too much speculation. The move would crimp down the amount of leverage given to investors.
"I don't think there is [too much leverage]. I think people have a right to speculate with some of their money," Cramer argued, "and they have a right to lose money."
Acquisitions by Gilead Sciences (GILD - Get Report) and Merck (MRK - Get Report) have resulted in large premiums being paid for certain small-cap biotech stocks. But those acquisitions are boosting sales and the companies' portfolios of treatment options.
In regards to Facebook (FB), the company trades with a somewhat reasonable valuation, given its projected growth, Cramer concluded.
-- Written by Bret Kenwell in Petoskey, Mich.