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EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Cramer: Can't Take the Heat? Get Out of Specs

Stocks in this article: SANGWPH

NEW YORK (Real Money) -- Not everyone can take the pain of speculating, and if you can't, don't do it. I know that's tough stuff. But so many people call me or tweet me and ask about risky biotechs, or one-hit retailers, or tech stocks with just a handful of customers and one product, that it's time to just face facts. You are going to lose some bucks when you speculate, even if you do it wisely, because it is the nature of the beast.

Perhaps more important, you must take responsibility for your own actions, because speculation always involves trading and rarely involves investing, regardless of your stated intentions.

Let's take an example of a spec that I have been recommending forever: Banco Santander (SAN), the gigantic Spanish bank. When this stock was at $6, I suggested that it would be an ideal speculation holding, because Spain wouldn't let it fail and because it has great worldwide assets. I repeatedly recommended it all the way up. I still like it because the Spanish economy is turning, and the banks holds a gigantic amount of Spanish sovereign bonds at very good prices. I always suggested that you take that stock dividend, which has allowed you to get an even bigger return.

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Yesterday some joker came out with guns blazing on Twitter accusing me of running people into the ground with Santander after a Portuguese bank, Banco Espirito Santo, was revealed to be on shaky ground. First, Santander is down a buck from its high. Second, I have always been adamant that, if you can ever play with the house's money, you should. So if you have been with me on this one, take some profits.

But, most important, show some responsibility. I was under the knife with hand surgery when news broke on the Portuguese bank. Feel free to sell. Don't wait for me to bless it or say no. It's a spec, for heaven's sake.

Or how about GW Pharmaceuticals (GWPH)? I have liked this stock as a play on the applications for cannabinoid, pure marijuana, that include epilepsy, autism and multiple sclerosis. It is a wild trader, as specs often are. I have liked this stock for many months, ever since I heard that parents are clamoring for its product. I also like it because this Britain-based company can do the work American companies can't, seeing as growing marijuana for commercial use is a class 1 felony in the U.S..

GW Pharma shot up 40 points soon after I last recommended it. I am not good enough to say you should sell it and then get back in. Nor was I even at work when it had its big move. Again, don't be afraid to take a profit and accept the risk that it might go back down. The story behind the recommendation is unchanged, though.

I have always understood that, when you buy a speculative stock -- meaning one with no real track record, or limited or no revenue, let alone earnings -- you must recognize that such a stock can go to zero. That's why specs should never be more than 10% of your portfolio if you can keep it that way. If you are doing more than that, I think there will be too much pain if things go wrong.

Don't be foolish. Accept the risk and, above all, be a grown-up. Decide for yourself when to take profits -- or losses -- as these are not meant to be staid, tried-and-true blue-chips. They are meant to make quick money, and if the story changes you must run, not walk from them and cut your losses. If the story doesn't change, be my guest. But it's your money, and I cannot and don't want to always be there to hold your hand, especially when mine is in as bad a shape as it is right now.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the securities mentioned.

This article was originally published on Real Money at 6:56 a.m. on July 11.

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