Jim Cramer's Stop Trading: Speculation Isn't Bad

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." 

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Acquisitions by Gilead Sciences (GILD) and Merck (MRK) 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.

At the time of publication, Cramer's Action Alerts PLUS held FB.

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