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A large cohort of red-hot speculative stocks have exploded in tandem with the broader tech boom — but now it’s now time to sell before these companies run out of money, CNBC’s Jim Cramer said.
“So far, you’ve done fabulously if you speculated in these stocks. But the underlying companies most likely need capital and, after a certain time, it won’t be available,” he said. “Warning: that time is now starting, so please sell some of these specs before the companies and the insiders do the same. At a minimum, please take out your cost basis.”
Speculative stocks are risky investments. The companies can see big gains quickly even though they are unprofitable. While these names can generate some revenue, Cramer said, they have little earnings to speak of, and none expected in the near future. While he said he advises investors to have one speculative name in their portfolios, he cautioned against making too many risky investments.
Retail investors have bought up these super speculative stocks as of late, he continued, often using platforms like Robinhood
