Speculating on Stocks

I'm sitting here watching Mad Money and Jim Cramer has been talking about speculative investing in stocks. He has some interesting ideas about what to look for.

One of the ideas I like best is looking for a company with a small float. This is the number of shares available for the market to trade. His thinking is that if a mutual fund wants to invest in the company and buy a large block of shares, they will have to pay a premium for the stock and increase the value of the shares.

Micro-cap stocks will generally have a smaller number of shares available to trade and will fit this criteria. One problem with micro-cap stocks is they are very volatile, meaning the stock price can change significantly over the course of the day.

You probably will not want to invest in stocks with a small float if you may need the money soon, as it can be difficult to sell the stock in a hurry.