Investing Strategies
Jim Cramers Action Alerts Plus – Review
Action Alerts Plus is a premium stock picking service available through TheStreet.com (TST). Love him or hate him Jim Cramer has become a widely successful investor and has been busy “helping the little guy.” Although he has been one of the most profitable hedge fund managers and investors he has made his mistakes like other famous investors. Read this short review and decide for yourself if it is the right fit for you. If you are unsure you can Sign up for a free trial of Jim Cramer’s Action Alerts PLUS!
This powerful service, Action Alerts Plus allows users to follow the stocks Jim Cramer buys and sells for his charitable trust fund. Subscribers are given email updates of stocks Jim Cramer will buy or sell before he makes the trade – trades he must commit to, due to SEC regulations. Users have found this particularly helpful, stating if you follow Cramers picks, Action Alerts Plus will make you big money. Buy when he buys and sell when he sells. Follow his trades in real time.
Should You Sign Up?
Emails are sent 1-3 times a day updating the trades of the stocks held in the charitable trust that Jim Cramer and his staff including Stephanie Link are going to make. Cramer also sends short reports regarding stocks held in the charitable trust. These can be really helpful and give you an idea of what research Jim and his staff use to buy or sell a stock. These are not spam and are extremely helpful to give you an idea of how professional investors and traders make decisions. The website describes in detail the background of both Jim and Stephanie as well as their investing philosophy.
Some subscribers have given poor reviews of Action Alerts Plus because of the seemingly high cost, $349.00 per year and what they describe as a lack of value. I understand where they are coming from mostly because of Jim Cramers CNBC television show Mad Money. The show often contradicts with some of Cramer’s principles and trading methods used in Action Alerts Plus and vice verse. Although the audience is mostly the same in both mediums the stakes and goals are different.
The main difference is that Cramer can use his investing principles but augment them on a daily basis as needed to secure profits and sell losers. As an example, although he does not necessarily like Lowes (LOW) and constantly puts it down on Mad Money he has bought and held the stock in Action Alerts Plus. He does not like the fundamentals or the business model compared to Home Depot (HD) but if he is able to make money off of it he will! Viewers of Mad Money may not be able to understand but Action Alerts Plus is a different style of trading. Mad Money focuses a lot more on fundamental analysis and common sense investing to common investors.
Action Alerts Plus Trading Style
Action Alerts Plus can also be very helpful for beginning investors. Being able to follow Cramer’s daily trades and the specific reasoning behind his stock moves is entertaining and educational. Although you can follow the trades of other investing experts, Cramer maintains a particular style in Action Alerts Plus that you have to try for yourself. Check out the 25 Rules of Investing and 10 Commandments of Trading before signing up.
Action Alerts Plus invests in mostly well known blue chip and large cap stocks. These are mostly household names of large conglomerates that are the best of breed in their sector. You will see very few small caps or anything remotely volatile as penny stocks. Stocks like John Deere, Apple, Oracle, and Bank of America are present in the fund. They also happen to buy a lot of dividend stocks. Cramer is not a day trader but certainly not a buy and hold. This makes dividend stocks highly profitable.
Cramer advocates daily on Mad Money against buy and hold strategies and maintains a “buy and homework” position. Many subscribers have also voiced concern over the number of stocks held in the fund, often between 20-30 at a time. They are concerned because Cramer advocates at least 1 hour of research and analysis a week for each holding. With 20-30 stocks in the fund they are concerned he is not giving them enough attention. But what they forget is he has the help of Stephanie and the entire staff to produce reports and act on potential profits in the market.
Action Alerts Plus is a great starting premium investment service. If you are still undecided on whether to sign up because of the price you can sign up for the free trial version which I am using to review the service. You will not be flooded with spam email, pressured into buying further services, or receive unrelated emails. Receive a FREE copy of Jim Cramer’s Getting Back to Even with a subscription to Action Alerts PLUS
Tagged Action Alerts Plus, Jim Cramer, Mad Money, Premium Services, TheStreet
Confident InvestorDec 29, 2011 at 6:51 pm
Jim Cramer is a solid showman that has an entertaining style. He teaches a few things on his show but more than anything, it is enjoyable to watch and while watching it the viewer thinks about stocks (which is a good thing).
The main problem with Action Alerts is the trading style that Mr. Cramer adopts for the fund. It is a larger fund than most readers can duplicate and because of this he can adopt a more frequent trading style – often doing quarter positions in a stock and then growing it over time (or moving out of it over time). Most people have only 10% of the investment capital of Mr. Cramer and so cannot trade in this way as effectively nor can they trade in as many different stocks. Since they cannot mimic Mr. Cramer’s portfolio they tend to not be diversified.
Also, the theme that Mr. Cramer carries in both venues is that the average investor can understand the dynamics of the market and how it affects an individual stock. He suggests that fuel prices are going to go up therefore airlines and transportation stocks will go down. This is an obvious conclusion but when he tries to relate that fuel price to the profitability of Amazon or Apple or Urban Outfitters, that conclusion takes a bit more understanding of the macro-market than most investors can accurately reproduce on their own.
Many times the viewer/reader comes out with the conclusion that price of a stock is simply the result of the profitability of the company. As any seasoned trader will tell you, as long as the company doesn’t miss its projections or show amazing changes in direction of profit, it is quite often the herd mentality of the market that causes major moves in a stock’s price. So while FedEx might get hurt on a 10% gas price increase, the stock may not move much at all due to that news.
My trading philosophy (see my site) is different. I believe in finding good companies and then moving in and out of them as the market indicators show the stock to be increasing or decreasing. Trying to understand the macroeconomic issues that affect a stock’s price is too subjective for most investors. Instead they need to learn to trade on the momentum and movement of a high quality company.
Investor BruceJan 17, 2012 at 6:09 pm
Jim Cramer is a brilliant investor and Action Alerts Plus is a great way for a young investor to get started. Although it might seem expensive Action Alerts Plus enables the subscriber to learn the ins and outs of trading and investing. You have the benefit of learning from one of the most successful investors and his entire company and team. Not bad for an annual subscription. This thing has been paying dividends for me. I just wish I found out about it sooner.