Jim Cramer’s Action Alerts Plus – Review – Updated for 2015

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.” Read this in depth 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!  After my free 14 day trial was complete I was not ambushed by countless emails begging me to come back or to sign up for the annual service. This was a breath of fresh air and quite relieving.

UPDATE 2015: This review has been updated to stay current with what’s going on with Jim Cramer’s Action Alerts Plus. Since this review, the price has been lowered, his research staff changed for the better and now the throws in a bunch of his books for free when you sign up for a trial. If you cannot read the whole review my recommendation is to sign up for the free trial. You will probably learn everything you need to know in that time and you won’t need the full subscription.

What is Action Alerts Plus? How does it Work?

This powerful service, Action Alerts Plus allows users to follow the stocks Jim Cramer buys and sells for his charitable trust fund of the same name, Action Alerts Plus. 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. All of the profits go to charity. Users have found this particularly helpful, stating if you follow Cramer’s picks, following the charitable trust will make you big money. Buy when he buys and sell when he sells.  Follow his trades in real time.

Some users have made zero money from this but, stay subscribed because of the wealth of knowledge you get in how an actual multi million dollar portfolio is managed. Jim does it right because his reputation is on the line. Keep in mind that you don’t have to do any of the trades Jim and his staff make. You can subscribe to Action Alerts Plus strictly to learn how it’s done.

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 are going to make. It used to be Stephanie Link that worked closely with Jim on these but is now a guy named Jack Mohr, a specialist researcher from TheStreet.

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. This goes way beyond what Mad Money teaches you. 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 Jack as well as their investing philosophy. Check out Jim Cramer’s multi-million dollar charitable trust portfolio and uncover the stocks he thinks could be HUGE winners.

Differences between Action Alerts Plus and Mad Money

Most of you are familiar with Jim Cramer’s 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 versa. How can we take this entertainer seriously and confidently spend several hundred dollars on his advice a year? Although the audience can be the same in both mediums the stakes and goals are much 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 this charitable trust is a different style of investing. Mad Money focuses a lot more on fundamental analysis and common sense investing to everyday investors. Action Alerts Plus goes much more indepth!

Jim 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 Link and the entire staff of TheStreet to produce reports and act on potential profits in the market.

Action Alerts Plus often settles between long term investing and day trading, two seemingly contradictory methods with often different goals. Yet, he maintains an average that has beaten the S&P500.

Is it Worth the Cost? How will it Help My Investing Strategy?

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. They are both free ebooks now along with a host of Jim Cramer’s other classic books. Take a look inside and receive Jim Cramer’s newest book “Get Rich Carefully” at TheStreet.com.

Some have even taken to publishing websites and blogs that update users for free of all of the trades that occur in this stock picking service without you having to pay the annual fee. I would caution against this. Not only is this shady activity on the part of these publishers but there is a great deal to be gained receiving these updates in real time right before they happen. A web site publisher may not notice these trades until well after they happen. At that point the trade could have affected the price of the stock dramatically.

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. It also happens to buy a lot of dividend stocks. Cramer is not a day trader in this fund but certainly not a buy and hold investor. This makes dividend stocks highly profitable.

The main problem with Action Alerts is the trading style that Mr. Cramer adopts for the charitable trust. It is a large fund buying a number of shares that might cost five or six figures. Most readers cannot duplicate this amount of money to invest. Cramer 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). For example, if Cramer wants to initiate a position in a stock, he might buy 20% of what he really wants to test the market and make sure he can get it at the price he wants. Most investors do not have this luxury and in fact may overpay. However, if you have positions in stocks at the four to six figure level you’ll be in good shape. This stock picking service is not for you if you have just a few shares of a few different stocks.

The cost, last time I checked, was $59.99 a month, which is on the lower end of cost on premium investment newsletters and stock picking services. Most penny stock picking services are cheaper (most are junk) and most of Cramer’s competitors like Motley Fool, Zacks, etc. are more expensive.

What’s the Bottom Line?

The majority of users will never have the amount of money like Cramer to invest and so cannot trade in this way as effectively nor can they trade in as many different stocks. Since they cannot mimic Cramer’s portfolio they tend to not be diversified.

Nevertheless, Action Alerts Plus should enable you on how to learn to invest and trade. By appealing to the everyday investor, the charitable trust speaks in a language that is often comfortable and with less jargon. Although some could argue this is a disadvantage, Cramer does all of the work for you. You would benefit to know the jargon but you don’t have to.

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. Start a monthly subscription of Jim Cramer’s Action Alerts PLUS for only $59.95 and receive your first 14 days FREE!