Jim Cramer really needs no introduction.
He was an ultra-successful hedge fund manager who walked away from the business after one of his best years ever. He is a well-known media personality who hosts a wildly successful television show called “Mad Money with Jim Cramer”. He is a part-owner of TheStreet.com, frequently penning articles for the site.
He has written books, appeared on major talk shows and is frequently quoted in major media stories.
There is no middle ground with Jim Cramer. Either people really love him or really hate him.
Regardless of what you think about him, there is one thing that is for certain – it’s not often that an average investor can see exactly what stocks a former hedge fund manager is trading.
This is the idea behind “Action Alerts Plus”, a membership service that is offered by TheStreet.com and Jim Cramer.
What is 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 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. 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.
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.
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 before signing up. These pages give you some insight into where he is investing foundation is laid.
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 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). 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.
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.