Action Alerts Plus Review- It continues to make me a lot of money!
It is certainly not a secret that I’m a big Jim Cramer fan but it’s not because of obvious reasons. A lot of people love his off the wall nightly show, Mad Money. I like it because of the interviews and market analysis but if it were as boring as most of the other financial shows, I would be just fine with that.
The truth is this: While Cramer’s stock picks aren’t all winners, would you expect that? Do you know anybody who makes only winning stock picks? I’ve never met this person and if he or she existed, I’m pretty sure that all of us would know. We buy their books, listen to their videos, and hang on every last word that comes out of their mouth. One of the closest examples I know is Meredith Whitney and she isn’t anywhere near perfect in her predictions.
Here’s what I do know: Not only do I listen to Jim Cramer but I also subscribe to his charitable trust, Action Alerts Plus. If you haven’t heard of it, here’s how it works. Jim Cramer and his staff put together a collection of stocks. As a subscriber, I get an average of 2 updates per day. An e-mail is sent to me that looks like this:
The company makes electrical products (90% of sales) and tools/hardware (10% of sales) and has leading market share in lighting fixtures, utility products and hazardous-area electrical components. Cooper has one of the most diverse end-market portfolios in the industrial sector — nonresidential construction (25% of sales), utility (21% of sales), industrial (40% of sales) and residential (6% of sales). It has 65% of its sales tied to the U.S. and 35% overseas, which is a great blend as the global economies recover.
This is another turnaround story where the management has restructured the company, cut production, closed factories and reduced its inventories in order to deal with the slower-demand environment and positioned itself to benefit from the recovery. Year to date, the company has incurred about $55 million in restructuring-related charges that has generated into $33 million in savings, with another $85 million expected in the back half.
(NOTE: I’m leaving out the company name and other specific details)
Also in these e-mails, he lists the company name, how many shares he’s buying or selling, and at what price. Every move that Jim Cramer makes is sent to his subscribers before he makes them so you have the option of making the trades with them or simply learn something new about a company, a sector, or overall market conditions.
How often are the Action Alerts Plus stock picks in this portfolio profitable? I haven’t done any kind of statistical analysis but I know about my bottom line and it’s this: When I buy in to a stock at the same Cramer buys and sell at the same time he sells, I make money. I figured it out that on average I’m making a 15% profit on each of these positions simply by doing what he says to do in his e-mails.
One word of warning: Action Alerts Plus is not a day trading portfolio. You aren’t going to make money unless you are patient and willing to hold the positions for months and sometimes years. Sometimes they make money quickly but often you have to be patient.
If you do the math, the price of the portfolio is about the cost of one dinner for two at your favorite restaurant. The portfolio is full of quality stocks. You’re probably not going to invest in all of them but even if you picked one and make 15% on your investment, the price of the subscription will be pennies compared to what you made.
There are a lot of people out there who claim to have winning picks but how many of them open up their portfolio and every move they make to prove it to you? Jim Cramer does and it proves that he knows how to make you and I money.
The best thing about the portfolio is that Jim donates the profits to charity at the end of each year!
Most retail or part time investors don’t make money in the stock market. While the stock market is often blamed, I believe it’s lack of education on the part of those investors. It takes more than reading a few articles and watching a CNBC. You have to do more. Action Alerts Plus isn’t going to give you that education but it’s going to start you down the right road.