PROS / You will receive frequent and well-supported stock trade recommendations from a successful investor.
CONS / The Jim Cramer Cult of Personality is not for everyone.
VERDICT / Action Alerts PLUS is the most popular subscription service on TheStreet.com for good reason.
TheStreet.com publishes financial content of interest to do-it-yourself stock investors. Jim Cramer is co-founder of TheStreet.com and host of the Mad Money television show. One of the best premium services on TheStreet.com is Jim Cramer’s Action Alerts PLUS subscription. Although some of TheStreet.com premium services are designed for mid- to high-level risk traders, Action Alerts PLUS is for low- to mid-level risk investors who invest on a six- to 12-month horizon and want to trade Jim Cramer stocks.
Cramer has conveyed his Action Alerts PLUS portfolio to a trust that sends all realized profits to charity. Such an arrangement allows Cramer to retain investment control over the securities in the trust and to make trades that he would not be allowed to make if he were to benefit personally from them. This portfolio is not about “buy and hold.” Rather, the strategy is to hold about 25 stocks in the portfolio for no more than a year. The strategy provides Cramer with the opportunity to teach his subscribers his approach to trading around a core holding as market opportunities present themselves. When Cramer refers to his charitable trust fund during his Mad Money show, it is his Action Alerts PLUS portfolio that he is referring to.
Subscribers have the chance to make Cramer’s recommended trades before Cramer is allowed to trade, which is after he has emailed the alert and received confirmation that the alert was sent to every subscriber. Cramer has other trading restrictions so he sometimes tells subscribers about trades that he would have made for the portfolio if not for the rules. Cramer must abide by certain trading restrictions such as the requirement to hold all Action Alerts PLUS portfolio securities for at least one month. And he is forbidden to buy or sell any stock that he has mentioned on television or radio for five days after the broadcast.
Action Alerts go out to subscribers about half a dozen times per day. The daily format is concise (usually less than 200 words), and the alert describes what Cramer intends to do after you have received his alert. If he is going to buy or sell, he describes which stocks, how many and at what price. He then discloses how up or down he is with the stocks and prognosticates about their long term potential. The alerts also usually contain the names of stocks that are on his active radar and why. And he usually concludes by disclosing how many total shares of a particular ticker symbol he will own after he completes his announced trades. He also tells you what percentage of the portfolio these stocks represent.
In addition to the daily alerts, you will receive a weekly roundup that is a lengthy analysis (5,000 to 6,000 words) of the week’s stock market dynamics with a guide to which stocks Cramer recommends, which ones he would buy on a pullback, which stocks he would sell on strength and which ones he would unload as soon as his trading restrictions allow. The writing is clear. The arguments are crisp and supported. The data is presented in multiple contexts such as trends, politics, competitive market dynamics and relevant news events. The weekly roundup circulated on Friday is a fascinating read with specific and actionable data for digestion over the weekend as you prepare for possible trading decisions for the following week.
Cramer’s transparency in individual alerts is backed up by publishing the exact status of his Action Alerts PLUS portfolio for every subscriber to see. Subscribers can view the entire portfolio, 24/7, including all open or closed positions and trading history. He also publishes performance results, including original cost, current value and total average return, and he shows the information alongside the S&P 500 Index for easy comparison.
Cramer is quick to point out that your results will not automatically be the same as his, even if you mirror his every move. For one thing, you may not have a portfolio as large as his and you might not be trading at volume levels high enough to warrant the lower commissions that his large volume affords him. Also, you might have purchased stocks at a different time than Cramer purchased them. And you might not have enough capital to trade as frequently as Cramer.
Cramer has earned his right to comment on markets for TheStreet.com and CNBC. He demonstrated journalist leadership early on when he was president of "The Harvard Crimson," the daily student newspaper of Harvard University. And he demonstrated his ability to think clearly and work hard by graduating magna cum laude from Harvard College. He prepared the way for his extraordinary success by graduating from Harvard Law School and joining Goldman Sachs. After Goldman Sachs, Cramer started his own hedge fund and helped Dow Jones to start Smart Money prior to co-founding TheStreet.com in 1996. The other co-founder was Martin Peretz, a Harvard faculty member and former owner of "The New Republic." Peretz disagreed with Cramer over policy and has since left TheStreet.com.
Cramer’s style, more manic than measured, attracts its share of disciples and critics. His detractors allege that he manipulates markets for personal gain, even though the only fund affected by his public recommendations is his charitable trust fund, which he cannot benefit from personally. Cramer is ambitious and energetic and sufficiently successful to retire if he so desired. Instead, he stays involved and shares what he knows with people who respect his opinion enough to imitate his trading decisions.
Jim Cramer’s Action Alerts PLUS newsletter is the most successful subscription on TheStreet.com. The newsletter lets you walk in the footsteps of an experienced trader and take advantage of the decisions that he makes based on conclusions by his research staff. The format is precise and useful. The writing is clear. If you want a steady stream of well argued and specific trade ideas based on actual market developments, subscribe to Jim Cramer’s Action Alerts PLUS newsletter.