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So, is Jim Cramer’s Action Alerts PLUS subscription worth the money?
What are you really getting from the Action Alerts PLUS subscription?
Can you achieve market-beating returns by following the stock picks inside the Action Alerts PLUS portfolio?
Are there any better stock picking services than Jim Cramer’s Action Alerts PLUS?
In this detailed review, I will help you answer all these questions and also share my first hand experience after trying Action Alerts PLUS monthly subscription.
Jim Cramer’s Action Alerts PLUS Portfolio
So, what is Action Alerts PLUS?
And what can you actually get from it?
Action Alerts PLUS is basically Jim Cramer’s members-only investing club, providing real-time trade alerts and investment advice from Jim Cramer and his research team.
A bit of back story first.
Cramer’s Action Alerts PLUS portfolio was created in August 2001 and sold on TheStreet.com.
Later on, the fund was converted into a charitable trust in 2005 with a stated mandate to donate any resulting dividends and distributions to nonprofit organizations.
Now, let’s take a closer look at what exactly you are getting.
As an Action Alerts PLUS member, you get full access to Jim Cramer’s $2,500,000 charitable trust portfolio which consists of 32 stocks as of today’s writing (Feb 2021).
On top of that, you get a real-time notification on every buy or sell trade that Jim Cramer and his team are about to make, together with their trading analysis.
So, what is the current holding of Action Alerts PLUS portfolio?
I am not legally allowed to disclose the current holding of the portfolio, so below is the public information taken from CNCB website about the current portfolio holdings.
It is made up of tech names like Apple, software firms like Salesforce, defensive plays such as PepsiCo and health-care stocks like CVS Health.
Inside the portfolio, the stocks will be given a rating:
- “1” means stocks they would buy right now
- “2” means stocks they would add on a pullback
- “3” means stocks they would sell on strength
- “4” means stocks they want to unload
Also, there are about 15 stocks out of the 32 stocks that are so called “Core Holding”.
These “Core Holding” are companies that Cramer thinks that should be held for the long term because on a financial level, they have high return on equity, strong margins and low debt.
However, based on the historical trades of Action Alerts PLUS portfolio, you can see there are also frequent buy and sell activities on these so called “Core Holdings”.
For one particular “Core Holding” stock, I saw that some shares were bought in Oct 2019 and then were sold just a few months later.
For the portfolio as a whole, they are constantly analyzing their holdings (technically and fundamentally) on a daily basis and take action as necessary—take a little off the table, add to positions and trim losers.
Personally, I feel that there is too much short-term trading taking place in the portfolio, and I believe in investing in great companies and hold them for the long term.
The hard truth about trading?
Majority of the traders lose money in the long term.
So, if you are looking for stock recommendations for the long term growth and appreciation, then Motley Fool Stock Advisor would be a much better alternative.
Now, let’s move on to other features of Action Alerts PLUS subscription.
Inside Action Alerts PLUS, you will also find four types of dynamic indices to fit different investment styles:
- Growth
- Value
- Income
- Blend
It actually sounded very sophisticated and useful before I signed up for the monthly subscription trial.
But, I was quite disappointed when I saw what “Dynamic Indices” really were.
So, basically, what they did was that they categorize the 32 stocks inside the Action Alerts PLUS portfolio by “Growth”, “Value”, “Income” and “Blend”.
Currently, there are 8 stocks in the “Value Index”, 12 stocks in the “Growth Index”, 3 stocks in the “Income Index” and 9 stocks in the “Blend Index”.
If you don’t want to buy every stock in the Action Alerts PLUS portfolio, you can choose the individual stocks that match your investment style.
There is another interesting feature inside Action Alerts PLUS.
It is called “Bullpen”.
Basically, the bullpen are stocks that they are watching along with the stocks within the Action Alerts PLUS portfolio.
By the way, it’s not a specific buy recommendation with entry price.
It’s merely opportunities that they find intriguing.
Also, it’s not guaranteed that they would add these stocks to the portfolio because sometimes they will also place stocks in the bullpen that are either too small for the portfolio or carry a lot of risk.
Lastly, Action Alerts PLUS members can join the monthly call with Jim Cramer where you can either watch it on a live video feed on any web browser or dial in to listen.
If you have questions for Jim Cramer, you can submit them in advance for him to answer during the live monthly call.
But, you can ONLY ask him questions regarding the current portfolio holdings or broader macro trends.
Basically, during the live call, Jim Cramer would talk about what has happened in the market and also briefly go through the individual stocks in the portfolio.
So, do I think the monthly call is valuable?
From what I’ve heard so far, I think you could get these latest market developments as well as individual stock news on any major financial news website for free.
To sum up, the biggest selling points of this investment subscription service is the Action Alerts PLUS portfolio and its real-time trade alerts.
So, will it really help you make money from the stock market?
That depends on the track record of the Action Alerts PLUS portfolio as well as the performance of the individual stocks inside the portfolio.
Action Alerts PLUS Portfolio Returns Vs S&P 500
So, what is the past performance of Jim Cramer’s charitable trust portfolio over the years?
Did it manage to beat the market every year?
As of 31st Dec 2020, the returns of Action Alerts PLUS portfolio is 189.97% while the returns of the S&P 500 index is 349.57%.
That means Cramer’s Action Alerts PLUS portfolio has been underperforming the S&P 500 index over the years.
If you have invested $10,000 in Cramer’s Action Alerts PLUS portfolio since 2001, your investment would be worth $28,997.
On the other hand, if you had invested $1,000 in S&P 500 index, your investment would be worth $44,957.
That’s a huge difference!
Now, let’s look at the performance comparison between Action Alerts PLUS portfolio and S&P 500 every single year since 2001.
| Action Alerts PLUS | S&P 500 | |
| 8/1/2001 -12/31/2001 | -2.67% | -4.64% |
| 2002 | -19.79% | -21.97% |
| 2003 | 34.46% | 28.36% |
| 2004 | 5.25% | 10.74% |
| 2005 | 5.19% | 4.83% |
| 2006 | 7.05% | 15.61% |
| 2007 | 9.51% | 5.49% |
| 2008 | -37.67% | -36.55% |
| 2009 | 31.14% | 25.93% |
| 2010 | 14.29% | 14.82% |
| 2011 | -9.58% | 2.1% |
| 2012 | 16.67% | 15.89% |
| 2013 | 25.78% | 32.04% |
| 2014 | 1.33% | 13.52% |
| 2015 | -2.33% | 1.37% |
| 2016 | 4.86% | 11.76% |
| 2017 | 12.66% | 21.6% |
| 2018 | -9.86% | -4.23% |
| 2019 | 30.39% | 31.19% |
| 2020 | 24.95% | 18.05% |
As you can see from the table, Action Alerts PLUS portfolio has ONLY narrowly beat the market 7 times out of the 19 years from 2002 to 2020.
Honestly, I am quite disappointed by this poor performance.
I mean, you would be much better off just putting your money in S&P 500 index ETFs, and also save yourself $299/year subscription fee and save you a lot of time from making so many trades based on the alerts.
So, if you are looking for stock picking service for long-term investment with proven track record of beating the market, I highly recommend that you check out my review of Motley Fool Stock Advisor.
Action Alerts PLUS Cost
So, how much does Jim Cramer’s Action Alerts Plus cost?
There are three types of pricing plans:
- Monthly subscription: $29.99/month
- Annual subscription: $25/month (or $299.99/year)
- Two-Year subscription: $20.83/month (or $499.99/two years)
There is a 14-day free trial before it starts to bill you with the option to automatically renew your subscription.
If you want to cancel and ask for a refund, that’s NOT going to be possible because they recently changed their terms of service on refunds.
So, once you have made payments, there are no refunds.
Is this subscription expensive?
Personally, I don’t think it’s worth paying $299.99/year for it.
Here’s why.
The stock picks in the Action Alerts Plus portfolios are NOT for long-term investments, unlike Motley Fool Stock Advisor stock picks.
There are just too many trades (add to positions, taking profits or trimming positions) going on to my liking.
For me, I want to buy fundamentally solid stocks with long-term growth potential and hold them for years, and not getting affected by the temporary market swings.
By the way, that’s how investment legends Warren Buffet and Charlie Munger do to accumulate their wealth.
Do you see Warren Buffet buy and sell stocks in his portfolios frequently?
Nope.
In fact, he has been holding Coca-Cola for 32 years and still holding it.
That’s why I prefer Motley Fool Stock Advisor to Action Alerts Plus and have been a paid Stock Advisor subscriber for years.
Price wise, Motley Fool Stock Advisor is only $99/year, which is just a third of what you would pay for Action Alerts Plus.
Action Alerts PLUS Vs Motley Fool Stock Advisor
So, what is the key difference between Action Alerts PLUS and Motley Fool Stock Advisor?
Action Alerts PLUS give you access to its stock portfolio and gives you real-time alerts on any buy or sell trades that are going to happen in its portfolio.
There could be as many as five alerts in one day, so there is a lot more short-term trading than long-term investing.
On the other hand, Motley Fool Stock Advisor gives specific stock recommendations every month to help you build a stock portfolio to achieve market beating returns.
It will tell you exactly what stocks to buy, when to buy them, and exactly why it is a good stock for long term investment together with the potential risks involved with the stock.
Also, you don’t have to worry about when to sell because it will give you real-time notification about the right time to sell the stock.
Now, let’s compare Motley Fool Stock Advisor’s performance with that of Action Alerts PLUS.
As both investment subscription services started on different dates, it would not be fair to compare their performance directly.
So, we would be using S&P 500 as a benchmark to measure their performance since inception.
First, let’s look at the performance comparison between Action Alerts PLUS and S&P 500.
As of 31st Dec 2020, the returns of Action Alerts PLUS portfolio is 189.97% while the returns of the S&P 500 index is 349.57%.
That means Cramer’s Action Alerts PLUS portfolio has been underperforming the S&P 500 index since 2001.
Now, let’s take a look at Motley Fool Stock Advisor’s track record as of December 2020.
Below is the performance comparison between Motley Fool Stock Advisor and S&P 500 between 2002 and December 2020.
As of December 2020, average Motley Fool Stock Advisor recommendations have returned over 546% since inception while S&P 500 has returned 111.9%
So, what does that mean?
If you had invested $10,000 in the stocks recommended by Motley Fool Stock Advisor, your investment portfolio would be worth about $300,000.
On the other hand, if you had invested $10,000 in S&P 500 index funds, your portfolio would be worth about $50,000.
In short, the Motley Fool Stock Advisor has beat the market 5 to 1.
That’s a HUGE difference in returns.
Now, what about the performance comparison between Motley Fool Stock Advisor and S&P 500 for the past 5 years?
| Year | Motley Fool Stock Advisor
(Average Return to 12th Feb 2021) |
S&P 500
(Average Return to 12th Feb 2021) |
| 2016 | 417% | 101% |
| 2017 | 214% | 73% |
| 2018 | 251% | 50% |
| 2019 | 152% | 40% |
| 2020 | 115% | 25% |
So, in terms of overall performance, the Motley Fool Stock Advisor has beat the market every single year for the past 5 years. (Note: Performance is calculated from 1st Jan of each year to 12th Feb 2021)
But, what about its individual stock picks?
This metric is important because you might not be buying every single stock recommendation made by Stock Advisor.
Below is a table that shows you the performance of individual stock picks over the years.
As of December 2020, Motley Fool Stock Advisor has had 183 stock recommendations with 100%+returns.
What that means is that you would have easily doubled your money if you had invested in any of the 183 stock picks by Stock Advisor.
Here are just some of their best-performing stock picks:
- Amazon: it’s up 20,255%
- Netflix: it’s up 21,471%
- Walt Disney: it’s up 9,625%
- NVIDIA: it’s up 7,855%
- Shopify: it is up 3,173%
- United Health Group: it is up 2,637%
- Activision Blizzard, it’s up 2,584%
Just imagine that you actually found out about these great stocks way before everyone else did.
What would your investment portfolio be like today?
Lastly, let’s compare the pricing.
So, how much does Action Alerts PLUS cost?
Its annual subscription is $299/year.
Now, what about Motley Fool Stock Advisor?
Its annual membership is only priced at $199/year.
Right now, there’s a special discount of 50% OFF on the annual membership when you click the link here to try it out for 30 days 100% risk-free.
So, for $99 a year- that’s just $1.90 a week – you can gain unlimited access to their library of expert stock recommendations which are carefully selected to help you grow your wealth.
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