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WHAT YOU NEED TO KNOW

Portfolio Construction

When crafting a portfolio, you can't invest too much in one area because you'll be undiversified—and that's a way to get blown out. So we want to show people what a diversified portfolio looks like. That's why we typically have recommendations in all nine S&P sectors, are only overweight in the areas we believe are set to outperform the rest and keep at least 5% cash on hand.

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Weekly Roundup

Every Friday, you'll receive analysis on each stock in the Action Alerts PLUS portfolio (you can find it at the bottom of the "Most Recent Issue" tab). This includes commentary on recent events in the stock market and economy and how these events are impacting stocks. You'll receive new rankings for each of our recommendations—you'll know exactly when to add to your holdings, when to trim profits and when to sit tight.

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Portfolio Trading Strategy

We are long-term by nature, owning stocks for a couple of years—not to be confused with "buy and forget" investing. Our style is to have some trading sensitivity with a long-term portfolio. What this means is we analyze our 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.

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Twenty-Five Rules for Investing

  • Rule No. 1: Bulls, Bears Make Money, Pigs Get Slaughtered—Have you taken profits? Have you booked anything? Or are you being a pig?
  • Rule No. 2: It's OK to Pay the Taxes—Stop worrying about the tax man and book your profits before they're losses.
  • Rule No. 3: Don't Buy All at Once—Don't be arrogant and buy all at once. Stage your buys and get the best price over time. View All 25 Rules
View all 25 Rules

Ten Commandments of Trading

  • Commandment No. 1: Keep It a Trade—Never turn a trade into an investment. Sell when the catalyst occurs.
  • Commandment No. 2: First Loss Is Best—Trades need to work almost immediately. If they don't, take the loss.
  • Commandment No. 3: Take Your Losses—Don't wait for a stock to come back — and miss out on a winner. View 10 Commandments
View Ten Commandments

Glossary

Don't get tripped up on financial terms in our daily alerts. Check out the Glossary page in the Resources section to view a list of definitions and gain a better understanding of your investment strategy.

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FAQ

Don't get tripped up on financial terms in our daily alerts. Check out the Glossary page in the Resources section to view a list of definitions and gain a better understanding of your investment strategy.

View FAQ's

FACTORS TO KEEP IN MIND

Before You Invest

First, understand your goals and level of risk tolerance before investing a single penny in Action Alerts PLUS recommendations. Do you have a minimum of $5,000 to invest? If not, you may want to consider using Action Alerts PLUS as a teaching tool, because $5,000 is necessary for true diversification.

Use Action Alerts PLUS the Best Way for You

Assess your investment objectives. Seek the advice of a qualified securities professional. Determine how much you can afford to invest. And don't speculate with funds that should be treated conservatively (i.e., retirement funds or funds essential to living expenses).

Then conduct your own research. We look at the financials and know how a company's doing. So with Action Alerts PLUS, you'll receive our analysis and daily commentary on each of our recommendations. But you should also perform a minimum of at least one hour of homework on each of your stocks per week.

Evaluate Performance

We purchase positions with a six- to 12-month time horizon in mind. We tend to focus on companies that pay dividends as they tend to outperform the market. Each trade receives a rating from one to four based on technical and fundamental analysis: One, buy right away; two, buy on a pullback; three, sell on strength; and four, sell immediately.

We try to be accurate to our rankings. If we give it a three or four, we would be more inclined to sell. The key is not to be greedy. If a stock shoots up 15%, we'd take a little off the table. At the same time, if a stock pulled back a few percentage points, we may buy it back.

And just a reminder, you get the trade before we do. You have the opportunity to act first on the advice, so your performance may beat the Action Alerts PLUS performance of the long term.

Build Your Portfolio

Action Alerts PLUS will guide you to build a portfolio with a relatively low turnover rate. Yet don't fall in love with your winners. You can't be afraid to sell a losing position when there's little chance of recovery. And don't feel like you need to act immediately on an Action Alert. With a long-term horizon, you can act on the advice when your criteria are met.

Remember, we're not traders. We invest for the long-term but we do trade around our core positions. We want the flexibility to buy on weakness. So we always have our eyes on new companies. We focus on stocks, dabble in ETFs and avoid options.

And we play with an open hand. As mentioned earlier, we are committed to a stringent investment policy. We can't purchase or sell a position for a set period of time after we've discussed the company in the service. So there is never any confusion about our intentions with a trade.