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How to Start Your First Stock Portfolio: Jim Cramer's Top Tips

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Jim Cramer and Action Alerts PLUS senior analyst Jeff Marks explained how to start your first stock portfolio in this video sneak peek from Cramer's August Action Alerts PLUS investing call


JEFF MARKS: All right, next question, "I'm a new subscriber--" thank you for subscribing-- "and I'm looking to invest. How would you recommend I build my portfolio to match the AAP portfolio? Should I replicate the entire portfolio, buy only the 1 rated stocks, or wait for new buy alerts and build the portfolio over time?" This is from Simon in Houston, Texas.

 Simon, what I would say is read the weekly roundups. Understand our investment theses in each name. And then, from there, pick what you understand. Pick what you like. Only pick 5 stocks is what we typically recommend. Don't try and mimic the whole thing because you'll find yourself too spread thin as well.

So I also don't think you need to focus solely on the 1s. If there is really a 2 that really caught your eye, maybe start with maybe a quarter of position. And let it come in, and then buy more. But really pick what you know, what you understand, and what you like. And stick to 5 names.

JIM CRAMER: Yeah, I mean, my late dad, who was working until he passed away at 92, but he looked at it like this. He said, "OK, I'm going to buy all the exciting ones." I said, "Pop..."

He said, "No, I'm going to buy all the exciting ones. I'm not going to buy American Electric Power at that point. I'll go buy FAANG." We didn't know it was FAANG, right? We didn't call it that.

 And he said, "It's going to be my Mad Money portfolio. I'm just going to buy the ones - I've got lots of Vanguard, lots of S&P 500. I'm just going to pick the 10 most exciting stocks to augment or what I did in mutual funds."

 I always thought that was a great way to use this. It was very always curious, too, the way he would pick. I mean, he loved tech. He really loved health care. And if we wrote that there was somebody that had some new drug, he would do that.

 But he was always mad at us that we never bought Roku. And I said, Roku's terrible. And then one day, you know, Roku turned out to be pretty good. He always loved it if there was a famous CEO. He would always like that, too, someone who did well on Mad Money. He'd say, well, that's very smart.

JEFF MARKS: A bankable CEO, yeah.

JIM CRAMER: Yeah. And so he had Honeywell. Because he said, "Boy, that guy's a smart guy, that Dave Coty."

 So I mean, there's so many ways to skin the cat here.

To hear Cramer's full August Action Alerts PLUS call or to take a look at the latest moves from the AAP team, head to Action Alerts PLUS today. 

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