Here's why Jim Cramer and his team prefer secular to cyclical growers when it comes to stocks. 

Do you know what those terms even mean?

For those who need a quick financial literacy lesson, here's what you need to know.

Secular 

Secular growth refers to the long-term growth of the company. However, it doesn't necessarily mean a good or bad growth. 

"Secular themes, I'm sorry, in the market are the ones we feel confident about putting money to work in because their growth extends well beyond the industrial cycle and is independent of any actions taken by the Fed," said Cramer. "We often find these types of trends in expanding industries or disruptive companies as they are fundamentally changing the way we view our world, as is the case with cloud computing and digital payments." 

So, what kind of stocks is Cramer taking about?

"On the other hand, a secular trend is the one that isn't tied to the business cycle, secular growth regardless of what stage we're in. For this example, I want to look at the cloud space, we're talking Amazon (AMZN) , Microsoft (MSFT) , and Salesforce (CRM) to name a few," said Cramer. 

Want to know what other secular stocks Cramer and his analysts at Action Alerts Plus are looking at? You can sign up and watch the video here

Cyclical

Cyclical stocks are affected by the market's ups and downs. 

Unclear of what that means? 

"For example, the semiconductor companies are highly cyclical, some more than others," said Cramer. "...they can be boom-bust."

Need some advice on when to trade a cyclical stock? 

"The best time to depart stock when it's a cyclical trade is when analysts are fighting over each other to raise price target, estimates...it's what I've been taught and it's what I'm trying to teach you."

Bottom Line

Any investor trying to learn how to trade or looking for portfolio advice should look into Cramer's November call. He focused heavily on how to pick a stock. 

His rules on secular growth versus cyclical growth is only the first rule out of seven. 

Interested in Action Alerts Plus? Go here

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