You’ve seen their commercials boasting about 500% returns on their stock picks. The Motley Fool is one of the oldest stock picking newsletter services with over a quarter-century of operations. The Company has survived through multiple bubbles and bull and bear markets. Let’s dive into the service and the company operations.
What is the Motley Fool?
Motley Fool Company History
Motley Fool was started in July 1993 by brothers David and Tom Gardner in Alexandria, Virginia. Originally, the brothers were very popular on America Online (AOL) through a partnership agreement to market their investment newsletter. As their popularity spread, they parlayed that into a book, “The Motley Fool Investment Guide,” which become a New York Times bestseller. Levity and humor, on the surface, tethered with compelling and multi-layered stock analysis at the core enabled them to generate a huge following. The brothers migrated off AOL and moved to its own website www.fool.com in 1997 at the beginning of the internet boom. This was the start of the expansion into multiple services and operating as a community with advertising revenues, subscriptions, and free content as a financial portal to millions of people.
Key Service Offerings
The Company offers over 25 various paid subscription services with stock and options picks, analysis, investment, and retirement advice. It can be quite overwhelming for beginners to the site and takes some time to let things sink in. The introductory newsletter is the Stock Advisor at $199 per year. This monthly newsletter is delivered electronically, delivering two new stock picks every month in addition to analysis, resources, and weekly picks. At the core, the site recommends building a portfolio of at least 20 stocks to hold for at least five years.
Who is the Team Behind Motley Fool?
The Company has over 300 employees and has been awarded many notable awards for its light-hearted culture, flexible work environment, and heavy benefits. Motley Fool believes in a work-life balance and backs that up with a high employee approval rating. The Company has won “Best Places to Work” awards from 2014 through 2019 by various publications from Washington Business Journal, Glassdoor to Washingtonian to the Washington Post.
Tom and David Gardner continue to operate not only as co-founders but writers and analysts for their newsletter services. Many of these newsletters have their own writers and managers, but the brothers are the most identified and synonymous with The Motley Fool brand.
Is Motley Fool Legit?
The question always arises as to whether Motley Fool is legit. There are plenty of Motley Fool reviews and testimonials, but we are aiming to answer the question – Can you actually make money with their service(s)? That all depends on your entry and exits. The Company tracks its picks against the S&P 500 index has a benchmark for comparison to show how they outperformed by over 5X.
Company Track Record
The Stock Advisor boasts a 592% performance versus 136% performance since inception. This is calculated by the average return of all stock recommendations since the inception of the service. While this appears to be impressive, there are a few things to remember and keep in mind when reading into this.
Claims vs. Reality
The claim of outperforming the benchmark S&P 500 index may be accurate, however, this is a cumulative performance on all its stock recommendations since inception. Keep in mind we are talking hundreds and hundreds of stocks and more that get added weekly. The average investor can’t possibly own every single stock they recommend, and not all of them perform either. The question of where you enter and most importantly, where you exit determines your own performance.
While the services provide stock picks and analysis, the actual execution of your entry and exits as well as portfolio allocation (share sizes) into each pick is what solely determines the performance. Newcomers to the service that jump in at all-time market highs are at most risk compared to long-time subscribers. That said, Motley Fool’s services are intended for long-term investors, and they have a solid track record of performing well in the long-term.
The value of each service is solely determined by what you’re looking for. The site offers services to meet every investing, finance, real estate, retirement, and wealth planning whim you need. It’s a one-stop shop. Where it gets confusing is there are so many services that it can be overwhelming. If you are retired on a fixed income and need a conservative income generation strategy, then you likely won’t be subscribing to the Rule Breakers: Augmented Reality and Beyond service. If possible, you may consider picking a bundle package which is available (IE: Stock Advisor and Rule Breakers Bundle for $498 per year).
With all the various niche newsletter services under the Motley Fool umbrella, it’s best to narrow down your preferences. If you’re looking for stocks to invest in long-term then the Stock Advisor service is the flagship service at $299 per year. Those looking for high growth, volatile momentum stocks can also add the Rule Breakers service at $299 per year or take the bundle deal. The Everlasting Stocks service for $299 per year provides stock recommendations from Tom Gardner’s personal portfolio enabling you to ride his coattails.
The more specialized newsletters range from $1,999 to $2,999 per year and enable you to follow the performance, trades, and analysis of active Motley Fool or fund manager portfolios. For example, the Everlasting: Cloud Disruptors 2020 service is $1,999 per year enables subscribers to access the portfolio and trades, which it has staked $500,000 into the Cloud Disruptors portfolio through 2022. The Market Pass subscription is $1,499 per year and provides access to Stock Advisor, Rule Breakers, Everlasting Stocks, and Rule Your Retirement, as well as special reports and the Ultimate Portfolio. For $13,999 per year, you can have full access to the whole site and all services. The costs get very expensive and can be quite confusing and overwhelming.
Free Content vs. Premium Content
Keep in mind that the site provides lots of free content ranging from investor education to retirement planning. It also provides daily free commentary and articles for anyone to use, even without registering. Many podcasts are free, and they put a ton of free analysis and stock pick content in syndication and on newswires. One could get a lot of stock ideas from the free content alone. The premium content tends to be timelier and more specific. You can read our full Stock Advisor review to learn more about the premium program
Motley Fool Marketing Tactics
The Company has a habit of sending tons of offers and promotions once you register or get on their mailing list. This can be a turn-off to many people, especially with the hyped nature of their promotions that are almost akin to pump and dump but feature legitimate companies. If you do sign up for a service, expect to be upsold on more services. It’s never-ending.
Motley Fool is a perpetual marketing machine so expect to get inundated with promotional offers. However, the picks tend to be very good and almost become a self-fulfilling prophecy as their community and membership grow with more investors diving into them. It’s important to be objective, kick the tires and then decide whether the services work for you. Motley Fool is legit, but the benefits differ individually depending on your situation.