Motley Fool Review
Motley Fool Stock Advisor is a subscription stock picking service that has been beating the market for over fifteen years. Members get access to two fresh stock picks every month, as well as a list of every stock pick ever made by the company. Is the service worth paying for? Read our review to find out.
What is the Motley Fool Stock Advisor?
The Motley Fool Stock Advisor is one of the oldest and most well-known stock picking services. The Motley Fool was launched in 1993 by Tom and David Gardner as a free online publication for stock market advice. The publication became so popular that the company started expanding into premium services. Simply put, readers loved the Motley Fool so much that they actually wanted to pay for their services.
In 2002, the company officially launched the Stock Advisor service. The goal was simple – give casual investors the resources they need to beat the market. In the spirit of simplicity, the program made it incredibly simple for beginner investors to achieve phenomenal returns. Stock Advisor members would receive two stock recommendations each month. All they had to do was sit back, relax, and watch their portfolios grow.
As of today, the program operates in the same exact way. Stock Advisor members get alerts to buy stocks that are set up for explosive growth. As part of our Motley Fool Stock Advisor review, We’re going to take a look at just how good these stock alerts are, but first, let’s take a look at the team behind the Stock Advisor program.
Stock Advisor Team: Tom and David Gardner
Investment advice and stock research are only as credible as the source. If Warren Buffett tells you to buy a stock, you buy it. If your coworker tells you to buy a stock, you should probably do your own research first.
So, who exactly is giving the stock recommendations at the Motley Fool?
The Gardner Brothers became a dominant force in the financial world for one main reason – they knew how to speak the language of the people. Investing in the stock market can seem complicated and intimidating to many people. Reading financial books can be boring and listening to complex investment advice can be overwhelming. The Gardner brothers are aware of this and they have a way of making investing fun and simple.
Of course, Tom Gardner and David Gardner also have an incredible track record to back them up. We’re going to take an in-depth look at this record later in our Motley Fool review. For now, let’s take a quick look at the program’s pricing.
Stock Advisor Pricing
Great investment advice has a quantifiable value. If someone told you to buy 1,000 shares of Amazon for $10/share in 2001, you’d know exactly how much that advice was worth (your shares would be worth over $3 million today!).
Accordingly, many investment advisors will overcharge for their service. If you knew you could make someone $10,000, why not charge $1,000 for it?
Fortunately, the Motley Fool Stock Advisor subscription is fairly priced at only $199/year (only $99 for new members). We’ve reviewed dozens of similar services and Motley Fool has the lowest subscription price we’ve seen. You can sign up here to get access to discounted pricing.
While The Motley Fool offers a monthly subscription option, it really isn’t practical since it is priced at $39 per month (compared to a whole year at $99). Additionally, the service offers a lot of long-term picks so you won’t get too much value out of a single month of service.
The yearly plan comes with a 30-day money-back guarantee. If you are unhappy with the service after 30 days, you can contact customer service for a full refund.
Who Should Subscribe to the Motley Fool?
Before you invest more time reading our Motley Fool review, you probably want to know if the service is right for you. Every investor is unique, and there’s no such thing as a universal service that meets the needs of all people.
So, who should consider signing up for Motley Fool’s Stock Advisor newsletter?
It really comes down to a single question: do you invest in stocks?
If you invest in individual stocks, you will get value from the Motley Fool (after all, they provide stock picks). It’s really that simple. Motley Fool’s monthly stock picks are great for building your first portfolio, growing an existing portfolio, or optimizing a retirement portfolio.
While the Stock Advisor service is primarily geared towards long-term investors, many of the picks also provide good swing trading opportunities.
What Do Stock Advisor Members Get?
The Stock Advisor offering is very simple. Members get two new stock picks every month.
There are some other perks included with the membership, but most members subscribe to receive stock recommendations (myself included). The stock picks are the reason I’ve been happily paying the membership fee for years.
Every month, Motley Fool will send out a new stock recommendation by email (also accessible from the member’s area of the website). Most of the stock picks are blue chip stocks and high growth stocks set to out perform the market.
The stock recommendation will tell you what stock to buy and at what price. If you want to keep things simple, you can add the stock to your portfolio, sit back, and wait for the next alert.
If you feel more comfortable understanding the rationale behind the stock pick (as I do), the alert is also backed by a full research report with an in-depth analysis of the stock that is being recommended. The research report is a “no fluff” explanation of why the Motley Fool made the stock pick. Each report includes sections on:
- About the Company
- The Big Picture Opportunity
- Thoughts on the Company’s Management
- Why the Recommendation Was Made NOW
- Potential Risks Involved with the Investment
The report combines hours of stock market research into a report that takes about 5-10 minutes to read. As mentioned above, you don’t need to read the reports, but I feel more comfortable when I know more about the stocks I invest in. If I am going to build a portfolio from Motley Fool stock picks, I want to make sure I know what I’m invested in.
So, how have these stock picks performed? Let’s take a closer look.
How Does the Motley Fool Perform?
The value and credibility of a stock picking service are measured by the performance of the service’s stock picks. If a company is going to charge for stock picks, they better make sure that those stock picks justify the fee they are charging for the service.
This is part of the reason I steer clear of traditional financial advisors. Most of the time, they throw your money in a few popular mutual funds and collect an annual fee of 1-3%. They rarely beat the market and their work hardly justifies their annual fee.
There’s a myth amongst cynics that “no one can beat the market” These cynics would be right to point to the majority of fund managers and advisors who do not beat the market, however, they neglect a large group of investors who consistently beat the market year-over-year.
Beating the market is hardly an impossible feat. The market represents average performance and there are plenty of investors who achieve above-average results. If trying to beat the market is a “fool’s game,” who better to trust than the Motley Fool?
As part of our Stock Advisor review, we looked at the company’s previous stock picks and past performance, and the conclusion is clear. Motley Fool stock picks have been beating the market for over fifteen years.
Just check out some of their top-performing stock recommendations below. Some of them have returned as high as 25,000%. While this type of performance isn’t the norm (and you shouldn’t expect to make 25,000% on a single stock), the company still has a track record of exceptional performance.
The Motley Fool Stock Advisor program has been beating the S&P 500 (i.e. “the market”) for over 15 years. Since its inception, the Stock Advisor program has achieved returns of 487%. In that same period, the S&P 500 has returned 102%. This is no chump change.
$10,000 invested in the Motley Fool’s stock picks would now be worth over $200,000. If that same $10,000 was invested in an S&P 500 mutual fund or ETF, it would be worth about $50,000. Both are great, but I’d certainly prefer the extra $150,000 I would have made by investing in the Fool’s stock picks.
To put it simply, The Motley Fool Stock Advisor beats the S&P 500 by a considerable margin every year.
How Does the Motley Fool Stock Advisor Compare to Other Services?
If you are looking for a stock advisor, it makes sense to shop around a bit. That’s part of the reason we made this site. There are dozens of different financial services and we wanted to make sure we were using the best ones.
To date, we’ve tried most of the popular financial services (ranging from stock brokers to stock pickers). So how does Motley Fool compare? Let’s take a look.
Motley Fool vs. Other Stock Picking Services
The Motley Fool Stock Advisor service is the best stock picking service for two key reasons:
- Track Record – There are very few stock picking services that have been around as long as the Motley Fool. Personally, I have a hard time trusting a stock picker who only has a track record of a couple of years. The market is ever-changing and previously successful investors get wiped out every year. The Stock Advisor program has a time-tested track record of over 15 years. While past performance is not necessarily indicative of future performance, it’s certainly a strong indicator of the viability of Motley Fool’s investment strategies.
- Price – Financial advice isn’t cheap. Shop around and you’ll see that many advisors charge upward of $1,000/year. Ask for a financial advisor at your bank or broker and they’ll want to take a cut of your portfolio. The Stock Advisor Program is $99 for new members. It really doesn’t get any better than that.
If you’re looking for hot stock picks and you are only going to sign up for one service, use the Motley Fool Stock Advisor.
Stock Advisor vs. Other Motley Fool Services
I’ve been a Motley Fool subscriber for a few years. During that time, I’ve come across a few other Motley Fool services. Some I came across during my own research, while other ones were pitched to me by the company.
The only service I consistently pay for is the Stock Advisor service. I’ve used Rule Breakers from time to time, but I much prefer Stock Advisor. Rule Breakers is a service that is complementary to the Stock Advisor service. The main difference is that Rule Breakers specializes in growth investing. The program’s stock picks are focused on “high growth” companies, whereas the Stock Advisor criteria is more broad. You can’t go wrong with either Rule Breakers or Stock Advisor, but if you’re going to pick one, The Motley Fool Stock Advisor service is your best bet.
Here’s a pro tip. Choose one service and stick to it. Motley Fool is known for its aggressive upsells. After you sign up for one service, the company will start pitching other, more expensive services. It’s easy to get caught up in the hype and FOMO (fear of missing out), but it’s important to stay grounded.
At the end of the day, you’re paying for stock picks, and you only need a few great stock recommendations to beat the market every year. You will get that with the Stock Advisor program. Furthermore, if you pay for a year of the service, you will get two new stock picks per month. There will be plenty of investment opportunities.
Additional Details About the Motley Fool
Is the Stock Advisor Program Worth the Money?
The Motley Fool’s Stock Advisor program is priced at $99/year (new member special pricing). I’ve been paying that subscription fee for years. The main question I ask myself before renewing every year is, “will I make more than $99 if I pay for this?” The answer is always a resounding, “yes!” The subscription fee is marginal compared to what you get.
In 2020, the Motley Fool’s stock picks are beating the stock market (S&P 500) by over 25%. This means, even if you only invested $500, the service would pay for itself. If you invested more than $500 (as most investors do), the program would pay for itself ten-fold. If you are ready to sign up, you can access the latest discounted pricing using this link.
Does the Motley Fool Have Losing Picks?
Of course. Every investor has losing picks. Investment ideas aren’t always winners. Even when they are, they are still subject to market trends and other random variables that may influence the short-term price action of the stock.
There are two points I want to hit here.
First, a note on risk management. It’s up to you to manage the risk of your stock portfolio. Every investor has a different investing style and risk tolerance level. Some stock market investors can stomach a 10% drawdown while others prefer to cut losses at 3%. There is no perfect way to manage risk in the stock market – it all comes down to your personal situation, preferences, and investment strategies. While the Motley Fool team will issue “sell alerts” when their thesis is swayed, it’s still up to you to look out for your own portfolio. Keep in mind that Motley Fool’s stock recommendations are long-term picks. The companies are expected to perform well in the long-term. While many picks find early success, you should not expect every stock pick to go straight up right away.
Second, a note on transparency. Many readers have asked me if Motley Fool shows their losing trades or just hypes up the winners. Stock Advisor members have access to the program’s track record since 2002. You can see every single one of Motley Fool’s stock picks, the resulting return, and its performance compared to the S&P 500. This list includes every single stock recommendation, both the winners and the losers.
Does Motley Fool Tell You When to Sell?
The main value of the service comes from the buy recommendations. The stock recommendations are intended to be long-term holds. Many of the stocks have performed well over the past decade, giving investors no reason to sell. That said, you may choose to sell a stock whenever you’d like. For example, if one of my stocks is up over 100%, I always like to sell some shares to lock in some profits. Other investors may be more patient.
Motley Fool will issue “Sell Recommendations” when they believe it is time to sell a stock that they previously recommended. Below is a recent example. The stock was recommended as a “buy” in April 2013 and a “sell” in June 2020.
Is Motley Fool Legit?
By this point in the Motley Fool review, it should be clear that the company is legitimate. The service is fairly priced and the program has a track record of exceptional performance. Motley Fool’s stock picks speak for themselves. The stock recommendations have been outperforming the stock market for over 15 years and the company provides a full record of every stock pick for investors who would like to dig deeper.
I wanted to use this section to address some of the misconceptions people may have about the Motley Fool. The company often gets a bad reputation for its aggressive marketing tactics. If you frequent any financial website you’ve probably seen their ads. Headlines often read “triple buy alert” or “the next Amazon.” Of course, you have to enter your email address to receive a special research report and once you enter your email address, the company is likely to pitch you on their premium services.
These marketing tactics and bold marketing messaging tend to trigger the “if it’s too good to be true…” reflex in most diligent investors. Most diligent stock market investors know that they are unlikely to discover the next Amazon on the ground floor. Sure’ it’s a possibility, but it’s unlikely.
While I cannot defend the company’s marketing tactics, I can say that the service is legitimate. Just look past the hype. The Motley Fool analysts have done a great job of uncovering stocks that beat the overall stock market for almost two decades. If you want to beat the S&P 500, you’re in the right place. If you’re trying to create generational wealth and achieve financial freedom from a single stock pick, you need to adjust your expectations.
The Stock Advisor service comes with a 30-day money-back guarantee, so if you’re unhappy with the results after 30 days, you can reach out to customer service to get a full refund.
Is The Stock Advisor Newsletter Suitable for Beginner Investors?
Yes, the Fool made their name by speaking the language of beginner investors and they stay true to this goal today. The service is free of confusing jargon and overly complex strategies. New members simply need to follow the stock picks to start building a strong portfolio.
What Should Motley Fool Subscribers Expect?
When you sign up for the Stock Advisor service, you will get access to the member’s area on the Motley Fool website. New members can start taking advantage of the Motley Fool service immediately. Here are a few sections of the site that are worth checking out.
- Best Stocks to Buy Now – If you are building your first portfolio or trying to diversify an existing portfolio, you should review the “Best Stocks to Buy Now” section. You can find a list of recommended stocks to help you get started, and continue to add more stocks as the company releases new stock ideas each month.
- Starter Stocks – The Starter Stocks section is similar to the “Best Stocks to Buy Now” section but is more geared towards beginner investors. The Motley Fool team believes it is important to build a diversified portfolio and recommends holding about 25 stocks. The Starter Stocks section offers ten stock picks that can offer a strong foundation for a new portfolio.
- Performance Page – The performance page shows a track record of all previous picks and recommended stocks. This can be helpful for two things. First, you can analyze the performance of previous picks. Second, you can generate some of your own investment ideas if you like doing your own research. Many of the previous picks still make for great investments and there are probably a few stocks you will like.
- Research Reports – Members have access to all of the past research reports from previous Stock Advisor picks. These reports offer in-depth analysis of different stocks and sectors. Reviewing this section can help you better understand the rationale behind the Stock Advisor picks so you know exactly what you are investing in. The research reports can also serve as great investment education that can help you better understand how to make investment decisions.
- Community – The member’s area also features an investment community where members can interact, share ideas, and ask questions. If you are looking to connect with other investors or learn more about investing, it’s worth checking out these forums.
If you are new to the service, your journey may look something like this:
- Start building your portfolio with “Starter Stocks” and the “Best Stocks to Buy Now”
- Review the Stock Advisor picks from the past to see if there are any other stocks you like
- Connect with members in the investment community
- Wait for the next edition of the Stock Advisor newsletter for more stock picks
Motley Fool Review: Final Thoughts
Motley Fool Stock Advisor is the best stock picking service on the market today. The company has a proven track record of beating the S&P 500 for the past 18 years. On top of that, membership is very affordable (sign up here). Members get instant access to a list of stock recommendations as well as two new stock picks per month. What more can you ask for?