The Motley Fool is one of the most well-recognized companies in the world of finance.
Whether you’ve been investing for a month or a decade, you’ve probably come across a The Motley Fool article, recommendation, or advertisement.
The company has been in business for nearly three decades (founded in 1993) and provides both free content and premium services.
The question is – is The Motley Fool legit?
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The Motley Fool’s Content
The Motley Fool offers free and paid content, which should be assessed independently.
The Motley Fool’s free content is created by website contributors with varying backgrounds and investing styles. While these contributors may be credible, their opinions do not reflect any official positions or opinions of the company.
Stock recommendations from free articles should not be viewed as official recommendations from The Motley Fool.
While contributors may be credible (and are likely vetted as part of The Motley Fool’s hiring process), their opinions are their own. Gauging their legitimacy should be done on a contributor-by-contributor basis.
Therefore, when assessing the credibility of The Motley Fool, we should focus primarily on the company’s paid services, which offer investment advice and stock recommendations from the company’s team of analysts.
Let’s get to it.
Defining Legitimacy
Before we move forward, we should discuss our definition of legitimacy.
While it may seem foolish (no pun intended) to define such a simple term, we believe it is important, especially in the world of investing.
We would define a “legitimate” investing advice service as one:
- That represents itself fairly and intends to do good
- With credible advice and recommendations
- With a proven track record
- That provides good value
The first criterion negates scammers.
The second criterion negates those with good intentions but bad opinions.
The third criterion separates the truly qualified experts from the one-hit wonders.
The fourth criterion ensures that services are fairly priced so customers may actually benefit.
So, let’s assess The Motley Fool
Is The Motley Fool Legit?
To answer the questions simply, yes, The Motley Fool is legit.
Here’s how it holds up using the criteria above.
Representation
We believe that, overall, the company represents its services accurately and aims to help investors.
The Motley Fool was founded by brothers Tom and David Gardner in the early 90’s. The brothers wanted to share their investing ideas in a fun and enjoyable format, which resonated well with the average investor. They avoided complex jargon and financial models and focused solely on what mattered – the stock recommendations.
Over time, the free advice became so popular that the brothers launched their first paid stock-picking service – Stock Advisor.
The company now offers a range of premium services built around the principles that sparked its initial success.
The Motley Fool’s premium services offer well-researched stock picks that average investors can actually understand and follow.
It is worth noting that, in recent years, the company has started marketing more aggressively with sensational headlines like “All In Stock Buy Alert” and “Triple Down Stock Alert.”
While these headlines may be a bit aggressive (and attract naive investors), The Motley Fool does have the track record to back up many of their bold claims.
Let’s take a look.
Credible Advice and Recommendations
One of the great things about investing is it’s very simple to assess the credibility of investors and their ideas.
If you’re good/credible, you make money. If you’re not, you don’t. It’s really that simple.
If I tell you to buy “x stock” and hold it for five years, we can check back in five years to analyze the quality of the recommendation.
If the stock is down 30%, it was a bad pick.
If the stock is up 50%, it was a good pick.
If the stock is up 1,000%, it was a home run.
If investors are transparent, gauging their performance is straightforward.
Fortunately, that’s the case with The Motley Fool.
The company provides a track record of all of its Stock Advisor stock picks, which have cumulatively 3X’ed the S&P 500 (as of September 2023).
The stock picks are credible, well-researched, and effective – the track record speaks for itself.
Track Record
While on the topic of track records, it’s important to make sure that investors have a long and strong history.
There’s a big difference between beating the market over a year and beating the market over 10+ years.
We saw evidence of this in 2020-2022 as more retail investors started participating in the markets. Stocks were going straight up from March of 2020 until January of 2022. Many first-time investors had outstanding returns and started positioning themselves as “gurus” and “experts.”
Fast forward to the present day, and many of those investors gave back a large portion of their gains.
Why did this happen, and why is it relevant to this analysis?
Investing is a long-term endeavor. Market conditions change yearly, and the best investors are forced to adapt.
Anyone can be an “expert” in a bull market. Anyone can have a few good years. The best investors thrive over longer periods of time. They know how to adapt to changing market conditions, they know how to capitalize on hot sectors and trends, and they know how to weather storms during less-than-favorable market conditions.
If you’re taking investment advice from an individual or company, you want to make sure they’ve been around the block – they’ve invested during both bull and bear markets, they’ve invested in a variety of sectors and asset classes, etc.
The Motley Fool passes this test as well. The company was founded three decades ago, and the Stock Advisor program was launched two decades ago.
The company’s team of analysts has seen both bear markets and bull markets. They’ve seen bubbles and crashes. They’ve seen recessions.
As mentioned above, Stock Advisor picks have 3X’ed the stock market over the long term.
Value
Last but not least, we consider the value of a service when gauging its legitimacy.
Why?
Because a service could have a strong track record of offering great advice and still be overpriced, meaning customers are not getting their money’s worth.
For example, selling a $3,000 financial advice service to an investor with only $10,000 to invest could be considered ethically questionable.
Since The Motley Fool caters to the casual retail investor, we expect pricing to be reasonable.
The flagship service, Stock Advisor, is priced at $199/year and regularly discounted for new members.
We believe this price is fair and reasonable.
Of course, the company also has more expensive services, and we encourage investors to take a realistic approach to assessing the value of any service before buying.
Final Verdict – Is The Motley Fool Legit?
Yes, The Motley Fool is legit.
The paid services have proven track records. They deliver on what they promise – well-researched stock picks that have a history of outperforming the markets.
The main services are priced reasonably and run by a credible team.
