Motley Fool Review
Ease of Use
Quality of Research
Motley Fool has been offering stock recommendations and investment advice since 1993. Over two decades later, they are still one of the largest financial media companies in the world. We did an in-depth review of their stock advisor program to see if it was worth the money. Here’s what we found.
- 1 About Motley Fool
- 2 Motley Fool Stock Advisor Program
- 3 How Good Are Motley Fool’s Stock Picks?
- 4 Motley Fool’s Investment Strategies
- 5 Is the Stock Advisor Program Worth the Money?
- 6 Final Thoughts on the Stock Advisor Program
About Motley Fool
Motley Fool is one of the most well known multimedia companies in the financial industry. The company was originally founded in July 1993 by David Gardner and Tom Gardner, who still run the company today. The company provides a combination of both free news (similar to sites like MarketWatch and Yahoo Finance) as well as premium financial advice and research. This is no small operation.
Motley Fool now employs over 300 people and is recognized as one of the top companies in the space. The company has maintained a positive reputation and is most well-known for their stock advisor program.
Motley Fool Stock Advisor Program
Motley Fool’s stock advisor program offers premium stock picks backed by extensive research. The Stock Advisor program claims to beat the returns of the S&P 500 by selecting outperforming stocks. Since inception, the stock advisor picks have returned 333%, compared to 77% returns from the S&P 500. So, what exactly does the program offer? Let’s take a closer look.
Monthly Stock Picks
The Motley Fool Stock Advisor program offers a few benefits, but the biggest value comes from the monthly stock picks. Subscribers will receive two new stock picks every month. These stock picks are recommended by Tom and David Gardner, the companies cofounders.
Motley Fool does extensive research on the stocks they recommend. They don’t simply say “buy stock $XYZ” without any explanation. Instead, they share their research on the company and explain why they are making the recommendation. This research is thorough and includes commentary on the company, sector, and general market conditions.
Motley Fool offers additional educational resources for investors who are looking to learn more about the markets. The members area contains market news as well as general investment education. Once again, the stock picks are the stars of the service, but the education is a nice perk.
The members section offers a community forum where members are free to discuss stock picks and general investing concepts. The forum is surprisingly active and serves as a nice community to network with other investors and exchange ideas.
Stock Advisor vs. Rule Breakers
Motley Fool offers a handful of premium investment services but the most popular are the Stock Advisor program and the Rule Breakers program. Many investors are torn between the two so we felt it necessary to do a quick comparison.
Both programs are priced the same at $99/year or $19/month. The main difference between the services is the investment methodology used to pick the stocks.
The Stock Advisor program is Motley Fool’s flagship service. This service offers stock picks based around the methodology that made Tom and David Gardner renowned figureheads in the world of investing. Rule Breakers is a follow-up service primarily built on David Gardner’s methodology.
Both programs seek to identify stocks poised for exceptional returns, however Rule Breakers is more focused on growth stocks. In this sense, Rule breakers is just a more narrowly-focused stock picking service.
We believe that the Stock Advisor program is more favorable to Rule Breakers for a couple reasons. First, you get access to more stock picks and resources. Second, the Stock Advisor program is clearly the flagship service. It’s the service that made the Fool famous and it even contains a lot of the elements of the Rule Breakers service.
When in doubt, you can’t go wrong with the Stock Advisor program.
How Good Are Motley Fool’s Stock Picks?
As mentioned above, most investors sign up for Motley Fool’s Stock Advisor program to receive stock recommendations. Investors are looking to recoup the cost of the subscription through superior stock picks.
Over time, Motley Fool has outperformed the stock market. Their recommendations are generally large cap companies with lower risk than small caps and micro caps.
Additionally, the company provides multiple stock picks every month, giving investors the opportunity to choose from multiple companies. You can find a list of all stock picks, including data about:
- The recommendation date
- The company ticker
- The market cap
- The risk level
- The performance since the recommendation (and relative to the S&P 500)
It’s beneficial that all stock picks are listed in a convenient table. This allows new members to analyze the performance and make decisions accordingly. Here is an example (to be fair, I’ve included historical picks instead of the most recent picks):
Some of the recommendations are companies you would expect to find on the list (such as Amazon and Apple), while others are hidden gems.
Motley Fool does a great job of presenting the “full story.” The company releases in-depth reports with research-backed stock picks. They do not hype up positions in an attempt to get investors to buy the stock immediately. They share their bullish arguments while addressing any bearish counterarguments. Most stocks are accompanies by a risk rating to allow investors to decide whether or not the stock fits their strategy.
The company is also quick to jump on shorter-term market trends with special reports (such as their recent report on the cannabis stock boom).
Overall, the stock recommendations are well-researched. It’s important that new investors understand broader market conditions before entering a position into any of these stocks. Because most of these stocks are large caps, they tend to fluctuate relative to the S&P 500. While their performance is not interlinked, there is still a correlation. For example, during a strong bull market, most stocks will perform well (and Motley Fool’s picks are likely to outperform). During correctional periods, investors should be more cautious.
Motley Fool’s Investment Strategies
Some investors simply want to know what stocks to buy and at one times. Other investors prefer to learn more about the rationale behind a stock pick. There’s a wide range of investing strategies, such as momentum, value, and growth. So, how does Motley Fool choose their stocks?
The company takes a well-rounded approach to their investment research. They account for broader market factors, sector trends, and the overall health of the companies they recommend. Fundamental research plays a major role in the decision making process. Motley Fool tends to assign weight to both value and momentum plays. They seek to identify undervalued companies with positive catalysts on the horizon. Personally, I find this to be a favorable strategy as it provides the best of both worlds. Investors can take advantage of undervalued stocks without waiting years for the markets to recognize the companies’ true values.
Motley Fool’s investment strategies are time-tested. The company has been researching stocks for over two decades.
Here’s a great video of Motley Fool co-founder David Gardner explaining his process in more depth:
Is the Stock Advisor Program Worth the Money?
The Motley Fool Stock Advisor Program is one of the most fairly priced programs available. Some research companies charge hundreds of dollars per month for their stock recommendations, but Motley Fool is affordable.
The Stock Advisor program can be purchased for $19/month of $99/year. Both plans renew automatically unless canceled.
At this rate, it’s hard to make an argument that the service isn’t worth the money. A single stock recommendation can make back the cost of the subscription ten-fold. While I ultimately opted for the annual subscription, I appreciated the availability of the monthly option, as it allowed me to test the service before committing to a year.
Final Thoughts on the Stock Advisor Program
The Motley Fool Stock Advisor program is ideal for investors with longer term horizons. Over time, these stock recommendations have outperformed the market. That said, investors should have realistic expectations. Not every pick is going to be a winner, and both the Fool and the S&P 500 will have down years. If you’re looking for well-researched stock picks, the Stock Advisor program delivers.