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Successful stock picking is no small feat. And even if you manage to do so, it can be time-consuming.
In this Motley Fool review, we’ll see if The Motley Fool is up to the task.
The Motley Fool offers many premium services, including:
- Stock Advisor
- Rule Breaker
- Rule Your Retirement
We will touch on each during the review, but the emphasis will be on Stock Advisor.
After all, Stock Advisor is the company’s flagship product. The Motley Fool helps you beat the market with its no-nonsense style of stock picking.
But does it work? Let’s find out.
What Is The Motley Fool?
David & Tom Gardner founded The Motley Fool in 1993 along with Erik Rydholm.
The company calls Alexandria, VA its home.
The Gardner brothers still run things today, and they continue to provide financial advice through articles, newsletters, and webinars.
The Motley Fool helps customers make better stock picks with its newsletter, podcast, YouTube videos, and more.
If you have ever done research on investing, you’ve likely heard of The Motley Fool. The company doesn’t like to take itself too seriously (hence the name).
At The Motley Fool, we take our purpose seriously, but that doesn’t mean we take ourselves too seriously.
It takes its name from a court jester in Shakespeare’s As You Like It. Still, Fool has had some serious success in the investing world.
It has also had its ups and downs. Due to the dot-com bubble, Fool lost about 80% of its staff. But despite some struggles in the past, The Motley Fool pressed on and is doing better than ever.
In 2002, shortly after the dot-com bust, it introduced Stock Advisor. This service has since become its most popular service.
Motley Fool Investment Style
The Motley Fool uses a buy-and hold strategy.
The co-founders have seen some impressive results using this strategy. Here are the returns each has recorded since Fool’s founding, compared to the S&P (Updated 01-04-21):
Tom Gardner: +299.1%
David Gardner: +855.9%
S&P 500: +115.1%
As you can see, these are excellent returns. So, you aren’t just buying into the hype.
In fact, Fool has updated these numbers over the past couple of months, and they have actually gone up.
That is despite all the uncertainty in the market due to COVID-19 and everything else going on.
Motley Fool Stock Advisor
The Motley Fool Stock Advisor
Stock Picking and Analysis
Newsletters, Articles, Reports, Community Forum
50% off First Year; 30-Day Money-Back Guarantee
Stock Advisor is a stock picking service that helps long-term investors earn great returns. Many “Foolish” investors even beat the market.
The result? Stock Advisor has been a huge success for the company and its members alike. And it’s a great way to start to invest in stocks.
Stock picks are updated every Thursday for Stock Advisor subscribers. That can save you a ton of time.
Why? Because it takes time to understand the ins and outs of a company. And the Motley Fool doesn’t just look at a few numbers here and there.
Instead, they do a deep dive into every company, performing an in-depth analysis. Only after a company meets their strict requirements do they decide to recommend it.
For new investors, this would be a huge undertaking. Therefore, a Stock Advisor subscription can be well worth it.
The Motley Fool is not a service for day traders, nor is it one that focuses on investing in mutual funds or ETFs.
Instead, its strategy centers around a buy-and-hold position on individual stocks. It helps you find the best stocks to grow your wealth in the long term.
These stocks are what investors would call “blue-chip” stocks. Blue-chip stocks are from established companies with a history of strong returns.
As a result, you can expect established companies like Amazon, Apple, and Netflix.
Another popular recommendation, Shopify (SHOP), has increased over 2,000% in the past five years.
However, there are also likely to be some stocks you wouldn’t have expected.
And that is where the real value is.
One of the first things you’ll the first time you log in is Stocks to Buy Today. This immediately gives you an idea of which stocks they are recommending.
Members receive two new stock picks every month. That may not sound like much, but when you are using a buy-and-hold strategy, you don’t need new picks all that often.
In fact, your portfolio may remain static other than stocks they recommend selling.
If one of the picks has shown it is no longer worth holding over an extended period of time, Fool recommends selling it.
The Gardners always give an in-depth explanation for their sell recommendations as well. That helps you understand the rationale for the sell decision.
Each time The Motley Fool recommends a stock, it provides an in-depth analysis along with the pick.
This allows members to help understand the specific characteristics as well as potential market factors that led to the pick.
This is a nice perk to have because these analyses can help you understand the specific factors that make a stock worth buying.
Even if you aren’t interested in picking winning stocks on your own, it is helpful to know the “why” and not just the “what.”
Fool is very thorough in the research it provides on its Stock Advisor picks. It uses various factors to show the strength of a stock.
But this is not to say every stock it picks is a winner, which is why it recommends maintaining a well-balanced portfolio of at least 15 individual stocks.
The more you diversify your stock portfolio, the more you can avoid such large swings in its value.
That might mean a lower return in the long run, but finding the right risk/reward balance is important.
Stock Advisor Pricing
One of the best things about Stock Advisor is just how affordable it is. If you use the button below, the fee is $99 (50% off) for your first year.
After that, the annual fee goes up to the regular $199.
Considering how lucrative the stock picks can be, a Stock Advisor subscription is a great deal. After all, you only pay just over $16 per month.
And that is even after the price increase.
When I signed up, I saw the new member prices:
I would not recommend signing up for one month for two reasons:
- Monthly cost. The most obvious reason is how much higher the monthly cost is. At $39/month, you would pay $468 per year.
- Money-back guarantee. Stock Advisor comes with a 30-day money-back guarantee. Therefore, you can ask for a full refund if you aren’t satisfied.
Fool offers a variety of premium services besides Stock Advisor. For instance, Rule Breakers runs $299, but this service also has a $99 for the first year.
Rule Breakers gives you access to David’s picks. His picks rarely overlap with Tom’s, and he focuses on high-growth stocks.
Remember, David has a historical return better than 700%.
Stock Advisor is likely the better starting point for a long-term investment strategy. Still, the two services can complement each other well.
Both are available on Fool.com.
The Motley Fool also offers Rule Your Retirement, which focuses on ETFs rather than individual stocks. The cost is $77 for your first year and $149/year thereafter.
Stock Advisor Performance
I mentioned above that each of the co-founders has done quite well, far outpacing the market. And that continues into 2021, with each founder’s picks performing extremely well.
Although the economy has been chaotic was throughout 2020, Fool’s picks remained strong. Yes, there was a significant dip in March, but things have since rebounded.
Current subscribers: to see more about how each stock has performed, check the Stock Advisor Performance screen.
At the top of the screen, you see once again how each Gardner brother has done compared to the market.
Below that, you see a list of stocks, along with when the stock was recommended and who recommended it.
Almost all of the team’s recent picks have positive returns. One is as high as 82.3%.
There is various other information on the screen, such as return for the stock since it was recommended. You’ll also see the S&P 500 return during that same time period.
The whole list is sortable to help you find different stocks. If you see something you like, you can add it to your favorites to purchase later.
Some notes about the 13 stocks shown above:
- All but one has a positive return.
- Average rate of return is 29.33% (including the one loser)
- The average S&P 500 return during the same time period is 9.21%.
- The average adjusted share price is $178.32. (Adjusted simply means adjusted for dividends and stock splits on the day of closing.)
- Average market cap is $41 billion. For reference, large cap is anything $10 billion and above, so these are not small, teetering companies.
Does This Help My Portfolio?
Yes, these are encouraging figures, and the real-world data proves it.
This graph shows the hypothetical growth of $10,000 in Fool’s recommended stocks:
What we see in this graph is that an investment in the S&P 500 would have grown to nearly $50,000 in 18 years.
That’s actually quite good by most standards, but it doesn’t hold a candle to the Motley Fool Stock Advisor service.
Using Motley Fool stock picks, your $10,000 investment would have grown to around $250,000 in just 18 years.
If you want to start investing in stocks, The Motley Fool is a great starting point.
Real-World Performance (+126.57%)
I haven’t yet invested a huge amount of money, but I do maintain a portfolio of Stock Advisor stocks in M1 Finance.
So why haven’t I invested more? Frankly, it’s only because I don’t quite have the cash flow for it.
I started investing in June, 2020, and here’s what my returns look like:
The dollar amounts are small so far, but I feel pretty good about what I’m seeing from Stock Advisor. I hope to invest more in the future.
Stock Advisor Features
In addition to the obvious benefit of Fool’s monthly stock picks, there are more features that will help you build a better portfolio. Let’s take a look at some of them now.
Starter Stocks are exactly what they sound like. These are stocks that are perfect for someone who is new and wants to start building a portfolio.
Fool compiles this list annually. It consists of stocks that are not only perfect for building out a new portfolio but can also strengthen existing ones.
This list is helpful. Sure, you see Stocks to Buy as you log in, but I couldn’t tell if these were good for a new portfolio.
And one of the best things about Starter Stocks is these aren’t just trendy stocks; they are stocks you can hold for the long term.
You’ll find stocks like Amazon (ticker: AMZN), Apple (AAPL), and Netflix (NFLX) plus some you may not have considered.
News & Updates
As a member, you’ll have access to frequent articles and their investment newsletter to keep you updated.
While these updates include buy and sell recommendations, they also touch on other topics, such as:
- Best buys now
- Guidance changes
These are just some of the categories, but this gives you an idea of the type of content that is published regularly.
Generally speaking, you’ll see at least one of these articles every 1-3 days. Sometimes you may see multiple articles in a single day.
By and large, the market can be chaotic and unpredictable, so it makes sense.
You may see an email with a product upsell here and there, but there are options to opt-out from each type of email if you’d rather not receive them.
You’ll also gain access to a community forum that allows you to discuss a variety of topics with other members – from very basic to more advanced.
The forum has quite a bit of activity, too, so you’ll be able to get a lot of your questions answered here.
Stock Advisor Reports
Stock Advisor reports are yet another way you can get an in-depth look at the inner workings of the stock market. Some of these reports are incredibly detailed and packed with a ton of information.
In addition to general stock market analysis, you’ll also find reports from Tom & David. They include some of their most recent picks and why each of the stocks mentioned are a buy.
These reports come in article format but often highlight short-term trends in the financial industry.
For example, one recent report is about a stock recommendation for the cannabis boom.
Other times, the reports provide forecasts and predictions and various stock tips.
Stock Advisor allows you to maintain a list of favorite stocks. You can add stocks to your favorites a couple of different ways, including:
- The Stocks to Buy Today list
- Searching within the My Favorites list
You will often receive emails with the latest buy alerts and sell alerts. Or, if you prefer, you can visit the website and see all the latest stock picks.
The site does let you favorite stocks and has a “buy” button, but you can’t buy directly through The Motley Fool’s website. You’ll have to use your own brokerage account.
However, if you use Fidelity, it does have the option of linking your Fidelity account to make things slightly easier.
How Does It Compare?
Another way to determine whether The Motley Fool is the right service for you is to compare it to other popular investment services.
Let’s see how it stacks up against the competition.
The Motley Fool vs. Zacks
If you’re wondering which one is better, The Motley Fool vs. Zacks, there’s no easy answer.
The Motley Fool Stock Advisor and Zacks Trade are both great services, but they cater to different trading styles.
Stock Advisor is best for passive investors who want guidance on stock picks, while Zacks Trade is best for active and semi-active traders.
Zacks is actually its own broker, meaning you can buy stocks on its platform. Stock Advisor doesn’t have That convenience.
But given that Zacks is for more active traders, this makes sense. If you couldn’t trade directly on the platform as an active trader, it would be too much back-and-forth.
Because Zacks Trade is a broker, it has its own trading interface. And its interface is technical in nature with lots of graphs and granular reports.
The Motley Fool’s Stock Advisor has plenty of in-depth reports and articles, but they are meant to help inform your trades on other platforms. Plus, they help you understand why the Fools make the picks they do.
Both services are great, but which you should use depends on your preferred style of trading.
The Motley Fool vs. The Street
The Motley Fool and The Street have products that are somewhat comparable: Stock Advisor and Action Alerts PLUS.
We’ve already covered Stock Advisor. Action Alerts PLUS is The Street’s subscription-based stock alerts service.
If you haven’t heard of The Street, it was founded by Jim Cramer. He’s best known as the lively personality behind CNBC’s “Mad Money.”
As such, Action Alerts PLUS gives you insight into Cramer’s stock portfolio and what he likes at the moment.
He does have a team as well, and a subscription gives you an insider’s look at the whole portfolio constructing process.
The biggest difference between the two is the trading style. You may know Cramer for his “Sell! Sell! Sell!” proclamations.
Indeed, AAP stocks are sold more frequently. While Stock Advisor will tell you to sell occasionally, the team at The Motley Fool is a bit more measured in its recommendations.
Thus, which one is better depends upon the trading style you prefer and which is more suited to your personality.
The Motley Fool vs. Robo-Advisors
It’s not a big surprise since many investors don’t want to spend lots of time picking stocks. All they have to do is a answer a brief questionnaire and deposit money regularly.
Investors don’t have to worry about having to research stocks or execute individual trades. Instead, the robo-advisor puts your money in a diverse set of ETFs with built-in diversification.
That means it’s less work, and returns are relatively stable.
So, what’s the downside of robo-advisors? The most obvious one is returns. While your money should grow in the long run, the return will likely be lower than you’ll see with Stock Advisor.
In addition, you can’t be selective with your investments. Some investors don’t like ETFs because they won’t be able to avoid the “loser” stocks.
Plus, ETFs make it more difficult to invest in a socially-responsible way. While robo-advisors like Betterment are adding socially-responsible investments, you will always have less control with a robo-advisor.
Of course, Stock Advisor has its downsides, too. Investing in individual stocks can take longer, and can be more volatile, too.
Overall, deciding between Stock Advisor and a robo-advisor is about how much risk you can tolerate and the returns you want. Plus, not everyone is comfortable managing their own portfolio.
Motley Fool FAQ
I know people have a lot of questions about The Motley Fool, so I wanted to answer some of them. Here are some of the most common questions people ask:
Is The Motley Fool Legitimate?
The Motley Fool is 100% legit. The company’s goal is the help its members get better returns and is not trying to deceive in any way.
They have been around since 1993 and are based in Alexandria, VA, just outside of DC. They provide a quality service and the subscription isn’t particularly expensive.
Plus, the founders have created a number of YouTube videos to help you get to know them better and better understand their mission.
Is The Motley Fool a Pump and Dump?
The Motley Fool is not a pump-and-dump. Tom and David Gardner own the stocks they recommend–they aren’t just trying to inflate the value before selling.
And they don’t own these stocks for a short period of time. Instead, they buy and hold for the long term.
If they ever do sell a particular stock, they will let you know via their sell alerts.
However, that only happens when a company starts to perform worse than expected. The overall strategy is to buy and hold stocks indefinitely.
So, no, The Motley Fool is not a pump-and-dump by any definition of the term.
Is the Motley Fool a Scam or Is It Worth It?
The Motley Fool is not a scam; it is a reputable company that’s been around almost 30 years. Your mileage may vary, and there will be picks that don’t see amazing results.
But there is nothing dubious or suspicious about The Motley Fool. If you start with Stock Advisor, you pay a modest fee for superb stock picks.
At the end of the day, isn’t that what most of us want with a service like this?
Trustpilot gives The Motley Fool a 3.2/5. While that may not sound spectacular, the largest number of reviews are five stars (42% of the total).
As with many marketplace-style review sites, there are just a few two-four star reviews. The second-largest number are one-star reviews.
But these one-star reviews tend to give what sound like minor complaints or are entirely suspect.
For example, a one-star review says “In summary what you receive is slightly more information than from their emails and website.” That seems to be this reviewers biggest complaint.
Also, Fool has a staff member providing in-depth, detailed responses to many of these reviews. That shows they don’t take low ratings lightly and value each and every customer’s input.
So while not every customer is completely satisfied, I see little reason to believe this service is a scam. In fact, it’s one of the top stock picking services out there.
The Motley Fool Ratings by Feature
Many people join simply for the great stock picks. While that is undoubtedly a nice perk, that’s not the only thing Fool offers.
So, how do the features stack up?
Stock picks from The Motley Fool have a great track record. This is not to say every single one has been a winner, of course.
Indeed, it has certainly had some picks that haven’t panned out so well. However, it has also had picks that have had better than a 20,000% return.
Unsurprisingly, then, the overall return has been strong. Its historical return fluctuates, but it tends to be around 400-500%.
One can hardly ask more for a service recommending stock picks.
Education & Community
The Motley Fool often publishes in-depth reports that keep you up to speed on market trends. Plus, you’ll see the latest developments on individual stocks.
If a stock falls out of favor and should be liquidated, you’ll be promptly informed of that, too.
Plus, there is an active community forum where you can get answers to all kinds of common questions and ask yours as well.
New members can sign up for both Stock Advisor and Rule Breakers for just $99 each for the first year. That means each will cost you just $8.25 per month your first year.
And this is not to say you have to sign up for both. You can sign up for one or the other.
Given the stellar returns both brothers have seen, this is a great way to access their picks.
The Motley Fool’s most popular service, Stock Advisor, is just $99 for the first year, and $199 after that. Its other popular stock recommendation service, Rule Breakers, is $99, then $299.
It’s not uncommon for services recommending individual stocks to cost several times more than this. In fact, day trading services can have monthly costs that look similar to Fool’s annual price.
How Do I Sign Up?
Signing up is incredibly easy. All you have to do is head over the premium services section, select the service you want, and that’s pretty much it.
Once you enter your name & billing information and select monthly or annual billing (note: annual is a much better deal), you’re be all set.
Note that a credit card number is required when signing up.
As you can see, getting signed up is very simple. It only takes a couple of minutes.
Is The Motley Fool Right for You?
The Motley Fool is a great value and has the data to show it’s been largely successful.
Although there have been a few hiccups along the way, the company continues to see long-term success.
After all, the numbers don’t lie.
The founders have had a combined 4-500% historical return (compared to ~100% for the S&P in the same time period). That alone shows just how success they have been.
Of course, you should be aware of the potential risks – individual stocks can have more volatility than an index fund or mutual fund.
You should certainly do your own research before you start buying individual stocks. But if you’re looking for an easy way to find some stock ideas, this is a great place to start.
Building a portfolio using Fool’s recommendations can put you on the path to investing success.
Ready to get started?