Last Updated on February 2, 2020
Motley Fool is a famous multimedia company in the financial industry. The company traces its roots back to July 1993 when it was founded by Tom Gardner and David Gardner, the duo that still runs this investment advisory giant today.
Motley Fool offers a combination of free news and premium financial advice and research. Presently, the company employs over 300 staff and enjoys a relatively favorable reputation as a reliable investment advisor. Motley Fool has a flagship stock-picking monthly newsletter known as the Motley Fool Stock Advisor, through which the company offers most of its investment advice.
Through the Motley Fool Stock Advisor, the company can help its clients get ahead of the stock market by offering them access to better and more lucrative stock picks. Motley Fool conducts all the market research before making stock recommendations to its members.
The Stock Adviser was launched in 2002 and since then, the program’s recommendations have garnered more than 300% in returns.In this Motley Fool review, we shall delve deeper and try to establish the legitimacy of the company, and whether it lives up to its claims or not.
History of the Motley Fool
The Motley Fool was founded by David and Tom Gardner in 1993 as a free financial media company. One thing that set the company apart from similar firms was the fact that the Gardner brothers always relied on in-depth and comprehensive research in their quests to uncover undervalued stocks.
The application of humor and humility throughout their research programs bolstered their reputation as a promising financial investment advisor. It was only a matter of time before the company grew into a vast community of like-minded investors, aka fools.
Right from inception, the Gardner brothers set the bar pretty high, with the ultimate goal of outperforming Wall Street financial analysts. In 1997, Motley Fool migrated its operations to its major online investment platforms – fool.com and fool.co.uk. Five years later, the firm unveiled its flagship premium service known as Stock Advisor.
The program was well-received and its success heralded the rollout of subsequent premium newsletters.
Throughout its existence, Motley Fool has published tons of New York Times Bestsellers as well as radio shows, live podcasts, and syndicated newspapers.
Motley Fool’s Premium Services
Presently, Motley Fool enjoys scores of premium services. The two most popular ones are the Stock Advisor and the Rule Breakers programs. Other examples include the Hidden Gems, Motley Fool Options, and Inside Value programs.
The goal of the Stock Advisor is to help average investors get ahead of the stock market by offering them deeply-researched findings and stock recommendations. According to the company, the Stock Advisor program claims to surpass the returns of the S&P 500 by selecting outperforming stocks. Indeed, the program’s picks have returned 333% since its inception, compared to a paltry 77% from the S&P 500.
Another popular product by Motley Fool, the Rule Breakers program, differs from the Stock Advisor in the methodology each one of them uses to pick stocks. While the Stock Advisor uses the methodology advanced by the two brothers, Rule Breakers is mainly built on the methodology of David Gardner, with a narrower focus on growth stocks. However, both programs seek to uncover stocks with promising returns.
Overall, the Stock Advisor program is the best offering by Motley Fool as most of the company’s methodologies and successes tie back to it.
What Investors Does Motley Fool Stock Advisor Target?
The following are the kinds of investors that the Stock Advisor program is designed for:
1. Long-term investors, i.e. buy & hold for 2 – 5+ years
2. Investors keen on beating the market
3. Investors that favor individual stocks more than mutual funds
4. Investors looking to add more stocks to their portfolios, either monthly or annually
Benefits of the Motley Fool Stock Advisor Program
The main advantage of Motley Fool Stock Advisor is the provision for monthly stock picks. In this arrangement, subscribers receive two new stock picks that are recommended by the Gardner brothers, on a monthly basis.
The following are some other major benefits of the Motley Fool program:
1. Extensive Stock Research
Tom and David Gardner undertake extensive research on every stock before recommending it to their clients. The brothers don’t just throw around vague referrals without adequate research and data to back it up.
Their research is also thorough and includes commentaries on every aspect of a company, including its history, niche, track record, and general market outlook. These comprehensive research findings enable investors to weigh their options carefully before choosing which stock to invest in.
2. Education of Members
As a subscriber with the Motley Tool Stock Advisor program, you’re guaranteed unrestricted access to extra educational resources pertaining to the stock market. Examples include market news and general investment education, such as guides and case studies of real life investment strategies in action.
These additional resources are instrumental for new investors who wish to explore the lay of the land before going all out on their first stock investments.
3. Stock Management & Alerts
Subscribers of the Stock Advisor can create their stock portfolios, similar to a watch list. The portfolios enable the members to track the performance of their stocks as well as receive alerts whenever their stocks register significant price movements.
There’s the possibility of adding your favorite stocks or choosing stocks based on the recommendations of the Stock Advisor report.
4. Motley Fool Forum
As a way of fostering friendly and fruitful interactions amongst members, the program comes with a stock advisor community feature. Through these online discussion boards, members can exchange their stock investment ideas, strategies, and challenges. It’s a great way to network with like minded individuals, seasoned investors and receive honest feedback on your investment ideas.
How Good Are Motley Fool’s Stock Picks?
Motley Fool offers multiple stock picks monthly, giving its subscribers flexibility on the number and nature of stocks to invest in.
Data on each stock pick covers the full spectrum, including:
- The stock recommendation
- The date of recommendation
- The company ticker
- Market caps
- Risk levels
- The stock’s performance from the date of recommendation, relative to the S&P 500
Besides the above data, subscribers can also access numerous recommendations that the company has ever made. That’s especially useful for members who are keen on investing in more than two stocks each month. You can easily comb through previous recommendations and uncover any stock picks that might still be relevant. What’s more – the information is tabulated for ease of interpretation.
The diversification of Motley Fool’s stock picks also manifests in the nature of recommended companies. Motley Fool doesn’t only research well-known companies; it also focuses on little-known firms that boast reasonably bullish outlooks.
The best part? All of these recommendations are presented on very easy to understand tables, allowing you to browse quickly and efficiently.
The above table shows historical stock picks, most being the recommendations you might expect including Amazon and Apple, while others are somewhat unexpected, so it can be quite insightful.
6. Practical Investment Strategies
Last but not least, Motley Fool’s investment tips are a result of well-rounded and practical research approaches. Some of the aspects the company accounts for include the broader market factors, emerging sector trends, and the overall financial health of the firms they recommend.
While conducting their research, Motley Fool takes into consideration the fundamental aspects of value and momentum plays. They not only identify and recommend undervalued companies, but also those with positive catalysts on the horizon. That way, investors can buy the undervalued stocks with an assurance of recouping their RoI sooner or later.
Here’s a recent interview with Motley Fool Co-Founder, David Gardner, discussing Multibagger Stocks, demonstrating that he definitely knows his stuff:
Is the Motley Fool Program Worth the Money?
The Motley Fool Stock Advisor program costs $199 per year. However, the company normally offers discounts on their services. There’s the option of an annual prepaid plan at $99, which comes with a 30-day 100% membership-fee-back guarantee. You can also opt for a monthly membership at $19, though this package doesn’t come with moneyback guarantee.
As a member, you have access to the following features:
- 2 new stock picks every month from Tom and David Gardner – one monthly stock each
- The “10 starter stocks for new portfolios” stock list
- The 10 “best buys now” stock list
- The exclusive Motley Fool Stock Advisor community that provides members unrestricted access to the Stock Advisor team
- The investment library which features archived research reports from previous stock recommendations, as well as other educational materials
Final Thoughts on the Motley Fool Program
First, Motley Fool boasts a relatively long presence in the industry, and with tons of positive customer feedback to show for it. And while the Motley Fool Stock Advisor program isn’t as old as the company itself, both have been time-tested.
The returns since inception of the company are as follows:
a) Tom Gardner’s Stock Picks – 143.6%
b) David Gardner’s Stock Picks – 499.4%
c) S&P 500 – 81.2%
Motley Fool also believes in the spirit of full disclosure, whereby it details the track records for both winning and losing investments. For each company it recommends, Motley Fool addresses both the bullish arguments and the bearish counterarguments. Not to mention, it conducts extensive research that analyzes various aspects of the stock performance of the companies they recommend.
The only drawback to the Motley Fool Stock Advisor is its low-risk tolerance, which makes it least attractive for older investors and technical traders.
Overall, Motley Fool is a legitimate financial investment company, and the Motley Fool Stock Advisor is definitely worth your money.