The Motley Fool Review

So you’ve seen The Motley Fool’s colorful—no, aggressive—advertising, and you’re digging a little deeper.

They claim to offer some pretty impressive gains. But are their claims legit?

The answer is both yes and no. If you bought Netflix stock when Motley Fool first made the recommendation to their subscribers, you’d be up more than 14,167%. 📈

However, we all know companies like Netflix are few and far between. So while Motley Fool might boast about their very impressive picks in the past, not every pick features such success.

This doesn’t mean their claims aren’t legitimate, but it could mean they are a bit misleading. For example, since 2002, The Motley Fool’s Stock Advisor picks have an average gain of 373%*—which is quite impressive compared to the S&P 500’s average return of 116% during the same timeframe.

That said, Motley Fool Stock Advisor is now considered to be a top stock recommendation service available.

If Motley Fool has caught your attention, there’s a lot more you need to know. Here, we’ll dive into every aspect related to their popular Stock Advisor service.

Ready? Let’s go! 🔥

What is The Motley Fool? 📚

The Motley Fool is a financial services and media company that offers a mixture of free news and a wide variety of premium content. 

It is one of the largest financial media companies today, and has greatly expanded its services, and now offers news, blog posts, and educational content, as well as stock picks, newsletters, and financial guidance.

The Motley Fool has been around for a long time – the company was founded in July of 1993, and they’ve successfully navigated the markets ever since – with the exception of the dot-com bubble. 

The company currently employs over 500 people worldwide, and their reputation as a great place for beginners and intermediates to find recommendations is well-deserved, as its track record speaks for itself. 

Who is Behind The Motley Fool? 🔍

The Motley Fool was founded by brothers David and Tom Gardner in 1993. In the following year, they published a series of online messages about a nonexistent sewage-disposal company – lampooning the ever-controversial topic of penny stocks. This drew a lot of attention to the brothers and their business.

A short while later, the brothers negotiated a partnership with AOL, which would last until 1997, when they moved to their own domain. Their irreverent, humorous approach to investing soon netted them a large and quite loyal following – which remains to this day. Their signature style hasn’t changed much, as all of the multimedia material that they produce is geared toward the layperson.

David and Tom Gardner have picked a wide variety of successful stocks over the years. Some of the most impressive picks are:

• ☑️ Netflix (up 17, 849%)
• ☑️ Amazon (up 12,718%)
• ☑️ Walt Disney (up 5,401%)
• ☑️ Nvidia (up 10,249%)

Not all of their stock picks have been successful, though. The saving grace of The Fool’s is that when they get it right, sometimes they get it extremely right – the winners more than make up for the odd bad stock pick. There is a pattern to be noticed – the Fool obviously has a talent for identifying who will be the biggest players in emerging industries.

Motley Fool’s Past Performance ⚙

The Motley Fool’s flagship product, the Stock Advisor, was launched in February of 2002. Since then, it has far outpaced the S&P 500 – with an average return of 373% compared to the S&P 500’s 116%.

Now, that’s not to say that you’re guaranteed to make five times as much as you invest – the image you see above is past performance. This means it’s a representation of what would have happened if you bought and sold everything at the perfect time. Naturally, past performance is not necessarily indicative of future results.

But the Stock Advisor’s strong history suggests that it is indeed reliable. In 2020, 10 of the stocks that were picked were winners – only 5 ended up losing value. The average overall return in 2020 so far has been 38% – which is roughly three times as much as the S&P 500. The average return of winning stock picks in 2020 has been 70% so far.

The Motley Fool’s Fees Explained 💰

Motley Fool’s most popular service, Stock Advisor costs $79 per year for new members. After the first year, the subscription goes up to $199 a year. While it might seem a tad expensive, the service has a proven track record of netting customers great returns, and Motley Fool offers frequent discounts.

If it isn’t to your liking Motley Fool offers a 30-day membership-fee-back guarantee.

Stock Advisor is Motley Fool’s most popular service by far – but it isn’t the only one. The company also offers Rule Breakers – a selection of hand-picked high-growth stocks, at $199 per year.

And if retirement planning interests you, the site also offers the Rule Your Retirement service at $149 per year. It offers asset allocation and rebalancing guides, mutual fund and ETF recommendations, and social security advice.

COVID-19 and Stock Popularity 📊

The reaction of investors to the coronavirus pandemic has been unexpected – at that’s quite an understatement. Against all odds, we’ve seen a resurgence in the stock market – a record-breaking resurgence, to be precise. Nobody could have anticipated that the market would bounce back so fast.

But it isn’t that shocking when you think about it. Lockdown measures abound, and millions of investors – particularly young people who have had no previous exposure to the stock market, are now actively trading and investing. Part of it has to do with the financial woes that the pandemic has caused – as people are eager to make up for lost income. But some of it is simply due to boredom too.

That might seem like a rosy picture – but it isn’t. There is a darker underside to the current situation – and it has to do with risk.

In times of unprecedented volatility, a large number of new traders making risky bets is a recipe for disaster. Day trading, swing trading, and forex all have their place – but they require time, knowledge, and commitment. It’s hard to resist the allure of the age-old idea of getting rich quick – but things like that simply don’t happen.

Motley Fool’s stock advisor program has its place in the post-Covid investment space. The fact that people are investing in the midst of a pandemic is quite encouraging – but without a proper assessment of risks, this can only spell trouble down the line. 

Investing isn’t a game of chance – it should be grounded in research, with realistic goals, and a healthy, rational, long-term perspective. All of these points are essential parts of the Gardner brothers’ investment philosophy – and the Motley Fool, as well as their stock picks, reflect this.

How Does Motley Fool Stock Advisor Work? 🤔

Now that we’ve covered some important points, we can move on to the meat of the matter – the specifics of the Stock Advisor.

Customers will receive access to two stock picks each month. These recommendations are made by The Fool’s team of analysts. These recommendations also come with in-depth analyses that explain the rationale behind their decisions.

You’ll also receive access to all previous picks, which is a nice addition. Some of them are still good investment opportunities, and having access to previous picks accomplishes two more things – it keeps the Fool honest and allows you to get a better sense of what went wrong when their recommendations didn’t pan out.

You will also receive a list of starter stocks that consists of 10 dependable stocks that will allow you to curate a strong portfolio from the get-go. On top of that, you’ll get access to another list of 10 stocks – the best buys now.

The members’ area of the website is home to plenty of useful educational material, and members can also make a watchlist of stocks, making it easy to analyze price movements. This watchlist also allows you to receive price alerts.

Members also gain access to the Stock Advisor forum, which is unexpectedly lively for a message board. The discussions can be quite helpful, and the forum is a handy way to communicate with other investors.

The Fool’s stock picks are solid – they have the track record to back up their claims. But the greatest value is the reports that they publish on their stock picks. They allow you to get a behind-the-scenes look at the investment methodology of people who’ve managed to beat the market over decades now – and that knowledge is well worth the asking price.

Motley Fool’s Investment Strategies 📜

The Motley Fool offers a reliable selection of good stocks that have solid long-term growth prospects. While this might sound like a one-size-fits-all approach, it isn’t.

Certain investment strategies don’t mesh well with Motley Fool’s Stock Advisor service. If you’re interested in dividend investing, you should look elsewhere – the program’s stock picks focus exclusively on high-growth stocks, and dividends don’t factor into the equation at all.

There’s another important note to make here – Motley Fool is geared towards investing in stocks, not trading stocks. To put that in more simple terms, if you’re trying to profit by using any short-term strategy—such as leveraging the top brokers for day trading—then this isn’t the service for you.

Stock Advisor is built in a way that is geared toward long-term, buy-and-hold investing. If you want to make the most of the suggestions that you will be given, you will have to hold the recommended stocks for several years – preferably, at least five.

The recommendations do make it incredibly easy to invest in high-quality stocks – but the program works best if you take the time to actually absorb and learn the methodology and rationale behind the picks.

Who is The Motley Fool Best For? 🏆

So, with that being said, who is this service geared toward? Quite a wide variety of investors, it turns out. As long as you’re comfortable with making long-term investments, Stock Advisor has plenty to offer you.

Beginners could benefit quite a lot from the basic investing principles that can be learned from material produced by The Motley Fool. The Stock Advisor community forum is also an excellent place to discuss investing and learn more about it from more seasoned investors. 👨‍💻

If you don’t have much time to commit to investing, or if you’ve picked it up as a hobby, Stock Advisor is an excellent tool. It allows you to make well-informed decisions without all of the groundwork that usually goes into picking stocks.

At the same time, the in-depth explanations behind each and every stock pick are a great way to familiarize yourself with important terms and metrics that you’ll need if you want to take a more hands-on approach later.

Stock Advisor focuses on high-growth stocks that could beat the market. This method is particularly suited to young investors who can take on a bit more risk, as they have more time to recoup any losses. ⏳

But young investors and beginners aren’t the only ones that can benefit from this service. Finding high-growth stocks has somewhat fallen out of fashion – beating the market has been waylaid in favor of more conservative approaches that have lower returns but are generally seen as safer. 

Even if you’re an experienced investor, chances are that focusing on high-growth stocks hasn’t been a priority. Stock Advisor can help you make sense of a section of the market that is often seen as intimidating, and with good reason – but one that can be incredibly profitable.

The site offers a great method to ease yourself into investing – it still leans heavily toward the DIY side of things, so you’ll have to find a good stock broker first – but expert advice makes the whole thing a bit less daunting.

Is Motley Fool Worth it? 🧐

If you’re planning on taking up long-term buy-and-hold investing, Motley Fool Stock Advisor is well worth the money. It might seem like a large sum to just fork out upfront, but the returns that the stocks which the Fool picks provide more than make up for the cost of the subscription. 

Even if you have a small amount of money to invest, you could make up for what you’ve paid. Knowing how to research stocks is a skill that takes some time to develop – and the software needed to analyze stocks has a learning curve of its own. If you don’t currently possess the skills needed to research stocks on your own, The Fool’s Stock Advisor can definitely be worth it.

Motley Fool vs. Robo Advisors 🤖

At first glance, it might seem as if the top robo advisors and the services offered by Motley Fool fill the same niche. And that is true to an extent – both offer beginners an approachable, simple way to invest.

However, the underlying differences between these two approaches are significant. Let’s go over them step-by-step. 📝

First of all, robo advisors invest in ETFs – Motley Fool’s Stock Advisor (unsurprisingly) recommends stocks.

The approach that robo advisors take has the benefit of diversification – ETFs consist of many stocks, and as such, they’re unlikely to fail. Even if a couple of stocks in an ETF end up underperforming, it won’t have a huge effect on the ETF.

ETFs are less risky – but, on the other hand, they also offer lower returns. The strategy behind Motley Fool’s Stock Advisor is picking individual stocks that will exponentially beat market returns. 💸

And even though that might sound riskier (and it is), The Motley Fool has a long history of picking good stocks, so this point isn’t as important as it would be if you were selecting your own stocks.

Risk tolerance is the name of the game here. Robo advisors are less risky, and they’re easier to use due to automatic rebalancing – The Motley Fool’s method will require monitoring and managing your positions. However, the returns that you can get from Motley Fool are generally believed to far outshine the returns from robo advisors.

Stock Advisor vs. Rule Breakers ⚖️

As we’ve discussed, while Stock Advisor might be Motley Fool’s flagship product, it isn’t the only one. Their other products tend to focus on different areas like retirement planning, but their Rule Breakers service is the one that is the most similar to the stock advisor.

Both Stock Advisor and the Rule Breakers program offer a set of stock recommendations that seem almost identical at first glance – but they do have some major underlying differences.

Rule Breakers also costs $99 per year for new members, and much like Stock Advisor, customers receive two stock picks each month. That’s where most of the similarities end.

Those that subscribe to Rule Breakers will also receive a larger list of stocks to buy right now, as well as a list of starter stocks that will help them build a strong portfolio from the get-go. Educational resources and access to community forums are also included in the package.

So, how do the stock picks in the Rule Breakers program differ from the picks you’d receive from the Stock Advisor? Well, first of all, the methodology is different – Rule Breaker stocks are selected a special team of analysts. These stocks are more volatile, and as such, riskier. That downside is balanced by the fact that they can easily turn out to be hugely profitable.

Rule Breaker focuses on companies that are poised to become major industry leaders. What this means in practice is that most of the picks are in the tech sector.

So, should you choose Rule Breakers or Stock Advisor? We’d give the edge to Stock Advisor on this one, as it offers you a wider variety of stocks, making it much easier to insulate yourself from risk with proper diversification.

Conclusion 💬

The Motley Fool has successfully stood the test of time. It is run by industry veterans who have assembled a team of expert analysts who are often on the right track. The returns that Stock Advisor has managed to net investors speak for themselves.

Stock Advisor is far from perfect. Two new stocks per month isn’t a lot, and not all of the stocks that the company recommends end up being winners. However, those that do win, more than make up for the (admittedly rare) bad calls.

Even if The Motley Fool is a bit heavy-handed with marketing and upselling, the service they offer brings actual value to customers. The price of Stock Advisor might seem a bit steep – but it could pay for itself many times over.

If you’re a DIY investor looking to learn more about stock analysis and want to diversify your portfolio with a selection of expertly-picked stocks, we think there’s no better way to spend a hundred bucks. 

If you take the time to really get into the huge amount of educational material and the research that their team publishes, you’ll gain a lot of value – value that will stay with you for a long time, even if you choose to eventually unsubscribe.