Figuring out how to create a personalized portfolio for trading or long-term investing is a massive challenge. While there are plenty of robo-advisor services that will help you build a portfolio automatically, these don’t offer the level of customization that many investors want – let alone the ability to invest in individual stocks.
Thankfully, you don’t have to go it alone when it comes to stock research and stock picking. There are numerous stock advisor websites that make the process of choosing investments and organizing a portfolio significantly easier.
In this guide, we’ll explain how stock advisor websites work and help you find the best stock advisor for your needs.
What Is A Stock Advisor Website?
A stock advisor website is a service that helps you choose stocks and assemble a portfolio. Depending on the service, you might get specific, highly researched stock picks or access to a database of stock research so that you can pick your own stocks.
There is a huge range of different stock advisors on the market. Some stock advisors are geared towards growth stocks, while others focus on dividend stocks that generate fixed income. At the same time, there are stock advisors that encourage multi-year investment horizons and advisors that help you actively trade on daily to weekly timescales.
It’s important to make sure that the stock advisor you choose matches your investing style and goals. A stock advisor that gives suggestions for stocks to buy and hold, for example, won’t be very helpful if you want to put together an actively traded portfolio that turns over every few months. Think carefully about what kind of trading or investing you want to do, and then find a stock advising service that matches that approach.
Most stock advisors charge a monthly or annual fee for their services. Prices can range widely, so it’s important to consider how much you’re planning to invest and your potential return from using the service when thinking about value.
Types Of Stock Advisors
In general, stock advisors can be split into two broad categories: stock picking services and research services.
Stock picking services tell you exactly what stocks to add to your portfolio and when. These stock advisor websites are extremely easy to follow since you typically don’t need to do any additional research on your own. Just add the stock to your portfolio at the time the stock pick is issued or when it hits a defined trigger. The stock picking service should also let you know when it’s time to sell the stock out of your portfolio. Some services like Motley Fool Everlasting Portfolio will even give you an entire pre-made portfolio with specific allocations for each stock.
Although stock picking services can be great for investors who want a lot of guidance, they can be restrictive. Typically, you only get information about the stocks that are being recommended – not about any other stocks that were perhaps considered, but not recommended. It can be difficult to know when to deviate from the recommendations or, if you want to expand your portfolio, what stocks would be good to add.
Research services allow you to take a much more DIY approach. These services give you access to in-depth stock research, often in the form of a multi-faceted stock grading system or analyst reports. You might also get portfolio analysis tools that help you identify potential gaps in your portfolio or overweighting towards a particular market sector.
The downside to research services is that they require a significant amount of hands-on work on your part. Since there’s no one telling you what stocks to buy, it’s up to you to use the information available to piece together a profitable and diversified portfolio. The main function of this type of stock advisor is to give you access to information that you can then use to make decisions on your own.
What To Look For In A Stock Advisor Website
Your biggest considerations when choosing a stock advisor website should be what type of advisor you want and what trading or investing strategy you want to pursue. That said, there are some minor factors that you’ll also want to consider when picking a stock advisor.
You should always analyze the track record of a service before trusting any investment advice. Some companies make it easy by sharing the exact returns of their picks. Other times, you will need to do some of your own digging. Here are some questions to consider:
- How long has the advisor been in business? Investing is a long-term endeavor. Many investors have great years, but a few years of success is not necessarily indicative of a viable long-term investment strategy. Look for an advisor that has been thriving for over a decade. This ensures that the strategy is time-tested and has weathered different types of market conditions.
- What are the total returns of the stock picks? Measuring the performance of a stock advisor is simple. There is only one metric that matters – total returns. While historical performance is not necessarily indicative of future returns, it’s a good way for you to measure how effective an investment strategy has been.
- How does the performance compare to a benchmark like the S&P 500? Stock advice is only worth paying for if it can beat the market. You don’t want to pay for stock picks that yield the same returns as investing in a broad market ETF or mutual fund. Make sure to benchmark the performance of a stock advisor against the market itself (i.e. and S&P 500 mutual fund or ETF).
- Does the performance justify the cost of the membership? When you pay for a stock advisor, your goal is to make more money with the advisor than you would without. It’s important to consider the cost of the advice in this analysis. For example, a stock advisor may help you make an extra $1,000/year on your investments. This is a great value proposition if the service costs $100/year – less so if the service costs $2,000/year. Your portfolio size is a factor in this analysis. For example, let’s assume a stock advisor can make you an extra 10%/year compared to the S&P 500. If you have a $10,000 portfolio, this advice is worth $1,000. If you have a $100,000 portfolio, this advice is worth $10,000. The value of a stock advisor is subjective. Consider your personal situation when doing this analysis.
- What percentage of picks are winners/losers? We discussed the importance of looking at a stock advisor’s returns. While the overall performance can be a good indicator of the program’s effectiveness, you may want to dig deeper. The overall performance may be skewed by outlier stock picks that achieved exceptional returns. For example, a stock advisor could pick 10 stocks in a year, 9 of which lose 5% and one that returns 300%. The advisor would boast annual returns of ~25% even though the majority of picks were losers. If you invested in all 10 picks, you would achieve a nice return. If you missed out on the single winner, you would lose money.
- How consistent is the performance? Lastly, you want to look at how consistent a stock advisor’s performance is. Do they have good years and bad years or do they generate consistent returns? Do they thrive in certain market conditions but fail in others? It’s important to find a stock advisor that is consistent so you don’t start investing during a “bad” year.
Frequency Of Picks Or Reports
A big thing to keep in mind, especially for stock picking services, is how often new picks are released. Some services issue stock picks every single day, whereas other only release picks once a month. Which is better for you depends in large part on your trading style and investment horizon.
Frequency isn’t as critical for most research services, but it’s still worth considering. How often are stock grades updated, for example? If a research service issues analyst reports, check how frequently those reports are released for individual stocks or the market as a whole.
Other Assets Included
Some stock advisor services stick strictly to stocks, while others offer ETF picks or research reports or even options trading strategies. If you want to trade in a down market, also consider whether a service offers advice on stocks to short.
Stock Scanners And Other Tools
When it comes to research services, having more tools at your disposal is almost always better. Look for capable stock scanners that integrate with the service’s research database to help you choose stocks. Newsfeeds and social trading networks can also come in handy for providing ideas.
Top Stock Advisor Websites
With all that in mind, let’s take a closer look at two of the best stock advisor websites on the market today. We talked about a lot of factors you should consider before choosing a stock advisor. Fortunately, we did the research for you. Here are our top picks.
Best For Stock Picks – The Motley Fool Stock Advisor
The Motley Fool Stock Advisor is a stock picking service with an incredible track record. Since 2002, when the service was founded, Stock Advisor picks have returned more than 300% and significantly beaten the broader stock market. On average, the service has generated gains of 16.6% per year.
This return is even more impressive when you consider the simplicity of the service. Stock Advisor issues two growth stock picks each month, along with a short research report explaining the rationale behind those picks. There are no shorts, options, or other complex strategies – all you have to do is buy the stocks and hold them. The investment horizon for Stock Advisor picks varies, but it is typically at least six months and can be up to several years.
Stock Advisor is also priced incredibly reasonably. It costs just $99 for the first year, then $199 per year after that.
Best For Self-Directed Research – Zacks Premium
If you prefer to do your own stock research, Zacks Premium offers an easy to use research interface and access to a huge amount of data. The service assigns A-F grades to thousands of stocks in three categories: value, growth, and momentum. On top of that, it organizes stocks into a #1 rank list that represents what Zacks analysts consider strong buys. For traders interested in shorting, there’s also a #5 rank list that represents strong sell stocks.
Zacks Premium also includes a few handy tools to help you choose stocks. There’s an earnings surprise prediction tool that can be useful for short-term trading around earnings announcements. Traders also get access to an advanced stock screener, which integrates nicely with Zacks’ scoring system and the earnings surprise tool.
Zacks Premium is relatively inexpensive considering the amount of analyst data you get access to. It starts with a 30-day trial, then costs $249 per year.
Conclusion: Stock Advisor Websites
If you’re interested in directing your own trading and investing, a stock advisor website can make your life significantly easier. These services offer individual stock picks or advanced research to help you make investing decisions. While there are dozens of stock advisor services on the market, we recommend The Motley Fool Stock Advisor for stock picks and Zacks Premium for self-directed stock research.