Motley Fool Review
  • Value
  • Quality of Research
  • Track Record
  • Credibility
  • Quality of Stock Picks
4.4

Summary

In this Motley Fool review, we do an in-depth analysis of the Stock Advisor service. The Motley Fool is arguably one of the most well-known online stock advisor programs. The company has been around for over 25 years and remains one of the most trusted names in the industry. The question is – should you shell out your hard-earned cash for their research?

About Motley Fool

The Motley Fool Stock Advisor is the flagship stock-picking newsletter published by investment advisory giant The Motley Fool. Our Motley Fool Review will look at the monthly newsletter service that is run by the company’s co-founders, David Gardner and Tom Gardner. The Gardner brothers have been beating the stock market for over ten years using their “foolish” investing strategy. How do they do it?

The Stock Advisor investment service helps investors beat the market by providing them with access to better stock picks. Motley Fool does all of the research and makes stock recommendations to members.

Since the program’s launch in 2002, the Motley Fool’s Stock Advisor recommendations have generated over 300% in returns. This is highly impressive when compared to the broader market returns over the same period. Investing in the Fool’s stock picks would have generated over 3X the returns of simply investing in the S&P 500. The company’s track record is even more impressive when compared to the returns of mutual funds over the same period of time.

Of course, we wanted to dive deeper to see whether or not the Motley Fool was legit. We did an in-depth analysis of the company and their offerings.

Read our Motley Fool review to see if the Stock Advisor program is a good fit for you.

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History of The Motley Fool

The Motley Fool was founded in 1993 by Tom and David Gardner as a free financial media company. The Gardner brothers shared their investment ideas on message boards and online publications.

The Gardner brothers used a unique blend of humor and humility to showcase the compelling research they used to discover undervalued stocks. The Fool’s refreshing approach to investing led to the growth of a community of like-minded followers (aka “fools”).

The Fool’s goal was and is to empower retail investors to outperform the Wall Street analysts and professionals.

Here’s a video that explains the company’s mission and values:

In 1997, the company migrated to its own investing site at fool.com and a U.K sister-site at fool.co.uk.

In 2002, the Motley Fool launched its first premium service, Stock Advisor. The response was phenomenal, and the success led to the rollout of additional premium newsletters including Motley Fool Rule Breakers, Hidden Gems, Inside Value and the Motley Fool Options.

The company continued to expand both their free content and premium investing services. The Gardner brothers published many New York Times Best sellers, syndicated newspapers, radio shows, and live podcasts.

Money management and investing services were launched, including Real Money Portfolio which enabled subscribers to track the trades of real-money portfolios and in-house mutual funds managed by Motley Fool Funds.

We’ve reviewed many of Motley Fool’s premium services and we still believe the Stock Advisor program is the best offering. Continue reading our review to see why.

Motley Fool Review

What is The Stock Advisor Program?

The Stock Advisor program is relatively simple, and purposefully so. The program’s founders, Tom and David Gardner, wanted to make it ridiculously easy for beginner investors to achieve the same returns as Wall Street fat cats.

The goal of the program is simple: help average investors beat the market by providing them with the best research reports and stock recommendations.

What Do Stock Advisor Members Get?

Stock Advisor members get access to two new stock picks every month. Every stock pick is backed by an in-depth research report that explains the rationale behind the recommendation.

Motley Fool Stock Pick

Members also have access to a record of every recommendation Motley Fool has ever made. The information is laid out clearly in a table so members can analyze the performance of past picks. Motley Fool offers full transparency by showing their track record of both winning and losing investments. Of course, transparency isn’t the only benefit of this resource.

Members can also comb through the list of previous recommendations to find stock picks that may still be relevant today. This is a great way to get more value out of the service if you are looking for more than two stock picks every month. I’ve personally found some great investment opportunities by reviewing historical picks.

I’ll be honest, the main reason I pay $99/year for the service (without thinking twice), is the stock recommendations. There are a few other benefits of being a member, but first let’s discuss whether or not the Fool’s service is right for you.

Investment advice is only useful if it is aligned with your personal investment goals. Keep reading to see if the Stock Advisor program is right for you.

Styles of Trading & Investing

The Stock Advisor newsletter is a long-term, buy-and-hold service catering to investors with a long-term outlook. The stock recommendations are based on “fundamental analysis,” meaning Motley Fool analyzes companies, management teams, industries, and more.

The stock market picks are segmented by Team Dave and Team Tom’s picks. Each report offers the reasons for investment along with the potential risk and fundamental triggers for selling the position.

Motley Fool Stock Advisor Research

The research explains why the recommendation was made and how the stock stands out from its peers. The company also lists the potential risks that would warrant selling the position.

Stock Advisor Historic Returns

The service is similar to GuruFocus and IBD, but more friendly to new investors. It also provides a great alternative to Morningstar for investors who prefer individual stocks over mutual funds.

Here is the investment profile that the Stock Advisor program is best for:

  • Long-term investors (buy and hold for 2-5+ years)
  • Investors who prefer individual stocks to mutual funds
  • Investors looking to beat the market
  • Investors who want to add new stocks to their portfolios monthly or annually

Basically, the service is a great fit for anyone who wants to rely on proven investment advice to beat the market.

The only thing that will vary by investor is risk tolerance. If you are younger you will have a higher risk tolerance than someone who is approaching retirement. Consider your risk tolerance before adding any stocks to your portfolio. For example, a young investor may set stop losses at 10-15% whereas a retired investor may prefer to cut losses at 5%.

There is no right way to manage risk. It all comes down to your personal situation.

Motley Fool Stock Pick Strategy Components

This part of the review is a bit technical, so feel free to skip over it if you’re not interested in the methodology behind Motley Fool’s stock picking.

  • If you want to learn how the Gardner brothers pick stocks, keep reading.
  • If you’d prefer to jump to the next section of the review, click here.

The Stock Advisor program uses a combination of fundamental components to present the arguments to buy a position. The company also offers a few counterarguments to ensure they are not overly biased.

I personally like this approach of playing devil’s advocate simultaneously. It keeps the readers on their toes and helps paint a more realistic picture.

So, what do the Gardner brothers look for when they make a stock recommendation?

Catalysts

Catalysts are the most compelling active factors for taking a position. These catalysts may include:

  • Upcoming product cycle upgrades
  • Robust product pipeline development
  • Global trends
  • Industry/sector trends

For example, The Motley Fool may provide stock picks that benefit from a US/China trade war or tech stocks that are set to explode with the growth of a new technology.

Valuation

Valuation is a key component used in all the program’s stock picks. Motley Fool stock picks consist of both large cap and small cap stocks. The more under-valued a stock is compared to its peers, the more attractive it becomes.

For example, if a stock is trading at 5X earnings while the industry average is 10x, Motley Fool may make a case that the company is undervalued.

Overreactions

Overreactions to unexpected fundamental news may present short-term buying opportunities.

For example, XYZ stock plummets 20-percent on a top-line earnings miss. However, further investigation reveals the miss was based on expected large contracts closing three-days after the end of the earnings period. Meanwhile, the company maintains its original sales forecast and raises EPS full-year guidance. In this case, the market overreacts on a temporary short-fall in revenues that will show up on the next quarterly earnings report.

Motley Fool may issue a buy alert so investors can take advantage of the market’s foolish reaction.

Trends

Trends within sectors or macro and global markets are taken into consideration. These can be a combination of cultural, social and business trends. For example, a monetary tightening policy and Fed balance sheet unwinding could impact mortgage rates and the housing sector. In this case, investors should look to avoid or trim real estate investment trusts (REITs) in their portfolios. Trends can also include regulatory and legislative rulings and trends like the crackdown on social medial privacy policies.

The analysts at Motley Fool do a great job of staying on top of the most recent news and trends.

Financial Metrics

Financial metrics are always a key component of analysis. Whether based on valuation, forward growth forecasts, debt-servicing or free cash flow analysis, the financial metrics paint a picture of the stability of the enterprise. Motley Fool’s stock picks usually include companies with strong leadership and healthy financials.

Motley Fool Stock Advisor Pricing Options

The Motley Fool Stock Advisor service is priced at $199 per year. The service is often discounted and a yearly prepaid plan is available for $99. This comes with a 30-day 100-percent membership-fee back guarantee.

Motley Fool Pricing

The monthly membership is available for $19-per month with no money-back guarantee. All memberships have recurring auto-billing per period unless cancelled by the user.

Membership provides instant access to:

  • Two new monthly stock picks from David and Tom Gardner – one monthly stock each
  • The 10 “best buys now” stock list
  • The “10 starter stocks for new portfolios” stock list
  • Access to the members-only Motley Fool Stock Advisor community which allows members to communicate with the Stock Advisor team
  • Full-access to the investment library which includes every archived research report from precious stock recommendations

Motley Fool Review – More Stock Advisor Benefits

Most Stock Advisor subscribers sign up specifically for the stock picks. It’s a strong value proposition. For less than $20/month, you can get access to stock market picks that have the potential to make back 100x your subscription cost. Better yet, these stock picks outperform the market and help investors avoid mutual fund fees.

I believe the stock picks alone make the service worth it, but the Stock Advisor Program comes with a few additional benefits.

Investment Education

The Stock Advisor Members Area provides access to some top-quality investment education. This is valuable for investors who want more than buy and sell alerts. Investors can learn about the strategies Motley Fool uses to make their stock recommendations.

Motley Fool Guide to Success

Stock Management and Alerts

Stock Advisor members can create their own portfolio of stocks, similar to a watch list. They can analyze the performance of the stocks and receive alerts for buy/sell alerts and significant price movement in their stocks. The functionality here is simple, but it’s a nice addition to the service.

Motley Fool Favorites

You can add your own favorite stocks or add stocks to your “Favorites” after reading a Stock Advisor report.

Stock Advisor Notifications

Stock Advisor Community

Stock Advisor members have access to an online discussion boards where they can discuss different investment ideas and strategies. I was expecting this area to be relatively quiet, as I’ve seen many failed attempts to create message boards. I was pleasantly surprised to see that the discussion boards actually have a decent amount of activity. They’re not as active as InvestorsHub and other similar sites, but there are a handful of interesting conversations.

Motley Fool Message Boards

Motley Fool Special Reports

The Stock Advisor program delivers a couple stock recommendations every month. On top of that, Motley Fool will also issue special reports when there are unique opportunities in the market. These reports may be based on recent short-term trends in the market and provide additional opportunities for investors. These reports may also include investment guides that help investors improve and expand their investment strategies (such as lessons in options trading).

Motley Fool Special Reports

Is Motley Fool Trustworthy?

By this point in the Stock Advisor review, you should have an understanding of the services offered as well as an understanding of the Fool’s investment strategies. The next obvious question is, “is the Motley Fool legit?”

The company is known for their bold marketing, but do they actually deliver on what they promise?

Here are a few things we took into consideration:

The Fool’s Track Record

The first, and most obvious, point we analyzed during our Motley Fool review was the company’s track record. This is the most important metric to look at when analyzing any investment research firm. We wanted to see if Motley Fool delivered on their promise to outperform the market.

We are happy to report that the Motley Fool Stock Advisor program has a strong track record of exceptional performance since their launch in 2002. In fact, we personally spoke to a few investors who have been using the service for years and have achieved great results.

You can find a record of the Fool’s performance on the chart below:

Motley Fool Stock Advisor Performance

As you can see, The Stock Advisor program beats the returns of the S&P 500 by identifying stocks and sectors that are outperforming.

This chart isn’t just used for marketing purposes. Members can access the details of every stock pick and verify the performance of the program.

This leads to the next point of transparency.

Transparency

The Stock Advisor members area includes a record of every stock pick the company has ever made. The list includes stock recommendations, the rationale behind the recommendations, and the performance of the recommendations. You can navigate to the “Performance” page of the members area to see every single stock recommendation the company has made since 2002. You can view a data table that includes:

  • The stock recommendation
  • The recommendation date
  • The risk score for the recommendation
  • The recommended buy price
  • The returns of the stock
  • The returns of the stock relative to the returns of the S&P 500

Stock Advisor Performance

In the spirit of full transparency, this list includes both winners and losers. Since inception, here are the returns:

  • Tom’s Stock Picks: 143.6%
  • David’s Stock Picks: 499.4%
  • S&P 500: 81.2%

It’s clear that Motley Fool outperforms the market (with David’s picks returning exceptional gains).

The company will also add a disclaimer if anyone involved currently holds a position in the stock they are recommending.

Motley Fool Disclosure

Furthermore, Motley Fool will issue reports and alerts when it is time to sell a stock.

Motley Fool Sell Recommendations

Quality of Investment Research

Motley Fool’s isn’t some “pump and dump” making manipulative stock recommendations. The company’s reputation depends on their performance so the research needs to be top-notch.

The research reports offered to members are thorough and unbiased. Motley Fool reports don’t simply “hype” a stock; they present the full story. The reports include information on the companies performance, sector performance, upcoming catalysts, and the risk level of the recommendation. The reports even address counterarguments to the Fool’s recommendation on the stock.

Stock Advisor Report

Example of a Report from 2014

Some of the reports make recommendations for stocks you may be familiar with (such as FANG stocks that have been outperforming the market recently), while others uncover hidden gems. The reports are well-researched and thorough.

What Type of Investor is Motley Fool Best For?

Motley Fool’s Stock Advisor service is best suited for long-term investors who are looking for individual stocks that will beat the market. Short-term investors and swing traders may also benefit from the monthly stock alerts.

Overall, the service is very easy to use. It’s non-intimidating for new investors while still providing great value for experienced investors. The service is great for investors who want the research done for them. Motley Fool does a great job of identifying unique investment opportunities and providing high-quality research reports.

Is the Stock Advisor Program a Good Value?

As part of our Motley Fool review, we wanted to discuss the value of the program. Many investment services deliver what they are offering but are far too costly. At $99, it’s hard to go wrong with Motley Fool’s Stock Advisor. The investment research is high-quality and the subscription fee can be recouped with a single good trade. Subscribers get instant access to a wealth of resources, including both research reports and educational materials.

We highly recommend choosing the annual plan over the monthly subscription due to the price difference ($99/year vs. $19/month). Every month, Tom and David Gardner continue to put out high quality research reports packed with compelling ideas.

Stock Advisor vs. Rule Breakers

Motley Fool offers a handful of premium investment services, but the two most popular services are Stock Advisor and Rule Breakers. Anyone doing research on the best stock picking services provided by the Fool is likely to narrow their decision down to these two services.

It’s clear that Stock Advisor program is the flagship service. The Stock Advisor program has been around longer than Rule Breakers and it seems the be the primary focus of the company’s marketing. If you want to simplify your decision, choose Stock Advisor.

Both programs have very similar offerings and the members areas are almost identical. The main difference between the programs is the type of stock picks. Stock Advisor makes stock recommendations using the Fool’s core investment methodology. Members get access to stock picks from both Tom and David Gardner.

Rule Breakers utilizes an investment methodology that is primarily focused on finding high-growth companies. The program, which offers stock picks from David Gardner only, is a bit more specialized in that the picks are chosen specifically with company growth in mind. You can read our full Rule Breakers review for more details, but our recommendation is simple.

If you’re new to investing and only going to choose one program, choose Stock Advisor. The Stock Advisor picks will help you build your portfolio with stocks that are expected to beat the market. If you already have a healthy portfolio and you’re looking to diversify and add new positions on a regular basis, join the Rule Breakers program. The programs actually work very well together, especially for investors who are looking to build a portfolio with more than a few hot stock picks. There’s almost no overlap in stock recommendations between the programs.

Rule Breakers can help you diversify by providing access to a) more stock picks, and b) stock recommendations that were chosen specifically with growth in mind.

Common Questions About the Stock Advisor Program

How Does the Stock Advisor service differ from other Motley Fool services?

During our review of The Motley Fool, we analyzed a few of their investment programs. The Stock Advisor program is the company’s flagship offering. The stock picks provided by this advisory service are chosen using the investing methodology that made the Fool famous.

The company offers a range of other services that utilize different methodologies. For example, Rule Your Retirement is focused on safer stocks that may be ideal for retirees whereas Rule Breakers focuses on riskier growth stocks that are best for longer term “buy and hold” investors.

What is Motley Fool’s Double Down Stock?

We cannot give this answer away since Motley Fool’s double down stock pick is available for paying members. What we can say is this – don’t get caught up in the hype. Motley Fool offers a ton of great stock picks every year through the Stock Advisor program. As a member, you will get instant access to a wealth of resources that will help improve your investment returns.

Is the Motley Fool Reliable?

The Motley Fool is one of the few investment advisory services that has been around for almost two decades. The company has weathered both bear and bull markets and continues to generate phenomenal returns. The results speak for themselves. The company doesn’t have a few lucky picks. They have a history of continuously providing stock picks that beat the market.

Can You Reveal Motley Fool’s Stock Picks?

We must respect the fact that Motley Fool’s Stock Advisor program is a premium service. If we gave away the stock picks, we would be doing a disservice to the company. It’s also important to note that the stock picks change monthly. As a member, you will have access to a history of all of the stock picks as well as two fresh stock picks every month.

While we can’t give away the most recent picks, we can show you a few historical picks that have delivered life-changing returns. Here are a few of the top stock picks:

Motley Fool Stock Pick

Is the Stock Advisor Program good for new investors?

Absolutely! This is one of the most beginner-friendly investment advisory services out there. The company makes it incredibly easy to follow and understand the stock picks. If you are new to investing, this service is particularly beneficial because it helps you start building your portfolio the right way. Many new investors who go at it alone end up making costly mistakes. Getting the proper guidance from the start can have huge returns.

How does the Motley Fool compare to other stock advisors?

We’ve reviewed over 100 financial services, many of which offer investment advice. For the price, Motley Fool cannot be beat. Here are the main reasons why:

  1. You can’t beat the price. Most competing services charge at least three times the price of the Stock Advisor Program.
  2. The Stock Advisor Program is time tested. Many newer services haven’t been tested by bear markets and/or changing market conditions. The Gardner Brothers have been delivering exceptional stock picks for over 25 years, meaning their strategy is time-tested and proven to work.
  3. The program is easy to follow. The Stock Advisor program is simple and easy to follow. You get told which stocks to buy and sell – simple as that. Other programs can get far more complicated.

Watch David Gardner explain a few of the ways the Stock Advisor program stands out:

Is the Motley Fool a Pump and Dump?

Absolutely not! Pump and dumps occur when a stock’s promotion leads to “artificial” buying activity that is later met with a huge sell-off. These schemes are best orchestrated on small and micro cap companies, since their volume makes them easier to manipulate.

The stocks that Motley Fool recommends are nearly impossible to “pump.” Take a pick like “Amazon” for example. There is almost no way that a newsletter recommendation could even have an impact on the stock since the volume is so high. Even if every Fool subscriber bought at the same time, it would hardly have an impact on the stock’s price.

Pros   

  • Solid history of consistent performance and research format
  • Moderated members-only message boards have intelligent posts without spam
  • Fundamentals-based investors gain the most from the content and presentation of bullish and bearish components of the monthly picks
  • Motley Fool analysts update recommendation changes on their picks
  • Great introduction to portfolio building and investment research
  • High quality

Cons

  • The non-stop flow of other Motley Fool product offerings can get overwhelming
  • Technical traders may not find the content timely or actionable

If our Motley Fool Stock Advisor review didn’t cover any information you were expecting, don’t hesitate to reach out to us directly. Feel free to leave a comment below or reach out via the contact page.

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