Motley Fool Stock Advisor Review: Is This Subscription Service a Solid Investment… or Foolish?
Stocks-
The Motley Fool Stock Advisor- Basics: The Motley Fool Stock Advisor is a subscription service that offers subscribers stock picks, insight, and other tools related to what the Motley Fool experts think you should invest in.
- Pros: This service is based on sound investing principles, which offers useful tools and insights for new investors, and gives you access to a community of investors to learn from.
- Cons: The analysis information from this service is lacking, in addition to tech-heavy picks, upselling, and the possibility of slim returns.
- Welcome Offer:
$99/year (new members only)
- Fees:
$199/year
- Minimum Investment:
$0
- Perks:
Cancel within 30 days and receive a full refund (annual memberships only)
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Today, I’m reviewing the Motley Fool Stock Advisor stock picks, a subscription service that offers insight to what the Motley Fool experts think you should invest in.
In this review, I’m going to give you a little background on the Motley Fool, show you how the Motley Fool stock picks have performed recently, and share the real pros and cons of using the Motley Fool’s stock pick subscription service to help choose your investments.
I actually purchased a subscription to the Motley Fool Stock Advisor, the Motley Fool’s flagship program, so I can review it for you and share my honest opinion.
If you’d rather watch a video of me reviewing the Motley Fool rather than reading this article, check out the YouTube video below!
Table of Contents
What Is The Motley Fool?
The Motley Fool is an investing guidance company that was founded in 1993 by brothers David and Tom Gardner. The name Motley Fool stems from Shakespearean dramas which included a “fool” or court jester who took on a joking persona – but was often the wisest character in the play due to their position as primary truth-tellers.
In a similar vein, the Motley Fool also claims to educate, amuse, and enrich individuals in search of truth. The name might come across as a little bit gimmicky (after all, who wants to be the “fool” when they’re spending money?), but the Motley Fool is actually a well-known multimedia financial-services company. It has been providing financial guidance for investors through a variety of stock, investing, and personal finance services since 1993.
As such, chances are that if you make a cursory Google search for something like “stock market guidance,” you’ll come across a publication known as the Motley Fool Stock Advisor, which is the pay-for-play investing subscription service that the Motley Fool offers.
Overview
As noted, the Motley Fool Stock Advisor is the Motley Fool’s flagship program. When you purchase a subscription to the Motley Fool Stock Advisor, you get access to the expert stock picks offered by the “fools” behind the recommendation program — which are the stock picks that their experts think are worth investing in.
When guiding people toward smarter financial investments, they encourage an approach that focuses on the long-term strategic balancing of a variety of financial instruments and securities.
The Motley Fool tries to gain subscribers to this premium service by sharing stock picks on the blog. If you visit Fool.com, you’ll see tons of recent blog posts, articles, and other content, all of which are touting stock picks.
You’ll find that most of the Motley Fool’s free investment content offers a basic analysis followed by a freebie in an attempt to procure your email address. If you give them your email address, they’ll put you into an email sales funnel for the Motley Fool Stock Advisor, the flagship stock-picking program.
Features
| Stock Picks | |
| Investment Tools | |
| Other features | Access to the Motley Fool community of users |
| Cost | Starts at $99 per year for new members, then $199 per year afterwards. |
Ongoing Stock Picks
If you sign up for the premium service, you are sent a list of their “Stocks to Buy Today,” which is a list of about 10 stocks that the Motley Fool thinks you should buy. I can’t show these stocks here without sharing the Motley Fool’s proprietary information, but I can tell you how they performed, which I’ll do below.
Starter Stocks
You also get access to foundational stock recommendations, which are intended for new and experienced investors.
Stock Pick Insights
Motley Fool Stock Advisor also offers stock pick insights, which are included with every proposed buying opportunity. These insights are called the “Buy Case,” which breaks down each of the reasons why Team Tom or Team David believes you should add the stock to your portfolio.
Instant Alerts
You can also set alerts for your favorite stocks. You’ll receive an alert if there are price changes, good buying opportunities, or opportunities to sell.
Risk Profiles
Stock Advisor attaches analyses known as “risk profiles” to everything they recommend, using plain English to explain the potential benefits or pitfalls of making an investment.
Library of Reports and Research
Should you want to elevate your knowledge when it comes to the world of investing and personal finance, Motley Fool Stock Advisor offers a knowledge base filled with a library of proprietary reports and research collected over fifteen years that is available online 24 hours a day, seven days a week, 365 days a year.
Access to the Motley Fool Community
As a Stock Advisor member, you’ll also get to join their exclusive message boards, where members have discussions about everything related to the stock market, personal finance, and anything else under the sun.
Fees
The Motley Fool Stock Advisor service is a premium service and it comes with a premium fee to use it. There are occasional deals on the service, but in general, the service costs $199 per year, with a welcome offer of $99 for new members. You can use my link to get this special welcome offer.
Motley Fool Stock Picks: How Did They Perform?
On the Motley Fool’s website, they claim that their stock picks have beaten the S&P 500 by leaps and bounds. In fact, according to them, their Stock Advisor service is up over 500% while the S&P is only up 100%.
However, it’s almost impossible to verify this, and the only proof on their website is the single graph you see here. As such, I decided to purchase a subscription so I could test the Motley Fool Stock Advisor and analyze this claim.
First, an Honest Review
Before I dive into the numbers on how this service performs, though, I want to briefly discuss an aspect of Motley Fool that I have real beef with: the mentality. In my opinion, the Motley Fool — along with almost every other stock picker — promotes a mentality of stock market addiction.
What do I mean by this? I’m not using the word “addiction” in a clinical sense, as I’m not a medical professional. Rather, when I say that somebody is addicted to the stock market, I mean that they check the market more often than they should, while spending significant amounts of time searching for the next stock pick that’s going to make them rich.
They also tend to rely on the performance of their stocks to determine their happiness. That’s a miserable way to live.
Don’t get me wrong. The Motley Fool never says that’s what you should be doing. In fact, they say the opposite.
However, when the Motley Fool constantly sends me emails regarding tons of different new stocks to invest in so that I can take advantage of X migration trend or a discount on Y stock, or tells me that I need to buy Z stock before the market opens, their actions speak differently than their words — at least in my opinion.
How Motley Fool Stock Picks Perform
Now, onto how this service performs. In this analysis, I’m comparing the performance of the Motley Fool picks with the performance of the Vanguard Total Stock Market Index Fund ETF (VTI), one of my favorite index fund ETFs.
Please note that this data only spans three months’ worth of performance, but according to the Motley Fool — and my — investing philosophy, you should be investing for a long period of time.
Thus, one might reasonably criticize my data, as it might not be fair to compare three months’ worth of performance to an index fund when the Motley Fool makes stock picks for the next few years.
However, I would counter this by saying that although this is not long-term data, this is still data from which we may be able to draw a conclusion, and because I’ve only been a subscriber for three months, this is the best data I have.
If I had invested $1,000 dollars in Motley Fool picks
You can see the data from the stock pick test above. Note that the columns with the stock names, the share prices, and other metrics are all hidden because I can’t share the Motley Fool’s proprietary information.
To obtain this data, I calculated the value of my investment for each stock, including dividends, on June 11, based on buying $1000 worth of each Motley Fool pick the day I was informed of that pick. I based my prices on the closing price of the stock for the day I would have purchased it.
For example, I would have invested $1000 in Stock 1 on March 18. On June 11, the value of the investment would have been $1,116.
I ran these numbers for all of the stock picks that Motley Fool sent me weekly through the Stock Advisor, and for their list of “Starter Stocks” that they sent one week.
There were 34 total stocks. If I had invested $1000 into each, my original investment total would have been $34,000. The value of these stocks on June 11 would have been $34,305.47, which is an increase of $305.47.
If I had invested $1,000 dollars in VTI instead
I also calculated the value of my investment as though I had invested the same amount of money into VTI on the same days. In total, I would have invested the same $34,000.
On June 11, I would have had $35,702.63, which is an increase of $1,702.63. That’s almost $1,400 more from investing in an index fund than I would have made investing in the Motley Fool picks.
Pros and Cons
The Motley Fool Stock Advisor isn’t all good, nor is it all bad. Here are the pros and cons.
Motley Fool Stock Advisor Pros
- Sound investing principles: I believe that the Motley Fool’s stated investing principles — investing for the long-term, not panicking when the market goes down, staying the course, etc. — are sound, even though the marketing doesn’t always reflect these principles.
- Tools and advice for beginners: The Motley Fool also does a decent job of simplifying basic investing concepts so they’re easy to understand for even the layman. That being said, in my opinion, the Motley Fool sometimes simplifies these concepts too much.
- A community of investors to learn from: This service also gives you access to a community of investors you can learn from. That can be useful for new investors or for those who don’t speak the investing “language” just yet.
Motley Fool Stock Advisor Cons
- Lackluster analysis: I found the “analysis” of Motley Fool’s stock picks to be somewhat lacking. While I can’t give specific examples without showing you the Motley Fool’s proprietary information, in my experience, the analysis is usually limited to a short description of the business, its position in the marketplace, a few numbers from the company’s latest financials, and basic chart and stock quote information you could find anywhere.
- Lack of diversity in stock picks: I can’t divulge what the stock picks are, but I can tell you that the Stock Advisor picks are extremely tech-heavy. Why is this a con? When investing in tech companies, you get big winners, but you also get big losers whose valuations were unjustifiably high and who end up tanking. Thus, if you do end up basing some of your portfolio on the Motley Fool’s Stock Advisor picks, you should be prepared to deal with volatility.
- Upselling: Motley Fool constantly upsells their products, sending me emails almost every day in an attempt to persuade me to purchase some additional service or subscription so I can get even more stock picks. I know it’s their business, but this rubs me the wrong way — I don’t want to spend all my time constantly chasing the next great stock pick.
- Slim returns: While my data collection has been somewhat limited, in my experience, the Motley Fool’s stock picks haven’t beaten the market.
If you’re interested in checking out the Motley Fool even after hearing my criticisms, I’d appreciate it if you did so through my affiliate link. If you use this link, I will receive a small commission at no additional cost to you.
FAQs
- Is Motley Fool Stock Advisor worth it?
- How much does the Motley Fool Stock Advisor cost?
- Does the Motley Fool Stock Advisor service beat the S&P 500?
Who It’s Good For
New investors who want guidance
If you aren’t comfortable choosing your own stocks to invest in, this service can be useful. It offers stock picks to choose from, including starter stocks and ongoing picks, and a number of useful tools and insights to help you learn about what you’re investing in.
Plus, new investors may find it useful to learn from other investors in the Motley Fool community. Having access to the insight offered by other users can be invaluable for the right type of investor.
Investors who can avoid stock addiction
As I noted, this type of “invest now!” mentality can lead to investors checking their stocks obsessively. If you can set and forget your stock investments, this service may help you earn some gains along the way. It promises strong returns on the investment picks but expects you to leave your investments alone over the long haul, so if you can stick it out, you may have some luck with these picks.
Who It’s Not So Good For
Those who know what stocks they want to invest in
If you’re a seasoned investor who knows what they like to invest in, this service may not be of much use to you. You probably won’t put much stock — pun intended — into the advice you’ll get from the community feature, and the heavy tech stock focus may be off-putting if you prefer to diversify your investment strategy.
Investors who constantly check their investments
If you’re the type of investor who needs to check stocks repeatedly, or if you’re constantly looking for the next big win, this may not be the right service. Constantly hearing that another stock pick may be the win you’re looking for could be too tempting, leading to some unhealthy habits in regard to your investment strategy.
Is Motley Fool Stock Advisor Safe and Legit?
Yes, the Motley Fool Stock Advisor service is legitimate and safe to use. Having used the service myself, I can say that although it may not make you the next Jeff Bezos, it’s definitely “safe” and “legitimate” in the sense that it delivers what it says it will: stock picks. Whether or not its stock picks deliver, however, is a different question.
Final Thoughts
Am I saying that the Motley Fool’s picks are always bad picks? Not necessarily. Again, this is only three months’ worth of data. However, with the limited data I have, I’m not convinced that I should use the Motley Fool to inform my investing.
As I’ve said before, I do play with individual stocks, cryptos, etc., with about 5-10% of my portfolio. That said, the majority of my money is in index funds — and it will stay there for now.
If you’re new to the investing game, check out my beginner’s guide to investing. When you’re ready to invest like a pro, here are my picks for the best stock trading apps of 2024.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
