The Motley Fool stands as a prominent name in the realm of stock market investing. Today, I present a comprehensive evaluation of their renowned Stock Advisor service, subjecting it to rigorous scrutiny.
Within this in-depth review of Stock Advisor, I elucidate the mechanics of the service and provide a detailed assessment of its value proposition. I unveil the service’s strengths, weaknesses, and idiosyncrasies, shedding light on who would find it beneficial and who might prefer to forego it.
Furthermore, I offer exclusive insider insights, delving into the performance metrics of Motley Fool’s stock recommendations to discern if they genuinely outperform the market over time. I accompany this analysis with an array of screenshots from within the membership area, granting you an authentic glimpse of the service’s inner workings.
It is important to note that I have personally honed my investment skills through my experience with Motley Fool, complemented by my role as the Founder & Chief Editor of Investor’s Handbook, which has led me to explore various stock picking services, enabling me to draw insightful comparisons.
To commenc let’s summarize my findings:
Motley Fool Review 2023 The Motley Fool has consistently displayed a knack for selecting stocks with substantial growth potential and long-term appreciation prospects. On average, their recommendations have outperformed the market, generating an impressive return of 464% compared to the S&P 500’s return of 124%. Since its inception in 2002, Motley Fool’s stock picks have seen 170 double in value, and 57 have surged by 500% or more. The top performer among their picks boasts a remarkable increase of 26,548%.
Quick Summary Motley Fool’s Stock Advisor stands as a premium stock recommendation and investment education service, specializing in high-growth stocks with the occasional inclusion of blue-chip selections. Since its launch in 2002, it has consistently outperformed the market. The annual membership fee for new subscribers is $89.
Here are the most pivotal takeaways from my Motley Fool review
Company Essentials Motley Fool is a financial content company headquartered in Alexandria, Virginia, with a global workforce comprising over 700 individuals. Stock Advisor serves as The Motley Fool’s flagship premium stock-picking service, catering to more than 1,000,000 subscribers. It offers two stock recommendations each month, along with an array of investing tools and educational resources. Members enjoy benefits like bi-monthly stock recommendations, Best Buys Now, Starter Stocks, historical stock pick performance data, live discussions, and an array of other offerings (full details below). Who Would Benefit from Motley Fool? Their recommendations span high-quality growth stocks and blue-chip stocks across the Technology, Healthcare, Industrial, Consumer, and Financial sectors. Their stock-picking service appeals to a broad spectrum of investors keen on high-quality stocks poised for substantial long-term growth, as well as those desiring to hone their stock analysis skills. Performance of Their Stock Picks Since its launch in 2002, Motley Fool’s stock picks have outperformed the market by a significant margin, tripling the returns. The majority of their stock picks yield positive returns, with approximately 60-70% of their selections delivering gains. Their star performers have surged by 9,000% to 27,000%, significantly outpacing the market. Even though most individual stock picks don’t surpass the S&P 500, the substantial gains from their top picks propel the overall portfolio to outperform the market. Discovering mega winners is an integral part of Motley Fool’s success, boasting nearly 200 picks that have soared by 100% or more. Over 30% of their picks have surged by 100% or more, and more than 10% have appreciated by 500% or higher. Motley Fool’s Stock Advisor focuses on stocks with substantial long-term growth potential, necessitating the acquisition of a diversified portfolio of 25 or more stocks, held for a minimum of 5 years to maximize the chances of attaining remarkable returns.
What’s the Cost of Motley Fool in 2023? The annual membership fee for Stock Advisor is a reasonable $89 for new members, offering an excellent value proposition through profitable stock recommendations and valuable investment education. It surpasses comparable services at the same price point.
Stock Advisor Returns & Performance (Updated October 1, 2023) Now, let’s address the pivotal question on your mind: “Can I generate profits by following Motley Fool’s stock recommendations?”
This query possesses multifaceted nuance and the answer naturally hinges on various factors
Below, I delve into Motley Fool’s comprehensive performance history, unearthing insights not readily available elsewhere. Subsequently, I unveil the key to deriving gains from Motley Fool’s stock picks.
Over the past 19 years Motley Fool has outperformed the market by a factor of four
To elucidate how a Foolish recommendation functions: Each Motley Fool stock receives an official recommendation date. If a decision to sell is made, it is marked with an official sale date. The performance of each stock is compared against the S&P 500 from the recommendation date until the present or until the date they recommend selling the stock.
For instance, they advocated purchasing Amazon on 12/17/2010, and that recommendation remains active to this day (with no sale date). It has delivered a 1,332% return, compared to the S&P 500’s 343% return (these figures fluctuate daily as the position remains open). Conversely, they advised Stamps.com on 05/20/2016 and recommended subscribers to sell the stock on 09/03/2021. During this period, their Stamps.com selection gained 303%, surpassing the S&P 500’s 144% (these figures remain static since the position is closed).
The fundamental principle is that each Motley Fool stock recommendation is continuously measured against the S&P 500 for as long as it remains active. Once a recommendation is closed, the final performance is recorded.
Motley Fool offers its subscribers an exhaustive explanation of how they gauge performance
For this Motley Fool review, I meticulously examined their complete history of 476 stock picks, spanning from 2002 through 2021. The results are presented below, categorized into five-year groups for clarity, as this approach facilitates the identification of significant trends.
Several critical insights emerge from Motley Fool Stock Advisor’s performance
Since its inception in 2002, their selections have outperformed the market by a substantial margin, amounting to hundreds of percentage points. Each five-year cluster of picks surpasses the market, with the older batches notably outshining the newer ones, primarily due to the extended growth period for older stock picks. Here, we unearth some intriguing trends:
The majority of their stock picks yield positive returns, with approximately 60-70% of their selections delivering gains. While most of their stock picks don’t surpass the S&P 500, their remarkable star performers more than compensate for the underperformance of their lower-performing picks. The top performers have surged by 9,000% to 27,000%, markedly eclipsing the market’s performance. The most substantial losses are substantial, with some witnessing a nearly complete erosion of their value. Their star winners significantly outperform the market by a much larger margin than their most significant losers underperform it. A standout winner might appreciate by over 12,000%, while a substantial loser can, at worst, diminish by 100%. Over 30% of their picks have gained 100% or more, with more than 10% exceeding the 500% threshold. Despite the majority of their stocks failing to outperform the S&P 500 individually, their standout winners boast such remarkable gains that the aggregated portfolio surpasses the market. The older stock picks from 2002-2011 exhibit a wealth of high-performing selections, boasting gains of 100% or more, including some exceeding 500%. In general, the age of the stock picks correlates with their performance, as extended periods provide ample time for the growth narrative to unfold.Crucially, it is imperative to acknowledge that the numbers mentioned above have been influenced by the recent downturn in growth stocks.
In 2022, global growth stocks experienced rapid declines due to surging inflation and central banks’ interest rate hikes. Given Motley Fool’s focus on high-growth stocks, their selections were negatively affected during this growth bear market.
While the performance metrics of Motley Fool remain undeniably impressive, it is worth noting that the figures appeared considerably more favorable in 2021 before the historical drop in growth stocks. As growth stocks inevitably rebound, these figures are poised for a significant improvement.
Considering the recent decline, now might be an opportune time to invest in high-growth stocks, as The Motley Fool’s picks likely include numerous oversold opportunities. In fact, Stock Advisor analysts have shared data demonstrating that Fool stocks have consistently outperformed the market by a factor of 2 to 5 in the five years following prior drawdowns.
Additionally, it is essential to bear in mind that recent stock picks have not exhibited the same level of performance as older picks, likely due to the time required for the investment thesis and growth to materialize.
With this substantial information in mind, let’s now shift our focus to the evaluation of actual stock recommendations and their performance to gain deeper insights into how Motley Fool stocks yield profits.
Here, I present all 24 of their stock picks from 2016. I chose this year as Motley Fool Stock Advisor recommendations are typically held for a minimum of 5 years to unlock their full potential, and by examining the 2016 picks, we can observe recommendations that are approaching their optimal performance in 2023.
Collectively, the data above underscores a pivotal takeaway concerning Motley Fool’s performance
Motley Fool’s Stock Advisor prioritizes stocks with significant growth potential, resulting in variable individual stock returns. Nevertheless, when assessed collectively, Stock Advisor picks consistently deliver substantial returns over time.
The crux lies in the necessity of owning stocks that emerge as standout winners. The most effective strategy to achieve this is through the acquisition of a diversified portfolio comprising at least 25 Motley Fool recommendations.
This underscores the principal secret to deriving profits from Motley Fool’s stock picks
Given the service’s focus on stocks with substantial long-term upside, it is imperative to assemble a well-diversified stock portfolio encompassing 25 or more of their stock recommendations. This approach substantially enhances the likelihood of securing notable winners and realizing the robust returns characteristic of the overall Stock Advisor portfolio.
It’s vital to emphasize that if you opt to purchase merely 1 or 2 of Stock Advisor’s recommendations and retain them for a brief 6-month duration, outcomes can be unpredictable, spanning from doubling in value to experiencing a 50% decline. However, by assembling a diversified portfolio of 25 or more stocks and retaining them for 5 years, your odds of surpassing the market become considerably favorable.
NOTE: For a comprehensive view of Motley Fool’s 2023 returns, alongside the complete performance data for individual stocks, it is advisable to explore them after subscribing with their 30-day risk-free guarantee and navigating to their Performance page.
What is The Motley Fool? The Motley Fool serves as a financial investment advisory firm headquartered in Alexandria, Virginia. With a global workforce exceeding 700 employees, the company is dedicated to generating content, including articles, videos, webinars, podcasts, and more, to furnish investors with advice, research, and education encompassing a wide spectrum of financial topics, with a primary focus on the stock market.
Established in 1993 by the Gardner brothers, Tom and David, The Motley Fool’s mission revolves around making the world more informed, content, and prosperous. It remains committed to helping individuals make informed financial decisions and achieve financial success.”
Conclusion
If you seek to unearth high-quality growth and blue-chip stocks with substantial upside potential over the next 3-5+ years, coupled with the desire to enhance your investment acumen, joining Motley Fool is unquestionably a wise choice. However, if you identify as an advanced investor, a day trader, someone with an aversion to risk, have no interest in growth stocks, or lack the time to delve into investing and manage your own stocks, this service may not align with your needs. For those uncertain about their fit, why not take a risk-free test drive? Simply subscribe, explore the offerings for 30 days, and should you remain unimpressed, request a refund.