The Motley Fool is a stock advice company begun by brothers Tom and David Gardner in 1993 and is based in Alexandria, Virginia. Initially they published various guides and investment advice, then in 2002 they launched their main product, Stock Advisor.
Since then, it has become wildly popular with hundreds of thousand of investors from all around the world relying on this service for their stock picks.
It would seem fair to say that if they weren’t getting their picks right most of the time, The Motley Fool would no longer be here. The fact they have so many subscribers, indicates they are doing better than most.
What does Stock Advisor do?
Stock Advisor has two teams led by each of the Gardner brothers and consisting of a group of analysts. Their goal is to pick the best stocks for long-term growth. It is recommended you hold each stock for a minimum of two to five years.
Each month, both teams will recommend one new stock to add to your portfolio.
The two teams work on different investing philosophies. David’s team focuses on stocks which they believe represent “unquantifiable greatness”, based on long-term market trends. Tom’s team concentrates on stocks with an excellent management Team, a strong financial performance, and has a presence in underrated industries.
Along with their monthly stock pick, they also reveal five more stocks to purchase immediately.
Because The Motley Fool has so many subscribers, and because those subscribers closely follow the advice they are receiving, the stocks picked each month are immediately flooded with new buyers, and this can cause each stock price to suddenly spike.
The six stock picks each month is ideal for anybody beginning their stock market portfolio. You can also view last month’s stock picks and see how they have performed.
It should be noted that they are still only human and not every pick is a winner. But they don’t shy away from their faults. They are very upfront about their failures as much as their winners. They will even recommend selling if they no longer believe one of their picks remains a good investment for the long term.
Having said that, over 80% of their picks have increased in value since being picked.
What returns has Stock Advisor gained?
Although Stock Advisor has now been operating for almost 20 years, it is the last 10 years where it has really proven itself.
Despite the two different stock picking philosophies, both have achieved outstanding long-term returns.
At times their average returns since inception have been up to 600%.
Despite the recent invasion of Ukraine by the Russians which has negatively affected stock markets worldwide, the Stock Advisor average return since it began still sits at 494% on the day, I write this, compared to 133% for the S & P 500.
I have read of one investor who from 2016 to 2020 (five years) has bought $2,000 worth of each stock recommended by Stock Advisor.
Of the 120 stocks he purchased, he sold 5 on the recommendation of Stock Advisor, here are his results over the five-year period: –
- His average return – 212%
- S &P 500 average return – 90%
- 79% of stocks have a positive return
- Of the 120 stocks, 53 have doubled in price, 33 have tripled in price, and 22 have quadrupled in price
- The biggest losing stock returned minus 94%
- But biggest individual stock gain was plus 4,353%.
So even though 21% of his stocks are worth less at the end of the period than when he bought them, he has still managed a phenomenal 212% growth on his investment.
Since Motley Fool Stock Advisor is not a brokerage but a subscription-based stock picking service, you must pay the annual subscription fee to gain full membership privileges.
The annual subscription cost of Stock Advisor is just $199 per year, but only $99 for the first year. If you click this link you can join for an even lower first year fee. Even at $199 per year, Stock Advisor is incredibly inexpensive compared to all competitors. Here’s another Motley Fool Stock Advisor review.
What are the Pros and Cons of Stock Advisor?
Pros
- Proven track record from a team of expert stock pickers
- Outstanding long-term investment gains
- Low-cost service
Cons
- Recommendations often cause spikes in the market
- Not ideal for short-term traders or inexperienced investors
- Not every pick is successful
Rule Breaker
Rule Breaker is another service where the stocks picked are chosen on their ability to disrupt the industry they’re involved with, by introducing something completely different, e.g., Tesla and their electric vehicles.
Rule Breaker tends to be much riskier stocks but since inception has outperformed Stock Advisers and about the same ratio of stocks showing positive and negative returns.
Summary
Stock Advisor suits all investing styles. Tom’s team choose stocks from less popular industries, often finding stocks that are undervalued. David’s team looks for stocks with some form of “X-factor” which in time will “take off”, resulting in opportunities for significant long-term gains.
The results, the customer service, the low cost, and the consistency all make The Motley Fool well worth following.
Of course, The Motley Fool only provides recommended stock picks. It’s up to you to choose whether to act on their recommendations, and how much to invest.
You can get started with The Motley Fool right here.
