Located in Alexandria, Virginia, The Motley Fool is a stock advice company begun by brothers Tom and David Gardner in 1993. While they initially published various guides and investment advice, since 2002 their focus has centred on their main product, Stock Advisor.
Since then, the website has grown in popularity, particularly over the last ten years. This growth is due to the tremendous success of their stock picks. The fact that they are one of the largest stock-picking websites indicates that what they do, they do better than most.
What does Stock Advisor do?
Stock Advisor has two teams led by each of the Gardner brothers, each with its team of analysts. Their goal is simple, pick the best stocks for long-term growth. They recommend holding each stock for a minimum of two to five years.
Both teams will recommend one new stock to add to your portfolio each month. So, you get a new stock pick in the second and fourth week of each month.
Each team has their distinctive investing philosophy.
David’s team focuses on stocks that 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.
In addition, each team also reveals five more stocks to purchase immediately at the same time as their monthly stock pick.
One danger with following The Motley Fool’s advice is caused by their continuing success. Once the monthly picks come out, there is always a surge of buying orders for the recommended stocks. This of course causes the stock price to quickly rise.
This means you might miss out on some immediate short-term gains. But remember, The Motley Fools Stock Adviser services have a long-term investment focus.
Of course, not every stock pick is a guaranteed winner. A refreshing feature of The Motley Fool is that they are completely open about their failures as much as they are about their successes. When they can see that one of their picks is not turning out the way they had expected and they no longer feel it is a good long-term investment, they do recommend selling those poorly performing stocks.
However, it should be noted that over 80% of their picks have increased in value since being picked.
What returns has Stock Advisor gained?
The Motley Fool recommends holding 25 of their stocks and holding them for a minimum of 5 years. If you held a portfolio of any 25 Stock Adviser recommended stocks for at least 5 years, you would have achieved a return of no less than positive 97%.
The cumulative growth of $10,000 invested with Stock Advisers picks from 2002 would now be worth about $290,000, compared to the S & P 500 index which would be worth a little over $50,000.
Twenty years of stock picks with two recommended stocks each month means 480 stocks have been recommended. Of those picks, 183 have recorded returns currently of more than 100%.
The Motley Fool Stock Advisor service is a subscription-based stock picking service. You must pay an 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. Have a read of this other 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 from The Motley Fool. With this service, 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 stocks have a far riskier investment profile. Since its inception Rule Breaker has outperformed Stock Advisers, with about the same ratio of stocks showing positive and negative returns.
Summary
Stock Advisor suits all investing styles. Tom’s team chooses undervalued stocks from less popular industries. David’s team looks for the “X-factor” in stocks that they expect to “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.
The Motley Fool is an advice platform with a proven record of outperforming stock picks. It’s up to you to choose whether or not to act on their recommendations, and how much to invest.
You can get started with The Motley Fool right here.
