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A while back I checked out The Motley Fool while doing some research on mutual funds. I found their educational content to be a great overview of what to look for and started exploring. While The Motley Fool has a lot of great content, I'm not entirely comfortable with their incessant up-selling.

They always so eager to tell me about some "insiders" stock of the day that they are sure is just about to explode tomorrow if only I will give them some of my valuable personal information. Is this a scam? Are they just using their legacy educational content to bait people into their premium services? Are their premium services even any good? The Motley Fool once had a fair amount of Internet street cred.

Are The Motley Fool's stock picks and services worth giving any mind share to or are they just another Jim Cramer loudly shouting ticker symbols to sell advertisements?

  • 2
    Realise that if they have so much geniune insider information, how come they still do research and publish rather than becoming an investment firm. Getting insider information isn't that easy. – DumbCoder Feb 17 '11 at 10:14
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    Actually, they are doing mutual funds now. – fennec Feb 17 '11 at 21:09
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    Those who know don't tell. Those who tell don't know. – G__ Feb 19 '11 at 3:59
  • Years ago, I started a trial subscription to one of their newsletters and then cancelled. During the following months, they advertised the subscription to me for lesser and lesser fees until I finally bought a subscription at the reduced price for educational purposes, even though I had no money at all to invest at the time. – Rice Flour Cookies Feb 20 '12 at 23:00
  • Can you buy stock in the Motley Fool? Usually, the people that sell the tools make the most money vs the people out there that are digging holes looking for gold with the tools. – user13444 Mar 5 '14 at 16:23
35

The Motley Fool is generally regarded as relatively legit, at least in that they're not likely to do anything outright fraudulent and they definitely have reasonably in-depth content to provide you.

The Motley Fool makes a fair amount of money off the subscriptions, though, and they do hawk them quite violently. If I didn't have a generally good opinion of them to begin with, I'd have been completely put off as well. It's pretty shameful.

I don't think it's worth hundreds of dollars a year, but then again, I don't look at investing as a second career like the Fool likes to suggest, either.

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    I agree with fennec on this. I visit Motley Fool regularly and like their analysis of things. It tends to be reasonable and hype free (though there are exceptions, there are far fewer than other places). I have not bought any of their paid content and unless you have a bunch of money riding on it, it may not be cost effective (you may not get the money you paid back in increased investment returns). – chrisfs Feb 17 '11 at 10:28
  • chrisfs It says it only costs $49 per year, surely that would be worth it if they have a good analysis on things? – ODP May 15 '14 at 23:20
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Upselling you is how they make money. That's the price of the free content.

Test their recommendations. Pretend to buy the stocks they say. How do they do? Do they ever say to sell the stocks after their buy recommendations?

There are lots and lots of opinions out there. I doubt people really hear about the good ones because (a) the good ones have paid newsletters and/or (b) the good ones aren't telling a soul because they're absolutely cleaning it up.

Warren Buffett doesn't announce his intentions. He's been buying for a while before anyone finds out.

5

I've had a MF Stock Advisor for 7 or 8 years now, and I've belong to Supernova for a couple of years. I also have money in one of their mutual funds.

"The Fool" has a lot of very good educational information available, especially for people who are new to investing. Many people do not understand that Wall Street is in the business of making money for Wall Street, not making money for investors.

I have stayed with the Fool because their philosophy aligns with my personal investment philosophy. I look at the Stock Advisor picks; sometimes I buy them, sometimes I don't, but the analysis is very good. They also have been good at tracking their picks over time, and writing updates when specific stocks drop a certain amount. With their help, I've assembled a portfolio that I don't have to spend too much time managing, and have done pretty well from a return perspective.

Stock Advisor also has a good set of forums where you can interact with other investors.

In summary, the view from the inside has been pretty good.

From the outside, I think their marketing is a reflection of the fact that most people aren't very interested in a rational & conservative approach to investing in the stock market, so MF chooses to go for an approach that gets more traffic. I'm not particularly excited about it, but I'm sure they've done AB testing and have figured out what way works the best.

I think that they have had money-back guarantees on some of their programs in the past, so you could try them out risk free. Not sure if those are still around.

  • They offer a complete refund if you're not happy after one month. – ODP May 15 '14 at 23:23
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I would personally beware of the Motley Fool. Their success is based largely on their original investment strategy book. It had a lot of good advice in it, but it pushed a strategy called "The Foolish Four" which was an investing strategy.

Since it was based on a buy-and-hold method with 18-month evaluation intervals, it was not a get-rich-quick scheme. However, its methods were validated through data mining and subsequently turned out to be not so good.

At least they admit this: https://web.archive.org/web/20130816011938/http://www.fool.com:80/ddow/2000/ddow001229.htm

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    Link is broken now. Any mirrors? – Joseph Garvin Jul 20 at 17:26
  • @JosephGarvin Found it! Edited, thanks for pointing this out. :) – Almo Jul 22 at 14:02
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Not sure how I came across the Motley Fool blog in the first instance, but found the writing style refreshing - then along came some free advice on ASX share prospects, then the next day and email expounding the benefits I would get by joining up for two years at 60% off if I hit the button "now", getting in at ground floor on the next technology stock rocket - I replied:

"What a hard sell - why wouldn't I apply the age old adage of " If it sounds too good to be true, it probably is"

Their reply was;

"Thanks for your note. The honest answer is that despite people knowing they should do something to help themselves prepare for their financial futures, few actually do it. We find these messages actually work in getting people to hit 'yes', much better than an understated email that just says 'here are our results and our philosophy - let us know if you're interested', unfortunately.

Yours Foolishly"

So I have put some of these recommendations onto a watch list, time will tell.

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    Any updates on the answer? How did these recommendations pan out in 5 years? – Joe Yahchouchi Nov 10 '18 at 22:47
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It might be time for an updated answer. The Motley Fool recently launched two ETFs: TMFC and MFMS.

They've finally put their money where their mouth is. If these ETFs beat the market after a 10-year period, their stock-picking ability will be validated.

So far, they have done well, but it's been a very short period.

  • "If these ETFs beat the market after a 10-year period, their stock-picking ability will be validated." How can you tell between validation and random luck? – NPSF3000 Jul 23 at 23:48
1

There are two parts to this answer.

First, let's talk about the core service. I believe Motley Fool is legit. I've been using their services on and off for almost six years. I started using them at a time when they were still sending PDF research reports and they always had some great insights. I've tested Jim Cramer's premium service as well (Action Alerts Plus) and I liked Motley Fool a lot better. Contrary to their marketing, the reports are actually well-researched and less hyped. They explain their picks and detail and warn of any risks that come with the stock pick. If you want more information on the service itself, this review does a good job of breaking it all down.

Second, let's talk about the marketing and upsells. In recent years, Motley Fool has been running some aggressive marketing campaigns. I'm pretty sure everyone has seen the "triple down" type campaigns. I'm not sure why the company went in this direction because it dilutes the professionalism of their brand but, personally, I just look past it. If you're going to buy into hype, you won't do well in investing - whether that's through Motley Fool, another service, or your own research.

Motley Fool's core offering is the Stock Advisor program and that's really all you need. It's priced at $99/year which is affordable and if you combine their picks with your own due diligence, the subscription can pay for itself. Don't get sucked into the hype of the special reports. Obviously, the company wants to upsell you, but the Stock Advisor program is the main service and it has a proven track record. As a member, you can see a history of all of the picks the company has ever made (losers and winners) dating back to the inception of the program. You really only need a few good stock picks to do well, so don't get caught up in the hype of "insider tips" or industries set for "explosive growth."

In the past few years, it's been very easy to make money following basic investment advice, such as the recommendations made by Motley Fool. Think about the FAANG stocks that have been a hot topic. If a company made a buy alert at ANY time between 2016-2018 it would have been a killer call. The market was hot and a lot of the most "obvious" companies reaped the rewards. The market environment is changing a bit now but Motley Fool has been around for over two decades.

The last thing to keep in mind is that a stock pick service helps you generate ideas but you still need to do your own research and control your own risk. "Buy and hold" strategies without regard for cutting losses may work well in the long-term but they could have costly short-term consequences. Take the FAANG stocks I mentioned above, some of which Motley Fool made recommendations on. A buy between 2016-2018 would have yielded amazing returns but a buy at the end of 2018 would have resulted in a "loss" of ~40% by early 2019. Luckily, those stocks recovered but you never know what the future holds.

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protected by MrChrister Mar 8 '14 at 1:21

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