Motley Fool Review: Performance & Stock Picks Test [2021]

The Motley Fool Stock Advisor Service Test. Full Stock Picking Analysis, Audit & Service Rating. Are Motley Fool's Stock Picks Worth It?

This unique analysis of the Motley Fool premium service “Stock Advisor” performs an in-depth test of their stock-picking performance and reveals the facts about their service.  You will discover the real pros and cons of the Motley Fool service and whether it is worth your investment.

Motley Fool Stock Advisor Review, Test & Audit
Motley Fool Stock Advisor Review, Test & Audit

Quick Summary: Motley Fool Stock Advisor

Since the Motley Fool team reorganized their approach to stock investing advice in 2002, they claim an excellent record of beating the market with their Stock Advisor service. I have independently verified that they actually do outperform the S&P 500, and they are a mature stock advisory service with a proven track record.

Motley Fool Stock Advisor - Review Winner - Best Stock Advisory Service
Motley Fool Stock Advisor – Review Winner – Best Stock Advisory Service

Stock Advisor Pros

✔ Proven to beat the market consistently over 20 years
✔ Ability to build watchlist & entire portfolios
✔ Very Cost-effective service
✔ Fully transparent auditing of stock picking performance
✔ A straightforward and intuitive website
✔ A passionate and loyal community of 700,000 people

Stock Advisor Cons

✘ Stock Screener is basic.
✘ It can be tricky to find the original research reports.

What is the Motley Fool?

Motley Fool is a privately held company owned by the brothers, Tom and David. For over 20 years, the Gardners have been providing sensible investing advice, both popularising investing in index funds and high growth stocks.  Motley Fool became a household name with the publication of “Motley Fool Investment Guide” in 1997. This book inspired me to start investing.

Motley Fool Premium

Surprisingly, Motley Fool offers 32 different premium services, from the most popular Stock Advisor and Rule Breakers, through to advice on real estate investing. The only services that they share the market-beating performance on are Stock Advisor and Rule Breakers.

The Motley Fool premium stock research reports are clear and precise, focusing on the company’s financials, but most importantly on the future of the industry and business outlook. This is important because if you want to have market-beating results, you need to select companies that are potential industry disruptors and market dominators.

I have been a subscriber to Motley Fool Premium for four years, primarily because I value the qualitative analysis they provide. My initial reason for subscribing to the service was to test if they were legitimate or really a scam. I was amazed at how simple and successful their service is.

Not only am I a paying subscriber, but I have also recently partnered with Motley Fool because I can wholeheartedly recommend their service.

Is The Motley Fool Legit?

Yes, The Motley Fool LLC is a legitimate business providing stock advice and educating investors since 1993. Employing over 300 people and headquartered in Virginia, the Motley Fool has never been involved in any complaints or litigation with the SEC. Also, Motley Fool has on 4 occasions testified in Congress to support individual investors’ rights.

Is Motley Fool Reliable?

Yes, the Motley Fool is a reliable service. Like any stock advisory service, it has made a few mistakes in its 27 years of operation. The Foolish Four recommendations in the early 2000s nearly bankrupted the company. More recently, their recommendation to buy Luckin Coffee backfired for investors, as the Chinese stock plummeted 90% on news of fraud.

“The Motley Fool deserves a great deal of credit for openly supplying a vast amount of information on a timely basis. While many investment industry participants offer model portfolios or other forms of advice, few actually maintain real-money accounts in public view (in effect, putting their money where their mouths are).” Source: Journal of Business & Economics Research

Motley Fools Claimed Performance Track Record

Motley Fool does not try to perform research on every stock and fund in the USA.  The team focuses on specific stocks that they feel will, over the long-term, significantly beat the S&P 500.  They then provide lightweight and easy to read research reports and recommend why they feel the stock will be a long-term superior investment.

Motley Stool Stock Advisor Research
Motley Stool Stock Advisor Research

Motley Fool Stock Advisor Portfolio Performance 2002 to 2020

Motley Fool Stock AdvisorS&P 500
421%85%

 

The team at Motley Fool claims outstanding market-beating performance.  But is this true? In the next section, I perform some independent analysis to verify the facts.

Does Motley Fool Really Beat the Market?

Yes, the Motley Fool Stock Advisor service is currently beating the market. Since its inception in 2002, Stock Advisor has returned 612% vs. the S&P 500 return of 120%, according to its detailed auditing. In real terms, the S&P 500 averaged 6.13% per year, and the Stock Advisor service averaged a 32.2% gain.

As a Motley Fool premium member, I can access all of the open and closed trades audited since 2002. In the next section, I will share my own research on the performance.

Motley Fool Stock Advisor Test Results Summary
Motley Fool Stock Advisor Test Results Summary

Motley Fool Stock Picks Test

My independent analysis of the stock advisor service’s audited results reveals that since 2002, 48% of the stocks beat the S&P 500. The average winning stock outperformed the S&P 500 by 780%. 28% of the stocks recommended made a loss of 42% on average, while 82% of the stocks made a profit averaging 640%.

What does this mean? It means that you still have a 28% chance of losing money on any single stock recommendation. But at current performance levels, you have a 72% chance of investing in a company that will make you a profit.

Motley Fool Stock Advisor Performance

I can independently verify and confirm that the Motley Fool Stock Advisor service had, since inception, the following performance:

  • They recommended 310 individual stock picks to investors.
  • 72% of the stocks made a profit but did not beat the market.
  • 48% of the recommendations beat the market.
  • The average winning stock beat the market by 780%.
  • The average profit of each profitable stock was 680%.
  • The average loss was -42%
  • The best recommendation was Netflix in 2004, which made a 29,990% profit.

Motley Fool Stock Advisor Independent Test

In January 2020, I downloaded the full list of Motley Fools Stock Advisor recommendations. I have independently analyzed the stock picks in Stock Rover, and I can confirm that last year the Motley Fool Stock Advisor service made a profit of +52.7% vs. the S&P 500 return of +18.4%. Motley Fool beat the S&P 500 by 34.3% for 1-year to January 1, 2021.

Testing the January 2020 Stock Advisor Recommendations - 1 Year Performance Independently Verified.
Testing the January 2020 Stock Advisor Recommendations – 1 Year Performance Independently Verified.

For the full year 2020, Motley Fool Stock Advisor picked a total of 97 stocks. 62 stocks beat the S&P 500 by an average of 83%. 35 stocks did not beat the market, losing by an average of 20% against the S&P 500. As you can see in the screenshot above, the average return vs. the S&P 500 was 46.3% across all stocks. This is really an impressive result.

Motley Fool Service Review

When signing up to Motley Fool, you get more than simply a list of stocks to buy. You get support, encouragement, and regular emails with suggestions on how to structure your portfolio. They also provide you with sound advice on investing and what to expect from the market.

Buy 15 Stocks

The service recommends you buy at least 15 stocks and hold those stocks for 3 to 5 years.  This is wise advice because, as we know, the stock market goes down as well as up, and according to our research, you can expect that 30% of their stock recommendations will not be big winners.  Buying a larger basket of stocks helps diversify your portfolio and reduce the risk of being over-exposed to a single company. Additionally, holding stocks for longer allows stocks the time they need to develop outsized profits.

Help Building Your First Portfolio

The service helps you build out your first portfolio by suggesting 10 starter stocks to buy to start your portfolio. This is a great help to any new investor or for anyone looking to refresh their investing performance.

Portfolio Allocator Tool

The Portfolio Allocator tool is powerful yet simple to use; it will help you build a portfolio based on your risk profile and investing timeframe. From the Tools menu, select Allocator to be presented with a list of potential portfolio structures. You can select your Risk/Reward and Time to Invest preferences, and they will recommend a portfolio that might meet your needs. See the Screenshot Below.

Motley Fool Review: Portfolio Allocator Tool Helps You Select Your Risk Profile & Investing Timeline.
Motley Fool Review: Portfolio Allocator Tool Helps You Select Your Risk Profile & Investing Timeline.

Your Model Portfolio With Stock Recommendations

When you open your recommended portfolio, you are presented with a Pie that suggests your investment allocation between stocks, ETFs, Bonds, and Real-estate. You can then drill down to see the specific stocks they advise to buy.

This is a great tool if you need this structured approach to building a well-rounded, diversified portfolio.

Motley Fool Premium Helps You Structure Your Portfolio - Click on Any Part of the Pie to See Which Stocks to Buy.
Motley Fool Premium Helps You Structure Your Portfolio – Click on Any Part of the Pie to See Which Stocks to Buy.

The Motley Fool Screener Tool

I prefer to get my stock selections using the Fool Premium Stock Screener. Simply click on Tools -> Screener, then select High Only to get a list of their High Conviction Stock Picks. These are the stocks they rate the best of the best for potential future growth.

Motley Fool Premium Stock Screener Test: Select - Tools - Screener - High Conviction To Get The Best Stocks.
Motley Fool Premium Stock Screener Test: Select – Tools – Screener – High Conviction To Get The Best Stocks. (Stock Selection Obscured Because of TMF Intellectual Property)

You can then click each stock to get a full research report on the company, so you can understand why Tom or David Gardner have selected them.  What is also great is you see the entire audit of when the stock was first recommended and every time they have re-iterated their Buy recommendation.

This stock screener does not screen the entire stock market; it is limited to the stocks that the Motley Fool team has recommended, meaning you will have a total universe of about 900 stocks.

Motley Fool Premium Pricing

Motley Fool offers 32 different services ranging in price from $199 per year for Stock Advisor to $13,999 per year for ONE Access to all their services. For stocks, I would recommend the Stock Advisor at $199 or the Rule Breakers at $299 per year. I pay for the Stock Advisor Service, and I am delighted with it.

You might think $199 per year is expensive. But for the chance to select high-performing stocks and beat the market, this service is an absolute bargain, which I am happy to pay for.

New Motley Fool Premium Client Discount

Luckily, through my new partnership with Motley Fool, all visitors to LiberatedStockTrader.com can get 50% off their first year of Stock Advisor or a 66% discount on Rule Breakers.

Stock AdvisorRule Breakers
Two New Stocks Per MonthTwo New Stocks Per Month
10 Best Stocks to Buy Now5 Best Stocks to Buy Now
List of Starter StocksList of Starter Stocks
Community AccessCommunity Access
Regular Exclusive Videos & PodcastsRegular Exclusive Videos & Podcasts
$199 Now $99. 50% Discount$299 Now $99. 66% Discount

As you can see, the only real difference is in the Best Stocks to Buy Now, where the list of 5 best stocks is smaller companies with considerable potential. However, the service with the best, proven track record is the Motley Fool Stock Advisor.

Is Motley Fool Stock Advisor Worth It?

Yes, the Motley Fool is worth the cost, as it improves your chances of investing in profitable stocks. In 2020 only 13% or 815 US stocks performed better than the S&P 500. Meaning you have only a 13% chance of picking an outstanding stock. Motley Fool Stock Advisor helps increase your chance of beating the market, as 48% of their recommendations out-perform the S&P 500.*

*According to my research using StockRover, out of 7,500 US stocks, only 851 companies with a market capitalization greater than $1 billion beat the S&P 500 index in 2020.

How Do I Use Stock Advisor?

For 20 years, I have preferred to perform my own stock research, but having used Motley Fool’s Stock Advisor for 4 years, I have found that it saves me a lot of time and provides me unique insights and ideas.

I typically review the High Conviction recommendations from Motley Fool, and then I add them into Stock Rover. Stock Rover enables me to perform my own in-depth analysis of the financials, analyst ratings, future revenues, and earnings. It also allows me to connect to my Broker, access their research reports, rebalance my portfolio, and screen the entire market for stocks. I have even developed my own Beat the Market Strategy that is now available for all Stock Rover customers.

Summary: Motley Fool Review

For many years I was skeptical about the Motley Fool Stock Advisor service, but having been a subscriber for 4 years, I can recommend it for the following reasons. Their stock picking is excellent, with a proven track record of significantly beating the market, and they support you with continual updates and new stock alerts. Motley Fool is a great place to start if you want to be one of the 10% of people who beat the market.

Get 50% Off Stock Advisor

 

Motley Fool Service Data Sheet.

CompanyMotley Fool
Product NameStock Advisor
Research Reports Stocks
Real-Time Research Reports
Analyst Research Reports
Fund Research Reports
Long-Term Investing
Stock Ratings
Portfolio Mgt Tools
Short-Term Trading
Buy Signals
Price Per Year$199 $99
VisitMotley Fool

 

Further Reading

Related Articles: Finding Great Stocks With Stock Rover

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