The Motley Fool Stock Advisor Service Test. Full Stock Picking Analysis, Audit & Service Ratings. Are Motley Fool’s Stock Picks Worth It?
Our Motley Fool review performed an in-depth test of their stock-picking performance and revealed the facts about their stock advisor subscription. You will discover the real pros and cons of the Motley Fool service and whether it is worth your investment.
I have been monitoring Motley Fool for 20 years and have seen its ups and downs. Over the last four years, I downloaded their database of stock picks and audited them independently with my favorite stock screener Stock Rover. The results are impressive.
Motley Fool Stock Advisor Review
After two years of independent testing, this Motley Fool Stock Advisor review confirms their excellent performance track record of beating the market. Motley Fool provides incredible value for long-term growth investors.
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.
Our independent Motley Fool tests confirm that Motley Fool Stock Advisor outperforms the S&P 500; they are a mature stock advisory service with a proven track record.
I independently subscribe to and pay for the Motley Fool Stock Advisor service out of my own pocket because it is that good.
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
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 provided sensible investing advice, popularising investing in index funds and high-growth stocks. Motley Fool became a household name with the “Motley Fool Investment Guide,” published in 1997. This book inspired me to start investing.
Motley Fool Stock Advisor Test
Motley Fool offers 32 premium services, from the most popular Stock Advisor and Rule Breakers to advice on real estate investing. Stock Advisor and Rule Breakers are the only services that share the market-beating performance.
The Motley Fool premium stock research reports are clear and precise, focusing on the company’s financials but, most importantly, the industry’s future and business outlook. This is important because if you want market-beating results, you must select companies that are potential industry disruptors and market dominators.
I have subscribed to Motley Fool Premium for four years because I value their qualitative analysis. My initial reason for subscribing to the service was to test if they were legitimate or 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 four 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 maintain real-money accounts in public view (in effect, putting their money where their mouths are).” Source: Journal of Business & Economics Research
Motley Fool’s Performance Track Record
The Motley Fool Stock Advisor claims a performance track record of 421% profit since 2002 versus the S&P 500 increase of 85%. This track record is impressive, but is it true? We put it to the test.
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 superior long-term investment.
Motley Fool Stock Advisor Portfolio Performance
| Motley Fool Stock Advisor | S&P 500 |
| 421% | 85% |
The team at Motley Fool claims outstanding market-beating performance. But is this true? In the next section, I perform an independent analysis to verify the facts.
Motley Fool Stock Stock Picks Performance 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 lost 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 Returned
I independently verified the Motley Fool Stock Advisor returns and confirmed a 46.3% profit. This is exceptional performance, recommending 310 stocks, of which 48% outperformed the S&P 500 with an average return of 680%. The average loss was 48%.
- They recommended 310 individual stock picks to investors.
- 72% of the stocks made a profit.
- 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 Performance Test
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.
For the full year 2020, Motley Fool Stock Advisor picked 97 stocks. 62 stocks beat the S&P 500 by an average of 83%. 35 stocks did not beat the market, losing 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 an impressive result.
Does Motley Fool Beat the Market?
Yes, the Motley Fool Stock Advisor service has returned 612% vs. the S&P 500 return of 120%, according to detailed auditing. In fact, Motley Fool has significantly beaten the market since its inception in 2002; in real terms, the S&P 500 averaged 6.13% per year, and the Stock Advisor service averaged a 32.2% annual gain.
As a Motley Fool premium member, I can access all open and closed trades audited since 2002. In the next section, I will share my research on performance.
Motley Fool Features Test
When signing up to Motley Fool, you get more than a list of stocks to buy. You get support, encouragement, and regular emails with suggestions for structuring your portfolio. They also provide 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 reduces 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 ten starter stocks to buy to start your portfolio. This is a great help to any new investor or anyone looking to refresh their investing performance.
Portfolio Allocator Tool
The Portfolio Allocator tool is powerful yet simple; 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.
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 you to buy.
This is a great tool if you need this structured approach to building a well-rounded, diversified portfolio.
$199 or $99 For New Clients
Motley Fool Stock Screener
The Motley Fool stock screener is simple and effective, allowing you to screen for their stock pick recommendations. I get my stock selections using the Fool Premium Stock Screener. 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.
You can then click each stock to get a full research report on the company to 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 Review Summary
I was skeptical about the Motley Fool Stock Advisor service for many years, but having been a subscriber for four 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.
The Motley Fool Stock Advisor service significantly beat the market since its inception in 2002. According to its detailed auditing, Stock Advisor has returned 612% vs. the S&P 500 return of 120%. In real terms, the S&P 500 averaged 6.13% per year, and the Stock Advisor service averaged a 32.2% annual gain.