*** UPDATED November 16, 2019 ***
Does the Motley Fool’s Stock Advisor newsletter provide good stock recommendations and is it worth the price?
At HowTheMarketWorks, one of the services we provide our users is that we subscribe to dozens of stock advisory services and we buy all of the recommended stocks in a virtual account.
In this article I will review the Motley Fool Stock Advisor newsletter’s performance for the last 4 years and reveal the profitablitity its stock picks.
I will show you some of their stock picks that were excellent stock picks and gave us huge profits. I will also show you how we used stop-loss orders to protect our initial capital. If you want to know how it rates against other stock picking services, then read our best stock newsletter review.
Here are the 4 main things you get when you buy the Motley Fool Stock Advisor service. This is directly from the Motley Fool’s webpage:
First of all, note that Motley Fool service is totally legitimate and you do get the first 3 email alerts and access to their community and investing resources just like it advertises.
So far so good.
Motley Fool Background
The Motley Fool has been providing stock market commentary and specific stock recommendations to the general public since 1993. They truly exist to help you make money in the stock market. Currently they offer about a dozen stock recommendation newsletters that cover a variety of investment strategies. The price for these stock advisory services ranges from $199 a year to $8,000 a year. The Motley Fool Stock Advisor is their most popular service and their most affordable.
Their office is located in Alexandria, Virginia. I have even been to their offices several times over the 20+ years I have been in the stock market education business. Based on the size of their offices, they probably have 200+ employees.
The Motley Fool’s “Stock Advisor” newsletter is their most popular and their most advertised stock picking newsletter. They claim this service has returned over 300% versus the SP500’s 80% over the same time period. That claim is enough to get everyone’s attention. In fact, this is the first service we bought so we could paper trade their picks to find out if their performance claims were realistic.
My Motley Fool Stock Advisor Review
With the Stock Advisor newsletter, they generally send out a two NEW stock recommendations each month. You will also get updates on previous recommendations, and occasionally a few sell recommendations. The emails are short and concise, and if you want to click to get more information, you can read their full analysis.
This Motley Fool Stock Advisor review is based on my own experience as a subscriber for the last few years. My father and uncle have both been subscribers for over a dozen years. I have heard both of them brag about the success of their stock portfolios and how a lot of their picks came from the Motley Fool Stock Advisor newsletter. Upon a little investigation I saw that the Motley Fool said their Stock Advisor Service was up over 300% compared to the SP500’s 80% as this graphs shows.
WOW! That’s an amazing graph if it is true!
Doesn’t every investor want to outperform the SP500 like that. As I dug down into their existing portfolio and their current recommendations, I found how how they got those returns. To have returns like that you need to have a couple stocks in your portfolio that double or triple every year.
And upon review, the Motley Fool does have a great knack for finding a few stocks each year that have fantastic returns. Think about it. If you buy 24 stocks a year, lose 8% on a 4 stocks, make 10% on 16 of them, have 2 that double and 2 that triple, your portfolio will be up 30% in one year. In 3 years you will double your portfolio. That is essentially what the Motley Fool Stock Advisor Service has done for the last few years.
To find out if it really works, I purchased it myself and I am now sharing my results.
Since I work for HowTheMarketWorks, at first I set up a virtual account with $100,000 and just started buying $5,000 of each of the stocks they recommended. Like most of you, I am a busy person. I can’t always stop what I am doing when I get their emails. Generally I would place my buy orders as a market order within a day or 2 of after getting their recommendations. I have been burned (ie, lost money) from other stock services. So to be cautious, I placed a stop loss order at 8% below my purchase price.
After seeing the positive returns on 8 of the first 10 buy recommendations that I paper traded in my HowTheMarketWorks account, I decided to start buying their stocks picks with my real brokerage account using my real money. At first I started buying $2,000 of each of their stock recommendations. I have to say that I am very, very pleased with the results. I just wished I had more money to buy more of their picks!
For their 2018 stock picks, 18 of their 24 picks are up as of November 16, 2019. Here are some of their specific recommendations:
- January 2018 pick OKTA is up 184%
- January 2018 pick PAYC is up 107%
- February 2018 pick FICO is up 63%
- April 2018 pick SHOP is up 63%
- June 2018 pick WIX is up 30%
- November 2018 pick ZS is up 82$
- January 2019 pick TWLO is up 57%
Obviously these are just some of their recent picks. My point of showing you these is that they really do pick stocks that double and triple each year. And THAT is how they have made the amazing returns they advertise.
In addition to the 2 picks per month, they also send out a few other BUY lists like this one…
Here is a sample email that they sent in May 2018 of their Starter Stocks recommendations. Here are 10 solid stocks.
Of those 10 stocks (AAPL, AMZN, ANET, FB, HAS ,MA, MAR, MKL, NFLX, PYPL), they have all gone up since I received that email. Remember, I use 8% trailing stops on all of my positions, so I have been stopped out on several of those positions, but ALL at a profit.
The cost of the Motley Fool Stock Advisor service has fluctuated over the years from as low as a few hundred dollars to $995 a year. Right now they show the price at $199 a year, but they currently have it on sale for only $99 a year or $19 a month. I paid the $99 (see the link at the bottom of this article) and I made that money back within the first 2 months with my purchases of AMZN and NVDA and then I continued to make lots of money with their other recommendations like MAR and SQ.
If you subscribe to the Motley Fool Stock Advisor service, you might find yourself making more stock trades than you normally do. So be careful of the commissions you pay with each trade. Commissions will eat up your profits if you are only investing a few hundred or thousand dollars.
If you don’t already have a real stock brokerage account, then open a new account and take advantage of the special “Commission Free” offers that a lot of the brokers have right now. To review all of the “Commission Free” stock broker offers for new accounts, CLICK HERE.
If you already have a brokerage account, don’t be shy to switch brokers or open a second or third account. I have 4 brokerage accounts myself. It has literally saved me thousands of dollars! I have 4 brokerage accounts for a reason. I take advantage of special offers to trade commission free, and you should too. A penny save is a penny earned.
Also be warned, the Motley Fool business model is they use this service as their entry level subscription service. Once they have your email address, they try to upsell you to their other services. They don’t call you, they just send you emails. So I don’t find them annoying at all.
Some people ask me if the Motley Fool is a legitimate business. Yes, absolutely they are legit and they are there to help you make money. I have visited their offices in Alexandria, VA several times. I have met several of their key personnel and I see them at investor education conferences. They take their job seriously and are truly focused on helping their subscribers make money in the stock market. If you are ever unhappy, you can always cancel. And yes, when you call they will answer their phone!
The Motley Fool Stock Advisor services is the best value for the money. Don’t just take my word for it, feel free to read this other review of the Motley Fool.
If you are just getting started investing in the stock market, or even if you have been managing your stock portfolio for years, the Motley Fool Stock Advisor is a great service for the money. I never would have bought SQ, MAR and NVDA without their recommendations. If you want to try the service, click on the link below…
The Stock Advisor newsletter is currently on sale for only $19 a month or $99 a year. At this price it is a NO-BRAINER to spend $99 and get their next 12 months of stock picks and market commentary. All of their stocks will probably NOT go up. From my experience, however, most will go up over the long term. Most importantly, they seem to have a way of finding stocks that double or triple in a year. Stock like NVDA, MAR, AMZN, and SQ did that for me. It’s always great to have a few stocks that double in a year to offset a few of their losing picks.