As you increase your interest in building wealth and investing, you might be looking to take your knowledge to the next level. And as you consistently work on your investing strategy and expand your interests, there will be more to understand and manage.
While I’ve never been into active day trading stocks, buying and holding onto individual stocks should conservatively be in your portfolio. Meaning, you should have some exposure to great individual stocks, but only be a fraction of your overall portfolio to minimize risk.
What percent of individual stocks you have in your portfolio is a personal choice based on your goals and current finances. However, I like to look at it as being between 1-5% max of my portfolio.
However, most people do not have the time or knowledge to research every potential investment or find great individual stocks that are out there. But one option you have is to sign-up for The Motley Fool’s Stock Advisor program.
What is The Motley Fool?
The Motley Fool was founded in the early 90s and has continued to be a leader in the financial space. Currently, the company is led by the founders (and brothers), David Gardner and Tom Gardner.
The company has its headquarters in Virginia, but they have offices around the world and employ hundreds of people. Their website covers the latest stock market news, numerous blog posts, and guides around investing, detailed guides, podcasts, and much more.
I think their about page sums up their approach to investing, business, and work culture nicely.
Here is a quick snippet:
“We believe in treating every dollar as an investment in the future you want to create. We believe that investing in great businesses, for the long term, is the most effective path to wealth. We believe in the power of a community to learn and grow together. We believe in keeping score and being transparent in our investment performance. We strive to fulfill our purpose by truly serving every Fool, from our employees to our members to our community.”
What is the Stock Advisor Program?
While The Motley Fool offers a plethora of free content, guides, and news — one of the staples of the company is its Stock Advisor Program.
The Stock Advisor program is a membership service that offers stock picks and various recommendations to their subscribers to help them invest wisely. And the goal of the program is to make it easy for beginner investors to get started picking the right stocks and improving their results.
What the program includes is Tom and David Gardners insights, research reports, and all the information as to why they are choosing certain stocks.
While they are looking to help you beat the traditional returns, these are not “get rich quick” options. Instead, these are stocks you should invest for the long-term that have great fundamentals.
What stands out about their recommendations, is these are not “pump and dumps” or junky penny stocks. Instead, they are legit companies that show various indicators of strong potential results over time.
And currently, the Stock Advisor program has over 600,000 active members using their services and accessing their stock market picks. So let’s explore more about the Stock Advisor program in this Motley Fool Review below.
How The Motley Fool Picks Their Stocks
While I won’t get into every little detail, I think it’s essential to cover the basics of their stock-picking approach and what investors get to see.
What’s cool about The Motley Fool’s approach to stock pick investing is its blend of strategy and information. They aren’t just throwing random stocks out there, getting paid to push a stock, or choosing a hot industry.
Their entire philosophy revolves around picking solid businesses based on current results, future potential, current management, market factors, trends, and other business signals.
This interview of co-founder David Gardner is from 2014 but goes into their process for stock picking and a bit about their Stock Advisor service.
Here are just some past recommendations they had made to their members, before the stocks took off: Hasbro, Bookings, Disney, Amazon, Costco, eBay, United Health, and Netflix. Many of which, their first recommendations, came in the early 2000s before any big price gains.
Quite the track record, and it gives you an idea of the kind of companies and stocks they look at for their members.
What members get in the Stock Advisor Program
As a member of their Stock Advisor Program, you can expect the following:
- Two new stock picks each month – That is the team’s latest stock recommendations based on their analysis that is delivered monthly
- The best buys for right now – The Motley Fool will provide ten timely recommended buys from over 300 various stocks.
- Starter Stocks – These are identified stocks that should be considered as the foundation of your portfolio.
- Their newsletter – The Stock Advisor newsletter comes with fundamental analysis, the positives and the potential negatives of the picks, and more. It helps you understand the reason for their choices, and figure out which stocks are best for you.
- Additional community and investing resources. While The Motley Fool has numerous free content, guides, and podcasts — they offer members exclusive materials that the general public readers will not have access to.
Another important feature for members, is they get access to a record of all the recommendations The Motley Fool has ever made. That means access to all their winners and losers in their investment picks.
I like this transparency because you can quickly access all the information, why it was recommended, and the results since the recommendation.
Personally, it’s great to see that they do not hide any picks that maybe did not perform as well. No financial company, investor, or advisor will have 100% accuracy.
The stock market and companies can do many unexpected things, so there is no way anyone should not have any losers or “low performers.” Instead, you want to see that the winning recommendations are more consistent with strong returns.
Motley Fool Review: Pros and Cons
Now that you understand The Motley Fool’s service for investors, what you get, and how it works — what are the pros and cons of being a Stock Advisor member?
Pros of The Motley Fool
- Founders and analysts have decades of stock marketing and investing experience.
- Tons of in-depth content, news, resources, tools, and services.
- Proven track record of results for their members in the Stock Advisor.
- It takes the burden of detailed research and analysis. Making it easier for you to make decisions about stocks
- Stock Advisor subscription costs $99 for a one-year membership and protection by their 30-day membership-fee back guarantee. You can cancel within 30 days and get 100% of your money back.
Cons of The Motley Fool
- Purely investing in individual stocks is still risky, as there is no guarantee a stock will win long-term or the company will have enormous growth over the years.
- These are recommendations, so you still need to do your due diligence. While the recommendations come with detailed information, risks and rewards, and more — you still should read and understand the stocks before just investing because they said they were good picks.
- You must be prepared before. That is not to get rich quick, and you can still lose money. Understand your goals, what you can risk, and what you are willing to hold during rough times if The Motley Fool is recommending that.
Is the Motley Fool Stock Advisor Worth It?
The Stock Advisor service from The Motley Fool is worth it if you are very interested in individual stock investing and looking to have more of the research done for you in advance. It’s also a good option if you plan on managing your portfolio and have a hands-on approach to investing.
Is the Stock Advisor Program Good for New Investors?
The Motley Fool Stock Advisor program can be a great and affordable choice for new investors that have long term goals and want to mix in individual stocks to their portfolios. Even though the Stock Advisor program has a strong track record, it’s important to understand the risks and do your research on stocks they recommend.
What Type of Investor is Motley Fool Best For?
Motley Fool’s Stock Advisor service is best for new investors and experienced investors looking to have an advantage over others and boost their portfolio returns. The recommendations are also best suited for long-term investors who want to mix in individual stocks that have the potential for higher traditional returns.
If any or a few of these points speak to you personally, then the program can be a great option if you:
- Are long-term investor (buy and hold for 2-5+ years)
- Like individual stocks and prefer them over mutual funds
- Are looking to add new stocks to your portfolio monthly or annually beyond index fund investing, bonds, etc.
Is The Motley Fool Trustworthy?
The Motley Fool is trustworthy and legit. Compared to other similar products or newsletters on the market, the company is not promising what they can’t deliver. Nor are they doing anything that would be considered fraud.
As someone who works in marketing, I will say they may come off a bit scammy with their aggressive sales tactics; however, their track record and quality content show they are legitimate.
There are also many scams and newsletters of people trying to lure readers into stocks with the promises of massive returns. If you see those, runaway! Most are paid to select these stocks to send them out to readers, and most are junk or hold no real value.
Fortunately, The Motley Fool does their homework, has a proven track record, and helps you build a nice portfolio of some individual stocks to help you make money while you sleep.
They may have aggressive marketing or sales tactics, which I tend not to like. But, since they are transparent and have proven results, I don’t judge them as much on those tactics since they can back it up (unlike most stock picking newsletters).
Founder of Invested Wallet and featured in Time, Business Insider, & HuffPost. Self-educated on personal finance and investing. He's passionate about financial freedom, investing, side hustles, and helping others realize they too can transform their finances.