In Shakespearean lore, the motley fool is the court jester who can openly speak the truth to the duke without getting his head chopped off. In 1996, David and Tom Gardner adopted the name for a series of messages promoting a fictitious online sewage company. Their intent was to poke fun at penny stock investing. It was really just two guys publishing a little satire.
What started as a joke turned into one of the most influential investment newsletters of our time. The Gardner brothers formed a partnership with America Online in August of 1994, giving them a national audience. They published an investment guide in 1996 that made the New York Times Best Seller list. Shortly thereafter, they expanded internationally.
Despite early criticism from industry insiders, the young company thrived and grew throughout the late nineties and the first decade of the new century. They nearly collapsed in 2001 when the dot-com bubble burst, but managed to survive and expand into the UK, Australia, Canada, Germany, Hong Kong, and Japan in 2002. They also switched to a subscription model that year.
Once described by PBS Frontline as a “group of twenty-somethings” giving “so-called” advice, representatives from the Motley Fool have testified before Congress on a number of issues, including mutual fund fees, the collapse of Enron, and the process of launching an IPO. Their writers also influenced the passing of the SEC Regulation Fair Disclosure Act in 1999.
In this post you'll learn:
What is The Motley Fool and Who is it For?
Today, the Motley Fool has over 600,000 subscribers worldwide. They position themselves as an educational resource for investors, but realistically the platform is more of a stock promotion engine. Subscribers to their “free” package are deluged with emails recommended the “next big thing” or projecting continued growth on already existing market trends.
The Motley Fool is a good read for newbie investors. The “Investing Basics” section of the website is solid. For new investors or folks who just want to learn more about how the stock market works, I’d definitely recommend it. The information is fairly basic and won’t earn you accreditation of any kind, but it’s definitely a good place to get your feet wet.
The “Retirement 101” section is fairly comprehensive. It won’t replace professional financial planning, so don’t look at it as an alternative. Once you get through that and the investment basics, you’ll need a premium subscription to delve deeper. Not recommended unless you’re a serious investor or trader. You’ll get good information if you subscribe, but it’s expensive.
The Motley Fool has a branded product, titled “The Ascent,” which is presented as a helpful resource in the “Personal Finance” tab. It’s legitimate. It’s also a cleverly disguised lead generation engine. Once you sign up, expect your inbox to blow up with offers to subscribe to premium newsletters. Read this entire review before you sign up for one of those.
Who is the Motley Fool for? It’s marketed as being for serious investors and professional traders, but that didn’t get them to 600,000 subscribers. The folks in the marketing office have created a platform that can be utilized by everyone, even those with limited knowledge of the stock market. The free package is a good resource to learn if you’re a newbie.
The Motley Fool is also a good resource for professionals. Day traders don’t typically use it because they rely more on technical analysis and chart patterns. Long term investment professionals and financial advisors make up a significant portion of their paid readership. There are multiple “premium” packages available, which I’ll review in the next section.
Services and Track Record
David and Tom Gardner aren’t just publishing gurus. They are professional investors with a track record of success in picking high-yield stocks. That’s where the real value can be found at the Motley Fool. Of course, no one is going to share money-making advice for free. If you’re looking for stock picks, you’ll have to pay for them.
According to their website, the cumulative return on stock recommendations by the Motley Fool has been 523% since the inception of the site back in 1994. The S&P has managed just 105% in that time period. Those are big numbers. Temper your enthusiasm a bit before you subscribe though. Market conditions have produced some of those gains for them.
On September 29, 2008, the Dow Jones Industrial Average fell by 778% in a single day’s trading. It was the worst day in stock market history and it essentially reset the market. Stocks have rebounded since then, with historical highs in 2020. That massive, long-term uptrend has been largely responsible for the gains that most stock promoters have been boasting about.
That said, it’s hard to argue with a 5:1 ratio on beating the index. The Motley Fool does appear to be picking winners and they offer a selection of premium subscriptions to share some of their insights. Those include the following newsletter publications:
Stock Advisor: $199 a year
Stock Advisor is the premium subscription for new and experienced investors alike. With a track record of five times the annual returns of the S&P, the stock picks provided each month are chosen to give investors a solid foundation and ongoing success with their portfolio. This subscription also offers ten “timely buys” and access to an investment community.
Having subscribed to this newsletter myself, I can attest that it provides sound financial advice and that the Fool is right more than it is wrong. I recommend this subscription, but caution against using it as your only source for investment decisions. The subscription price is reasonable, and is deductible as a business expense, so go for it.
Rule Breakers: $299 a year
Rule Breakers is published by founder David Gardner and is designed for investors interested in high growth stocks. These have a higher risk factor than income stocks, so the wins and losses tend to be larger. David’s cumulative return on growth stocks is 262% since 1994, compared to 89% for the S&P. That’s roughly a 3:1 chance of beating the index.
The subscription price is obviously higher, so I wouldn’t recommend this newsletter for newbie investors. Growth stocks are more of a gamble than income or value stocks. Anyone with an aversion to risk should stay away from this. If you’re experienced and have other sources for evaluating growth stocks, I give this newsletter a big thumbs up.
Rule Your Retirement: $149 a year
For $149 a year, Rule Your Retirement might be worth the money if you’re going to read it. This newsletter is more of an educational tool than an investment resource. It offers model portfolios, advice on mutual funds and ETFs, and social security tips. It’s also well-stocked with information on retirement topics like estate planning and insurance.
Are you constructing your own retirement portfolio or just relying on a 401(k) or pension fund? If you’re building your own, subscribe to this newsletter. For more traditional, company-funded employees, it’s not worth the money. You can get all the information provided in this monthly publication for free on sites like Yahoo Finance and Investopedia.
Other Member Packages
The three premium newsletters above were created for investors seeking advice and information to construct winning portfolios. The Motley Fool has other premium subscriptions available that are specialized and, not surprisingly, more expensive. I’m not going to go too deep into the weeds on those. Here’s a list with brief explanations:
- Cloud Disruptors 2020 – $1999 per year: Stock picks, advice, and information on the projected $3.2 trillion cloud computing market.
- One Access – $13,999 per year: Unlimited access to all Motle5y Fool services including Tom Gardner’s real money Everlasting Portfolio.
- Premier Pass – $3999 per year: An access pass to a combination of Motley Fool services, including Stock Advisor, Rule Breakers, Marijuana Masters, Crypto Society, and Options.
- Market Pass – $1499 per year: Recommendations from Stock Advisor and Rule Breakers, along with Motley Fool research on market trends in AI and biotech.
- Options – $999 per year: Billed as “Options University,” this subscription is highlighted by a weekly email providing news, commentary, and updates on options trading.
- Supernova – $2999 per year: Access to David Gardner’s portfolio models and investment strategies, including historical stock market plays.
- Total Income – $1999 per year: Also includes access to Options, this selection outlines high-yield, dividend growth, low risk, options, and bonds strategies.
- Everlasting Portfolio – $2999 per year: Access to Tom Gardner’s personal model portfolio. Buy and sell guidance from Tom to duplicate his success.
The following subscriptions are listed as “Extreme Opportunities” and are each $1999 per year. The titles are self-explanatory, so there’s no need to elaborate. These are also all currently not accepting new members, as of the writing of this review.
- Global Partners
- Marijuana Masters
- Augmented Reality
- Artificial Intelligence
- Future of Entertainment
Other subscription options include a “Discovery” section that has Warren Buffett portfolio suggestions in a newsletter called Moneymakers, a Rising Stars option for investing in new companies, and access to IPO Trailblazers. You can subscribe to each individually for $1999 per year or spend $4999 per year (titled: Boss Mode) to get access to all of them.
Pros and Cons
There are a lot of positives in subscribing to the Motley Fool. There are also some negatives to consider, particularly if you’re going for one of the higher end packages.
- Access to comprehensive stock market research
- Current source for market news and information
- Free educational resources
- Experienced company with a thirty-year track record of success
- Multiple subscription options
- Subscribers become too reliant on recommended stock picks
- Specialty premium subscriptions are too expensive
- Research data is available for free elsewhere
If you’re going to embark on an investment or trading career, or even do it as a part time source of income, make sure you educate yourself and don’t rely strictly on stock promoters to make you successful. The Motley Fool is a good resource, but they are not infallible. Treat them for what they are, and you’ll reap rewards from subscribing to them.
As for the so-called “specialty” subscriptions, don’t waste your money. Start out with the free platform to learn the basics, then subscribe to Stock Advisor. The $199 per year that will cost you is a worthwhile investment. If you’re a financial advisor, ask your custodian or broker dealer if they offer similar resources. It should be included in your agreement with them.