Is Motley Fool Worth It? An Unbiased Motley Fool Review
An assessment of whether Motley Fool is Legit
The Motley Fool – All Your Questions Answered
The Motley Fool is a prominent name offering stock recommendations and financial advice to investors. But with so many investment options available today, and so many scammers out there, it’s hard to know if Motley Fool is legit or just another scam. I’ve had a lot of personal experience using various products they have put out, and have written about them in the past if you want to see the older posts.
Let's hit up some of the most common questions about The Motley Fool as well as my own experiences with them.
How are Motley Fool’s Returns?
Motley Fool makes a lot of unsubstantiated claims about how they have beaten the market by 4X since they started in the 1990s. But it’s unclear how they calculate this feature since they provide zero evidence and little methodology. They only state they have time-weighted returns (whatever that means) and average hold times of 3 years. This means little as they also state in various places their target hold times are above 5 years. I even had to sign a document stating I understood their recommendations required waiting 5 years. This is pretty sketchy to me as it means they get to collect my fees for 5 years regardless of their performance. What’s more, they do not say how they weight each stock “purchase” that went into this analysis.
I also find it a bit dodgy they started their analysis in 2002, after the largest market selloff in history. That gives a nice bump up as everything went up following the dot com bubble bursting! According to their own website, the service started in 1993.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
Can Motley Fool Be Trusted?
Based on this discrepancy and their lack of transparency, I’m leaning no. But we will dig deeper. I mean, it’s easy enough to make recommendations, review their performance 5 years later, then decide they wanted to cut the returns to 3-year periods to maximize the look of the returns. I’m not saying they do this, just that it could be done.
I also recognized a bit of scheme over at Motley Fool. When I was a subscriber, I subscribed to multiple products. The Stock Advisor is their entry product. I often saw the same recommendations on various products. The only difference was when I heard about them. As a more premium member, I received Motley Fool recommendations and then weeks later as a lower tier member, I got the same alert. Maybe it was coincidence, but it seems like they were feeding those paying the most their best tips first and then boosting the returns by feeding the same alert to the masses that have subscribed to lower tiers and got the tips later. This is just my opinion, I could be wrong.
Motley Fool Returns I Witnessed Firsthand
Ok, so let’s get to it. One of the first products I bought was a list of small caps that were supposed to be 10X stocks. The guidance was to hold for 5 years. It’s been 4, so I feel we’re close enough to examine the evidence which I tracked in my Fidelity account.
Every single stock is down with 1 exception, SHSP, which was acquired for a 17% premium. Thankfully I only bought two of these and sold them pretty quickly.
Now to be fair, I didn’t keep subscribing after many tanked. So it’s possible they sent sell alerts though if their main goal was a 5-year hold times for these, why would they?
Perhaps they did better in the Stock Advisor and IPO Trailblazers products. Let’s have a look. I added these from alerts late 2021 and early 2022. To be fair, this was a bad time for stocks. But as stock experts, shouldn’t they know this and advise safe investments accordingly? Maybe it wasn’t so bad…let’s look:
Pretty rough. Every stock is down tremendously except for Crowdstrike and Autodesk. Again, to be fair, I did not stick around the last 4 years as a user so perhaps they said to sell ALL of them. But if they are long term investor, why would they? They are all great stocks right? In truth, many of them are great stocks, but the entry points were just plain stupid. They were trading at insane valuations and it was just a matter of time before the bubble popped.
This is my main takeaway from Motley Fool: while they do find legit growth stocks, their timing sucks, they don’t do valuations well, and they seem more interested in ensuring they send new alerts then in ensuring people don’t lose money. I saw this early as a fairly savvy investor that constantly beats the market.
I signed up for Motley Fool in hopes of saving time monitoring the market for cool new stocks. They did save some time, but I still had to do my own analyses of the macro environment and the stock’s valuation relative to peers and history. And I have a different view than Motley Fool, which says to never try and time the market. I like having access to my money and would rather miss part of a rather and not get caught in a massive selloff, than get the whole rally after losing 50% of my money.
What is Better than Motley Fool?
Here Are 3 Tools We Like Better Than Motley Fool :P
There isn’t a one-size-fits-all answer to this. Ultimately, the best service depends on your investment strategy, whether you're looking for in-depth analysis, a wide range of tools, or a particular focus on stock picking.
Great Alternatives to Motley Fool
1) Review of LevelFields.ai: The AI-Powered Stock Analysis Tool for Smart Investors
Website: LevelFields.ai
Rating: ★★★★☆ (4.7/5)
LevelFields started out by offering event-driven alerts using AI on the premise the AI could find the events proven to move stocks. They nailed it. And the interface also shows the average impacts of those alerts. I was an early adopter and admit I drank the cool-aid some because I loved their mission of taking hedge fund strategies and making it available for cheap for average folks like me that don’t meet the $10M minimums for hedge funds.
Unlike traditional trading tools that rely solely on historical data and technical analysis, LevelFields.ai leverages AI to analyze real-world scenarios like layoffs, leadership changes, product launches, dividend changes and how they impact specific stocks, allowing investors to locate and anticipate market movements with greater accuracy. This makes it a valuable tool for both beginners and experienced investors looking for actionable insights and a strategic edge.
Very early on, they definitely had some bumps in the system. The system was a bit buggy, slow and sometimes the alerts came late. But it always found the juicy nuggets I could not find on my own. Since it only costs 200 bucks, I was patient. Over the last year, they seem to have really gotten their shit together. The platform is awesome now.
Pros
User-Friendly Interface: The platform is intuitive and easy to navigate, even for those who are not tech-savvy.
Ready-made Ideas: If you don’t know exactly what you want, they have ideas based on event scenarios. It’s one click to get the alerts for these major events.
Personalization - I can setup alerts for just the type of companies, financials, and event types I want. Since I also trade a lot of stock options, using AI to locate stocks in play because of big events had made me a lot of money.
Transparent Data - Unlike many trading tools that function as a "black box," LevelFields.ai offers clear reasoning behind every stock alert. All data is visible and auditable (is that a word?) and not hidden in some secret algo that may/may not work.
Data-driven: The AI's predictions are supported by extensive backtesting, which users can actually play with themselves to alter settings for different outcomes.
Premium Service - I had some health issues over the past years that really took me down. Still wanting to trade but not having as much time, I upgraded my subscription to their premium tier which is 167/mo. I was skeptical at first but within a few alerts, I quickly saw the value. They did all the work for me by filtering all the events coming through the platform, cherry picking the best ones, analyzing and documenting their rationales for the trade, and providing an entry and exit point for both stock and options trades. I was able to continue doing what I was doing with about 30 minutes a week of work - down from about 10hrs/wk. I don’t swing at every trade, but their win rate is 85% and I am learning a lot about macroeconomics just from reading their alerts which map the macro picture to the company level in an easy to get way.
Exceptional Returns - I like they track all their trades and display their returns each week in a nice graph (shown below). I’ve compared the graph to their alerts to make sure they weren’t cheating because the numbers were astounding. LevelFields is legit. Most alerts return 20-45% but that’s in timeframes of days to months, and they’ve had some multi-baggers like shorting SBNY.
In a future post, I’ll calculate the returns. But I need to go back and dig out each one and compare to my brokerage system and that takes longer than I had today.
Cons
Subscription-Based: Access to the full range of features requires a subscription, which might be a barrier for casual investors or those just starting out.
Limited Free Trial: It’s noteworthy they offer a pretty limited free trial and free newsletter. The newsletter is great, but it would be better if they enabled users to see the platform before purchasing it. They could cut down a lot of data and still offer a free access.
Limited Technical Analysis: Similarly, while they do technical analysis in their premium alerts, there is only one event out of dozens that is based on a technical breakout.
Who is LevelFields.ai Best For?
Active Stock Traders: If you are actively trading and looking for insights beyond basic technical analysis, LevelFields.ai offers a strategic advantage by focusing on real-world events that impact stock performance.
Short to Mid-term Investors: Those looking for quicker gains and higher returns without worry about the broader market or tax issues.
Advanced Beginners: Investors who know the basics but want to really evolve their investing without spending time watching YouTube videos should try out the premium service.
Options Traders: The platform is great for helping figure out entry and exit points and expiry dates for options trades. Using the AI to spot great options trades is an easy way to 2-4X the returns.
2) Review of Portfolio Visualizer
Website: Portfolio Visualizer
Rating: ★★★☆ (4/5)
Overview
Portfolio Visualizer is a powerful, web-based tool designed to help investors analyze, optimize, and backtest their investment portfolios.
Key Features
Portfolio Backtesting:
Portfolio Visualizer's backtesting feature allows users to analyze historical performance for different portfolios, adjusting for asset allocations, rebalancing strategies, and more. I admit I played with this for two days straight thinking I’d come up with something no one else has ever done but alas, most outcomes didn’t beat the SP500. But a few did and I’m using those in my long term portfolios.
Monte Carlo Simulations:
This tool uses Monte Carlo simulations to predict potential future outcomes for portfolios based on historical data. It helps investors understand the range of potential returns and risks associated with different investment strategies.
Asset Correlation Analysis:
The platform provides detailed correlation analysis between different assets, allowing users to understand how various assets move in relation to one another. Think Coke vs Pepsi, Visa vs Mastercard, Gold vs S&P 500. Super useful tool. But I learned there’s no correlation between chicken stocks and Wingstop, or between egg stocks and chicken stocks. I guess one came first haha.
Factor Analysis:
The Factor Analysis tool helps investors understand how different factors (like market size, value, momentum, etc.) impact their portfolios.
Retirement Planning Tools:
Portfolio Visualizer provides retirement simulations that estimate the likelihood of achieving retirement goals based on various conditions.
Pros
Comprehensive Analysis Tools: It’s one of the most comprehensive portfolio analysis tools available.
User-Friendly Interface: The platform is well-organized and easy to navigate, with a clean layout that makes it accessible even to those new to investing.
Customizability: Users can customize their analysis by inputting their specific asset allocations, adding custom tickers, or using different rebalancing and withdrawal strategies.
Free Access with Paid Upgrades: Many of Portfolio Visualizer's tools are available for free.
Cons
No Stock Picks: The feature set is great, but there’s no help finding great stocks to buy here. You’re on your own there, so you’ll have to pair it with another tool unless you just want to buy ETFs.
Advanced Features Can Be Overwhelming: While the range of tools is impressive, it can be overwhelming for beginners or those without a solid understanding of investment analysis and portfolio theory.
Limited Real-Time Data: The platform relies heavily on historical data, which may not always capture current market conditions.
Premium Features Behind Paywall: While the free tools are great and really most of what I need, the most advanced features and data are restricted.
Who is Portfolio Visualizer Best For?
Experienced Investors and Financial Professionals: With its advanced tools and in-depth analysis capabilities, Portfolio Visualizer is ideal for experienced investors and financial advisors.
DIY Investors Seeking Data-Driven Insights: Self-directed investors looking to figure out how different stocks are correlated will find this tool addictive.
Retirement Planners: The retirement planning tools make it a great choice for those planning for long-term financial goals and retirement.
3) Review of CapitolTrades.com: Tracking Congressional Stock Moves
Website: CapitolTrades.com
Rating: ★★★★☆ (4.3/5)
Overview
CapitolTrades.com is a unique financial platform that offers insights into the stock trades made by members of the U.S. Congress. Given that members of Congress often have access to privileged information, CapitolTrades.com aims to make their insider trades transparent.
Key Features
Tracking of Congressional Trades:
CapitolTrades.com provides data on stock trades made by U.S. Senators and Representatives, detailing which stocks are being bought or sold, the trade size, and the timing. This feature allows investors to monitor the actions of lawmakers who may have access to market-moving information. You can monitor Nancy Pelosi’s trades on here easily and get ideas for new stocks to buy and sell.
Historical Data Analysis:
The platform has 3 years of historical data to analyze. Some of the analysis is automated, like the total value of trades and the total size of positions. You can also search by committee to see if certain members of a committee, say Homeland Security, are buying defense stocks. Naughty naughty.
Search and Filter Options:
The site provides solid search and filter tools, and a nice browsing interface shown below. It’s best served with popcorn and a glass of wine in my opinion, but I’m a bit of a politics junkie and like to see what the politicians I hate buy and whether that makes sense given their personalities. Apparently Ted Cruz is a Bitcoin man, WTF!
Pros
Unique Data Source: CapitolTrades.com offers a rare set of data that while publicly available, is locked in PDF filings. They make it really easy to be a professional snoop.
Historical Analysis: The access to historical trade data helps investors analyze patterns and backtest strategies based on congressional activity.
User-Friendly Interface: The platform is easy to navigate.
It’s free, so there’s no cost to getting ideas. Thanks for the PANW trade Nance!
Cons
Data Lag: There can sometimes be a delay between when a trade is made by a lawmaker and when it is reported on CapitolTrades.com, which could reduce the timeliness and potential impact of the information.
Limited Use: IMHO most of the folks on the platform are not worth following and making trades too small to care about. They are easily filtered out but it would be better to just limit to the congresspeople worth snooping on.
No Alerts: I was unable to find a way to just get alerted when there’s a new trade. I think it’s part of their plan to sell to other businesses who offer this.
Who is CapitolTrades.com Best For?
Political Enthusiasts and Analysts: Those who are closely following U.S. politics and want to understand the financial moves of lawmakers will find this tool especially useful.
Active Traders: Investors who are looking for unique data points to inform their trading decisions might benefit it. I find it a useful “check and balance” for my trades to ensure I’m not buying something all of Congress is dumping.
More Frequently Asked Questions About Motley Fool
How to Get Motley Fool for Free?
The Motley Fool's premium services, like Stock Advisor and Rule Breakers, require a subscription. Occasionally, they offer promotional discounts or free trials for their premium services.
Is it Hard to Cancel a Motley Fool Subscription?
No, canceling a Motley Fool subscription is relatively straightforward. You can cancel your subscription by contacting their customer service team via email or phone. The process is easy, thankfully.
Does Motley Fool Manage Your Portfolio?
No, The Motley Fool does not manage portfolios directly.
Is Motley Fool Worth Paying For?
If you are looking for a service that can provide clear recommendations and save you time on research, then The Motley Fool could be a valuable investment. However, if you prefer to do your own in-depth analysis or have a different investment style, other resources might be more suitable.
What is The Motley Fool Method?
The Motley Fool method is a strategy focused on long-term growth investing. This approach emphasizes buying and holding high-quality stocks with strong fundamentals, innovative business models, and significant growth potential.
What is the 4% Rule Motley Fool?
The 4% rule is a retirement planning guideline suggesting that retirees can withdraw 4% of their retirement savings annually, adjusted for inflation, without depleting their funds for at least 30 years. This rule is commonly referenced by The Motley Fool and other financial advisors to help investors plan sustainable retirement withdrawals.
What is the Rule of 72 Motley Fool?
The Rule of 72 is a simple formula used to estimate how long it will take for an investment to double in value at a given annual rate of return. You divide 72 by the annual return rate to find the approximate time needed for doubling.
What is the Average Return on Motley Fool?
The Motley Fool claims that their Stock Advisor picks have significantly outperformed the S&P 500 since its inception. The average return is reported to be much higher than the market average, but it's unclear what the methodology is.