Introducing Stock Advisor Best Buy Performance Insights 5.00/5 (100.00%) 1 vote

I’m pleased to introduce my newest premium product: Stock Advisor Best Buys Performance Insights.

Each month Stock Advisor recommends 10 stocks, pulled from all of their active recommendations, called their Best Buys. There are 5 from Tom’s side, and 5 from David’s side. These recommendations are in addition to their 2 monthly recommendations and are meant to represent their best picks at that point in time. The idea is that they represent timely, opportunistic recommendations which the advisors believe have upside from where they are currently priced.

And although Stock Advisor never recommends short term trading, it would make sense that these Best Buys would have upside over the short term. Many members have wondered if they could take advantage of these recommendations to make short term gains. Well now you can see for yourself.

Using all Best Buy recommendations from May 2012 through May 2015, my Best Buy Performance Insights give you the 1 month, 3 month, 6 month, 9 month, and 12 month performance of their Best Buys vs. the S&P. You’ll see the average, median, best and worst performance for each point in time, broken out by Tom and David’s recommendations.

Understand before you invest

Successful investing is not about guaranteed results – no equity investment can promise you that. Successful investing is about increasing your probability of positive results. My Performance Insights are about giving you the information you need to make better, informed decisions. If you are a Motley Fool member looking to make the most of your membership, or just a prospective Stock Advisor member wanting to understand if their results are worth the price, you’ll want to check them out.

Go to my Best Buys Performance Insights page now to get your copy and even see a sample of them before you buy!

in Performance, Stock Advisor

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Motley Fool Performance – May 2015

Motley Fool Performance – May 2015 3.00/5 (60.00%) 4 votes

Here are the latest performance stats for all the Motley Fool services, since their inception. The returns are calculated using the official methodology of each of the services, per the Motley Fool site.

If you like these posts, share with a friend, and rate the content by clicking on the stars above. You can sign up via email (in the right sidebar) to get instant notifications when my monthly performance stats are updated. You can follow me on Twitter too (@motleyfoolrview).

And of course, leave a comment below and let me know what you think.

Check the Performance category posts on the right to see all my performance posts.

Another Good Month

Here we are, another month into 2015 and the market continues to climb up. May was basically a flat month for both the S&P and the Russell 2000, yet most of the Motley Fool services have had a good month. Income Investor had another tough month, but largely due to its exposure to energy and oil stocks. I don’t see that as a long term trend, and personally think there are some good investments to be found in the Oil stocks which have been battered the last couple months.

And then there is Special Ops. We have officially hit triple digit under performance vs. the S&P in that service. Quite a milestone, but not one to be proud of for sure. Are any of my readers a member of that service? If so, I’d love to hear your view on the service – leave a comment below.

And finally, on the topic of performance, I updated my analysis comparing Supernova vs. Stock Advisor and Rule Breakers. I recommend taking a look as the results are much different than I found last year.

Understand Before You Invest

For those of you who are looking for a deeper dive into the performance of the Recommendation Services, I have a premium product called Performance Insights.  I’ve calculated Success Rates, CAGR’s and Annualized returns for all of the stock recommendations services. If you ever wanted to look into the historical trends of their performance, or performance by industry, or performance by number of years held, you should check these out.  My Motley Fool Performance Insights page has further details and a sample of what you get.

in Performance

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Supernova Performance vs. Stock Advisor and Rule Breakers – Updated 5.00/5 (100.00%) 5 votes

Background

Supernova was created in March of 2012. The idea behind the service was to create various real money portfolios based solely on David Gardner’s picks from Rule Breakers and Stock Advisor. In theory you get the benefit of a team of advisors who are able to pick the best of all of David Gardner’s prior picks, with more flexibility to buy and sell, and perhaps most importantly, the ability to provide allocation guidance in building these portfolios (for more information on Supernova, read my detailed review).

The price for those additional features is significant. As of December 2014 a one-year subscription to Supernova was $1999. Signing up for a 5 year subscription reduces the per year rate to $800, but still at a total cost of $4000. Compared to the annual subscription costs for Stock Advisor and Rule Breakers ($199 and $299, respectively), this is a substantial difference.

Is Motley Fool Supernova Worth It?

Given this significant expense, the question I often get is whether Supernova is “worth it”. It’s a question I first addressed last year. At that time, 22 months into the service, my general conclusion was that Supernova was only really worth the extra cost for investors with large enough portfolios to absorb the additional cost. But even then, there wasn’t enough of a performance difference to make them a compelling option.

This time around, with Supernova in existence for over 3 years, my conclusions are very different.

The Analysis

I wanted to tackle the question of “Is Supernova worth it?” in a practical, real world way. So I looked at every single monthly recommendation that Stock Advisor and Rule Breakers have made since Supernova’s inception in March 2012, and looked at how much money would an investor have if they invested $1000 evenly in each of those recommendations.

I did the same with every single Supernova Odyssey and Phoenix pick as well, so that I could do an apples to apples comparison using my mechanical investing methodology, for the sake of this analysis.

I also calculated how much the same investment in an S&P index ETF (specifically State Street’s SPDR SPY) would be worth. I chose the SPY because it is an actual vehicle that you can invest in, and so can be considered a true alternative to active stock picking.

I also accounted for any stocks that were sold during this time, locking in their gain or loss at the date the stock was sold. For all transactions, I used the adjusted closing price on the day the recommendation was issued.

Finally, I wanted to compare this mechanical approach with the actual returns that Supernova has achieved, per the official website. These official results account for their actual allocation decisions, and actual buy and sell prices.

The Results

Following my mechanical investing approach, the best performers vs. the SPY were Tom Gardner’s side of Stock Advisor (+29.5%) and Supernova Phoenix (+24.9%). Rule Breakers and Supernova Odyssey would also have outperformed the SPY, although by a smaller margin. It is only the David Gardner side of Stock Advisor that would have underperformed. David Gardner’s lagging performance is consistent with what I found last year, as is Tom Gardner’s leading performance. Note that following a combination of Tom and David’s picks would have outperformed the SPY by +15.2%.

However what really caught my eye was the actual returns of the Supernova portfolios versus my mechanical approach. While Odyssey’s picks only outperformed the SPY by +6.9% using the mechanical approach, their actual results were +27.0%. The huge difference is attributed to the fact that they allocated larger amounts of capital to some of the best performing stocks and allocated less capital to some of the lower performing stocks. In other words, the allocation decisions made by their advisors led to an additional +20 percentage points in gains as compared to just buying the same amount of each recommendation. This is a clear indication that they have added value to the investing process.

When you do the same comparison for Supernova Phoenix, you only see +3.9% difference in their actual performance vs. the mechanical approach (28.8% vs. 24.9%). So the allocation decisions that their advisors made apparently added some additional value, however the difference is much slimmer. And it would be difficult to say how much of this difference is “statistically significant”.  That being said, the stocks they recommended had very strong performance, even if the allocation decisions did not play as much a part.

Factoring in Costs

So both Supernova portfolios have had great performance. However, the results don’t take into account the price of membership. The common rule of thumb is to keep your transaction costs to around 1-2% of your investments. That typically applies to the cost of commissions when you buy or sell a stock, but membership costs can be treated the same way.

So in my mechanical investing examples, what if you back out the cost of membership? At $6000 for Supernova ($1999/year for 3 years, approximately equal to the 39 months of trades I analyzed), this represents 5.4% of the 111K invested in Odyssey, and 8.3% of the amount invested in Phoenix, significantly higher than the recommended 1-2%.

Similarly, if you back out 3 years of costs for Stock Advisor ($600) this represents 0.7% of the invested amount; and for Rule Breakers ($900), it would be 1.1%. This is more in line with the cost guideline.

As you can see, the costs have a big impact on the gains of Supernova, almost wiping out all the gains of Odyssey (in my mechanical investing approach) and dropping Phoenix’s gains to about 17%. That is still better than Rule Breaker’s results but only marginally better than Stock Advisor.

Keep in mind this assumes you are investing roughly $2000/month which is not practical for many people. If instead you only invested $1000/month ($500 per recommendation), the membership cost eats even more into your return, and Supernova’s performance versus the other services suffers the most.

Conclusions

When I did this analysis last year, the results left me with the general conclusion that Supernova was not really worth the extra cost unless you had a very large portfolio. Both Stock Advisor and Rule Breakers results were in line or slightly better than the results either of the Supernova portfolios produced, so membership cost was a major factor.

Since that time, we have crossed the 3 year mark for Supernova, and they have made a number of additional buy decisions, a number of sell decisions, and allocation decisions within both the Phoenix and Odyssey portfolios. Phoenix’s overall performance has slightly improved in the last 14 months, while Odyssey’s performance has slightly decreased, but both have remained very strong over the time frame. And in that same time, Stock Advisor and Rule Breaker’s performance has decreased noticeably, and they no longer compare favorably to Supernova. The additional cost for Supernova is still a factor, but much less so for portfolios above a certain size.

But the key finding here is that Odyssey’s advisor’s decisions led to much better performance than even a mechanical approach using the same stocks, and even if you factor in high annual costs. So as to whether Supernova Odyssey is “worth it”, I would say that it definitely is for investors with at least a 80K – 100K portfolio. Anything smaller than that and the cost would start to eat up too much of your profits, and you would probably be better served with Stock Advisor or Rule Breakers.

You also could have stuck to Tom’s side of the portfolio and done extremely well, better than either of the Supernova Portfolios in fact. And with very low annual costs, the true performance is even better in that light. In the scope of this analysis, this would make Tom Gardner’s Stock Advisor selections the clear winner.

The important thing to keep in mind is that to achieve these results with any of the services, you would have had to invest in every single recommendation at similar prices and in the exact same amounts. You also would have had to follow all their sell recommendations. And the important thing is you would have had to do this consistently for over 3 years. For all the services, a big portion of their outperformance comes from a minority of their picks. If you missed even one of them, your results likely would have been lower.

Finally, of course, this is all based on past performance, and future performance may be very different.

 

If you enjoy this type of in depth analysis, you may find my Performance Insights to be of value as well.

in Performance, Rule Breakers, Stock Advisor, Supernova

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Motley Fool One SMA’s – Now With Less Motley 5.00/5 (100.00%) 2 votes

In September 2014, Motley Fool One’s SMA offerings underwent a significant change. It used to be that the SMA’s exactly matched one of their portfolios (Supernova, MDP, Pro, or Everlasting), and they touted the ability of members to follow their favorite service exactly via these accounts. It was the ultimate in auto-pilot investing for those that wanted to invest with the Motley Fool but didn’t want to be bothered with executing all the trades, and worrying about matching allocations. And if you were a believer that a certain Motley Fool portfolio would outperform, you could rest assured that by opening up one of these SMA’s your performance would equal the performance of the portfolio. It was a great solution.

Now however they have changed that approach and the SMA’s no longer exactly match the service they are named after, but instead are “inspired” by those services. This means that they may not actually buy all the same stocks the portfolio buys, or may in fact own stocks that the portfolio never bought. They will likely overlap quite a lot but the important distinction here is that you are not actually able to do the type of auto-pilot investing they originally touted. It will be close, but not exactly the same.

Most importantly, you are basically relying on advisors other than the portfolio managers to pick the stocks they will invest and at one allocation. So if you open a Pro SMA because you are a fan of Jeff Fischer (the lead advisor for Motley Fool Pro), you are not necessarily getting Jeff’s exact recommendations; instead you are relying on the SMA managers, Brian Hinmon and Nate Weisshaar, to make the investments for you, inspired by what Jeff is doing. What’s the big deal, you might ask, surely it will be very close? I would argue that I can run my own portfolio inspired by Jeff Fischer without paying the extra money to join One.

The other big change they made with their SMA offerings is that they now have 3 new portfolio strategy SMA’s: International, US Small/Midcap, and Fixed Income. As the names suggest, they provide exposure to those sectors. It’s an expansion of their offerings and is another step for Motley Fool moving to become a full fledged Wealth Management shop. It’s a logical transition for them, and it will be interesting to see how it evolves.

in Motley Fool One

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Motley Fool One Now Comes in 2 Flavors: Classic and… Regular? 5.00/5 (100.00%) 4 votes

Motley Fool is now offering their uber-premium investing service Motley Fool One, in two different varieties: the standard Motley Fool One service they’ve been building up over the last couple years that includes their Wealth Management services, and a new, stripped down version they are calling Motley Fool One Classic, which includes everything but the Wealth Management features at a lower price point.

Their most recent membership drive in March of 2015 unveiled these two versions for the first time. It’s a welcome move, one I’ve suggested they make in the past. There are a lot of investors out there, like me, who want access to all the Motley Fool content, recommendations, and community, and could care less about having the Motley Fool provide wealth management services. As I’ve written in my previous coverage, I’ve found those wealth management offerings to be underwhelming at best, and downright buggy in many cases.

And from the Motley Fool’s point of view, this becomes a very high margin service that they can offer without any additional investment on their end. I also suspect they are doing this because their wealth management services are getting overwhelmed by users, and they don’t yet have the infrastructure or human capital to keep up with them. Splitting out those services into the highest price point will thin the herd so to speak.

When my current membership expires, I can see myself downgrading to this Classic service, as I’ve basically been paying for services I don’t even use.

For the most recent prices and details for Motley Fool One, including the new Classic service, see my Motley Fool One page.

in Motley Fool One

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Motley Fool Performance – April 2015

Motley Fool Performance – April 2015 4.22/5 (84.44%) 9 votes

Here are the latest performance stats for all the Motley Fool services, since their inception. The returns are calculated using the official methodology of each of the services, per the Motley Fool site.

If you like these posts, share with a friend, and rate the content by clicking on the stars above. You can sign up via email (in the right sidebar) to get instant notifications when my monthly performance stats are updated. You can follow me on Twitter too (@motleyfoolrview).

And of course, leave a comment below and let me know what you think.

Check the Performance category posts on the right to see all my performance posts.

Don’t Fear the Downturn

Month after month, we keep hearing about how overvalued the markets are, how earnings are disappointing, and the predictions of a market down turn keep getting louder and louder. And we know one will come at some point, but when is that? If you know, please send me an email. The S&P 500 was up +1.4% in April, and up +1.3% YTD. The Russell 2000 was down -2.6% for the month, but also up +1.3% for the year. It’s another reminder about the need to invest consistently, and to drown out all the noise in the financial media.

And I’ve also been reading a lot lately about how passive investing is the only way to succeed and how stock-picking is dead. Much of this is due to the recent popularity of so-called “robo-advisors” such as Wealthfront and Betterment. But if you want proof that stock-picking is not dead, look at the results of the Motley Fool. The majority of the services have increased their out-performance of the S&P 500 in 2015. Take for example, Supernova Phoenix: as of the end of December 2014, they were out-performing by 5%; as of April, they’re now at 26%. Not too shabby. In fact, of all the Portfolio services with a positive out-performance at the end of 2014, all have improved their performance this year.

One interesting data point is that the 3 portfolio services that were under-performing the S&P 500 (MDP, MDP DV, and Special Ops) are now further under-performing as of April. In fact that trend holds up over the last 12 months as well. All three services have gone further into the red in that timeframe, with Special Ops on the verge of under-performing by triple-digits if the trend keeps up. In fact, Special Ops (and MDP DV) have had worsening absolute returns compared to twelve months ago. Those of you who read these updates regularly know my feelings on these two services, so rather than repeat myself, if anyone who reads this wants to offer a counter opinion, please leave a comment.

Understand Before You Invest

For those of you who are looking for a deeper dive into the performance of the Recommendation Services, I have recently launched a premium product called Performance Insights.  I’ve calculated Success Rates, CAGR’s and Annualized returns for all of the stock recommendations services. If you ever wanted to look into the historical trends of their performance, or performance by industry, or performance by number of years held, you should check these out.  My Motley Fool Performance Insights page has further details and a sample of what you get.

MF Performance Stats - 2015-04Apr

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in Performance

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Goldman likes Banking Disruption

Goldman likes Banking Disruption 5.00/5 (100.00%) 6 votes

There was an interesting article on BuzzFeed news the other day about Goldman Sachs getting into small business and consumer lending. This quote stood out to me (emphasis mine):

“The firm has identified digitally led banking services to consumers and small businesses as an area of opportunity for GS Bank,” the memo from CEO Lloyd Blankfein and the firm’s president, Gary Cohn, said. “The traditional means by which financial services are delivered to consumers and small businesses is being fundamentally re-shaped by advances in technology, maturity of digital channels, use of data and analytics, and a focus on customer experience.”

Say what you want about Goldman, but they know banking, and they know how to make money. Goldman entering into this business,which is a far cry culturally from their predominant focus on institutional clients, reinforces the legitimacy of the peer to peer lending business models of firms like Lending Club. It also speaks to the strength of online-only banks like Bank of Internet (BofI) and Ally.

Although Lending Club’s share price has struggled since its recent IPO, Bank of Internet is coming off another strong quarter. I have small positions in both, and will be looking to add to them in the next few weeks. The disruption of the traditional banking industry is inevitable in my opinion, but will play out over a long period of time. The rise of the various so-called robo-advisors is another sign of this change. But these types of long term trends make for great investing opportunities if you have the patience to see them through.

in Strategy

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Motley Fool Performance – March 2015

Motley Fool Performance – March 2015 4.64/5 (92.73%) 11 votes

Here are the latest performance stats for all the Motley Fool services, since their inception. The returns are calculated using the official methodology of each of the services, per the Motley Fool site.

If you like these posts, share with a friend, and rate the content by clicking on the stars above. You can sign up via email (in the right sidebar) to get instant notifications when my monthly performance stats are updated. You can follow me on Twitter too (@motleyfoolrview).

And of course, leave a comment below and let me know what you think.

Check the Performance category posts on the right to see all my performance posts.

In like a Lion, Out Like a Lamb

March was a tale of two markets, with the broader S&P 500 down -1.7% while the small cap index Russell 2000 +1.5%. This interesting shifting in sentiments is consistent with the actions of hedge funds going into Q1 earnings. You see some of that contradictory activity in the Motley Fool services, with the small cap focused Hidden Gems up 14% (vs. the S&P) month over month, with a mixed bag across the rest of the services.

Supernova Phoenix continues a nice upwards trend, but it will be interesting to see if they can decrease the volatility if it’s going to be successful as a retirement oriented service. Inside Value also is seeing a nice move upward with minimal downside in the last 12 months. What more can you ask for from a stock-picking service?

Understand Before You Invest

For those of you who are looking for a deeper dive into the performance of the Recommendation Services, I have recently launched a premium product called Performance Insights.  I’ve calculated Success Rates, CAGR’s and Annualized returns for all of the stock recommendations services. If you ever wanted to look into the historical trends of their performance, or performance by industry, or performance by number of years held, you should check these out.  My Motley Fool Performance Insights page has further details and a sample of what you get.

Click on Image to Enlarge

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in Performance

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Motley Fool Performance – February 2015

Motley Fool Performance – February 2015 4.75/5 (95.00%) 8 votes

Here are the latest performance stats for all the Motley Fool services, since their inception. The returns are calculated using the official methodology of each of the services, per the Motley Fool site.

If you like these posts, share with a friend, and rate the content by clicking on the stars above. You can sign up via email (in the right sidebar) to get instant notifications when my monthly performance stats are updated. You can follow me on Twitter too (@motleyfoolrview).

And of course, leave a comment below and let me know what you think.

Check the Performance category posts on the right to see all my performance posts.

Rising Tides Lift All Fools

February was a good month for the markets with the S&P 500 up 5.5% and the Russell 2000 up 5.8%. Not surprisingly, most of the Motley Fool services are up as well. Supernova Phoenix, the Everlasting Portfolio, and Stock Advisor are the biggest monthly gainers, with Stock Advisor closing in on the 200% outperformance mark.

On the downside, the usual suspects of Special Ops and MDP Deep Value continue their slide vs. the S&P, and even MDP is at its worst relative performance in the last year, even as it tries to relaunch itself with new advisors and a new strategy.

Income Investor, the dividend focused service, is also down significantly in the last few months, a surprising trend given its usual steady performance. But they have a lot of exposure to the energy sector and in particular the oil industry, and with the recent plunge in oil prices, stock prices for companies in that sector have been hammered. It goes to show what can happen even when taking a generally conservative investing approach, and the importance of diversifying your exposure across different industries.

Understand Before You Invest

For those of you who are looking for a deeper dive into the performance of the Recommendation Services, I have recently launched a premium product called Performance Insights.  I’ve calculated Success Rates, CAGR’s and Annualized returns for all of the stock recommendations services. If you ever wanted to look into the historical trends of their performance, or performance by industry, or performance by number of years held, you should check these out.  My Motley Fool Performance Insights page has further details and a sample of what you get.

Click the Picture to Enlarge

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in Performance

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Motley Fool Performance – January 2015

Motley Fool Performance – January 2015 4.71/5 (94.29%) 7 votes

Here are the latest performance stats for all the Motley Fool services, since their inception. The returns are calculated using the official methodology of each of the services, per the Motley Fool site.

If you like these posts, share with a friend, and rate the content by clicking on the stars above. You can sign up via email (in the right sidebar) to get instant notifications when my monthly performance stats are updated. You can follow me on Twitter too (@motleyfoolrview).

And of course, leave a comment below and let me know what you think.

Check the Performance category posts on the right to see all my performance posts.

A New Year brings with it New Hope, and Some Changes

It’s the first month of 2015, and with it, the Motley Fool services look a little different. They made some significant changes in two of their worst performing services, and expanded Supernova late last year with the Phoenix 2 portfolio. I’m most excited about their changes at Million Dollar Portfolio, and will be keeping a closer eye on that service as it tries to turn the ship around.

I still think Special Ops is too much of a niche strategy to be a stand alone service, and my suggestion would be to combine it with MDP Deep Value, and turn it into an educational service that focuses on teaching the nitty-gritty of valuation and investing, using a case study model that would take subscribers from initial screen to final investment decision. I envision live webinars and even project assignments for the subscribers, kind of like a masters-level investing class. I think there is a market out there among their existing subscriber base that would be interested in something like that.

But I digress…

Performance-wise the markets in January were off to a shaky start with the S&P down -3.1% and the Russell 2000 down -3.3%. Almost all the Motley Fool services did better than that however, and are off to a positive start. It’s a big year ahead for the services. Besides the changes mentioned above, Supernova Odyssey and Phoenix will hit their 3 year anniversary in March, and 3 years is a standard yard stick for measuring the performance of a long-term investing focused service. Everlasting Portfolio hits that milestone in May. All 3 have done fairly well so far and I have no reason to think the wheels will come off the track in the next few months, but the services are maturing and we will see how they progress as the number of positions they have grows, and growth becomes harder to come by.

Understand Before You Invest

For those of you who are looking for a deeper dive into the performance of the Recommendation Services, I have recently launched a premium product called Performance Insights.  I’ve calculated Success Rates, CAGR’s and Annualized returns for all of the stock recommendations services. If you ever wanted to look into the historical trends of their performance, or performance by industry, or performance by number of years held, you should check these out.  My Motley Fool Performance Insights page has further details and a sample of what you get.

MF Performance Stats - 2015-01Jan

in Performance

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