Stock Advisor

Stock Advisor 3.79/5 (75.76%) 33 votes

Motley Fool Stock Advisor Review

Stock Advisor is Motley Fool’s flagship investment newsletter service, started in 2002. The subscription consists of a monthly newsletter, weekly email updates and access to the members-only Stock Advisor website and forums.

Stock Advisor is a long-term, buy and hold long-only service. Members receive 2 stock picks each month, typically on the 3rd Friday of each month at noon.  One pick is chosen by Team David and the other by Team Tom.  You also get a list of 10 Best Buy stocks each month (5 from Team David and 5 from Team Tom). There are regular weekly email updates, and the Stock Advisor website will have miscellaneous updates on a regular basis. They also publish a list of 10 “Core” stocks (5 from both Tom and David), that they update on an annual basis, and consider their best overall investment ideas.

Stock Advisor analysts will also issue “Hold” or “Sell” recommendations on stocks when they deem appropriate. But given the long-term, buy and hold philosophy of the service, Hold and Sell recommendations are unusual.

Stock Advisor Performance

You can view up to date overall Stock Advisor performance, along with all other Motley Fool services, here. Team David’s performance is 140% vs. 32% for the S&P.  Tom’s performance was 54% in the same time frame. These are really great results, and I do not know if any other investment service can boast of similar results over the same time frame.

A number of the picks are truly high-flying stocks that have outperformed the market by over 1000%, but there are also a number that have severely underperformed the market as well. As of this writing, 58% of their active picks are outperforming the market.

Performance vs. the S&P

StockAdvisor 2013-03-08

What Stock Advisor is Not

Motley Fool Stock Advisor is not an active trading service. David and Tom Gardner view their investing horizon as at least 3-5 years, and they hold stocks for the long-term. If a stock issues a bad earnings report and the stock drops 7% in the morning, you will not get an immediate notification with an update and definitely no alert to sell. You can however go to the message board for that stock, and are likely to find an update from one of the knowledgeable fellow members or one of the various other analysts assigned to keep an eye on the boards. This lack of immediate guidance has at times been a source of frustration for some members who panic when they see a stock in their portfolio taking a sizable hit. However it’s important to understand that this is not what the Stock Advisor service is about. It’s about long-term investing, and you should be able to stomach some rocky days.

However, if a stock moves up or down by 10% or more, the advisors will post an official “10% Promise” response in which they will give their analysis on the reason for the movement in the stock price.

Even in cases where the stock drops on potentially alarming news like a CEO resigning or even a rumored accounting scandal, for example, they rarely will issue a Sell or Hold recommendation that day. Their tendency is to digest and analyze the news and issue a more detailed response a day or two later.

Motley Fool Stock Advisor is not a valuation based service. You get the Monthly Recommendations and you get the monthly Best Buys, but they do not tell you when to buy the stock, and more importantly, nor do they tell you at what price to buy them.  They do not issue “Buy Below” guidance nor do they give any valuations of what they think their picks are worth. It is implied that when a stock is selected as a Monthly Recommendation or a Best Buy that the price represents a good entry point, but the service focuses on the overall quality of the company as an investment, and not on specific price levels or momentum indicators. There have been many instances where the a stock drops significantly shortly after being recommended, which again can cause some frustration, but unless there is a substantial change to the investment thesis, Motley Fool’s general view is that they are investing for the long-term and if the stock pick plays out as expected, a small dip in price will not matter in the long-term.

Motley Fool Stock Advisor is not a portfolio service either.  You do not receive any guidance on how many shares of a recommendation to buy. They also do not view their picks as being part of a holistic portfolio so if they recommend 4 pharmaceutical firms in a row, that doesn’t necessarily mean they are recommending their members go overweight on an allocation in that industry. However, they do provide a risk rating for most of their stocks, which are of debatable value, but it is up to each individual to assess for themselves how they want to build their portfolio.

My Take

In my opinion Motley Fool Stock Advisor is an excellent investment newsletter for any investor with a long-term investment horizon. And by long-term I mean 3-5 years.

At its core, Motley Fool Stock Advisor is an idea generation service.  Their monthly stock recommendations are chosen because they are deemed great companies with superior long-term growth prospects. If you are looking to make money overnight, this is not the service for you. If you are looking for a service that will tell you exactly which stock to buy, at exactly what price, and exactly when to sell it, this service is not for you either. If you are not either financially or mentally prepared to hold a stock that may drop up to 20% in the short-term – again, Stock Advisor is not for you.

However, if you are looking for generally high-quality investment ideas and an outstanding community, you will find value here.

Even though the performance of the service itself is enviable, probably the most valuable aspect of the service is the forums. There are some very active and knowledgeable members of the community who provide professional-caliber analysis and commentary not just on individual companies but investing in general.  Investors of any experience level will learn something here. In particular, if you are a novice investor, you will find many fellow members, in addition to the Motley Fool analysts, that will be happy to provide helpful and in-depth guidance and answers to your questions.

Consistent with the other Motley Fool premium subscription boards, the Stock Advisor forums are a very friendly and supportive environment. There are rarely any “pump and dump”-type posters like you see on other public boards, and rarely do you encounter any overly aggressive or obnoxious posts either. Any perpetrators of the former or latter offenses are usually quickly called out.

David and Tom are excellent analysts, particularly David Gardner as evidenced by his results.  And although Tom is rarely present on the boards, you will see David responding to some posts, despite what must be a very busy schedule. The other Motley Fool Stock Advisor analysts are also generally very present on the boards as well.

Motley Fool Stock Advisor is currently available at the price of $199/year, and you can find their sign up page here. You can also sign up for a 30-day trial, during which time you will have access to the entire site, including the full archive of prior issues and updates. My suggestion for those interested in trying out Stock Advisor, is to sign up for the trial when you know you’ll have some free time to dive into all the different areas of the site. And make sure to visit the boards and post a question or two to test out this vital part of the service.

Leave your comments or questions below, and stay-tuned for more Motley Fool Reviews to come!

And if you want to learn more about the Motley Fool investment strategy, take a look at some of their books here.

Leave a Comment

{ 20 comments }

  • J D March 8, 2013, 8:35 am

    Penny stock obje has nothing but lost money since I received two reccomendations to purchase. It is the habit of owners of these low volume trading stocks to stir up interest to buy them and then sell their when they actually get more volume than normal. It then proceeds to go down in value since I have purchase it. Not one up day. Any hope this will go back to above a dollar or will it just keep going down to zero?

    Reply
    • admin March 11, 2013, 12:43 am

      Welcome to Motley Fool Review! I know nothing about this stock, and it’s definitely not a Motley Fool stock, but penny stocks rarely perform well for very long. I did find some less than flattering coverage on the stock here. It does not seem promising. My personal advice would be to cut your losses now before you lose more.

      Reply
  • soni March 19, 2013, 5:40 pm

    Would like to know your opinion on the exclusive Member One Motley Fool is offering at several thousand a year?
    This started I guess last May and is now “open” for new members.

    Reply
    • Kevin March 19, 2013, 6:55 pm

      Welcome! I’ve written extensively about the service but take a look at this post where I give all the details about Motley Fool One. See my full coverage by clicking on the Motley Fool One category on the right hand side of my site. I think the service offers excellent value for the cost, but it’s still a hefty price tag. If you have a small portfolio, it’s probably not worth it from a cost perspective. If you have a larger portfolio and really want exposure to a lot of investing education and ideas, Motley Fool One would be a very good choice.

      Reply
  • j l May 19, 2013, 12:45 pm

    what is wrong with sdt? Does it expire in 4 years?

    Reply
  • Girish June 15, 2013, 7:11 am

    Useful

    Reply
  • Cecelia Davies June 25, 2013, 1:03 pm

    Where can I get information on the Motley Fool Independence Fund?

    Reply
    • Kevin June 25, 2013, 10:38 pm

      Here is a link to the official page for that fund. Hope that helps.

      Reply
  • timothy prendergast July 9, 2013, 8:31 pm

    Excellent information written very well. Thanks.

    Reply
  • James Tinsman August 21, 2013, 3:09 pm

    I signed up last week for some kind of stock advisor. I read the first notice, and I wish to cancel the subscription. I believe I had some 30 to 60 days to ancel the foolish subscription. My email address is above should you wish to correspond with me. I will notify card carrier of my decision as well. Thank you

    Reply
  • Judy Main September 4, 2013, 4:00 pm

    I signed up for stock advisors and cannot get in anything but My Fool.
    Please help me with this problem and what am I doing wrong.

    Reply
    • Kevin September 4, 2013, 8:15 pm

      Judy- thanks for the note. Up at the top of your motley fool site (in the black bar), you should see a menu that says “Premium Advice”. Click on that, and you should see Stock Advisor listed there. If that doesn’t work, I’d suggest contacting the Motley Fool’s customer service.

      Reply
  • Collin November 20, 2013, 2:16 am

    Thanks pertaining to furnishing these types of good details.

    Reply
  • Graeme Wall February 14, 2014, 5:48 pm

    I went to check out Motley’s so-called high divide companies…what a joke…not one was over 6%…I can do better than that with high yield bank mutual funds without commissions and after MER. The lowest in my portfolio is Just Energy at 10%…so why stick with the mickey mouse club of 3-5% income…even if a company stops or lowers their divide you do a simple thing…sell it and buy another.

    Reply
    • Kevin February 14, 2014, 8:52 pm

      Graeme – I assume you are referring to Motley Fool Income Investor. They actually do have a handful of recommendations with a dividend yield over 6% but you are right most are lower. But they also look for companies that will earn price appreciation so combined with dividends their overall returns are very good. The company you mention, Just Energy is trading at $7 down from a high of over $14 in 2012 so despite the high yield an investor may have lost a lot of money. But if you have a system that works, more power to you. For those interested, you can read my review on Income Investor on this site as well.

      Reply
  • Gurkamal March 17, 2014, 6:32 pm

    Hi I am interested in investing in managed funds run by the Motley Fool. I live in Australia and I don’t know how to invest in the fund.

    Reply
  • David Metcalf May 19, 2014, 2:05 pm

    Please comment on Black Rock and Fidelity recent partnership on investments?

    Reply
  • tThomas H. Weyand May 23, 2014, 5:05 pm

    hello

    Reply
  • jeffery June 6, 2014, 11:10 am

    How much would it cost per share to invest in the 3D printing revolution with one of the three companies that I saw on one of your post

    Reply
  • Anchit July 15, 2014, 4:59 pm

    Hi,

    In the performance charts that you post monthly, Stock Advisor returns are total average returns (vs SPY and absolute). When is the starting point of these calculations. I mean it says 236% returns till June by SA David but calculated from when?

    Also you mentioned Team David’s performance is 140% vs. 32% for the S&P. Tom’s performance was 54% in the same time frame. What is the time frame? Are we talking of 2013 or YTD, or from inception of the service?
    Also is there any data on the annualized returns of the Stock Advisor service ?

    Regards,
    Anchit

    Reply