Great guide if you beware of the duds and ignore the hype
Motley Fool is a Stock Picking and model portfolio service with multiple "managers" in charge of multiple "Services". At latest count the services are, in alphabetical order:
MDP Deep Value
Million Dollar Portfolio
Motley Fool Options
Motley Fool Pro
Rule Your Retirement
Since I joined in 2009, two such services went away -- Global Gains and Alpha -- and new ones came in -- Special Ops, MDP Deep Value.
Each such service has its own "philosophy" though most share a focus on value stocks and generally a buy and hold strategy. You may have seen their basic, entry-level service --- Stock Advisor -- advertised or have been spammed by it. Try to ignore the insufferable hyperbole contained in their emails, the substance is considerably better than the style would imply.
After getting reasonable results with Stock Advisor (compared to S&P 500) I was upsold over the years to more and more of their services, until eventually ending up with the all-encompassing "Fool One" which I recently renewed for a full 5 years at an interesting discount. I am mentioning this so that the reader may put some of my critical remarks that follow into perspective.
What I like about TMF is its consistency of record keeping -- most of its services feature an actual portfolio and keep track of its overall performance, even when it does not make them look good at all. I've done some detailed tracking in Excel and found that, by and large, their numbers are believable and not biased. This is a welcome difference to their advertising copy (the one you get *before* you sign up) which promises ridiculous returns. As I said, with TMF you have to learn to listen to the substance and ignore the chaff.
Another aspect I like is that several of the services not only tell you what to buy, but also quantitatively in what proportion, and -- almost more importantly -- they tell you when to sell, in a timely fashion. They will also reach out to you when a stock they recommended tanks or pops and try to explain why and what to do next.
All this being said, there are some really bad apples at TMF which I learned the hard way by losing good money. Arguably the worst was the since closed-down Alpha, a shorting service that was spectacularly wrong in the majority of its predictions. Only recently was I able to close the last of its ill-fated positions at an illness-inducing loss. A similarly ill-fated service is the still-open Special Operations. Stay away from this one! It's hard to tell if its managers have extraordinarily bad luck or are just incompetent. I get sick thinking of how much money I lost following their advice. Finally, there is Hidden Gems which, in my view, should be hidden for good. All of these services were and are quite upfront about their performance, if you are willing to look at their own numbers that are on their website and ignore the misplaced self-confidence with which they tout their latest recommendations. It must be hard to get up in the morning and put up a brave face when your own published, long-term performance is so dismal.
So why after all this did I decide to sign up for 5 more years of TMF? Because there is no crystal-ball-holding advisor out there. Much of long-term success in stock picking comes from consistency and not changing horses too often. I prefer the stock picker with warts that I know to the superman that I don't. Finally, last year, when measured over the entire year and over my entire portfolio of well over 100 positions that I manage for my extended family, I achieved a 30.6% return, a few points ahead of the S&P 500. Of course last year (2013) was an unusually stellar year and I do not expect to repeat this performance any time soon, I don't even expect to beat the S&P 500 by much, if at all. But this is a real collection of accounts with several individuals' lifetime savings in it, including cash for emergencies and ongoing expenses, not a model portfolio.
I did all this on the recommendations of a subset of the TMF services that in my view stood the test of time (5 years for me, so far), a small number, actually. So here are my favorite TMF services, in order of preference:
1) Motley Fool Pro -- solid, reasoned strategies, quantitative recommendations, good track record. Also recommends options on selected positions;
2) Motley Fool Options -- run by two excellent, no-hype managers, particularly good educators with a minimum of hot air, one of whom also runs (1).
3) Million Dollar Portfolio -- not bad, though I could do without their self-congratulatory videos
4) Rule Breakers -- co-run by one of the TMF founders who unfortunately mars his obvious stock-picking talent with considerable verbal hubris and self-important demeanor
5) Stock Advisor -- perfectly good entry-level service, but only if you don't subscribe to anything else. Does not have a model portfolio and does not make quantitative recommendations.
Other services that I am warming up to but do not have a good feel for yet are:
MDP Deep Value -- I followed a few of their recommendations but am not ready to pass judgment
Inside Value -- I like the manager's sensible tone, but again have too little data of my own to judge
Income Investor -- Have not used much but appears sound
Rule Your Retirement -- I'm not quite retired yet
What else is there to say: The TMF "boards" are excellent -- you can post almost any question and -- at least on the boards that I have used -- expect an answer from one of the TMF staff members within hours. You may also get a lot of answers from other members.
The TMF also organizes various live, in-person events to which I get regularly invited. I have never gone and am unlikely to, as they appear to be driven by the same hype and rah-rah atmosphere that is such a turn-off. The trinkets that they send to absentee "high rollers" like myself (on account of the subscription $$ they get from me) are bad enough. Then again, if you are sufficiently extroverted and like parties, don't pay attention to this part of my review.
In conclusion, if you are willing to turn a deaf ear to the hype and focus on the substance, and stay away from the black sheep I mentioned, I would wholeheartedly recommend TMF.
This review is the subjective opinion of an Investimonials member and not of Investimonials LLC
Was this review helpful?