Motley Fool. Is Motley Fool a scam or is it legitimate? Let me know your thoughts
below in the comment and please like and subscribe to this channel you can go to
BestStockStrategy.com and enter in your email address to receive
over 400 dollars of free options training education. In this video we're
going to learn whether Motley Fool is a scam or whether it's legitimate and in
my opinion I definitely do not believe that motley fool is a scam however what
I can say is I do believe that in my opinion the motley fool is more
entertainment than it is actually going to help you make money and the primary
reason why is it focuses more on simply buying specific stocks and going
long them and holding them then it does by selling option premium remember that
anytime you buy or sell a stock you are price guessing and by price guessing you
really have no idea whether the stock is going to go up or down now I know that I
remember seeing an ad for Motley Fool which tries to make you believe that a
specific security is underpriced but my question regarding underpricing a
specific asset is underpriced - who write like Motley Fool is not the
determining factor in whether a stock is underpriced or overpriced additionally I
remember when I was an investment banker on Wall Street and I will put together
these complicated financial models and when we would value a company from an
enterprise value 2lt on ebay table we would take direction from the managing
director on what the target ratio on what the target multiple is so for
example let's say a company reported around 10 billion dollars of EBIT are
you could tell let's say it's a proxy for like net income it's it's not but
let's just say income all right so let's say they reported 10 billion dollars of
income if the managing director said that they wanted to value this company
at eight times well you could do is then take some
non-recurring items from their income statement you can take that out you can
also look at capitalized leases and capitalized assets non-recurring
expenses their cash flow there are certain ways that you can manipulate the
numbers so that it hits so that you change the ratios and you change the
multiples so when Motley Fool is saying that something is underpriced I'm
assuming that they're referring to like p/e ratios or price to sales or PEG
ratios or things like that but who are they to make the determining factor on
whether something is underpriced or not when I look at prices I always think of
it that in the short term prices are always extremely volatile volatile and
they're moving up and down they're always trying to find equilibrium but
they always shoot over the price target or they shoot under if there is bad news
so let's say like the appropriate price is this straight line right like let's
say even if for Amazon you have it's a market-leading stock and it's tended
over it is over history to go up however it doesn't just go up it goes up and
down up and down so it constantly fluctuates between them over priced and
under price and as a result if you view prices that way I don't think that
anyone who possibly teaches you that it's in your best interest to buy a
stock or to sell a stock can possibly have the best strategy on how to make
consistent profits in the stock market instead if you take an example that we
did last Wednesday or last Thursday when Raytheon which Monday of last week or
even Tuesday of last week was trading in around one hundred eighty seven dollars
and fifty cents then on Tuesday a closed at around one hundred and eighty two
dollars and on Wednesday have fell eight dollars so because bad news came out so
at that time the Motley Fool might have sent out an alert to their subscribers
and said hey Raytheon right now was trading at 175 we believe based upon all
these metrics which as I said before in my opinion are complete bullshit because
I've been on the opposite end of the spectrum or I'm putting together the
financial models and I know how much license you have to completely make up
numbers or how much license you have to fudge the numbers and to not be entirely
accurate but let's say Motley Fool sent out an alert or an email to his
subscribers and said right now we believe that Raytheon at 175 is a great
deal you should buy it at 175 and part of their justification was just was that
two days previously it was trading in 180 750 that represents a 12 dollar and
fifty cent decrease from where it's currently trading at $12.50 let's say
that's around 9% below where it was just two days ago but the problem with that
is that you're essentially price guessing once you lock in and make that
trade you are committed to simply hoping that Raytheon is going to go up so you
buy it in 175 and then you just pray that it's going to turn around it's
going to stop going down and it's gonna increase in price and return back to
where it was trading around two days ago the problem with that is that you're
just guessing well you could do instead is you could sell options so when
Raytheon traded down to 175 you know that the implied volatility in Raytheon
is going to substantially increase so instead you can sell a put-on Raytheon
with the strike price of around 160 and you could have collected around a dollar
50 in premium that means that on a net basis even in the worst case scenario
where you would be a sign which is extremely rare remember I probably get a
sign around two or three times an entire year and I make a lot of trades and the
two or three times that I get a sign I know that I'm getting a sign and I
choose to get a sign because as long as there's extrinsic premium left in that
security and you are not going to get a sign because no one's gonna give you
free money in order for them to put a stock to you so you can just go out in
the free in the open market place and sell it for a profit so I wouldn't worry
about assignment but my point is that is that my Leefolt would tell you to buy
raytheon at 175 but what you could do is you can sell them 160-foot receive a
dollar 50 in premium and then even in the worst case of scenario where you'll
get a sign you would be able to all night socket 158 50 that is a major
difference that's a difference of 17 dollars owning a stock or $16.50 but
owning a stock at 158 50 versus owning it at 175 that is your built-in edge
that's your moat that's your safety net and that's the
reason why as an option seller you will always have a higher statistical
probability in a higher statistical edge then you will by simply buying and
selling stock so is mildly full of scam in my opinion I do not believe it's a
scam but I can tell you from someone who has worked on Wall Street who was put
together financial models I can tell you that buying and selling stock is not a
good strategy and there is never a situation where buying a stock will give
you a higher statistical probability of profit than selling an option even if
you decided to sell at that time when Raytheon was trading at 175 if you
really wanted to own it you could sell an at the money put for Raytheon with a
strike price of 175 and in return you probably could elect could have
collected around $4 a premium so what would you rather do selling at the money
put of Raytheon and collect $4 which would therefore put your net price at
171 or would you rather pay four dollars more to buy raytheon at the current
market price of 175 it just doesn't make sense why would you pay a hundred and
seventy five dollars or something when if you simply sold it at the money put
you could collect four dollars and then your net price would be 171 I don't like
doing that I don't like selling at the money puts because the probability of
profit is substantially less then selling a put with a strike price that
is around 10 or 15% below the depressed the artificially depressed price because
remember when Raytheon was ready and 187 50 and then it fell down 175 in my
opinion when he's trading at 175 it was artificially depressed therefore you
could have sold a put with a strike with 116 you probably could all like
to collect around dollar 50 and premium that is a much higher success rate so I
know that Motley Fool has been around for a really long time they've been
around for around 20 years and I've just been making videos for I don't know like
a year or so but I can tell you that buying and selling stock is not your
best option so if you want to put people on a pedestal because they have amazing
marketing or you want to believe that that by following all their
recommendations you're going to make a lot of money then so be it I encourage
you to do so and I encourage you to learn from experience but buying and
selling stock is not going to provide you with a high statistical probability
of profit instead you really need to sell out of the money options and if you
have any questions leave a comment below you can go to BestStockStrategy.com
and enter in a new email address and receive over $400 worth of free training
materials that's better than anyone elses paid materials and I appreciate
your attention