﻿Alright, everybody, I’m Logan Allec, I’m a CPA, and in this video I’m going to give you an actual
review of the Motley Fool, I’m going to tell you how the Motley Fool stock picks have performed
recently, and I’m going to give you the real pros and cons of the Motley Fool. There’s real talk in
this video, I actually purchased Motley Fool’s flagship program the Motley Fool Stock Advisor
subscription so I can review it for you, yes, this is an actual review, and I say this is an actual
review because unfortunately right now when you search “Motley Fool Review” what you often see is
YouTubers basically just shilling the Motley Fool so they can collect their affiliate commission,
in fact one of the comments on one of the more popular Motley Fool review videos basically
says as much. But in this video I’m actually going to give an honest review
of the Motley Fool’s stock picking service, real talk, so I would really appreciate it if you hit
that like button, the thumbs-up button below this video because it really helps with the YouTube
algorithm so that people can know the real pros and cons of the Motley Fool and not just watch a
sales pitch when they try to do their research on this service on YouTube. Alright, so before
I get into the pros and cons of the Motley Fool and my personal experience with the Motley Fool,
let’s give a little background and history. So the Motley Fool was founded in 1993 by brothers David
and Tom Gardner. Why’d they name themselves the Motley Fool? It’s because in Elizabethan dramas
such as those written by William Shakespeare, there was often a character who was the fool or
the court jester, and in these dramas the fool, though he played the part of a ridiculous person,
was often the wisest character in the play and he could actually speak his mind,
because he plays the role of the joker he can actually speak truth about the king
or otherwise in his jesty fashion, truth that if said by others would end up with
other people losing their head. So in Elizabethan dramas it’s often the fool, the court jester,
who serves as the primary truthteller for the audience. For example in King Lear, the unnamed
fool is always calling out King Lear on his dumb decisions. He’s a truthteller, and he’s an amusing
truthteller, so that’s the inspiration for the Motley Fool’s name, the Motley Fool claims to
educate and amuse and enrich individuals in the search of truth. And the main way they try to do
this is by sharing stock picks. If you go to fool.com, you’ll see all their recent blog
posts and content basically full of stock picks. For example, here’s an article, “Forget Alibaba,
these 3 Chinese tech stocks are better buys.” So how all their free content works is there’s an
elementary-level analysis and then at the bottom they pitch you on a freebie in an attempt to get
you to give them your email address, and of course after you give them your email address you’re on
their mailing list so they can put you in an email sales funnel for the Motley Fool Stock Advisor,
their flagship stock picking program. So that’s their basic business model. Now, the question is,
how are their picks? How are their actual stock picks? Are they good or are they bad? Well,
on their website, they claim that their stock picks have beaten the S&P 500 by leaps and bounds,
that their Stock Advisor service is up five hundred plus percent while that raggedy old
S&P 500 is only up 100%. Problem is, though, is that it’s pretty much impossible to verify
this one way or the other, and other than a tiny graph here, I don’t see any proof of this claim,
so I don’t really put much stock in this, no pun intended. But the proof, or lack of proof,
is in the pudding, so I decided to purchase a subscription to Motley Fool Stock Advisor
so I could test it out and tell you what I think about it, and that’s what I’m going to do. So what
do you get with the Motley Fool Stock Advisor? Well the main thing you get is stock picks,
they have their “Stocks to Buy Today,” about ten or eleven so stocks that the Motley Fool thinks
you should buy today, I’m not going to show them here because that is of course the Motley Fool’s
proprietary information, I will however later in this video tell you how they performed. Now,
before we get into the stock picks themselves and their performance, before I get into those
numbers for you, I just want to talk about the mentality that the Motley Fool promotes because
more than anything, this is what I have beef with. The mentality that the Motley Fool, and
any stock picker, frankly, whether it’s CNBC and Jim Cramer or all these other financial rackets,
in my opinion the mentality they promote is one of addiction and in this case stock market addiction.
Now, I’m not a medical professional, I’m not using the word “addiction” in a clinical sense,
by stock market addiction I just mean, when I say that, when I say that somebody is addicted
to the stock market I mean that they check the stock market more often than they should
and they’re always looking for that next stock pick that’s going to make them rich,
and their mood and their day is affected by how their stocks performed today because they’re
constantly checking them. That’s a miserable way to live. Now, don’t get me wrong here. The
Motley Fool would never say that’s what you should be doing. The Motley Fool says that
their investment philosophy prioritizes buying and holding quality stocks for long periods of time,
if you look on their investing philosophy page, it’s all very sound, invest for the long-term,
hold for the long-term, don’t worry about short-term fluctuations, yadda yadda yadda,
all the good stuff, right. But in my opinion when the Motley Fool sends me, after, mind you, I have
purchased their flagship service, the Motley Fool Stock Advisor, when they send me daily emails
talking about new stock picks constantly, their number one stock for the Sun Belt migration trend,
my free Real Estate Trailblazers stock pick, a relatively unknown stock that
was three hundred and fifteen x growth potential, stocks to invest in before the market opens, the
next Amazon, blah, blah, blah, more stock picks than you know what to do with, this seems to me,
and feel free to disagree, but it really seems to me that they’re promoting this “next big thing,
next hot stock pick” investing mentality. That’s just my opinion, now let’s get into some numbers,
how the Motley Fool Stock Advisor picks have performed in the approximately three months
since I’ve been a subscriber compared to one of my favorite index fund ETFs, the Vanguard Total
Stock Market Index Fund ETF, ticker symbol VTI, which seeks to track the performance of the U.S.
stock market as a whole, so in the analysis I’m going to share with you shortly I’m going
to show you the Motley Fool picks performed vs. how your money would have grown if you had just
put the same amount as put in Motley Fool into VTI. And look, I want to emphasize that this is
just three months’ worth of performance, but when you’re investing, you invest for the long-term,
not just for three months, I believe that, that is Motley Fool’s philosophy,
so one criticism of the analysis I’m going to share with you here, and it’s a valid criticism,
is that the Motley Fool makes stock picks for the next X number of years
and maybe it’s not fair to just compare three months’ worth of performance to an index fund,
but my counters to that is A) this is still data, no, it’s not long-term data, but it’s still data,
and we might be able to make conclusion from it and B) this is the best I have because I’ve only
been a Motley Fool subscriber for three months. So without further ado, here’s the data. Obviously
some columns are hidden here because I don’t want to share with you the Motley Fool’s proprietary
information, so I’m not showing you the ticker symbols obviously, I’m not showing you the share
price of the stocks, or any of that, all that information is hidden in columns A, D, F, and G,
which you cannot see here, but basically what I did is assumed that in this hypothetical example
I bought a thousand dollars’ worth of each Motley Fool pick the day I was informed of that pick,
by the way to keep things consistent here between one stock and another,
all prices I used were based on the closing price of the stock for the day
purchased. And then I calculated what the value of that investment would be, including dividends,
because dividends reduce the price of the stock, but I want to capture the dividends too, the total
return, and I calculated what the value of that investment (including dividends, if paid) would
be on June 11, which is when I ran these numbers. So you can see that for Stock 1, for example,
in this example I would have invested a thousand dollars on March 18, and on June 11, the value
of the investment would have been one thousand, one hundred and sixteen dollars. So I ran these
numbers for all the stock picks that Motley Fool sent me on Thursday through the Stock Advisor,
it’s on Thursdays that they announce picks through the standard Stock Advisor program,
one week they didn’t do that, but instead they sent a list of what they called “Starter Stocks,”
so that’s included here as well, anyway I basically tracked these stocks
and basically if I had invested a thousand dollars into all these stocks on the day I got each pick,
I would have invested in thirty-four stocks so my basis would be thirty-four thousand dollars, and
the value of these stocks on June 11 would have been thirty-four thousand, three hundred and five
dollars and forty-seven cents, so an increase of three hundred and five dollars and forty-seven
cents. So at least they went up in value in the aggregate. Now, what if I had simply, invested the
same amount of money on the same days into VTI, the Vanguard Total Stock Market Index Fund ETF,
how much would I have? So on March 18 in the first example, I would have purchased eleven
Motley Fool stocks, putting a thousand dollars into each one, so in the ETF example, I assume
that I purchased eleven thousand dollars worth of VTI on March 18. So if I would have done this,
I would have invested the same thirty-four thousand dollars into the market in this
three-month period, how much would I have had on June 11, the day I ran these numbers,
I would have had thirty-five thousand, seven hundred and two dollars and sixty-three cents,
an increase of one thousand, seven hundred and two dollars and sixty-three cents.
Compare that to the Motley Fool picks, almost fourteen hundred dollars more by just investing in
the index fund. So what am I saying? Am I saying that the Motley Fool’s stock picks are always bad
picks, they’re dogs, not necessarily, again, this was only three months’ worth of data, but with
the limited data I have, I’m not convinced that I should use Motley Fool to inform my investing, I’m
sticking mostly to index funds for now folks, as you know, as I’ve said on the channel, I do play
with individual stocks, cryptos, and things like that with five to ten percent of my portfolio,
but the majority of it is in index funds. Alright, now let’s talk about pros and cons, starting with
the pros. Pro number one, while in my opinion its marketing doesn’t always reflect this,
I believe that the Motley Fool’s stated investing principles are sound, investing for the long-term,
not freaking out when the market goes down, staying course, all that good stuff,
so I would say pro number one is sound overall investment philosophy. Pro number two,
the Motley Fool does do a decent job of making basic investing concepts easy to understand
and oriented toward the layman. That being said, and this is kind of my segway into the cons here,
the Motley Fool can sometimes be a little too simplistic in my opinion. So con number
one, and like I said, this is just my opinion, but sometimes I found the “analysis” you get with
the stock picks in Motley Fool stock advisor to pretty light. I can’t show you a specific example
because that would be showing you the Motley Fool’s proprietary information, but oftentimes
the commentary on a particular stock when the Motley Fool releases a new pick, a new best buy,
the analysis is basically something like, “OK, here’s the stock, here’s what the business does,
here’s a few sentences on its unique position in the marketplace, here’s a few numbers we picked
from the latest financials the company released, and here’s the basic chart and stock quote
information you could get from anywhere.” So in my opinion the analysis can frankly be a bit light.
Con number two, in my opinion, the Stock Advisor picks are really heavy in tech,
so naturally with tech, oftentimes you have some real winners but then also some real dogs whose
valuations were just unjustifiably sky high and the stock tanks,
so if you do base at least part of your portfolio on the Motley Fool’s Stock Advisor stock picks,
be prepared to deal with volatility. Con number three, the constant upselling,
every day or almost every day, email from the Motley Fool trying to get me to purchase some
additional service or subscription so I can get even more stock picks, look, I know this is their
business, but like I said earlier in this review, that kind of rubs me the wrong way, that’s not how
I want to invest, constantly chasing the next great stock pick. And finally con number four,
at least in my experience, which is limited as I said, the Motley Fool’s stock picks
haven’t beaten the market. Alright, folks, that is my honest Motley Fool review, if you’re interested
in the Motley Fool, checking them out even after watching my criticisms in this review,
I’d appreciate if you did that through my Motley Fool affiliate link below, if you’re so kind
as to use my link, the channel will receive a small commission at no additional cost to you,
be sure to check out my investing for beginners video, link to that one right over here,
as well as as my video showing you the many brokerages right now where you can get
free shares of stock, link to that video is right down here,
I will see you over in those videos, everybody, happy investing, buh-bye.