Motley Fool Stock Advisor Review 2020

Motley Fool Stock Advisor

$99/ first year

Strengths

  • Two new stock picks each month
  • Starter Stocks and Best Buys Now lists the best open recommendations
  • In-depth research reports
  • Performance tracking tools let you build a watchlist

Weaknesses

  • There might be too many recommendations
  • Focuses on growth stocks, so not a good fit for all investors
  • Not every stock pick makes money
  • $99 annual fee is only for the first year – after that it’s $199 per year

Investing in stocks of high-quality companies can be an effective way to boost your investment performance. Buying shares of your favorite companies or today’s top market movers may have impressive short-term results but can be a risky long-term strategy.

Instead, you should be selective and choose companies that are well-run and have long-term growth potential. Motley Fool Stock Advisor makes it easier for you to find winning stocks. You get two new recommendations each month of stocks to “buy and hold.”

This Motley Fool Stock Advisor review helps you decide you can become a better investor.

What is Motley Fool Stock Advisor?

Motley Fool was co-founded by brothers David and Tom Gardner in 1993. One of their beliefs is “investing in great businesses, for the long-term”. Long-time investors are quite familiar with Motley Fool investment research and that can outperform the average stock market return.

Today, Motley Fool publishes free investing news articles, podcasts, and several premium newsletters that recommend specific stocks to buy – including Stock Advisor.

Stock Advisor invests in highly liquid and well-known stocks from many industries. You get two new monthly recommendations with an in-depth analysis of why you should invest and the potential risks. Not all newsletters or reports give you the same amount of research.

In addition to two monthly picks, Stock Advisor keeps a running list of the best open recommendations to buy now. If you still need to buy your first stock, there’s a Starter Stock list of ten stocks with low volatility and high potential performance you might choose first.

Since launching in February 2002, the Motley Fool Stock Advisor newsletter has a total portfolio return of 493% versus 101% for the S&P 500 (through August 10, 2020).

Some of Motley Fool Stock Advisor’s successful picks include:

  • Amazon
  • Shopify
  • Zoom Video Communications
  • PayPal
  • Costco

Stock Advisor first recommended Amazon, PayPal, and Costco in 2002 and has held them since.

Like any newsletter, not every Stock Advisor pick is successful. Some companies don’t live up to expectations and others commit fraud – like Luckin Coffee.

As Stock Advisor publishes new picks twice monthly. No need to buy everything that’s recommended, you can be patient and buy positions that are a good fit for your investment strategy.

Stock Advisor is also reasonably priced at $99 for the year (then $199/year) – similar to other “entry-level newsletters.” 

Let’s take an in-depth look at everything Stock Advisor offers.

Two Monthly Stock Picks

Stock Advisor members get two new stock picks each month while most stock newsletters only have one monthly recommendation.

One monthly pick models the conservative investment style for Tom and the other follows David’s more aggressive approach. Each pick is usually for a growth stock. If you are a dividend investor you may find that the picks are somewhat lacking for your investment style.  

If it’s still a good buy, Motley Fool may re-recommend a previous business. Sometimes, buying more of what you already own is the best option.

Each monthly pick gives you a detailed analysis covering these topics:

  • What it does: Brief overview of crucial stock facts and business details
  • Why buy now: The main reasons why this stock is worth buying today
  • Potential risks: Reasons why you may avoid this stock or when you might sell

It only takes a few minutes to read the pros and cons of each stock pick. You should still perform your due diligence to decide if this pick fits your investment strategy.

Best Buys Now

As some of Stock Advisor’s earliest picks are still active, it can be hard to decide what to invest in. Motley Fool updates the “Best Buys Now” list each week. This list is the ten best recommendations to consider buying now.

The two newest monthly picks are usually on this list, yet some are several years old.

Starter Stocks

Each year, Stock Advisor publishes a “Starter Stocks” list containing ten stocks. This list is for new investors who still need to purchase their first stock.

Most of these stocks are well-known and you might use their services daily. They can be less volatile than the monthly stock picks but have plenty of long-term growth potential.

The Stock Advisor team recommends buying at least three starter stocks. Your other buys can come from the “Best Buys Now” or new monthly recommendations.

Sign up for the Motley Fool Stock Advisor

Motley Fool Investing Strategy

How Motley Fool invests might be the most essential part of this Motley Fool Stock Advisor review. Swing traders and those investing in risky “micro-caps” should avoid this product.

Stock Advisor follows a “buy and hold strategy” with a minimum investment period of three to five years – unless the investment thesis changes. Owning a stock through dips and surges for multiple years is one way that Stock Advisor outperforms the S&P 500 long-term.

Most newsletters recommend stop losses to sell your position if it drops 25%, for instance. Stop losses help you manage your downside risk but encourage focusing on short-term results.

Not panic selling can be tough and sometimes Stock Advisor holds onto stocks for too long. Stock Advisor isn’t perfect but its 18-year performance is better than most active investors.

Here are some of the Motley Fool investing rules to invest in stocks successfully:

  • Buy 15 or more Motley Fool recommendations
  • Plan on holding your stocks for at least three years
  • Invest new cash regularly
  • Prepare for stock market declines – and buy more quality stocks
  • Focus on long-term returns

The Fool also advises that no position exceeds 5% of your total portfolio value to minimize downside risk. Picking stocks gets a bad name when you don’t keep a balanced portfolio.

Long-term investors who appreciate the “buy and hold” philosophy are a good fit for Motley Fool Stock Advisor. Swing traders and those who use stop losses may not appreciate the Fool’s infrequent sell recommendations.

Risk Rating

Stock Advisor assigns a “risk rating” between 1 and 25 for each stock recommendation. Picks with lower scores are less risky. Most Stock Advisor picks have a risk score between 8 and 15.

Some of the questions that Motley Fools asks include:

  • Is the company profitable?
  • Does the company have intense direct competition?
  • Is the brand a household name?

The risk score helps you find stocks that fit your investing goals. You can also view the Fool’s previous recommendations and investing articles for that stock.

Sign up for the Motley Fool Stock Advisor

What Else Does Stock Advisor Offer?

The two monthly stock picks and the various Starter Stock and Best Buy Now lists are the best reason to get Stock Advisor. Their recommendations shorten your research time as you can quickly build a stock watchlist.

However, they also offer other tools that can make it easier to research stock ideas or track your investments.

Video Interviews

Video Interviews is a new feature that is exclusive to Stock Advisor members. These videos may have the Motley Fool team give an in-depth look at the latest stock pick. Sometimes, a video can be an interview with a company CEO that Motley Fool recommends. No matter what, the video will give you more in-depth knowledge of the recommendations you are receiving. 

Stock Screener

The stock screener tool lets you filter stock picks by company size, industry, and conviction rating. This is an easier way to look through open Stock Advisor recommendations. 

However, the Best Buys Now list is a great place to start researching stocks. These top stocks have the potential performance in the Stock Advisor portfolio.

Performance Tracking

Similar to your online broker, you can build a stock watchlist in Stock Advisor. You can “favorite” stocks you want to buy or track. Stock Advisor lets you enter purchase details if you buy shares.

The watchlist tracks the stock’s performance from when it joins the list. This tool also compares its return to the S&P 500. Your entry price can differ from the Stock Advisor’s original recommendation price. Adding stocks you own to the list makes it easy to see whether or not you outperform the broad market.

Another advantage of tracking stocks is the Motley Fool sends you notices when they write content about that stock. One example is the “10% Promise” notice when a share price changes at least 10% in a market session.

Motley Fool also includes earnings call transcripts for stocks they recommend.

Special Reports

Periodically, Stock Advisor provides special reports exclusive to premium subscribers. These reports suggest potential investments for a specific theme including:

  • Autonomous vehicles
  • Artificial intelligence
  • Digital payments

These reports can be worth reading if you want to invest in a certain sector. 

Community

The Motley Fool Community is another section you might enjoy. This message board is like Reddit but only for Motley Fool subscribers, including Stock Advisor.

You will see discussion boards for various investing topics including how to start investing. Other board focus on active Stock Advisor recommendations. Some members also share their investment portfolios to help give you investing ideas.

Like the official Motley Fool Stock Advisor picks, use your personal diligence to research and investing advice you see in the community discussions.

How Much Does Stock Advisor Cost?

Motley Fool Stock Advisor costs $99 for the first year – there’s also a 30-day free trial.

After your first year, your Stock Advisor membership renews at the normal rate. Currently, that’s $199 per year. But Motley Fool may send you a $50 discount if you renew early – check your email a month before your renewal date.

The $99 annual fee is competitive with most entry-level newsletters. This subscription cost is low so you have more cash to invest in different Stock Advisor stock picks.

Sign up for the Motley Fool Stock Advisor

Is Motley Fool Stock Advisor Worth It?

Yes, Stock Advisor is an excellent option for many long-term investors. You get investing ideas for stocks from a variety of industries. Most stock picks are in the tech and biotech industries as these companies have the most growth potential.

Stock Advisor isn’t a good option for short-term traders who rely on technical data and hold positions for days or months instead of several years.

Investors who want to invest in Dividend Aristocrats may find Stock Advisor too aggressive. It’s better suited to those planning on buying some growth stocks without a dividend.

If you prefer the extensive diversification of active investing ETFs or mutual funds, Morningstar Premium is a better research tool. Here’s our full review of Morningstar Premium

Pros

  • Two new stock picks each month
  • Starter Stocks and Best Buys Now lists the best open recommendations
  • In-depth research reports
  • Performance tracking tools let you build a watchlist

Cons

  • There might be too many recommendations
  • Not every stock pick makes money
  • $99 annual fee is only for the first year

Summary

Motley Fool Stock Advisor is one of the best investment tools for buying individual stocks. The annual cost is low enough that you can afford to buy several positions per year in well-run companies. Don’t forget to continue investing in your index or target retirement funds to maintain a diversified and balanced portfolio.

Sign up for the Motley Fool Stock Advisor

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Originally posted at https://wallethacks.com/motley-fool-stock-advisor-review/

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