Is Motley Fool Legit? (2024)

The Motley Fool is one of the most well-known investment research services, providing stock recommendations to over 300,000 paying members. But with mixed reviews online, a common question from investors is “Is Motley Fool legit?”

In this in-depth review, we’ll take an objective look at their track record, services, and what real users say to determine if Motley Fool is a scam or not.

Overview of The Motley Fool

Founded in 1993 by brothers David and Tom Gardner, The Motley Fool aims to empower regular investors to beat Wall Street professionals. They offer a variety of stock picking newsletters, specialized services, and educational resources.

Their flagship product is Motley Fool Stock Advisor, which provides monthly stock picks and analysis. Other popular services include Motley Fool Rule Breakers, focused on growth stocks, and Motley Fool Options, providing options trade ideas.

In addition, The Motley Fool offers tons of free content including stock research, podcasts, discussion boards and investing basics education. The company is based in Alexandria, VA and is 100% digital subscription service.

Is Motley Fool Legit? Track Record Analysis

The core of The Motley Fool’s paid services is stock picks designed to outperform the broader market. But do their recommendations actually deliver?

According to Motley Fool, their Stock Advisor picks have averaged returns of 584% since 2002, compared to the S&P 500’s return of 114% over the same period. That’s over 5x the market’s performance.

Some of their most successful recommendations have included stocks like Netflix (over 9,000% return), Amazon (over 3,000%), and Apple (over 1,000% return). Even picks with more modest returns have cumulatively crushed the index.

The Motley Fool also provides access to their full 20+ years of stock picks so users can verify performance claims. While past returns don’t guarantee future results, The Motley Fool’s track record is impressive.

User Reviews of The Motley Fool

In addition to their stock picking performance claims, it’s also important to look at user reviews:

• Trustpilot: 3.6 out of 5 stars based on 8,200+ reviews
• SiteJabber: 3.1 stars with 330+ reviews
• BBB: 1.8 stars and 100+ complaints

The majority of reviews rate Motley Fool positively overall. But there are some complaints about high pressure sales tactics, misleading claims and poor customer service response.

Despite some negatives, most say the stock research merits the membership fee. And the long term track record seems to validate their ability to identify promising stocks.

Is Motley Fool a Pump and Dump Scheme?

Some skeptics question if Motley Fool is a “pump and dump” scheme where they tout stocks simply to build hype. However, several factors indicate this is very unlikely:

• Long-term approach - Motley Fool focuses on multi-year investment time horizons, not short-term surges.
• Large company - With 300+ employees and decades in business, Motley Fool is an established company, not a fly-by-night operation.
• Transparency - Unlike pump schemes, Motley Fool is upfront about their past picks and performance.
• Lasting gains - Many recommendations like Netflix and Amazon have shown lasting, multi-year gains, not temporary spikes.

While no stock picking system is perfect, Motley Fool’s approach seems focused on legitimate research to identify promising stocks, not manipulative hype.

Motley Fool Stock Advisor Service

Motley Fool Stock Advisor is The Motley Fool’s flagship stock picking newsletter. Here’s an overview:

• Cost: $99 for the first year, renews at $199 per year
• Picks: 2 new stock picks each month
• Performance: Average returns of 584% since 2002

Stock Advisor is focused on identifying long-term investments poised for high growth. Past recommendations have included hugely successful stocks like Tesla, Netflix, Facebook and Amazon early in their run.

The service provides detailed analysis on each stock pick including investment thesis, risks, financial metrics and more. The monthly recommendations span various sectors and market caps.

For investors seeking expertly analyzed stock ideas, Stock Advisor is a solid offering. The cost is reasonable given the extensive research and past performance.

Motley Fool Rule Breakers

In addition to Stock Advisor, The Motley Fool offers other premium services targeting different strategies.

Motley Fool Rule Breakers specifically identifies earlier stage, rapid growth stocks. Here are the key details:

• Cost: $299 per year
• Picks: 30+ stocks per year
• Strategy: Disruptive innovation stocks
• Past Gains: 5,000% returns on Netflix, 4,000% on Amazon

Rule Breakers leverages Motley Fool’s expertise in spotting up-and-coming market leaders early in their trajectory. The stocks tend to be higher risk, higher reward. But getting in early on the next Amazon or Netflix can lead to massive gains.

This service appeals to more aggressive investors comfortable with increased volatility in pursuing multi-baggers. The analysis focuses on transformative companies.

What Stocks Does Motley Fool Recommend?

Motley Fool issues dozens of new stock picks every month across their various services. Some recent popular Motley Fool recommendations have included:

• Shopify - Ecommerce platform play with Strong Buy rating
• MercadoLibre - Leading Latin American ecommerce provider
• Sea Ltd - Singapore digital entertainment/ecommerce leader
• Pinterest - Social media stock with robust user engagement
• Roku - Streaming platform benefiting from cord-cutting tailwind

The picks range from mega-cap stocks like Apple and Microsoft to lesser-known small caps. Motley Fool aims to identify compelling stocks across all sectors and market caps.

While not every pick is successful, members gain valuable perspective on stocks likely to outperform. The recommendations come with thorough analysis explaining the investment thesis.

Is Motley Fool Better Than Morningstar?

Morningstar is another popular investment research provider. How does The Motley Fool compare to Morningstar?

While both services offer extensive stock research, Morningstar focuses more on in-depth fundamental analysis. Motley Fool takes a more narrative-driven approach to identifying future winners early on.

In terms of cost, Morningstar is generally cheaper for more casual investors. Motley Fool provides better value for serious stock pick subscribers given their market-beating returns historically.

Ultimately, Morningstar takes a rigorous data-driven approach. Motley Fool appeals more to investors who appreciate compelling stories identifying visionary companies. The two services can complement each other well for investors wanting both quantitative and qualitative research.

Pros and Cons of Motley Fool

Here are some of the key pros and cons to consider regarding The Motley Fool:

Pros

• Strong track record beating the market
• Reasonable pricing for services
• Tons of free educational investing content
• Easy to understand stock analysis

Cons

• Complaints of overly aggressive upselling
• Can oversimplify investing guidance at times
• Minimal technical or quantitative analysis
• Customer service responsiveness issues

While Motley Fool has some drawbacks, their proven stock picking performance over decades remains a standout positive. But their story-based approach may not appeal to more quantitatively oriented investors.

Is Motley Fool Premium Worth It?

The Motley Fool clearly provides savvy stock recommendations and abundant educational resources. But is paying for a premium membership worth it?

For stock investors looking for actionable ideas, Motley Fool services likely merit the reasonable annual fees. Just a couple successful stock picks can recoup the membership cost.

However, more advanced investors doing their own analysis may find limited benefit relative to the fees. Casual index fund investors may also not need stock picking services.

But for stock enthusiasts seeking expert guidance, Motley Fool’s market-beating track record makes their premium services worthwhile. You just have to be comfortable with the narrative-based investing approach.

Common Motley Fool Complaints

While most reviews of The Motley Fool are positive, here are some common complaints:

• Aggressive upselling to higher tiered services
• Claims every stock pick is a winner when some underperform
• Difficulty cancelling subscriptions
• Auto-renewal without sufficient prior notice
• Poor customer service and lack of response

Many complaints relate more to certain business practices rather than the investment research itself. But it’s important to be aware of these consumer issues cited in some negative reviews.

Is Motley Fool Legit? The Verdict

The Motley Fool is absolutely a legitimate investment research service company, not a scam. Here’s a summary of the key evidence:

• Long track record: 28 years of operations with over 300 employees
• Transparency: Clearly documents past recommendations and performance
• Lasting gains: Many stock picks like Netflix, Amazon and Apple have shown multi-year gains, not temporary pumps
• Reasonable pricing: Services are fairly priced in line with the extensive research provided
• Trusted brand: Known and established company featured prominently in financial media

While there are some complaints about customer service responsiveness, their core stock analysis and picks appear sound. For investors seeking actionable stock ideas, Motley Fool is a legitimate low-risk option to consider.

Is Motley Fool Worth Paying For?

The Motley Fool undeniably provides investors with astute stock recommendations and abundant educational resources. But should you pay for a premium membership?

For stock investors, Motley Fool services are likely worth the reasonable costs given the successful track record. Just a couple winning stock picks can recoup the annual fee.

However, more passive index fund investors may find limited benefit relative to the membership costs. And traders may prefer services with more robust technical charts and screening tools.

But for a stock enthusiast looking for expert guidance, Motley Fool's market-outperformance makes their premium services a wise investment. Just be prepared for aggressive upselling of their various offerings.

Should You Follow Motley Fool Picks?

Here are some best practices for using Motley Fool stock recommendations:

• See them as a good starting point for research, not the only factor in decisions
• Focus more on Strong Buy and Strong Sell rated stocks with the biggest potential upside
• Use recommendations to find stocks to research further, not buy immediately
• Combine Motley Fool picks with other technical and fundamental analysis

The key is not over-relying on Motley Fool ratings alone. But used prudently in conjunction with your own due diligence, their picks can significantly boost your investment success.

Motley Fool Review Summary

The Motley Fool has a proven 28-year track record of providing savvy stock recommendations and abundant educational investing resources. Their solutions can undoubtedly help give individual investors an edge.

However, expect aggressive upselling and realize their story-driven approach may not appeal to all investing styles. For quantitative strategists, Motley Fool may not provide sufficient value.

But if compelling narratives to identify promising growth stocks appeals to you, then Motley Fool is a legitimate low-risk option. Just supplement their guidance with your own robust due diligence and technical analysis.

Used judiciously, Motley Fool provides individual investors the tools to potentially beat Wall Street pros. Their premium services merit consideration for those seeking actionable stock ideas based on a proven methodology.

Frequently Asked Questions

1. Can Motley Fool stock picks be trusted?

Yes, Motley Fool has a long track record suggesting their stock picks are generally reliable. But as with any service, not every pick is guaranteed to be successful.

2. Is Motley Fool a pump and dump scheme?

No, given their multi-year returns, established company status and transparent track record, Motley Fool does not appear to be a pump and dump scheme.

3. What stocks does Motley Fool recommend?

Motley Fool issues dozens of stock picks per month across sectors like technology, healthcare, consumer discretionary and more - targeting companies of all market caps.

4. Is Motley Fool better than Morningstar?

Motley Fool excels more at story-driven stock ideas. But Morningstar provides superior fundamental and quantitative analysis. The two services nicely complement each other.

5. Does Motley Fool beat the market?

Yes, Motley Fool’s stock picks have significantly beaten the market over the long run. Their Stock Advisor recommendations have returned over 5 times more than the S&P 500 since 2002.

6. Is Motley Fool worth paying for?

For stock investors, Motley Fool is likely worth the fees given their robust research and successful past picks. But index fund investors may find less benefit relative to the cost.

7. Can you make money following Motley Fool?

Yes, many Motley Fool members have made substantial profits following their stock picks over the years. Of course not every recommendation is successful though.

8. Is Motley Fool Stock Advisor worth it?

Yes, the $99 annual fee seems reasonable given access to Motley Fool's analysis and track record of identifying winning stocks. But index fund investors may find less value.

9. What are the downsides of Motley Fool?

Common downsides are excessive upselling, confusing marketing claims, mediocre customer service and oversimplification of investing guidance at times.

10. How can you access Motley Fool for free?

Motley Fool offers free investing education through podcasts, articles, videos and discussion forums. But full access to stock picks and premium research requires a paid membership.