# Motley Fool stock picks are worthless



## james4beach (Nov 15, 2012)

Thanks very much to @Jimmy and @MrBlackhill for motivating me to dig into the past history of The Motley Fool.

In the present day, this web site has a Stock Advisor service which claims to have an amazing stock-picking record. They show 5X the return of the S&P 500 index. Hmm that doesn't sound right... is it possible they are being misleading about their past returns?

Turns out, yes! See this Internet Archive historical record of Fool.com from 2001.

Exhibit #1 is shown below. This is what was on their web site in 2001. Here you can count 10 different stock-picking portfolios which no longer exist today, such as the 'Harry Jones'. In fact they wrote some very humble articles about how badly their strategies did.

It appears that the game at Motley Fool is creating many different stock-picking portfolios. Over time, some will (inevitably) turn out to work well. But most of their portfolios were total failures.

That means that the stock picks in their current portfolios are worthless.











Exhibit #2 is shown below. Here's a snapshot of the performance of one of their (many) past failures, the 'Rule Maker' portfolio. Uh oh ... it appears to have underperformed the major market indices, even during a bull market! How embarrassing.


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## newfoundlander61 (Feb 6, 2011)

Here is an example of their articles both are related to SU written days of each other but different writers.

(1) Stocks to Avoid: This Canadian Stock Has Been Treading Water for 16 Years - Suncor

(2) Canadian Investors: Here Are My 3 Stock Picks for 2021 - Suncor


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## Jimmy (May 19, 2017)

james4beach said:


> Thanks very much to @Jimmy and @MrBlackhill for motivating me to dig into the past history of The Motley Fool.
> 
> In the present day, this web site has a Stock Advisor service which claims to have an amazing stock-picking record. They show 5X the return of the S&P 500 index. Hmm that doesn't sound right... is it possible they are being misleading about their past returns?


No.

All that is possible is *just you being dishonest*. Their main flagship service is in fact 'Stock Adviser' that has been in existence since the mid 90s in fact and is not a 'failure' so you are wrong from the start. Your little obscure blog link is from some forum poster about some 20 yr old 'theme services' that change overtime. New services start like '5G for ex to replace older themes. You omitted to mention that of course.

You were posted their results from independent reviewers of the main 'Pro Adviser' too at least 3x yet you still post misleading records - here it is again. This is their actual current record over 20 years.









Motley Fool Review - Is The Stock Advisor Program a Good Investment?


In this Motley Fool review, we provide an in-depth analysis of the Stock Advisor program. Considering paying for a subscription? Read this first.




daytradereview.com























james4beach said:


> Over time, some will (inevitably) turn out to work well. But most of their portfolios were total failures.
> 
> That means that the stock picks in their current portfolios are worthless.


That is false. Their flagship service " Pro Adviser" has been in existence since the mid 90s - they started in 1993. It has returned multiples of the market. So have their other 2 main services. I encourage you to study them vs posting misleading false accusations.




james4beach said:


> View attachment 21047


Nice 20 yr old post but who cares if they lost in one year in in one service 20 yrs ago . 

They have a proven 20 yr performance record.

Here is another independent review w some of their picks and performance from 2002. Only 2 didn't beat the market.









Motley Fool Review - Can You Trust the Stock Advisor Program?


Looking for stocks that outperform the market? We did an in-depth review of Motley Fool to see if the Stock Advisor program was legit or a scam.




toptradereviews.com























Do you actually think Disney , Amazon, Costco, ebay , Paypal , Fedex etc are bad investments over 20 years? lol

Here are their results in the pandemic year. 3x the market










Maybe you can put aside your pet peeves and see their service helps investors.


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## MrBlackhill (Jun 10, 2020)

@james4beach I'm sorry, but you've only posted archives of their very debut in the 90s and sure they have made mistakes in their young years during the dot-com bubble, as many other. Read the quote in my signature. Find some archives of the last two decades.

@newfoundlander61 Yes, I've seen many ads like this and I agree that's very funny. Those articles are just free content and they are also meant to be ads so that people gets to know Motley Fool. Their authors may have different opinions and I think that's healthy. I prefer reading articles where 50% are bullish and the other 50% are bearish so I can make my own opinion based on their arguments. If all articles about a stock would be 100% bullish, I'd feel I'm missing some information. There's no truth in forecasts, they are forecasts, that's it. For instance, should you invest in TSLA or not? Certainly one of the most documented stock of the moment. Articles certainly aren't all bullish or all bearish.

Dalio says to have more geographic diversification, Buffet says you shouldn't bet against America. Buffet made a bet against hedge fund managers that they couldn't best the index and he won. He also said he knows a handful of people who can do 50% CAGR with small money (one million). The world is full of contradictions.

A subscription will allow to see a list of stocks and their current opinion about it, so it's less misleading than reading two articles with opposite opinions, because you get to know their final thought about it. Yet, I just see that as a list of investing ideas where I should do my own due diligence before buying.

I'll tell you that, I don't like how many of the free articles are written because many of them are sensationalist. I've subscribed just to test their services and I don't like how they spam with emails of events and other services that I should not miss (with a price tag on each). The paid service has more quality articles. But if you're someone rational who can see through those marketing technics, you won't get caught.

Why did I subscribe to Motley Fool at the end of December? I wanted to test it for 2021. Then I'll decide if I continue with them or not. What I want to test is that I see Motley Fool as a provider of investing ideas, ideas which I would not find from my own screening. For instance, in 2020, from stocks I've bought after I've discovered them in some free Motley Fool articles (before my subscription), I've made in profits more than 20x the cost of a subscription to Motley Fool. That's why I was willing to give them a little of those profits to test it.


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## like_to_retire (Oct 9, 2016)

MrBlackhill said:


> Yes, I've seen many ads like this and I agree that's very funny. Those articles are just free content and they are also meant to be ads so that people gets to know Motley Fool. Their authors may have different opinions and I think that's healthy.


My opinion has always been that any company that resorts to this type of click baiting and aggressive hawking is simply not a company I would deal with. Yes, people have different opinions about the same stock, but Motley Fool prints this contradicting junk under their name and we've all seen the complete opposite opinion offered on consecutive days. In that regard, they don't do themselves any favours.

ltr


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## capricorn (Dec 3, 2013)

If the Motley Fools were really so good and trashing S&P, why do they need to peddle subscription all over the place. They should invest and run a hedge fund. Probably they themselves can not follow the advice they dish out.

I am sure there is a list of stocks from MF but then the credit for outperformance is your own and not MF as you executed and stuck to strategy.


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## MrBlackhill (Jun 10, 2020)

like_to_retire said:


> My opinion has always been that any company that resorts to this type of click baiting and aggressive hawking is simply not a company I would deal with. Yes, people have different opinions about the same stock, but Motley Fool prints this contradicting junk under their name and we've all seen the complete opposite opinion offered on consecutive days. In that regard, they don't do themselves any favours.
> 
> ltr


I cannot disagree.

Personally, I just take the good and leave the bad. There's many good companies with bad marketing. We're more than ever in a world of click-bait titles. I can see through it and ignore that. I don't use Motley Fool as a tool to blindly buy stocks. I use it as a source of investment ideas.

In 2020, it worked well as I've found some stocks in those free & bad marketing articles/ads. I don't think my current screening would have found them. I want to study how I could find them by myself so I wouldn't have to find them in such articles.

It's Motley Fool free content that made me discover:

WELL, up +300% in 8 months
XBC, up +165% in 8 months
GSY, up +80% in 7 months
ERO, up +65% in 8 months
KXS, up +45% in 8 months
VMD, up +10% in 8 months
REAL, down -20% in 3 months
GSY and KXS, I may have found them by myself, but not WELL nor XBC.

Also note that AT was a Motley Fool recommendation and it's up +1000% in 6 months.

But if you don't believe in stock-picking, it's ok. I'm not experienced and I may be wrong. You can go and see my thread below where I do a small test about some stock-picking I've done on my own in only a few hours and only backward analysis, no forward forecast. Just basic historical screening, nothing complicated.

Go in that thread below and make a bet about its outcome for the next 10 years, if you don't believe it'll beat the index.









Stock-picking, let's test it


Hi all, Let's test this and make bets. It may look similar to this thread or this thread but here the goal is to follow a specific portfolio fully documented and make bets on what will be its faith. If you want, as @Karlhungus suggested below, if you believe you are good at stock-picking, you...




www.canadianmoneyforum.com


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## james4beach (Nov 15, 2012)

like_to_retire said:


> My opinion has always been that any company that resorts to this type of click baiting and aggressive hawking is simply not a company I would deal with. Yes, people have different opinions about the same stock, but Motley Fool prints this contradicting junk under their name and we've all seen the complete opposite opinion offered on consecutive days. In that regard, they don't do themselves any favours.


They churn out tons of portfolios and endless stock picks. I've illustrated here that they have had at least TEN previous stock-picking portfolios that were discontinued due to poor results.

Among their present-day portfolios, some of those will also have poor performance will be discontinued, just like their previous ones (like Drip Port) were discontinued. Then they will create more portfolios to replace them.

That's the game. Generate tons of portfolios / stock picks with clickbait titles. Heavily market the ones which happened to be successful, *misrepresent yourself as genius stock-pickers*, and use them to bring in more subscribers. Keep closing portfolios and generating new ones over the years.

The actual stock picks are garbage, and they have no stock-picking skill. This is one of the oldest tricks in the book.


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## fireseeker (Jul 24, 2017)

(Cross-posted from the stock-picking thread because it belongs here)

In the debate between @Jimmy and @james4beach, they both may be right. 

James appears to be taking the broad view -- multiple portfolios over different time periods to identify survivorship bias -- while Jimmy appears to be looking narrowly at the current portfolio and its current record.

I share James's skepticism, but Jimmy's confidence in the Fool portfolio's record may not be misplaced. The record may well be accurate. And for $99 it is certainly a low-risk way to gather investment ideas.

For anyone thinking about fully emulating the Fool portfolio, I would offer these considerations:
1) The portfolio record looks backward. There are no guarantees it will continue.
2) If you believe the Fool pickers can reliably crush the index going forward, ask yourself what most investors would do with such insight. Would they a) trade on it privately so as to make a killing? b) sell the formula to a hedge fund so as to make a killing? or c) peddle it to retail buyers at $99 a pop?
3) Assuming the answer above is option c), think about the implications of that. Whenever a new pick is made, that info will be sent to thousands of people simultaneously -- maybe tens of thousands of people. What happens to the price/opportunity then?


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## Tostig (Nov 18, 2020)

The only Motley Fool articles I read are the free ones from Yahoo Finance. Before Yahoo stopped the comments, I read an article from Motley Fool that was contracted by the same Motley Fool author just a few days earlier on the same topic. So I posted a comment on each article referencing the other one.

Other than that, if I see a Motley Fool article that seems to merit recommending something, I'll dig deeper looking for the past five to ten years of revenue and earnings growth etc.


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## Pluto (Sep 12, 2013)

fireseeker said:


> (Cross-posted from the stock-picking thread because it belongs here)
> 
> In the debate between @Jimmy and @james4beach, they both may be right.
> 
> ...


1) there are no guarantees in life on anything. It can help to think in terms of probabilities instead of guarantees. 
2) Retail investors are not numerous enough to move the market in most stocks.


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## MrBlackhill (Jun 10, 2020)

fireseeker said:


> (Cross-posted from the stock-picking thread because it belongs here)
> 
> In the debate between @Jimmy and @james4beach, they both may be right.
> 
> ...


I agree on the part where you mention we are just debating something that is not black or white.

What you guys don't see is that once you have a subscription, you have a list of all their Best Buy Now, Buy, Hold and Sold. You see on what date they said to Buy and on what date they Sold.

It's fully transparent because you see all the stocks that have lost money since their buy signal. For instance, on October 2013, they said to buy SCL.TO. The stock then soared +50% in a matter of a few months... until it crashed. They never sent a Sold signal on it, just a Hold. So it's currently at -90%. On the other side, they have sent a Buy signal for SHOP.TO on March 2016 and it's now at +4000%. They have even sent another Buy signal for SHOP.TO in February 2019 and it's now at +513%. You also see stocks which where bought & sold, for instance WPM.TO bought in April 2014 and sold in April 2020 for +136%. Every month, one Canadian stock and one US stock is added to the list. If ever they sell, you'll have to watch. Out of the 87 past picks (87 months), they have sold 19 times. That means they are still holding most of their picks of the past 7 years.

With that information, I can do the ultimate test.

$1000 in every stock they have picked every month on the Canadian side since October 2013 vs $1000 every month in XIU.TO
Motley Fool current value at the end of December 2020 : $156,436
XIU.TO current value at the end of December 2020 : $115,027
The current value after 7 years is 36% higher than XIU.TO

$1000 in every stock they have picked every month on the US side since October 2013 vs $1000 every month in SPY
Motley Fool current value at the end of December 2020 : $189,010
SPY current value at the end of December 2020 : $150,554
To be fair, here's QQQ current value : $215,630
But they've invested in both NASDAQ and NYSE, so here's VTI current value : $151,989
The current value after 7 years is 24% higher than VTI

There's also another portfolio to which I have access. Their monthly picks are documented since January 2018.
Motley Fool current value at the end of December 2020 : $64,656
XIU.TO current value at the end of December 2020 : $43,292
The current value after 3 years is 49% higher than XIU.TO

On the US side
Motley Fool current value at the end of December 2020 : $65,893
SPY current value at the end of December 2020 : $50,260
VTI current value at the end of December 2020 : $51,104
QQQ current value at the end of December 2020 : $62,360
The current value after 3 years is 29% higher than VTI

Now, I subscribed to Motley at the end of December 2020 because I want to use it as a source of investment ideas and to chat on the forums with other stock pickers.

After all, what is few hundred bucks when I've made a few thousands in profits this year from screening through their articles as investment ideas?

I agree with all of you that I don't like their marketing, their click-bait titles, their contradictory free articles (they have higher quality articles for subscribers). Also, if you are wondering how their make money when they offer a service for only $100? First, that's a discount for new members, afterwards it's more like $300 if I recall correctly. Second, they spam with "opportunities" which all have a price tags of a few hundred dollars each. So, yes, their marketing is about fooling the gamblers and all the people who buys into get-rich-quick scams. I don't like that, obviously. But as I said, I can see through that and ignore it, and just get the best of what I need and what I want to test and learn.


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## fireseeker (Jul 24, 2017)

Pluto said:


> 2) Retail investors are not numerous enough to move the market in most stocks.


For sure. 
But if the Fool strategy can reliably beat the market, big money will also pony up $99 to take advantage of the slam dunk. As we know, about 90% of equity mutual funds fail to beat their benchmark over 10-year periods.

If hedge funds, prop desks and institutional money managers are not signing up with MF, maybe we should be asking why.


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## fireseeker (Jul 24, 2017)

MrBlackhill said:


> With that information, I can do the ultimate test.
> ...
> The current value after 7 years is 36% higher than XIU.TO
> ...
> ...


No argument about this. Looking backward, these particular Fool returns are awesome. 

Here is another list of awesome stock pickers:
Top Performing Canadian Mutual Funds in 2020 
YTD returns range from 66% to 95%!

It is easy to find funds/pickers that have extraordinary records, even ones that go back a decade. 
The hard part is finding ones that will keep it going.


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## james4beach (Nov 15, 2012)

I don't think it's wise to gloss over the survivorship bias. It's not just a small detail... it's the heart of this entire game.

When I say they are being misleading, I'm not saying they are telling any lies about their current (surviving) portfolio. They are accurately tracking it, fully transparent.

That's not the misleading part. The problem is the 10+ portfolios they tried before and abandoned. Of their current portfolios, they will eventually abandon one of these too. It might even be the Advisor list you guys are paying for.

But anyone wise to these methods knows better. That's why these guys are peddling their stock pick to retail investors with flashy marketing for the low low price of $99, instead of selling the advice to hedge funds or Wall Street. It's because nobody on Wall Street will buy it, because they are wise to the trick.

But here's the great news. Now YOU are wise to the trick too! You're welcome! lol .... you don't care, I know. Go pay for the subscription.


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## Pluto (Sep 12, 2013)

fireseeker said:


> For sure.
> But if the Fool strategy can reliably beat the market, big money will also pony up $99 to take advantage of the slam dunk. As we know, about 90% of equity mutual funds fail to beat their benchmark over 10-year periods.
> 
> If hedge funds, prop desks and institutional money managers are not signing up with MF, maybe we should be asking why.


They probably are not signing up. They probably already know about all those stocks. 
The purpose of institutional money is to make money for the institution, not the client. 
That's why I buy shares in the institution, and don't pay for advice at the institution. The tellers often try to get me an appointment with an advisor to manage the cash in my account. I tell them to have a look at my stock account. They do and blush. I tell them I do it myself. they blush more. I'm tempted to ask the teller for an interview to get a job as a money manager/advisor because there are endless numbers of naïve people to make money off of. Trust me, these advisor's are really sales people, and they get noticed by management based on how much revenue they bring the institution, not on how much money they make for the client.


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## james4beach (Nov 15, 2012)

capricorn said:


> If the Motley Fools were really so good and trashing S&P, why do they need to peddle subscription all over the place. They should invest and run a hedge fund. Probably they themselves can not follow the advice they dish out.


The Motley Fool people actually did create two mutual funds and an ETF, and the performance of all of them is only about average (index-like).

In reality, they are not able to "trash" the S&P 500 index, because they don't actually know how to pick stocks. They are playing a multiple-portfolios game. It's incredibly important to learn this survivorship bias trick.


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## MrBlackhill (Jun 10, 2020)

fireseeker said:


> The hard part is finding ones that will keep it going.


I agree, but I prefer doing +30% CAGR during 15 years than doing +15% CAGR during 25 years.

Because in the first case I'll retire after 15 years.

I prefer outperforming during a shorter timespan, just enough to retire.


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## depassp (Mar 22, 2020)

Pluto said:


> That's why I buy shares in the institution


Which institution?


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## Pluto (Sep 12, 2013)

depassp said:


> Which institution?


Canadian bank known for a "Wealth Management" division.


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## Jimmy (May 19, 2017)

The service has helped me a lot for their picks, stock picking instruction guides,forums and other information. For $99 they have great reviews of companies, much better than I could find for free and are a well reviewed stock advisory service. They have 10 core stocks of familiar blue chip names they review each year that have easily beaten the market designed for beginner investors really that you can't go too wrong with even if you want to just have that as a portfolio.

Then it is up to you to decide among the others for type, sector etc where you have to do your own research and keep in mind the timing of their recommendations, they aren't infallible and will miss at times too. There is nothing nefarious about what they do as they track and post their results transparently and are generally just very enthusiastic about finding good investments.

I don't like their marketing emails either but you can unsubscribe and just get the stock picks and other monthly reports. They should make the free site better and less marketing oriented too. The subscription service's success is almost in spite of the free site.

Their recommendations on the growth stocks which was a newer area for me were really helpful. At least now w some metrics I can sort of sift through the 100s of ecommerce and other tech stocks growing sales at 20%+ per year and get some idea which have value as it is daunting otherwise.

I think indexes are still fine and they have advantages like being less stressful and still hold many ETFs. Both approaches are good and depend on your risk profile and I may have been a little cynical in response to some of the outright dismissions of stock advisory services. For me I am mainly swapping index ETFs for blue chips w a mix of ~ 35% in growth stocks, 65 % in blue chips,utilities,stable dividend payers etc so still being conservative. For now the returns have been good w their picks and my own so we'll see how this goes too but so far so good.


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## james4beach (Nov 15, 2012)

Jimmy said:


> The service has helped me a lot for their picks, stock picking instruction guides,forums and other information. For $99 they have great reviews of companies, much better than I could find for free and are a well reviewed stock advisory service. They have 10 core stocks of familiar blue chip names they review each year that have easily beaten the market designed for beginner investors really that you can't go too wrong with even if you want to just have that as a portfolio.


No problem with getting reviews and commentary. Probably lots of good information available to their subscribers.


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## depassp (Mar 22, 2020)

Pluto said:


> Canadian bank known for a "Wealth Management" division.


All of the big5 have a wealth management division...






Private Wealth Management | TD Wealth


Investment and financial advice, planning, and strategies with a personalized approach for high-net-worth individuals and entrepreneurs.




www.td.com













RBC Wealth Management


We’ll help you grow and protect your wealth with tailored strategies that focus on what's important to you and the needs of your family or business.



www.rbcwealthmanagement.com










CIBC Private Wealth


CIBC Private Wealth Management offers customized services and solutions to meet all of your financial needs.




www.cibc.com










BMO Private Wealth - Wealth Management, Investing & Banking


Our BMO Private Wealth professionals work with high net worth individuals to develop private wealth management solutions tailored to your goals and needs.




www.bmo.com










Wealth Management Canada - Scotia Wealth Management


For individuals and families with complex wealth management needs who prefer to work with a collaborative team of professionals who can deliver comprehensive solutions.




www.scotiawealthmanagement.com


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## MrBlackhill (Jun 10, 2020)

This was written in 2016.






First, Break The Rules... -- Manifest Investing


This month, we take a look at the track record of Motley Fool founder and rulebreaking leader, David Gardner.



www.manifestinvesting.com







> Morningstar identifies 1404 mutual funds with 15-year track records. How many of them performed better than David’s Stock Advisor selections? ZERO. NADA. Goose egg. That’s right. The top performing fund is CGM Realty (CGMRX), a formidable fund that checks in at 14.9%. It’s not an accident that Mark Hulbert features the Stock Advisor newsletter as one of the best.


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## Pluto (Sep 12, 2013)

depassp said:


> All of the big5 have a wealth management division...
> 
> 
> 
> ...











Canada's RBC turns heads in U.S. with wealth management recruitment push


Royal Bank of Canada's <RY.TO> U.S. wealth management unit has been luring teams managing bigger amounts of assets from much larger rivals, driving a surge in revenue from the new recruits and helping it outperform others in the industry.




www.reuters.com


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## Pluto (Sep 12, 2013)

MrBlackhill said:


> This was written in 2016.
> 
> 
> 
> ...


Thanks for that link. This analysis is more reliable.


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## MrBlackhill (Jun 10, 2020)

I just wanted to show you guys that Motley Fool is not only about wrong marketing strategies, there's value that can be found in such a service. Does that mean you should buy a subscription? No, it may not fit your needs. Maybe you don't need investing ideas. For instance, I'm just testing to see their picks for a year. Maybe you don't need another forum to talk about some stocks. That's all good. I totally agree. But don't make the picture all black or white.

But does that mean the Motley Fool staff is just throwing garbage at their customers? No.

See, on Motley Fool forums, there's a thread about Acuity Ads (AT.TO) because it was one of their picks and it soared more than +1000% in less than one year. Now, people are all excited.

Here's two posts of a Motley Fool staff member to some of that excitement.

Maybe their marketing is wrong because it's all about the over-excitement, but the staff on the forums are doing it right.



Jim Gillies said:


> Hi craftyone,
> 
> “_My question is why trim even if AT has become a large % of your portfolio? Are we not still essentially in the early stages of this company with a really long runway?
> 
> ...





Jim Gillies said:


> Hi eDixit,
> 
> _“A related follow-up question on allocation and watering flowers (I might also ask on SAC Forums later):
> 
> ...


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## Jimmy (May 19, 2017)

MrBlackhill said:


> I just wanted to show you guys that Motley Fool is not only about wrong marketing strategies, there's value that can be found in such a service. Does that mean you should buy a subscription? No, it may not fit your needs. Maybe you don't need investing ideas. For instance, I'm just testing to see their picks for a year. Maybe you don't need another forum to talk about some stocks. That's all good. I totally agree. But don't make the picture all black or white.
> 
> But does that mean the Motley Fool staff is just throwing garbage at their customers? No.
> 
> ...


Their forums are great for stock discussion and information. As you see in SAC there are ~ 160 threads one for each stock they cover but 100s more started by other posters on other stocks. You can find information usually on any stock you want w the search too. Lots of good free advice form the other posters and advisors on investing in general as well .


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## MrBlackhill (Jun 10, 2020)

Just for information purposes, today I calculated Motley Fool's XIRR (MWRR aka DWRR) when investing the same amount of money every month. (They offer 1 stock pick per month)

So, here, I'm reporting the XIRR when investing the exact same amount of money every month.

One service has a track record of 3 years. It shows Canadian and US stocks. I only calculated the Canadian stocks. Their XIRR is an insane 49%, mainly due to AT.TO. Even when taking out AT.TO, the XIRR stays high at 28%. For reference, that's beating XIU.TO’s 9%, SPY’s 19% and QQQ’s 35%.

The other service has a longer track record of 7 years. Still, that’s 7 years of bull market, so Motley Fool still has to prove its skills through a bear market. Anyways, the Canadian picks have an XIRR of nearly 19%, much higher than XIU.TO’s 7%. The US picks have an XIRR of nearly 30%, which beats SPY’s 14% and QQQ’s 24%.

By the way, an XIRR of 30% over 7 years turns a monthly $1,000 ($84,000 invested) into something around $250,000.


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## Pluto (Sep 12, 2013)

MrBlackhill said:


> Just for information purposes, today I calculated Motley Fool's XIRR (MWRR aka DWRR) when investing the same amount of money every month. (They offer 1 stock pick per month)
> 
> So, here, I'm reporting the XIRR when investing the exact same amount of money every month.
> 
> ...


Interesting report. This is the kind of investigative stuff this forum should be doing. Hope you do more.


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## MrBlackhill (Jun 10, 2020)

Pluto said:


> Interesting report. This is the kind of investigative stuff this forum should be doing. Hope you do more.


The issue with such a service is that you get that performance only if you can follow the plan and buy/sell at that exact same day/price. Most of the time, it's possible, unless the stock is very volatile or micro cap.

For instance, I bought HAI.TO from my own research before it was recommended on Motley Fool. Though, a few hours after the recommendation, its price soared +30%. That means some didn't get in on time and/or some paid a huge premium or they are waiting for a pullback.

Some people also use the service as a no-brainer plan to follow, but the truth is that they can't stand the volatility of investing in equities. There's people so pissed off at Motley Fool when their first buy using the service is a loser.

For instance, I bought REAL.TO from my own research before it was recommended on Motley Fool. At the moment, it's my worst pick in terms of performance, but I still think that I should continue holding it. Seems like Motley Fool also thinks the same thing because they didn't send a sell signal. But there are Motley Fool subscribers totally pissed off from losing -20% in 2 months, so they decided to sell at loss. At the moment, it's too soon to tell if they made a better decision, but some people are locking their loss which would've become gains just a few months later.

At the moment, one of the Canadian service with a 87 months history has sold 15 times. Out of those 15 sells, 4 were at loss. They currently have 21 positions in the red and 51 positions in the green. Not everybody can feel comfortable with nearly 1/3 of the positions in the red. Yet, as I said, it's totally outperforming with a XIRR near 19%. Okay, that's because they've picked on SHOP early. Even if I remove it, their XIRR is over 10%, beating XIU's 7%. And why would I remove it? In all of their picks, they always stumble upon a big winner, or more.

On the US side, they've picked pretty early MELI, TTD and VEEV. After all, to offset a -50%, you only need to find a +100%, which they have plenty. To offset a -75%, you only need to find a +300%, which they have plenty. Or even, to offset their worst pick ever (but still holding) currently at -90%, you need a +900%, which they also have. GME insane frenzy? They've picked it in September 2020 and decided to take the profits on January 25, 2021 for a +710% in 4 months. Oh, I've found a few sells that didn't went well. -96%, -84%, -82%. Who cares when you also have all the winners?

At the moment, I don't know if I'll buy their service for more than 1 year. I just wanted to investigate what they were doing and how they are analysing their picks. I'm not following their signals, but I'm looking at their positions for ideas. But I can tell that following their signals truly leads to outperformance - so far. If I find out that I don't have time anymore to do my own researches, or if my stock picking skills aren't as good as I wished, then I'll surely continue paying to follow their signals.

Though, I'll repeat, I absolutely hate their advertising and spamming. I block everything. And all the contradicting articles you see for free about Motley Fool are due to outsider authors publishing on Motley Fool, and it seems like Motley Fool doesn't care if it makes sense or not.

There's that guy from Motley Fool who is stock-picking for one of the services and he's on the forums. Very nice guy. He's been working there for the past 22 years, so I guess he likes his job. You can even see the stocks he owns. https://boards.fool.com/profile/TMFCanuck/info.aspx


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## james4beach (Nov 15, 2012)

Pluto said:


> Interesting report. This is the kind of investigative stuff this forum should be doing. Hope you do more.


The real investigative stuff is what I uncovered, which you should be thanking me for Pluto (you're welcome) which is that Motley Fool has abandoned tons of their previous portfolios, and at this point is really just generating random-ish portfolios and filtering them, to create the perception of great performance.

Seeing the above posts, I think some of you are still not grasping the bigger picture "scheme" that Motley Fool runs, with this endless-newsletters game.

Books have been written on this topic. It's one of the oldest tricks on Wall Street, and is how novices are often fooled into thinking stock picking works. It's why these guys don't actually advise mutual funds or pension funds, and it's why *their own* mutual fund and ETF haven't worked out well.

It's because the whole thing is somewhat of a deceptive scheme. But one which is actually quite difficult to grasp. That's why Wall Street people have been running the same scheme for nearly 100 years.



MrBlackhill said:


> GME insane frenzy? They've picked it in September 2020 and decided to take the profits on January 25, 2021


In which of their 20 portfolios? You're talking about MF as if it's one newsletter, but it's not. It's something like 20 distinct portfolios. Are you writing about one very specific portfolio? If so, please identify it.


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## MrBlackhill (Jun 10, 2020)

First thing, a stock-picking service and a portfolio management service (ETFs, funds) are not the same thing. Not sure how you are comparing them.



james4beach said:


> In which of their 20 portfolios? You're talking about MF as if it's one newsletter, but it's not. It's something like 20 distinct portfolios. Are you writing about one very specific portfolio? If so, please identify it.


They have 3 newsletters services (stock-picking services).

Stock Advisor Canada (87 months)
Hidden Gems Canada (39 months)
Dividend Investor Canada (I'm not subscribed)
They are not portfolios. They are monthly stock picks. Then they track if it's still a good Buy or a Hold and if ever they Sell, they tell you and it's tracked.

When they pick a monthly stock to buy, they write a professional article detailing why. When they sell, they also write an article explaining why.

Ok, let's take an example with stocks we all know. Stock Advisor Canada picks into those mostly well-known stocks. ATD-B dropped recently. What do you think Motley Fool's stock pick was for January? ATD-B, recommendation sent on January 13, 2021. I saw it, I got the email. It's still flagged as a "Best Buy Now" at the moment. It's not the first time they pick ATD-B. When was the last time? May 9, 2018. They are picking stocks since October 2013. When was the first time they recommended ATD-B? 2014.



james4beach said:


> It's why these guys don't actually advise mutual funds or pension funds, and it's why *their own* mutual fund and ETF haven't worked out well.


That's certainly why the global fund FOOLX is a 5-star rated fund on MorningStar, a great outperformer with over 10 years of history and nearly 15% CAGR since inception for a globally diversified fund. But TMFGX didn't do as good, that's true, that's an average performer.

And how can you judge their ETFs?
I guess you'll tell me TMFC is a bad performer at 22% CAGR since inception, 3 years ago?
Or that MFMS is a bad performer at 39% CAGR since inception, 2 years ago?


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## newfoundlander61 (Feb 6, 2011)

I don't invest based on their articles but sometimes find information that is good to know about a specific holding I may have.


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## MrBlackhill (Jun 10, 2020)

newfoundlander61 said:


> I don't invest based on their articles but sometimes find information that is good to know about a specific holding I may have.


Yes, their free articles may or may not have good information because they are published by different authors which are not necessarily part of the Motley Fool team and that's why there's diverging opinions, but I have also found some great information. The author is more important than the publisher, so I check who's the author.


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## Jimmy (May 19, 2017)

james4beach said:


> The real investigative stuff is what I uncovered, which you should be thanking me for Pluto (you're welcome) which is that Motley Fool has abandoned tons of their previous portfolios, and at this point is really just generating random-ish portfolios and filtering them, to create the perception of great performance.
> 
> Seeing the above posts, I think some of you are still not grasping the bigger picture "scheme" that Motley Fool runs, with this endless-newsletters game.
> 
> ...


No it isn't. Mr Blackhill did a a real study . All you posted was just a personal biased opinion. In fact their main newsletter has been in existence unchanged since 1993 which you always omit to mention. As already discussed repeatedly they add and change some theme portfolios based on themes of the time. ie 5G and cloud portfolios now which will be discontinued when 6G and new IT themes roll out.


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## Pluto (Sep 12, 2013)

james4beach said:


> The real investigative stuff is what I uncovered, which you should be thanking me for Pluto (you're welcome) which is that Motley Fool has abandoned tons of their previous portfolios, and at this point is really just generating random-ish portfolios and filtering them, to create the perception of great performance.


I have abandoned tons of my own portfolios too. its good to know when to sell. Why do I have to have the same stocks now that I had 40 years ago?

I prefer folks with an open mind and who can accept the results. Negative thinkers with a preconceived conclusion are less valuable.


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## MrBlackhill (Jun 10, 2020)

Just thinking out loud, here. Peter Lynch once said "All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don't work out."

What do you think happens when someone invests the same amount of money every month on the Motley Fool stock pick of the month?

Hidden Gems picked on :

AT.TO, up +1537%, which can break even 15 other picks going bankrupt
TDOC, up +723%, which can break even 7 other picks going bankrupt
GME, sold for +710% profits, which can break even 7 other picks going bankrupt
FLGT, up +481%, which can break even 5 other picks going bankrupt
APPN, up +460%, which can break even 4 other picks going bankrupt
Those 5 picks can break even a total of 38 other picks which would all go bankrupt.

Does that mean they will always find such gems? No. But they've been doing great so far.

Oh, and Stock Advisor picked on SHOP.TO on March 3rd, 2016. I'll let you calculate the returns on that one. Hint, it can break even with nearly 40 other picks going bankrupt.

Sure, you don't want your winners to just break even your losers, but it's only the put things into perspective.

Stock-picking doesn't seem risky when you know what you're doing.


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## Pluto (Sep 12, 2013)

MrBlackhill said:


> Just thinking out loud, here. Peter Lynch once said "All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don't work out."
> 
> What do you think happens when someone invests the same amount of money every month on the Motley Fool stock pick of the month?
> 
> ...


Lynch has been an inspiration to me, and it has worked out very well. He voiced a similar idea on a television interview many years ago - probably wall street week. He said something like all you need is one or two really good one's in a lifetime. that comports well with Phil Fischer's idea to let winners run. I am loathe to sell my best performers. If I need to sell something I look at my worst performers first. 
By all means, buy their pick of the month. Keep the winners, and if it makes sense sell the poor performers. that way you won't have to work so hard for your nest egg.


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## like_to_retire (Oct 9, 2016)

Pluto said:


> .....that comports well with Phil Fischer's idea to let winners run. I am loathe to sell my best performers. If I need to sell something I look at my worst performers first.


That's not really keeping with the old adage of buy low, sell high - is it? I've done fairly well following that method through my life. 

I suppose it would be called a value play. I generally watch stocks for times when they're low and the market hasn't priced them for what they're worth and then I buy. If I feel they've run up enough, I'll sell the excess that exceeds the percentage I've assigned to that sector. Again, it just follows the simple buy low, sell high.

Seems like the opposite of what you're recommending.

ltr


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## MrBlackhill (Jun 10, 2020)

like_to_retire said:


> That's not really keeping with the old adage of buy low, sell high - is it? I've done fairly well following that method through my life.
> 
> I suppose it would be called a value play. I generally watch stocks for times when they're low and the market hasn't priced them for what they're worth and then I buy. If I feel they've run up enough, I'll sell the excess that exceeds the percentage I've assigned to that sector. Again, it just follows the simple buy low, sell high.
> 
> ...


Not quite. "Buy low, sell high" (@like_to_retire) and "Cut your losses short and let your winners run" (@Pluto) are two adages which can be used together.

It simply means... buy low, watch how it goes, cut your losses short if it goes wrong, let your winners run if it goes right, then sell high only if there's a very good reason to sell.









Let Your Profits Run Definition


Let your profits run is an expression that encourages traders to resist the tendency to sell winning positions too early.




www.investopedia.com












The Art of Cutting Your Losses


Taking corrective action before your losses worsen is always a good strategy. Find out how to keep your capital losses small and let your winners run.




www.investopedia.com


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## Pluto (Sep 12, 2013)

like_to_retire said:


> That's not really keeping with the old adage of buy low, sell high - is it? I've done fairly well following that method through my life.
> 
> I suppose it would be called a value play. I generally watch stocks for times when they're low and the market hasn't priced them for what they're worth and then I buy. If I feel they've run up enough, I'll sell the excess that exceeds the percentage I've assigned to that sector. Again, it just follows the simple buy low, sell high.
> 
> ...


Give some examples ltr. On Monday are you going to sell everything above your buy price? and keep everything below your buy price?


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## Pluto (Sep 12, 2013)

like_to_retire said:


> That's not really keeping with the old adage of buy low, sell high - is it? I've done fairly well following that method through my life.
> 
> I suppose it would be called a value play. I generally watch stocks for times when they're low and the market hasn't priced them for what they're worth and then I buy. If I feel they've run up enough, I'll sell the excess that exceeds the percentage I've assigned to that sector. Again, it just follows the simple buy low, sell high.
> 
> ...


I'm not convinced you know what "value" is.


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## like_to_retire (Oct 9, 2016)

Pluto said:


> I'm not convinced you know what "value" is.


You're probably right.

ltr


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## MrBlackhill (Jun 10, 2020)

All years certainly won't be like 2020, but if I look at the 12 Canadian stock picks and the 12 US stock picks for the 12 months of 2020 (Hidden Gems service) and if I say that I had put $1,000 in each of those stocks when they were recommended (total $24,000), I'd be sitting on $72,000 today. That's 3x or +200%. That's even more impressive when looking at XIRR. Mainly due to AT.TO, GME and FLGT. The other picks "only" had returns of 40% to 100%+...

Either very lucky to pick 3 amazing winners out of 24, either awesome stock pickers for 2020.


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## Pluto (Sep 12, 2013)

MrBlackhill said:


> All years certainly won't be like 2020, but if I look at the 12 Canadian stock picks and the 12 US stock picks for the 12 months of 2020 (Hidden Gems service) and if I say that I had put $1,000 in each of those stocks when they were recommended (total $24,000), I'd be sitting on $72,000 today. That's 3x or +200%. That's even more impressive when looking at XIRR. Mainly due to AT.TO, GME and FLGT. The other picks "only" had returns of 40% to 100%+...
> 
> Either very lucky to pick 3 amazing winners out of 24, either awesome stock pickers for 2020.


thanks for doing these calculations


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