Motley Fool Stock Advisor – Update
It’s a bit early for a results update on the Motley Fool Stock Advisor service, as the picks take a long time to realise their full value, with the average holding time for a share being 3-5 years.
So we thought we would just do a quick update on how we have found the service so far.
Basically you normally receive one pick from each of the Gardner brothers, Tom and David, every month together with their reasoning for their pick.
I really like the detailed explanations for their stock picks. They are a mixture of sound reasoning as to why the particular company is expected to grow (and thus the share price should grow) and detailed (but not boring and overly-long) analysis of the numbers.
You can see why they have made such incredible picks, like 500-bagger Amazon, 40-bagger Netflix and so on over the years.
On the website you can also look back at all their previous picks and the thinking behind them, which is interesting. Quite a lot of their predictions about how companies would grow have proved startlingly accurate!
There are David and Tom’s top 5 “Best Buys” now, plus their 15 “Starter Stocks” – the essential companies that embody David and Tom’s investing philosophies and the ones they think should form the basis of your portfolio. These are mainly big-name companies that we’ve all heard of and have been solid growth engines, with more expected.
In addition you will find other features on the site such as a community forum to discuss things with other members, plus a “scorecard” to track stocks you are interested in.
After signing up to the Stock Advisor service, you are hit with quite a lot of marketing to sign up to other Motley Fool services. Some of these actually look quite interesting, particularly the Rule Breakers and Options Trading services.
However, these are all considerably more expensive than the Stock Advisor service, which is a squeak at a mere $99 per year.
So overall our impressions of the service are very good so far. Obviously as we say only time will tell how they get on in the long term with their stock picks, but we will update things periodically on the progress being made.
Motley Fool Stock Advisor – New Review
22nd November 2016
Among the many dozens of e-mails, adverts and requests we receive each week to look at betting and investment opportunities, occasionally one comes along that really sparks our interest.
This happened to us today when we came across an article talking about a stock recommended by a guy called David Gardner, who is the co-founder with his brother Tom of the popular Motley Fool share website.
The article went on to mention that David Gardner had a pretty decent record in his stock tips, having recommended Amazon back in 1997 (and again in 2002).
Now everyone knows that Amazon has grown massively as a company since those recommendations. But how much exactly?
Well, back in 1997, Amazon was worth around $1.50 per share. In 2002, it was around $15 per share.
Guess what it is today?
A whopping $785 per share.
Yep, that’s not a typo – it really is $785 per share.
That is pretty astonishing growth. And yet, back in 2002, most people would certainly have heard of Amazon, used its services and would have expected it to grow as a company.
But how many people actually bought some shares
Well David Gardner did and now he’s sitting on a 500-bagger (i.e. a share that has grown 500-fold, or 50,000% since he bought it).
Intrigued by this, I started looking at some of the other recommendations made by David and his brother Tom in their Stock Advisor newsletter.
How about Netflix – advised in 2007 at $2.69 per share, now worth $118.
Or Nvidia, advised in 2005 at $7 a share and now worth $93.
There is Priceline group, advised in 2004 at $23 and now worth $1,526.
Or Walt Disney, advised at $3 per share in 2002 and now worth $98.
Some pretty astounding success stories there, any one of which could have made you pretty wealthy. Think if you had invested just $1,000 in Amazon when he recommended it in 2002, you would have made a cool half a million dollars.
Looking at their overall record, obviously not every stock they pick is a winner and there have been some losers as well.
But the beauty of this kind of investing is that you can afford a few losers if you have some shares that 10, 20, 50 or even 500-bag.
Indeed, David has averaged an incredible 300% profit for each of his stock picks whilst Tom has managed a very respectable 81%.
And this isn’t one of those “throw enough stuff at the fan and some will stick” situations either. They tend to give out just one or two stock picks per month, so it is a very selective service and should be manageable in terms of running a portfolio based on their picks.
The other thing we like about this service is that these are all big companies they are investing in, not some fly-by-night penny share nonsense that you see ramped by the pump and dump merchants.
That means they shouldn’t suffer from some of the problems we have seen with other share services that recommended much smaller stocks, where they recommend a tip and then it has shot up in price by the time you get to buy it.
We are quite excited about this service, as you can imagine. It takes the approach that we think is the correct one for investing in shares – buy and hold for at least 3-5 years.
The only negative we can see from looking at the results is that the recent results over the last couple of years aren’t quite as impressive as previous years, but then a lot of their really big wins took a few years to build, so this is perhaps understandable.
Anyway, we have signed up to their $99 per year subscription today and will be commencing a review.
Obviously given the nature of their approach, we will have to run the trial for longer than the normal three months and will aim to run it for a year.
In just a year we won’t see the kind of massive winners they have had, which as we say take many years of growth, but it should give us ample time to judge how the service works in practice and to see if it is worth carrying on with.
Just a final note to point out this is the US version of Motley Fool’s Stock Picks, as there are ones in other countries as well but it is the US one that we will be reviewing here.
Onwards and upwards then – let’s hope they find the next Amazon!