Motley Fool Advisor returns?

[OverThinkMuch]

After I paid for Rule Breakers, I went through every buy recommendation and entered them into a spreadsheet. Using their first buy recommendation and price, I calculated the gain and then the CAGR. Looking at the picks I entered into a spreadsheet, 88 beat the market (over 10.74%/year) and 31 underperformed. If you exclude stocks under a year old, that would be 85 beat and 24 underperformed. I was too lazy to research stocks that are no longer around, so I don't know the mix of acquired/collapsed stocks. That's an impressive ratio.

I see a public advertisement where Rule Breakers mentions a few stock picks and their performance from 2017-2020: Tesla +1320% and Shopify +4628% (VTI +82%). If you bought 24 stocks that went bankrupt, but also Shopify and Tesla, you beat the market. Now consider that the 24 multi-year losers had a median -3%/year performance, not bankruptcy. And that Tesla performance is extremely modest of them - Rule Breakers recommended Tesla long before 2017, and left out their +58% YTD performance. Tesla has done much better than +1320%, but they limited the time frame for comparison.

 

[thefist]

Happy Thanksgiving to you, too.

I login to "Rule Breakers", click "Buy Recommendations", then click page [10]. That last page shows me a stock from Oct 2013, and one from Sept 2013. I don't see anything before Sept 2013.

When I login I see a More tab on upper right. Click that, then Performance

That shows all stocks since 2004. If that doesn’t work, try customer service.

 

[OverThinkMuch]

When I login I see a More tab on upper right. Click that, then Performance

That shows all stocks since 2004. If that doesn’t work, try customer service.

Thanks, that's very helpful. I think that's a more complete picture, although it does have some gaps, like 2006 having 4 entries.

 

[thefist]

Not hard to understand at all, it sounds like a smoke and mirrors shell game (prove me wrong)!

"so you can’t just look at historic returns of the S&P." - Oh, yes I can! And do!

I think you are saying that to compare, you must match up the time/amount in market with their buy's times/amounts - same $ invested at the same time. Nope, that's where the smoke starts clouding the view.

Because for me, the alternative to some stock pickers newsletter picks is to just buy and hold. That is what I do, so that is what I compare to. Simple. Do-able. So I do it.

OK, I think you refer to post # 12, which does seem to match my description. So if their buy/sell/buy/sell S&P under-performed a buy & hold S&P, that just helps confirm that buy & hold the S&P is better than any timing (although their timing wasn't aimed at maximizing S&P, but still). Those kinds of shenanigan comparisons also have me doubting their performance numbers as well:

Another way to view it: If I didn't buy their newsletter, I wouldn't know their timing to buy/sell the S&P, so I wouldn't be able to compare anyhow! It's a totally bogus, adulterated 'benchmark'. Adds to my skepticism.

-ERD50

The time weighted method they use is proper. As I wrote above, SA is a stock idea service, not a real money portfolio. The measurement method needs to be consistent with a dollar cost averaging style.
This is how we all would need to measure our own results from day 1.

SA adds 2 stocks per month, so an equal purchase of some benchmark is needed to compare them. It’s not hard to understand. This isn’t a lump sum investment in 2002 and forget about it.

And I believe their results were confirmed by Mark Hulbert, so go tell him he’s wrong too.

Here’s the thing about MF, they have always encouraged the use of cheap index investments. They have a cheap Retirement newsletter which has reference portfolios consisting of mutual funds, and another with ETFs. One can copy those to get a diversified, tax efficient portfolio. For those who wish to go further, they offer services for that too. But it’s not necessary and they ARE the first to say that.

Haters gotta hate I guess.

 

[Aerides]

A reminder, threads in this sub-forum not the place for some of the arguments being attempted in recent days:

https://www.early-retirement.org/forums/f44/refocusing-the-forum-read-before-posting-110405.html

"Many members wish to discuss specific opportunities and alternatives without the distraction of more popular index/passive investing methods. All members are free to post in all threads in both forums, but we ask that debating/challenging investment approaches be limited to FIRE and Money."

 

[thefist]

For those that may have missed it, there was a thread from earlier this year about SA:

https://www.early-retirement.org/fo...l-stock-advisor-really-worth-it-106666-3.html

Post #44 from Running_Man is especially worth reading.

 

[garyt]

That is such ridiculous logic.

Seriously, you ask what if they don't have any money to invest? Who takes advice from someone too poor to invest?

Yes, they are monetizing their skills, but their skills are convincing people that they have insight that they lack. Pickpockets monetize their skills.

PT Barnum was right.


Oh, and Happy Thanksgiving!

Again, lots of people here don't like anything but index funds and if they don't like it, it can't work. And they can't help themselves from saying it. Nobody's saying you have to use them.
As to not having money to invest, it obviously doesn't apply to them as I'm sure they were quite profitable before they started their investment services, but everybody has to start somewhere. There was a time when I didn't have money to invest in stocks I liked. Some college nerd without a penny in his pocket could become the next Peter Lynch. And no matter how much you have, more is better, right?
You're PT Barnum comment shows where you stand. I and others here have posted some of their big gains, and we've stated that we did real well with their recs but we have to be "Suckers who are born every minute" because you and others don't think it can work. The negativity here can be strong some times.

 

[OverThinkMuch]

What am I missing about Stock Advisor (SA) that makes it perform better than Rule Breakers (RB)?

They've revealed AMZN publicly, and from their data SA picked it 200x ago. Maybe Amazon ensured SA beating RB? On the flip side, I've read that David Gardner's picks (including AMZN) performed better than his brother Tom... so should I focus on RB, which David runs?

(And thanks, mods, for clearing away the non-active investing discussion)

 

[bobandsherry]

I can't speak for their long term "advice", but I got a free account earlier this year and thought I'd look at what they advised at that time. Here was their "can't lose" long term holds from February 23 and their performance to date:

PINS: (43.39%)
LMND: (59.16%)
FVRR: (-46.57%)
ZM: (-43.27%)
CRWD: +6.53%
IDXX: +15.67%

Total for the portfolio (19.62%)

 

[WhenIsItTime]

The time weighted method they use is proper. As I wrote above, SA is a stock idea service, not a real money portfolio. The measurement method needs to be consistent with a dollar cost averaging style.
This is how we all would need to measure our own results from day 1.

SA adds 2 stocks per month, so an equal purchase of some benchmark is needed to compare them. It’s not hard to understand. This isn’t a lump sum investment in 2002 and forget about it.

And I believe their results were confirmed by Mark Hulbert, so go tell him he’s wrong too.

Here’s the thing about MF, they have always encouraged the use of cheap index investments. They have a cheap Retirement newsletter which has reference portfolios consisting of mutual funds, and another with ETFs. One can copy those to get a diversified, tax efficient portfolio. For those who wish to go further, they offer services for that too. But it’s not necessary and they ARE the first to say that.

Haters gotta hate I guess.

I agree with this. When you listen to MF talk to their community, they are speaking to folks in their income earning years who have new money to invest monthly. I'm fine with their comparison for that reason.

However, they seem to use a cumulative return approach. Since inception that result has been good. Not all members have participated that long. I wish they would show the return from each new year cumulatively.

I rejoined MF for $99.00 in 2021, after many year hiatus, with the Stock Advisor program. I did a calc of recommendations for 2021 at a $3k investment level to the nearest whole share compared to S&P 500 investment on same day using closing prices.

MF recommendations have accumulated an 8% loss (not annualized). Benchmark S&P 500 investments would be up 13%.

MF does have some followers as the 24 picks in 2021 rose an average of 3% on pick day from open/close price.

 

[bobandsherry]

I can't speak for their long term "advice", but I got a free account earlier this year and thought I'd look at what they advised at that time. Here was their "can't lose" long term holds from February 23 and their performance to date:

PINS: (43.39%)
LMND: (59.16%)
FVRR: (-46.57%)
ZM: (-43.27%)
CRWD: +6.53%
IDXX: +15.67%

Total for the portfolio (19.62%)

Another month later, this is the performance since February. Not impressed.
PINS: (54.42%)
LMND: (65.68%)
FVRR: (56.77%)
ZM: (50.59%)
CRWD: (2.66%)
IDXX: +26.20%

Total for the portfolio (21.72%)

 

[OverThinkMuch]

I can't speak for their long term "advice", but I got a free account earlier this year and thought I'd look at what they advised at that time. Here was their "can't lose" long term holds from February 23 and their performance to date:

What is the source for your quote "can't lose"? That doesn't sound like anything I've ever read on any investment website. Especially since the SEC would consider that fraud - investments can lose, and I've never seen Motley Fool claim otherwise.

What do you mean you got a free account?

 

[OverThinkMuch]

Seeing as there might be no reply, I wanted to give my take on Motley Fool's suggested high growth stocks. They have lost significantly in the past few months, and I like them. If I buy a utility and it barely moves, but rarely loses much, that's normal for a low volatility stock. But stocks with potential for explosive growth also have explosive downside when conditions are against them.

For many tech stocks, lockdowns were good business. And now inflation is high, and the Fed plans to combat it by raising interest rates. Higher interest rates hit aggressive growth stocks hard, so this is a bad environment for them. I would be very suspicious if these stocks only lost a little - they are supposed to lose a lot in these circumstances.

 

[bobandsherry]

What is the source for your quote "can't lose"? That doesn't sound like anything I've ever read on any investment website. Especially since the SEC would consider that fraud - investments can lose, and I've never seen Motley Fool claim otherwise.

What do you mean you got a free account?

Let me start with the 'free account'. There was a promo that gave me a credit back to my credit card for signing up with MF. So it was "free".

As for "can't lose", these were specifically noted as "BEST BUYS NOW". Sure, they give their disclosures, but a pot of losers, and BIG losers at that. I just created a watchlist from these "recommendations" to see how they perform, after all MF likes to boast about their big returns. So I tracked these and they were all dogs, but they don't mention those These are all stocks that you should hold for 5 years to get their bit returns. I'll check back in 4 more years on these

 

[bobandsherry]

Here's MF's current list of recommended stocks and their reported performance. I truncated it down to the first 35, covers their past year of "best buys". You can decide if this is advise worth paying for.

 

[aja8888]

Here's MF's current list of recommended stocks and their reported performance. I truncated it down to the first 35, covers their past year of "best buys". You can decide if this is advise worth paying for.

View attachment 41461

Lots of RED on that chart!

 

[OverThinkMuch]

Let me start with the 'free account'. There was a promo that gave me a credit back to my credit card for signing up with MF. So it was "free".

As for "can't lose", these were specifically noted as "BEST BUYS NOW". Sure, they give their disclosures, but a pot of losers, and BIG losers at that. I just created a watchlist from these "recommendations" to see how they perform, after all MF likes to boast about their big returns. So I tracked these and they were all dogs, but they don't mention those These are all stocks that you should hold for 5 years to get their bit returns. I'll check back in 4 more years on these

Thanks for clarifying. In my view a "dog" is a stock that underperforms over long time frames - year in, and year out. I expect lots of people to give up on Motley Fool, but I expect some of those stocks to pay for the others in the next several years.

Take Zoom (ZM), with an IPO in Apr 2020. The pandemic pushed their stock from $80 to $500 as they became a household name. Good investment? And then lockdowns became less likely and people went out more, and Zoom plummeted to $178. Bad investment? I think the timing matters a lot in the short term, as it has for Zoom.

 

[Montecfo]

If the strategy has worked over the long-term, then to me that is what matters.

I would expect underperformance at times as should anyone. By definition, their ideas are LT growth names. Ride can be expected to be bumpy, and that volatility provides opportunities to add to positions.

It's a bit like going on an exercise program hoping to lose 10 pounds over six months. Two weeks in you have gained a pound.

You stop exercising since it is not "working".

As far as my experience, I am aware that I own 2 MF recommended stocks (Which I chased down and bought or added to based on stock gumshoe.com);

Shopify (SHOP) and The Trade Desk ( TTD). I have huge gains in both. Both have been terrible recently but I still like for the long-term and look to add to.

Not an apologist for TMF but I am for these ideas.

 

[matjung]

As far as my experience, I am aware that I own 2 MF recommended stocks (Which I chased down and bought or added to based on stock gumshoe.com);

Shopify (SHOP) and The Trade Desk ( TTD). I have huge gains in both. Both have been terrible recently but I still like for the long-term and look to add to.

Not an apologist for TMF but I am for these ideas.

I completely agree with you that both lost almost 40 to 50% in the last few months.
You are not worried that they may go down another 50% in the short run?

 

[mebden]

Yesterday I paid $100 for 2 years of "Motley Fool Rule Breakers". I was curious and want their help with active investing. I'm keeping most of my portfolio in passive index funds, but also exploring some of my picks, and some of theirs. I think it's fair to charge money, so I won't reveal their specific picks. But when I login, they showed this month's 2 picks, and suggested 3 other stocks. They also have their prior suggestions, each with an article.



Why not share their picks you paid for it and may give some other people here some laughs at what they want people to buy.

 

[Montecfo]

I completely agree with you that both lost almost 40 to 50% in the last few months.
You are not worried that they may go down another 50% in the short run?

Not in the slightest. I expect to add to them.

That's because I have researched them and understand their businesses and prospects.

I hold them for the long-term. I bought them when markets were down hard.

I believe your greatest opportunities arise in down markets when trading becomes irrational.