Trading stocks should be relatively simple. A good company with a solid balance sheet issues shares, investors buy them, and the share prices rise as the company’s prospects improve. Any college freshman coming out of a Finance 101 class could tell you that the stock market is the embodiment of logical capitalism, that investing is easy, and that a little math is all it’ll take for them to turn their birthday money into a sprawling investment empire.
If those freshman had waited for a few semesters, they would’ve learned a few valuable lessons:
- The stock market is rarely logical.
- There’s a reason their finance professors don’t work on Wall Street anymore.
- They should’ve used their birthday money to buy beer instead.
Security Analysis-style value investing is great and all, but you won’t be building an empire of any size on the back of low double-digit annual returns anytime soon.
It is easy enough to find stocks with solid balance sheets and future prospects. All you have to do is check their SEC filings and do a little number crunching. It’s much harder to find stocks that haven’t had all that priced in already, and it’s even harder to find stocks that are undervalued and can deliver significant returns in the near- to mid-future.
Picking stocks is an art and a science. It’s so hard, in fact, that people are willing to shell out big bucks just for recommendations from the right people. People like, oh, the folks at the Motley Fool, for instance.
Motley Foolishness
The Motley Fool makes its money by being one of the most reliable stock research and investment advice firms in the business. They don’t always get it right, obviously, but that’s true of literally everyone. When they do get it right—and they do so on a pretty regular basis—though, they don’t just swing for the fences. These Fools knock it right out of the park.
Over the years the Motley Fool has expanded its team and its purview to cover a whole range of potential investments. You can get advice on options, retirement guidance, digital assets, and every flavor of stock from biotech to augmented reality to fintech and entertainment.
Pro Tip:
The Motley Fool’s Stock Advisor stock picking service has MORE THAN TRIPLED the S&P 500 over the last 20 years. The Everlasting Stocks service is still new, but could also provide outstanding returns in the future.
That stuff’s great and all, but we aren’t here to talk about all of the stuff the Fool has going on behind the curtain. We’re only here to talk about two of their offerings, the Stock Advisor service and their Everlasting Stocks service. What are they? What kind of numbers are they putting up? Which one would be the best choice for a busy investor on the go like yourself?
A Little Overview, Because Why Not?
Let’s take a quick look at what these two services are from a high level.
What they are:
Stock Advisor and Everlasting Stocks are actively managed portfolios of stocks hand-picked by experts at the Motley Fool. They’re helmed by the same people—Tom Gardner, co-founder of Motley Fool and Andy Cross, the chief investment officer—and they both employ elements of the Motley Fool’s investing philosophy. They also list the same Principles for Success on their pages:
Principles for Success:
- Buy 25 or more companies recommended by the Motley Fool over time
- Hold those recommended stocks for 5 years or more
- Invest new money regularly
- Hold through market volatility
- Let your portfolio’s winners keep winning
- Target long-term returns
The two services do differ in some ways, most notably in the stocks that they recommend; but we’ll cover that in a little bit.
How much they cost:
- Stock Advisor: $199/year
- Everlasting Stocks: $299/year
Pro Tip:
The Motley Fool’s Stock Advisor stock picking service has MORE THAN TRIPLED the S&P 500 over the last 20 years. The Everlasting Stocks service is still new, but could also provide outstanding returns in the future.
The Motley Fool: Stock Advisor
The Motley Fool’s Stock Advisor service is exactly what it sounds like. If you sign up for the service you’ll receive a few things:
- Access to the Stock Advisor page on the Motley Fool’s website
- Two new stock picks every month
- Regularly updated top 10 stock rankings picked from over 300 stocks
- A set of starter stocks recommended for new and veteran investors
- A bunch of educational materials and research
- Access to the Motley Fool’s investing community
If you’re a good investor, you’re probably thinking one thing: Is the Stock Advisor service worth $199 per year? And if you’re a really good investor you’re probably wondering something along the lines of: What’s in it for me? Why not just do my own thing?
Here’s why.
Since the inception of the Stock Advisor service back in the ancient year of March 2002, the S&P 500 has delivered time-weighted returns of 117.35% as of writing. The Stock Advisors portfolio has returned time-weighted returns of 392% in the same period.
How does the time weighting work? Great question. But because math is math, it’s pretty safe to assume that the stocks recommended by Stock Advisor have returned about 3.4 times as much as the S&P 500 as a whole.
Let me ask a rhetorical question: What’s the point of hiring a financial advisor, paying for stock recommendations, or doing anything other than just buying an index fund and calling it a day? Oh, that’s right: To beat the market. That’s literally the whole point.
Given these numbers, it’s pretty clear that the Stock Advisor service is worth the price of admission—provided you actually follow the directions and hold onto the stocks for the long run.
There’s just one issue: Things aren’t as clear-cut in the short run.
Of the 15 most recent recommendations, only 8 have gone up in price since they were first recommended. Of those, only 6 are up compared to the S&P 500 over the same period. That doesn’t look great, but remember that the oldest of the 15 recommendations was only made back in September of 2022. You need to give these things time to appreciate in value, right?
The picture looks a lot clearer when we look at the first 15 recommendations made as part of the Stock Advisor service. Every single one of the first 15 recommendations is in the green since 2002-2004, and 13 of them are well over the S&P’s returns over the same period.
In theory, the Stock Advisor service should be a bit more short-term than the Everlasting Stocks service (hence the whole “Everlasting” thing), but the portfolio is clearly more than capable of delivering outstanding returns over the long run.
For more information on Stock Advisor, read our full Motley Fool Review.
The Motley Fool: Everlasting Stocks
The Everlasting Stocks service is, again, exactly what it sounds like. The whole point of the service is to pick stocks that Mr. Gardner thinks will be worth buying and holding for as long as humanly possible. When you sign up for the Everlasting Stocks service, you’ll get a lot of the same stuff as the Stock Advisor service:
- Access to the Everlasting Stocks page
- 15 immediate stock recommendations from Tom Gardner’s personal holdings
- Access to the Everlasting Stocks/Motley Fool investing community
- Proprietary research and reports
- Two new stock picks each month
The numbers for the Everlasting Stocks portfolio aren’t as compelling as Stock Advisor’s, though a big part of that is because the Everlasting Stocks service has only been around since September of 2018. That’s less than 5 years, which means the service hasn’t yet had time to reach its “hold for at least 5 years” threshold. That being the case, it isn’t all that surprising that the portfolio’s actually down 2.61% since its inception compared to the S&P’s growth of (time-weighted) 12.17% over the same period.
It’s kind of hard to say what the actual practical differences between the two services are beyond their stock recommendations. Their philosophies and principles for success are similar, if not identical, they’re both run by Tom Gardner and Andy Cross, and they provide the same number of stock recommendations each month.
Read our full Motley Fool Everlasting Stocks review.
Pro Tip:
The Motley Fool’s Stock Advisor stock picking service has MORE THAN TRIPLED the S&P 500 over the last 20 years. The Everlasting Stocks service is still new, but could also provide outstanding returns in the future.
So, Which One’s Better?
From a purely numerical standpoint, the Stock Advisor service seems like the better call. It’s cheaper, it has a longer track record, and it has a documented history of stellar returns. It’s also been recommending stocks for a long time, so there’s a ton of older recommendations that can still be of use to you if you’re looking to expand your portfolio.
All that said, it’s probably not a great idea to bet against Tom Gardner and the rest of the Motley Fool. If they’ve chosen to put the Everlasting Stocks service out into the world—plus price it higher than the Stock Advisor service—then chances are that they’re pretty darn confident that it’s going to pay off.
If you have the extra cash and really feel like covering all your bases, the Motley Fool’s Epic Bundle gives you access to both services plus their Rule Breakers and Real Estate Winners services. The whole Bundle is only $499 a year, which is a pretty great deal when you consider the fact that buying all four services on their own would be $1,046 per year.
And if you’d like to learn more about some other Motley Fool services, read our Motley Fool Options review and Motley Fool Augmented Reality review.