Investing in the stock market is a rewarding way to plug into the economy and make money.
However, anybody who knows anything about investing knows that it's not easy.
In fact, picking stocks that are WINNERS is very difficult.
If you've ever seen an ad for a Motley Fool total conviction stock, you may be wondering, “What does this mean, and how does it relate to picking winning stocks?”
Don't worry – we will get into that in a little bit.
There is an entire industry of hedge funds and wealth management firms dedicated to finding the best ways to find companies that are going to perform well.
So you may be asking yourself, “What can I do to get ahead and make wise investment decisions?”
The first thing to know is that asking this question is a sign of maturity for an investor.
This may seem like a surprise, but many people think that they can beat the market by themselves without any help or research.
What happens to these people?
These people typically lose a lot of money and blame factors outside of their control.
Today, we are going to look at investment research as a whole and why the Motley Fool and their “total conviction” stocks can be an excellent resource for any investor.
Stock Picking: Two Schools of Thought
Fundamental Vs. Technical Analysis
Before we can delve into why a total conviction recommendation is so exciting, let's discuss the two most prominent schools of thought regarding stock valuation.
On one side of the aisle, you have fundamental investors.
On the other side, you have technical analysts.
Each style of investing has its own merits, strengths, and weaknesses.
Let's explore them here.
Fundamental analysis focuses on everything related to the company that is issuing the shares of stock.
It's called fundamental analysis because it takes the most complicated metrics and breaks them down to their base level.
Fundamental analysts answer questions like:
- What industry is this company in?
- What is their market share in their sector?
- Are there financials painting an optimistic picture or a negative picture?
If you were going to compare two stocks in the same industry, you would look at things like:
- Company size;
- How many shares they have outstanding; and
- What their growth trajectory looks like.
One of the best litmus tests for a company's financial performance is looking at their earnings per share history online.
The earnings-per-share metric tells an investor how much money a single share of stock has either made or lost for a given period.
You can check earnings-per-share reports on the NASDAQ website or on the company investor relations page on their website.
The goal of fundamental analysis is to compare apples to apples (or Apples to Samsungs) by using standard standards across the board.
A lot of fundamental analysis is done using financial ratios, analyzing quarterly reports, and projecting sales and revenue into the future using numbers from the past.
Famous investors like Warren Buffett and Ray Dalio have made their fortunes by using fundamental analysis to pick the right companies to put in their portfolio.
Technical analysis is primarily focused on stock charts and the daily volume of a given security, without paying much attention to what the company actually does or if it is successful or not.
These types of investors want to understand what the market as a whole thinks about a particular stock.
If it goes one way, it will signal the trader should use one type of strategy.
If it goes the other way, then the trader should bet the other direction.
Setting goals for technical trading is very different because the only metric that matters is the stock price.
This perspective generally lends itself to short and medium-term investments.
Now that we have a rudimentary understanding of the two schools of thought and investing…
…let's look at the Motley Fool, and how they use both together to create a comprehensive investment newsletter.
An Overview of Motley Fool
Information is one of the most valuable assets when it comes to investing in the stock market.
If you are going to invest your money in a company, you want that money to grow and for your investment to be worth more as time goes on.
So, it's absolutely vital that you not only do your own research.
However, you need to make sure that your research is coming from a reputable source.
There are plenty of investment newsletters and blogs online…
…but none have the pedigree or reputation that the Motley Fool has built for itself over the past few decades.
In the late 1990s, Brothers David and Tom Gardner realize that they were not accessible resources of in-depth stock analysis available to the general public.
This was back in the Dark Ages when the internet was small in the “dot com bubble” hadn't burst yet.
Wall Street Traders and investors always have access to the most up-to-date information because that is what their entire industry hinges on.
But what about Main Street?
What about those people who want to invest their money on their own but just don't know where to start?
This is the question that Tom and David wanted to answer when they created the Motley Fool.
When they started, it was a small publication with only a few subscribers.
Fast forward to over 20 years later, and Motley Fool has amassed an enormous following.
The company even has offices worldwide, including the United States, England, Germany, and beyond.
Motley Fool Stock Advisor
The Motley Fool's top newsletter is called Stock Advisor.
Remember those two different investments Styles: Fundamental and Technical?
They're important here because Tom and David each have their own teams and then blend both of these styles to come up with a top stock recommendation for that month.
The brothers are pretty competitive, so they do their research on their own independently of each other, and at the end of the month, they submit their stock for the newsletter.
Other benefits of the stock advisor subscription ( which is $99 a year) complete access to the starter stock list.
This starter stock list is a list of stocks that both a novice investor and an experienced investor can find very valuable.
Building a diversified portfolio is easier said than done.
The Motley Fool takes a lot of the leg work out by compiling valuable lists of companies that are strong and have good reputations.
These lists include companies across a variety of industries.
Investing in what you know is great, but sometimes you need some inspiration, and this starter stock list is a great way to expose yourself to new companies and industries.
Finally, subscribers receive a list of other stocks that have strong potential from the analysts at the Motley Fool. Like the pics from Tom and David, they also attach plenty of data and research that they used to recommend stocks.
As you can see, the Motley Fool Stock Advisor service offers TONS of value for its subscribers.
But what happens if Tom and David both recommend the same stock?
This occurrence is a total conviction stock because out of all stocks in the market, they both came to the same company's conclusion independently.
Total conviction stocks do not happen very often.
Because the brothers utilize such different methods of research and evaluation.
Therefore, when it does happen, you need to be on the lookout because it might be a HUGE investment opportunity.
Whether you are brand new to the Motley Fool, or have you been a long time subscriber, you know how powerful a total conviction stock can be.
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Better yet, we have been tracking ALL of the Motley Fool stock picks since January 2016. That's 5 years, 60 months and over 120 stock picks. As of Friday, August 3, 2021, their 2019 picks are up 130%; their 2018 picks are up 232%, their 2017 picks are up 215%; and their 2016 picks are now up 423% for an average return of 218% over the last 5 years. 88% of their picks were profitable and 57 our to 120 have more than doubled! The Fool has done so well because they quickly identify stocks year that will perform well in the current environment. THAT is how the Fool consistently does so well--they adapt and constantly pick stocks before everyone else realizes the opportunities.
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Updated as of September 18, 2021 -- The Motley Fool Stock Advisor continues to crush the market, and outperform all of the others stock newsletters we track. In fact, it has been the best source of stock picks for the last 4 years in a row. If you subscribed to the Motley Fool in January 2020 and bought equal amounts of all of their 24 picks for 2020 you now have a 87% return compared to the market's 43%. 18 of those 24 stocks are up, 6 have at least doubled, and 2 have more than tripled. Their top performer from 2020 is TESLA which is now up 780% in a year and a half. >/p>
In fact, over the last 5 years the average Motley Fool stock pick has more than tripled, being up 219%. Impressively, 99 of their 120 picks over the last 5 years are profitable and 54 of those have more than doubled! This time period covers the 2016 election, the Trump administration, the China trade negotiation, COVID, and now the Motley Fool is continuing their excellent stock picks with many of their 2021 stock picks already up double digits.
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- October 21, 2021 - David's New Stock Recommendation
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