I’ve seen a lot of people wondering how Motley Fool picks compare to a basic market index like VOO. So, here’s what I did:
Took all the Motley Fool Stock Advisor and Rule Breaker picks from Feb 2022 to Feb 1, 2024. Put them into a spreadsheet and treated them as a ‘buy and hold’ - no dividends included.
Collected VOO prices from the same dates and used it as a comparison.
Waited almost 2 years, then compared the growth up to now.
Here’s what I found:
Holding every MF pick would get you a 43.09% gain (without dividends).
The range of gains and losses was wide, from -69.09% to +334.22%.
31 out of 96 stock picks actually lost value.
Median stock gain was 26.42%.
Meanwhile, VOO over the same period gained 42.73%, also without dividends.
Bottom line:
Motley Fool picks ended up close to VOO. The biggest winners in their picks canceled out the losers. If you like using MF for research and are lucky (or skilled) with your picks, you could come out ahead.
Wendell said:
Let us know how this looks in 5, 10, or even 30 years!
Their service does keep track of each pick’s performance over time compared to the market. I believe Stock Advisor and Rule Breakers have outperformed the market over the last 20-25 years. Some of their other services, like the dividend one and Hidden Gems, haven’t been around as long, but I think they haven’t always done as well.
@Winter
I wanted to see if their numbers are mostly driven by huge older wins like Amazon and Netflix. So I focused on recent picks to get a more current picture.
Niko said: @Winter
I wanted to see if their numbers are mostly driven by huge older wins like Amazon and Netflix. So I focused on recent picks to get a more current picture.
Makes sense. Around 2018-2020, they started recommending more stocks, and they may have stretched a bit to find new ones, leading to some duds. Also, they don’t always factor in the current price, so a good stock might still be a bad buy if it’s at an inflated price. Many picks from 2020-2021 went negative; I think only a handful beat the market from that time.
I use their picks as ideas. I skip half of their recs and research the other half, maybe buying 4-6 stocks a year. They also re-recommend the same stocks a lot, like TDOC, which they kept pushing even when the price was too high. I try to stick to reasonable prices and avoid anything trading at crazy multiples.
Niko said: @Winter
I wanted to see if their numbers are mostly driven by huge older wins like Amazon and Netflix. So I focused on recent picks to get a more current picture.
All great portfolios are driven by a few standout companies. You might as well ask Warren to take Apple out of his results.
@Winter
I don’t agree with all their picks, but doubling down on companies like Netflix, Nvidia, Tesla, and Amazon shows that holding great companies works. That said, their articles aren’t the best.
Rowe said: @Winter
I don’t agree with all their picks, but doubling down on companies like Netflix, Nvidia, Tesla, and Amazon shows that holding great companies works. That said, their articles aren’t the best.
Yep, you don’t always have to buy in super early to get big gains. Netflix launched streaming in 2007, and even if you bought it five years later, you’d still be way up.
Wendell said:
Let us know how this looks in 5, 10, or even 30 years!
I’ve been with them since the early days as a paper newsletter, over 20 years. I didn’t buy everything, but I’ve done well with a few picks each year. After running my numbers last year, I realized I’d made about $1M more than if I’d just invested in VOO. For $250 a year, it’s been worth it.
Wendell said:
Let us know how this looks in 5, 10, or even 30 years!
Over the long term, Motley Fool does well against the market. People tend to criticize them based on short-term performance. Once the market heats up again, people will call them geniuses.
Start with an equal amount across ten stocks. Each week, check the performance and sell small portions of the worst performers, using the funds to buy more of the best performers.
By the end of the year, you’ll hold bigger positions in the stocks that performed best. You could even make one of your positions VOO or VTI for stability.
