Monday, September 12, 2011

The Motley Fool Comes Full Circle

I got to know the Motley Fool web site back in the mid 1990s as a great place to learn about investing in stocks. They taught me about avoiding high MERs and commissions and investing for the long run among many other useful lessons. However, they seem to have lost their way.

The Fool message in the early days was clear: investing in indexes is a great approach, and for those who are willing to put in the work, picking individual stocks can be rewarding as well. They advocated investing for the long-term with low turnover (infrequent trading) to keep costs low and keep the focus on company fundamentals rather than short-term trading.

The Motley Fool was a big part of my attempt to beat the market through stock selection and my ultimate decision to give up on this strategy and buy low-cost index ETFs. I even subscribed to one of their newsletters for a while. Since I cancelled my subscription, I received many “last chances” to come back. In just the past year I’ve received 63 pleading emails to re-subscribe, 61 of which came after a message that started “This is positively our final offer.

Their latest invitation offers me “Rare investments that can make you 3-5 times your money in a single year – without abandoning conservative investment values.

How can I take this stuff seriously? This kind of come-on is exactly the type of thing that sensible web sites warn people to avoid because it is too good to be true.

Given how highly I regarded the Motley Fool in the 1990s, it’s hard to believe how little regard I have for them now.


  1. If it makes you feel better, I find it easy to believe. :P

  2. @Preet and @Mark: Do your responses mean that you knew about Motley Fool in the mid-90's or that you see what they are now and hold them in low regard?

  3. I was speaking directly to your last line "'s hard to believe how little regard I have for them now."

    After 63 emails and an about face on what they are all about, I find it easy to believe how little regard you have for them now. :)

  4. @Preet: You're right. Maybe what I should have said is that I find it hard to believe that they were once so different and that I held them in high regard.

  5. I agree with your post, Michael. Their book The Motley Fool Investment Guide and website came along at the right time for me to learn investing in common stocks. Up to that point, I was a mutual fund investor and their book convinced me I was paying too much in fees for slim chance of matching the market.

    The book set forth many experiments in investing that continue to this day. I found their message boards to be quite valuable back in the late 90s. I used their method to analyze just after I heard of the company and deemed it too expensive. Shortly after that, added Amazon as an investment in their model portfolio and did extremely well. Feeling remorse for not following them into this stock, I bought some of their next recommendation, a company called 3DFX. That was a real disaster, so I got that one really wrong.

    Eventually they started charging to use their forums and I left the site. They have since opened the forums again, but I don't go there much. They do have an interesting service called CAPS where you can rate stocks as a buy or sell and track a mock portfolio over time. As far as I know, their content may be okay too, though I don't read it much. Definitely their marketing stinks though, as you mention. Seems they've become like those investment companies they used to disparage. Perhaps it's understandable since they were forced to switch from an advertising-supported model to a sales model.

  6. @Gene: It sounds like your experience was very similar to mine. I understand that everyone has to eat, but I agree that "they've become like those investment companies they used to disparage."