The financial markets are ripe for all manner of online scams. Nowhere is this more common than in the stock market. It’s not uncommon for a stock picking service to be covertly offering a pump and dump scheme.
If you’re one of the 14% of Americans directly invested in individual stocks, you need to be wary of these schemes. Motley Fool Stock Advisor is one of the most well-known stock-picking platforms in the world. With a track record of success for over 25 years, this is one of the few platforms investors can trust.
Let’s take a look at what value you can extract from the Motley Fool. If you want to know more about the service, check out this review on the Motley Fool.
Why the Motley Fool isn’t a Pump and Dump Scheme
A pump and dump scheme is a sort of scam whereby an investor with shares in a company will promote how much that stock is going to increase in price. As people buy into these shares, the price rises. Once the price hits a particular peak, the person behind the scheme will sell all their shares and the price collapses back to its original range. Any investor caught up in the scheme is left holding a stock that will never hit those price highs again. In most cases, the stock will be worthless.
The Motley Fool’s stock picks have demonstrated strong growth for decades. The Gardner brothers are as transparent as a freshly cleaned window when it comes to their strategies. They use solid numbers and facts when publishing their recommendations.
This in itself means the Motley Fool is a brand you can trust and is most definitely not a pump and dump scheme.
Motley Fool for Long-Term Investors
The Stock Advisor service provides you access to three primary features:
- Two monthly stock recommendations.
- The Best Buys Now report.
- The Starter Stocks report helping you build your portfolio.
You can also look back at all their previous stock recommendations to see how they performed. The vast majority have been winners.
When using this service, you need to remember the Motley Fool makes recommendations based on long-term holds. If you’re unwilling to hold those stocks for a minimum of 2-5 years, they’re not the stocks for you.
Transparent Recommendations for Every Risk Tolerance Level
The Motley Fool makes it clear that they cater to different types of investors. Most investing guides recommend that the closer to retirement you are the more conservative your investments should be. This is why all recommendations have a ‘crushability’ rating attached. This rating ranges from 0-25 and details exactly how likely a stock is to get crushed.
A low rating means the stock is riskier and should be treated with caution. Higher ratings tend to be popular mega-cap stocks like Amazon and Apple. These ratings help you to decide what to invest in based on your risk tolerance.
Save Money on Fees and Commissions with Robo-Advisors
The best robo-advisors enable you to invest in individual stocks without fees and commissions. Take a look at this review on SoFi Invest to get an idea of what you can expect when using these platforms. Moving to a robo-advisor is a smart move because it’s not uncommon to lose 2-3% in annual fees through a traditional brokerage. Your profits will be significantly higher if you’re saving money by not paying a yearly fee or commissions on every trade you make.
What many investors also forget is how inflation is factored into their investments. In the U.S., inflation has ranged between 1.5% and 2% on average since 1998. That means 2% of your annual gains go towards maintaining the original value of your investment.
Add in that 3% management fee and your first 5% annual gain is wiped out. You can’t do anything about inflation, but moving your money to a no fees, no commission online broker is one of the most profitable long-term investments you can make.
Proven Success Over Time
What classic pump and dump schemes lack is proven results over a long period. Even if you’re teaching investing to children, the number one rule is this is a long game.
Short-term trading and quick money schemes are akin to gambling. Intelligent investors realize that the most successful investors are those who add to their portfolios over the decades.
The Motley Fool Stock Advisor program keeps a running score of their overall gains when compared to the S&P 500. Since February 2002, the program is up more than 500%, when compared to a 120% increase in the S&P 500. These results assume an investor followed every recommendation since then.
The Motley Fool Stock Advisor costs $99 per year and it’s proven its value time and time again. It’s far from a pump and dump scheme. Any investor who enjoys learning about the market and investing in individual stocks they believe in cannot go wrong with the Motley Fool.
