November 11, 2021

Motley Fool vs Morningstar

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Anyone who actively manages their investments has probably heard of Motley Fool and Morningstar. But which is right for you? And are they worth the money?

Motley Fool and Morningstar are two of the biggest names in investing.

But when your hard-earned cash is on the line, who's advice can you trust?

In this article, find out how Motley Fool and Morningstar compare in pricing, features, and historical returns. Plus, get an in-depth comparison to other platforms like Zacks, Seeking Alpha, The Street, and more.

What is Motley Fool and How Does it Work?

Motley Fool's mission is to "make the world smarter, richer, and happier." They offer free beginner-friendly educational content on their website that covers:

  • The basics of investing
  • How the stock market works
  • Common investing themes, like value vs. growth

Apart from their free content, Motley Fool offers a range of paid stock-picking services. These come with monthly stock picks, along with their rationale for why they believe the stocks are strong buys.

Historical Returns
Stock Advisor is Motley Fool's flagship stock-picking service, and one of the cheapest. It gives you two new fundamental stock picks each month and 10 "timely new buys."

This service boasts an impressive 600%+ inception-to-date return compared to just 137% for the S&P 500 over the same period (more to come on this claim).

Product Features
Motley Fool's stock-picking packages offer stock, mutual fund, and ETF recommendations that cater toward almost every investor.

They offer something for everyone, from biotech investors to those looking for more conservative retirement picks, to risk-heavy investors looking for the next "10-bagger."

Plans and Pricing
Motley Fool offers a few dozen different stock-picking packages, which range in price from $100 to $5,000+ per year. Some examples of packages include:

  • "Rule Breakers," high growth stocks, trying to find the next Amazon, Tesla, Apple, etc.
  • "Cloud Disruptors" top buys in the fast-growing cloud computing space
  • "Rule Your Retirement," provides more conservative mutual fund and ETF recommendations for those investing for their retirement

Is Motley Fool a rip-off? While many of The Fool's stock picks have been duds, many have also produced spectacular gains. Historical returns never guarantee future results, but The Fool's picks in the aggregate have beaten the S&P 500 by a wide margin, mostly thanks to Amazon.

What is Morningstar and How Does it Work?

Morningstar is a financial services company that offers investing content and tools. Much of it is free, though some of it only available via their Premium subscription.

Plans and Pricing
Morningstar Premium will cost you $199/year. However, that wouldn't be a practical expense for a smaller portfolio.

While The Fool focuses on stock-picking, Morningstar's approach is to provide you with all the tools you'll need to make your own, educated decisions. To get your money's worth from these tools, you'd need a portfolio worth at least $20,000.

Historical Returns
Morningstar analyzed the performance of stocks rated by their rating system, and found mixed results.[1]

In one analysis, Morningstar's ratings were "predictive of future stock returns after controlling for factors like market, size, value, and momentum effects." In others, there was mixed evidence to support that claim.

Bottom line: take their rating system with a grain of salt.

Product Features
A subscription with Morningstar includes a range of tools to help you research investments, build your portfolio, and monitor and rebalance it.

This includes their mutual fund, stock and ETF screener, Portfolio X-Ray tool, proprietary ratings, and research.

The industry-accepted Morningstar ratings are objectively and quantitatively calculated and are based on the funds' historical risk-adjusted returns. Only the top 10% of funds receive five stars - the top rating.

How does Morningstar's Portfolio X-Ray work? Let's say you own Apple stock and also have money in Nasdaq-tracking mutual funds which holds Apple. The X-Ray tool can peek into your funds and calculate your total Apple exposure across all your investments. This is especially valuable as your portfolio grows and increases in complexity.

Is Motley Fool or Morningstar better?

The answer largely boils down to your specific portfolio and what kind of investment guidance you are looking for.

Choose Motley Fool if…
You already have a diversified portfolio and are looking for some additional stock picks with solid research behind them.

Motley Fool's few dozen unique subscriptions cater toward niche investment themes to hone into your specialty - whether it is cannabis stocks or biotechs.

Choose Morningstar if…
You are a hands-on investor looking for well-rounded portfolio management tools. Or, you want to do your own research and build and maintain a diversified portfolio.

Morningstar's fund ratings are quantitative and respected across the industry, and their screener and X-Ray tools will help you monitor your allocations.

And in terms of the cost, Morningstar is more competitive - we would caution investors to be wary of some of The Fool's premium plans, which cost upward of $3,000 a year.

Motley Fool Alternatives

Zacks, Seeking Alpha, The Street, and IBD are other popular investing platforms with similar subscription plans. Review these options in the paragraphs that follow to find the best fit for you and your portfolio.

What about Motley Fool vs. Robinhood?
Both are popular with millennials, but they offer different services. Motley Fool provides investment advice and recommendations on what stocks to buy. Robinhood is a broker that provides the platform on which investors can buy and sell stocks (and other securities).

Motley Fool vs. Zacks

Zacks, popularly known for its small-cap research, is similar to Morningstar and The Motley Fool in many ways.

Zacks also offers a free/basic membership with access to their weekly newsletter and stock picks in addition to basic portfolio research and screening tools.

Unlike the Fool, Zacks doesn't provide stock picks from a specific industry like The Fool offers. One benefit of Zacks, though, is they also offer their own quantitative stock and mutual fund ratings to help you compare different investments. This is a feature you won't get on The Fool.

Overall, Zacks is the better deal when compared to the sky-high prices on some of the Fool's packages.

That said, if you are a niche investor looking for stock picks from a very selective universe of companies or industries, you would only be able to get this from Motley Fool.

Price: Zacks Premium membership starts at $249/year

Motley Fool vs. Seeking Alpha

Seeking Alpha is another popular website with investors of all types.

It's different from Motley Fool because it's a more collaborative platform for investors to pitch and debate different investment candidates.

Seeking Alpha is a collection of hundreds of thousands of unique, well-researched investment ideas contributed by qualified users (they vet all their authors to ensure only quality content is shared).

You can filter through these articles by sector, investing strategy/style, author, etc., and then discuss and debate the merits of each idea in the popular comments section.

Seeking Alpha is geared more toward hands-on investors who enjoy the research process. The Seeking Alpha platform just enables the investor to identify promising investments much more efficiently.

Price: Seeking Alpha Premium starts at $240/year

Motley Fool vs. The Street

If you've ever seen CNBC's Mad Money with Jim Cramer (yes, that guy who screams out investing picks), then you know roughly what to expect from The Street.

The Street is Jim Cramer's website, which offers a lot of free investing content (news and articles and some opinion pieces) as well as several paid subscription plans, similar to The Fool's.

The Street's premium plans provide you with regular stock picks (buy/sell advice) that are related to the specific plan(s) you pay for.

For example, "TheStreet Quant Ratings" package gives access to their proprietary quantitative stock ratings while "Trifecta Stocks" sends you stock picks that pass their intensive quantitative, fundamental, and technical screening process.

The "Stocks Under $10" plan is self-explanatory, so you can see how they cater their different packages to specific types of investors, similar to The Fool.

Price: The Street's plans range in price from $49/year to more than $2,000/year (similar to, or even slightly less, than Motley Fool)

Motley Fool vs. Investor's Business Daily (IBD)

Investor's Business Daily (IBD) is another popular subscription-based platform that offers investing articles, research, and stock recommendations based on its proprietary "CANSLIM" investing criteria.

It's an acronym that identifies investment prospects based on quantitative and fundamental criteria, like:

  • Consistent earnings growth
  • Institutional accumulation
  • What products the companies offer

IBD provides lists of top stocks across all sectors that ranked well based on their CANSLIM criteria. They take it a step further than The Fool by providing specific price ranges, where they advise new investors to initiate or exit the positions they recommend.

More conservative investors might prefer IBD over Motley Fool as their CANSLIM criteria is very transparent and acts as a template from which investors can follow the logic used to arrive at their stock recommendations.

Price: IBD is priced fairly at around $37/month or $349/yea

Bottom Line: Who is the Best Stock Advisor?

Motley Fool and the various competing platforms we covered in this article all try to differentiate themselves in different ways.

Which platform is best for you and your portfolio mostly depends on the type of investing guidance you are looking for.

But why settle for one of these right off the bat when you might not have to? Most of these offer discounts or even free trials - so why not try a couple of the ones that seem the most suitable before paying up?

References

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Write to Andrew Fitzgerald at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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