Abstract
The Motley Fool has been described as “the most popular Internet stock chat website” (Hirschey et al, Financial Analysts Journal, 1999). Per the company’s website, the mission of the privately-held multimedia financial services company is to educate, amuse, and enrich” in order “to build the world’s greatest investment community” (www.fool.com/press/about.htm). The Motley Fool notes that their products are designed to “help people take control of their financial lives”. While other internet financial services exist, this article examines the performance of the investment services/advice provided by The Motley Fool (TMF) because of its notoriety. We use investment publications, information posted on the company’s website, and academic research for our analysis. Our findings show that, despite the popularity of TMF, investors need to critically evaluate TMF financial recommendations. Considerable time and effort are required to effectively manage financial resources and, undoubtedly, there will be mistakes, even by financial advisors such as TMF. It is doubtful that performance that beats the market can be accomplished in 15 minutes per year as suggested by TMF.
Highlights
I n July of 1993, David and Tom Gardner, along with a college friend, Erik Rydholm, began a 16-page print newsletter, The Motley Fool, on investing information
This paper describes and evaluates the performance of the TMF investment advice provided through real-money portfolios, newsletter subscription services, and a website service, The Motley Fool CAPS
The Motley Fool, which began in 1993 with the publishing of the financial newsletter The Motley Fool, describes itself as a “multimedia financial-services company dedicated to building the world's greatest investment community” whose mission is to educate, amuse and enrich
Summary
I n July of 1993, David and Tom Gardner, along with a college friend, Erik Rydholm, began a 16-page print newsletter, The Motley Fool, on investing information. An article by Investor Home (http://www.investorhome.com/fools.htm) notes that part of the popularity of TMF results from the performance of real portfolios, which are discussed on the TMF website and its books. This paper describes and evaluates the performance of the TMF investment advice provided through real-money portfolios, newsletter subscription services, and a website service, The Motley Fool CAPS. This evaluation examines the performance of TMF investment strategies using a variety of independent sources that includes both academic and nonacademic research and the TMF website. Investor Home (http://www.investorhome.com/fools.htm) praises TMF for its performance reporting: The Motley Fool deserves a great deal of credit for openly supplying a vast amount of information on a timely basis.
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