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Are you deciding which is better, Motley Fool or Seeking Alpha?
So, what are the key differences between Motley Fool and Seeking Alpha?
Also, can they really help you improve your investment returns?
And how do you actually decide which one is more suitable for you?
In this review, I am going to share with you everything you need to know about Motley Fool and Seeking Alpha to help you make an informed decision.
Motley Fool Vs Seeking Alpha: History
First of all, let’s look at the history of both Motley Fool and Seeking Alpha.
Founded in 2004, Seeking Alpha is a crowd-sourced content service for financial markets, with thousands of contributors publishing investing ideas every month.
Anyone can apply to be a contributor through its website.
So far, tens of thousands of people have contributed articles to Seeking Alpha.
These contributors include individuals, institutional investors, fund managers, college students, analysts, and retirees who want to share their investment insight with the Seeking Alpha community.
The articles on Seeking Alpha, written by contributors, cover a wide range of investment asset types from stocks and ETFs to commodities and cryptocurrencies.
On the other hand, the Motley Fool, founded by Tom and David Gardner, is a financial and investing advice company that has been around for almost 30 years.
As of 2020, The Motley Fool has operations in the United Kingdom, Australia, Canada, Germany, Hong Kong, and Japan.
Motley Fool is regarded as one of the leading financial websites for stock research and analysis.
All the articles on Motley Fool come from its team of professional investment analysts.
Both Motley Fool and Seeking Alpha not only provide free stock market news and stock analysis, but they also provide paid investment service.
Motley Fool Vs Seeking Alpha: Investment Service
Seeking Alpha Premium
Let’s first take a look at Seeking Alpha.
Seeking Alpha offers two types of paid investment services:
- Seeking Alpha PREMIUM
- Seeking Alpha PRO
So, what do they include?
And, what is the difference between Seeking Alpha PREMIUM and PRO?
As a Seeking Alpha Premium member, you get access to unlimited premium articles, stock ratings as well as lists of top stocks to buy now.
On the other hand, Seeking Alpha PRO includes all PREMIUM features as well as Top Ideas from top-performing authors, exclusive access to short ideas, VIP service, and an ad-free experience.
The most unique feature is Seeking Alpha’s stock ratings.
There are three types of stock ratings offered by Seeking Alpha:
- Quant Rating
- Seeking Alpha Authors Rating (i.e. ratings given by Seeking Alpha article contributors)
- Wall Street Rating (i.e. ratings given by Wall Street equity analysts)
The most interesting of all is its proprietary quant rating.
It was developed by CressCap, a quantitative analytics and data platform that was acquired by Seeking Alpha.
So, what exactly is Quant Rating, and also how does it really work?
Quant rating is derived by comparing over 100 metrics for the stock to the same metrics for the other stocks in its sector.
These metrics include the company’s financial data, stock price performance, and analysts’ estimates of future revenue and earnings.
Essentially, the quant rating evaluates the stock in relations to its peers in the same sector, not the rest of the stock market as a whole.
There are five types of quant ratings:
- Strong Sell (i.e. a score of 1)
- Sell (i.e. a score of 2)
- Hold (i.e. a score of 3)
- Buy (i.e. a score of 4)
- Strong Buy (i.e. a score of 5)
The advantage of this method is that you can use Quant Rating to find the best performer of any particular industry or sector.
So, how exactly is Quant Rating calculated?
Quant Rating is derived after taking into account of the following five “Factor Grades”:
- EPS Revisions
The Factor Grade is determined by comparing the relevant metrics for the factor for the stock to those for the other stocks in the same sector.
For example, to determine the grade for the “Growth” factor, metrics such as past sales growth, projected earnings growth and stock price performance for the stock will be compared to the same metrics for the other stocks in the same sector.
Then, each factor is assigned a grade, from A+ to F.
Grade A+ means that the stock has the highest growth potential compared to its peers in the same sector.
On the other hand, a grade F means that the stock has the lowest growth potential compared to its peers in the same sector.
So, how do you use Seeking Alpha’s Factor Grades?
The value, growth and profitability grades give you a snapshot of the stock’s fundamentals, while the momentum and EPS revisions grades tell you if the stock is gaining momentum.
So, if you are looking for value stocks, you just filter out all the stocks with a “Value” Grade of A or A+.
After that, you further research analyse these value stocks one by one.
The advantage of Factor Grade is that you get a very quick idea of what type of stock it is. (e.g. a value stock? a growth stock? momentum stock?)
Below is an example of what you will see inside Seeking Alpha Premium.
Seeking Alpha’s Quant Rating updates once a day before the market open.
Also, its Quant Ratings and Factor Grades currently cover about 5,600 stocks.
Just to summarize, Seeking Alpha Premium is a powerful stock market research and analysis platform where you can discover new good stock ideas and also help you research your stocks.
Try Seeking Alpha Premium Out For 14-Day Risk Free!
Motley Fool Stock Advisor
Now, let’s look at Motley Fool’s investment services.
Motley Fool provides a wide range of stock picking services.
Its two most popular stock picking services are Stock Advisor and Rule Breakers.
So, what are Stock Advisor and Rule Breakers?
And what can you get from them?
Stock Advisor is created to help you find good companies that offer long term potential for investors.
Its investment philosophy is to play the long game.
So, for all their stock recommendations, they recommend you to buy and hold them for at least 3 to 5 years.
New Recommendations: Every month, Motley Fool investment team makes two stock recommendations. Each new recommendation comes with a full analysis and risk profile.
Best Buys Now: you will also get 10 Best Buys Now every month which they think are the most timely opportunities.
Starter Stock: you will also get the top 5 Starter Stocks that features the ideal stocks that should be the foundation of new investor’s portfolios.
If there is a price fluctuation of 10% or more on any of the stock recommendations, you can expect a report that explains such a big price move.
Lastly, you will also receive a real-time email notification when it’s time to sell, so you are never left wondering what to do.
In essence, you get specific stock recommendations that not only tell you when to buy but also when to sell.
Now, what about Rule Breakers?
And how is Rule Breakers different from Stock Advisor?
Motley Fool Rule Breakers, started by David Gardner in 2004, is specifically to help people find market-beating growth stocks.
Its investment strategy is focused on uncovering the hidden gems in the stock market.
So, it’s not the mainstream stocks (i.e. Apple and Facebook) that everyone is following right now, but little known stocks that have great potential to be the market leader in the future.
Think “Amazon” and “Netflix” that were recommended by Motley Fool Rule Breakers many years ago.
Basically, the main difference between Rule Breakers and Stock Advisor is that the stock recommendations inside Stock Advisor are less volatile than those inside Rule Breakers.
But, the upside potential of Rule Breakers stock picks is much greater than that of Stock Advisor stock picks.
With that, let’s take a closer look at the performance of Motley Fool Stock Advisor and Rule Breakers, and compare it with that of Seeking Alpha Premium.
Motley Fool Vs Seeking Alpha: Performance
First of all, let’s take a look at Motley Fool’s track record as of Jun 2022.
Below is the performance comparison between Motley Fool Stock Advisor and S&P 500 between 2002 and 2nd June 2022.
As of 2nd June 2022, average Motley Fool Stock Advisor recommendations have returned over 357% since inception while S&P 500 has returned 123%.
In short, the Motley Fool Stock Advisor has outperformed the market 3 to 1.
That’s a HUGE difference in returns.
Now, what about the performance comparison between Motley Fool Stock Advisor and S&P 500 for the past 5 years?
|Year||Motley Fool Stock Advisor
(Average Return to 31st Dec 2021)
(Average Return to 31st Dec 2021)
So, in terms of overall performance, the Motley Fool Stock Advisor has outperformed the market almost every single year for the past 6 years. (Note: Performance is calculated till 31st Dec 2021)
[*Returns as of 31st Dec 2021. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.]
But, what about its individual stock picks?
This metric is important because you might not be buying every single stock recommendation made by Stock Advisor.
Below is a table that shows you the performance of individual stock picks over the years.
As of May 2022, Motley Fool Stock Advisor has had 171 stock recommendations with 100%+returns.
What that means is that you would have easily doubled your money if you had invested in any of the 171 stock picks by Motley Fool Stock Advisor.
Now, let’s look at the performance of Rule Breakers.
As of Jun 2022, average Motley Fool Rule Breakers recommendations have returned over 210% since inception while S&P 500 has returned 107%.
You can see that Rule Breakers beat the market roughly 2 times.
Okay, the overall performance of Rule Breakers looks impressive indeed.
But, what about the performance of each individual stock pick?
Because you don’t necessarily buy every single Rule Breakers stock recommendation.
So, let’s take a look at the performance of individual Rule Breakers stock picks.
As of April 2022, there are 138 stock recommendations with more than 100% returns.
So, you can see that both Stock Advisor and Rule Breakers stock picks have very impressive returns.
Would you get the same stock picks from Stock Advisor and Rule Breakers?
For example, if you are a Rule Breakers subscriber, you would get the stock recommendation “MercadoLibre” as early as 2009.
At that time, the stock price was $14.58.
Guess what the stock price is right now (Jan 2021)?
That’s up 10,860%.
If you missed it the first time, Rule Breakers actually recommended it again on 01/24/2012 (buy at $86.09), 12/22/2014 (buy at $125.11), and 04/25/2017 (buy at $227.91).
In fact, they have been recommending its Rule Breakers members to hold it even till now.
If you had invested $1,000 when they first recommended it inside Rule Breakers, your $1,000 investment would be worth about $108,000.
On the other hand, Stock Advisor subscribers don’t get this high-growth stock pick- MercadoLibre, because high-growth stocks are more volatile and risky although they have much greater upside potential.
So, if you are comfortable with taking a bit of risk and are looking for the next 10-bagger (or even 50-bagger) stocks, Rule Breakers would be a good option.
Here are some other examples of Rule Breakers stock recommendations:
- MercadoLibre: 5,589%*
- Tesla: 14,656 %*
- Shopify: 39,116%*
- The Trade Desk: 16,918%*
- Intuitive Surgical: 5,232%*
- Meta (Previously Facebook): 1,143%*
- Etsy: 979%*
- Hubspot: 514%*
- Monster Beverage: 1,441%*
- Universal Display: 1,464 %*
[*Returns as of 27th Jan 2022 since it was first recommended. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.]
So, just to summarize, both Motley Fool Stock Advisor and Rule Breakers have a very impressive track record of beating the market by a very large margin.
Now, what about Seeking Alpha’s track record?
In June 2019, Seeking Alpha launched Quant Rating which rates stocks from Strong Buy to Strong Sell.
On its website, it published the backtesting results of a hypothetical portfolio consisting of all the daily “Strong Buy” recommendations from 31 Dec 2009 to Jan 2022.
Here’s what happens in the backtest.
It assumes that you buy all the daily “Strong Buy” stock picks with equal weighting and re-balances it on a daily basis with zero transaction costs.
The stocks are sold right after it’s no longer rated “Strong Buy”.
So, what is the backtesting result of this strategy?
It shows that Quant Rating has a total return of 1,641% while S&P 500 has a total return of 307% over the same time period.
This is quite impressive.
Motley Fool Vs Seeking Alpha: Pricing
Now, let’s take a look at the pricing comparison between Motley Fool and Seeking Alpha.
So, how much does Motley Fool Stock Advisor cost?
Before that, let’s first look at what you get from your Motley Fool Stock Advisor subscription:
- You will receive two stock recommendations every month, as well as their monthly “Best Buys Now“:
- On the first Thursday of the month, you will receive first stock recommendation
- On the second Thursday, you will receive first 5 New Best Buys Now
- On the third Thursday, you will receive second stock recommendation
- and on the fourth Thursday, you will receive second 5 New Best Buys Now
- You will receive a real-time email notification when it’s time to sell, so you are never left wondering what to do
- You gain instant access to all past Motley Fool’s Stock Advisor recommendations
- You gain instant access to all of their stock reports
- The Motley Fool’s Top 10 Best Stock to Buy RIGHT Now report that features some of their recent picks that still offer the best potential return.
- The Motley Fool’s Top 5 Starter Stock features the ideal stocks that should be the foundation of new investor’s portfolios.
Now, consider the fact that many investors have made many profitable investments by following their stock advice, how much would they value Motley Fool Stock Advisor subscription?
If they have made tens of thousands of dollars based on their stock tips and recommendations, would they mind paying them hundreds of dollars or even thousands of dollars for their knowledge and expertise?
They most probably won’t mind at all.
Here’s the fact.
Motley Fool Stock Advisor does not cost thousands of dollars.
It does not even cost you a few hundred dollars.
So, how much does Motley Fool Stock Advisor cost?
Its annual membership is only priced at $199 a year.
Right now, there’s a special discount of 60% OFF on the annual membership for NEW members when you click the link here to try it out for 30 days 100% risk-free.
So, for $79 a year- that’s just $1.50 a week – you can gain unlimited access to their library of expert stock recommendations which are carefully selected to help you grow your wealth.
Now, how much does Seeking Alpha Premium cost?
It offers both an annual subscription and a monthly subscription.
If you buy the annual subscription, it’s $239/year (i.e. $19.99/month).
As you can see, the Motley Fool Stock Advisor is much more affordable compared to Seeking Alpha.
Personally, I have been using Motley Fool Stock Advisor and Rule Breakers for years.
So, does it mean that Seeking Alpha Premium is not worth it?
I have recently started trying out Seeking Alpha Premium as well.
It’s very different from Motley Fool because you can use Seeking Alpha Premium stock ratings, stock financial and fundamental data as well as experts’ stock analysis to help you find good investment ideas both in the short term as well in the long term.
Seeking Alpha Premium is more suitable for stock investors who are more active and prefer to do their own research and analysis.
Which One Is Better For You?
So, how do you choose between Motley Fool and Seeking Alpha?
If you are an active investor and trader who is looking for a stock research and analysis platform to help you find new investment ideas as well as make investment decisions, then Seeking Alpha Premium might be a good option.
However, if you are an investor who wants specific stock recommendations and analysis for long term investments and also wants to leverage the expertise of experienced investment experts with a proven track record, then I highly recommend Motley Fool Stock Advisor.