How good is Motley Fool ?

[steve2470]

http://www.fool.com/

I get their email newsletter but I'm no investing/finance expert.

Thanks for your time.

[On the Road]

1. Motley Fool is Not a Bad Site

to learn about the basics of fundamental investment. I used to visit there a while back. IMO, it helps to learn from a source with a consistent philosophy that's been around awhile, regardless of whether you invest in any of the stocks they champion. I would say the same for Jim Cramer -- he can be a good source for gaining insight into how markets and stocks work, but I would never 'surf' Cramer by buying all the stocks he recommends.

The one negative thing I heard about Motley Fool which I can't personally verify, had to do with their own stock portfolios, which they used to list and track. Most of them did well in the late 90s -- some extremely well. However, I heard it claimed that there were some portfolios that did not do well and were quietly dropped. This can skew the perception of well the site did as a whole.

One of things Motley Fool used to champion was the PEG -- a relationship between Price/Earnings Ration and growth. This is a good metric and I have used it myself. They originally said to look for growth stocks with a PEG of 0.5 or lower. However, by the late 90s there were very few growth stocks like this to be found. Ultimately they changed the bar to a PEG of 1.0. This still identified better valued growth stocks and kept people using the method. Many of these stocks were not undervalued, however, because pretty much all growth stocks were overvalued.

Motley Fool is good on the basics of fundamental investing. This approach seems to make sense for long-term stock purchases, but it often does not work as well as advertised. The reason, as far as I can tell, is that stock values are mostly set by large investors and pension plans. These people not only have access to rumors and a certain amount of non-public information, they also have sophisticated projections of companies, industries, and the whole economy as well as years of experience with the same firms. This gives them an edge on seeing into the future and making valuations.

I have found that technical analysis is a good complement to fundamentals. I tend to use both in buying a stock. The best source I know of learning technical indicators is the Education section on clearstation.com. Ultimately, neither assures you of success. It is very hard to beat the market in any event.