Welcome to my review of the Motley Fool Market Pass.
I recently shared my in-depth look at Motley Fool so wanted to follow that up by taking a closer look at their individual services.
In this article, I will be reviewing the “Market Pass,” which happens to be one of the more well-known offerings of Motley Fool.
Keep reading to learn more as I share all the details I unearthed about the service, including pros and cons, and the investment strategy behind it. I also reveal whether I think it is a legit newsletter or a dud.
Before I start…
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Market Pass Review
Table of Contents
Introduction to Market Pass
Market Pass is an investment research service offered by the Motley Fool (which some simply refer to as “The Fool”). The premise of this newsletter is to deliver stock picks to its subscribers in the same way as other services that are offered by the firm.
This includes staples like Rule Breakers and arguably their most popular service, the Motley Fool Stock Advisor.
The Market Pass was started to help investors find the best stocks in the market. It is particularly useful for investors who are buying stock as they attempt to build the ultimate portfolio.
Its landing page on the official Motley Fool website gives us an indication of what it is all about in one paragraph. It reads,
Learn how to build your own diverse portfolio using recommendations from Stock Advisor, Rule Breakers, and additional styles like dividend, small-cap, and value investing.
But, the advisory service has more to it than that, and that’s what we will be addressing in this article.
First, it has a strong correlation with Rule Breakers and Stock Advisors.
Although Stock Advisor and Rule Breakers have been great services, they created a unique challenge for investors as Michael Douglass, an analyst at the Motley Fool, describes on the Market Pass order page:
You see, Stock Advisor‘s been around for almost two decades, and it has an incredibly successful investment record across literally hundreds of stocks.
That may not sound like a problem at first glance.
In fact, Stock Advisor‘s long history of success attracted me to it in the first place. I didn’t want some ‘flash in the pan’ investment scheme without a proven track record.
I wanted a systematic approach to the stock market that had produced winner after winner over a long time horizon.
I wanted results.
And lots of data to prove out those results.
And that’s what Stock Advisor and Rule Breakers have both provided!
But here’s the issue –
Given that there are so many stocks in Stock Advisor, Rule Breakers, and across The Motley Fool, how does someone pick the right stocks to rapidly grow their portfolio TODAY?
This means is that the Motley Fool’s Stock Advisor and Rule Breakers, though massively successful, created a unique problem whereby they offered investors too much choice, it was tough finding stock picks that traders would be comfortable with. The technical term for this psychological impairment is choice overload.
So, an analyst called Rich Geifner decided to create a new advisory service to tune out the “noise” to make it easier to find the best stocks to invest in at any given moment out of the ones recommended in Rule Breakers and Stock Advisor.
Michael acknowledges this when he says:
Which is why I think Market Pass could be the “natural next step” for any Motley Fool member who started off with Stock Advisor or Rule Breakers…
(Or perhaps both!)
And is looking to take their investing to the next level.
We will take a closer look at how the service works, but first, some background on the people and company behind it.
Who Is Behind Market Pass?
Market Pass is designed by an advisor who works for the Motley Fool called Rich Greifner. He is also the advisor of Motley Fool Inside Value.
He goes by the name TMFTenacious on the website and he is a value investor. He joined the Fool in 2006.
The service is run by Motley Fool’s investment analysts who collectively work to analyze the stocks before they put together a list of recommendations.
What is the Motley Fool?
The Motley Fool is an independent research firm that offers investing advice to its readers and followers through its publications and advisory services.
They also offer advice touching on personal finance, estate planning, insurance, and social security, just to mention a few.
The origin of the name is a unique to say the least,
Our name is in homage to the one character in Shakespearean literature — the court jester — who could speak the truth to the king and queen without having his or her head lopped off. The Fools of yore entertained the court with humor that instructed as it amused. More importantly, the Fool was never afraid to question conventional wisdom.
And that encapsulates the ethos of the firm. The analysts are not afraid to share contrarian opinions.
Its headquarters are in Alexandria,Va, with international offices in Sydney, Australia. It serves clients in other countries as well.
It was launched by two brothers, David and Tom Gardner back in 1993, so it has stood the test of time to say the least.
Both Tom and David are not only experienced, but also they have a unique investment analysis approach that has been lauded by other players in the industry. They have co-authored books like Rule Breakers, The Motley Fool Investment Guide for Teens, the Million Dollar Portfolio, The Motley Fool Investment Guide, and You Have More Than You Think, Rule Makers.
They both contribute to the flagship advisory service of the Motley Fool, Stock Advisor.
Although the firm publishes a large number of advisory services, two of the most important ones (that are also heavily linked to the Market Pass) are worth looking into. They are Motley Fool Rule Breakers and Motley Fool Stock Advisor.
Motley Fool Stock Advisor
Motley Fool’s Stock Advisor is the flagship advisory service on offer. It was started in 2002 and it has multiple contributors led by the two founders, David and Tom.
Its modus operandi is finding small companies with growth potential and adding them to its portfolio. The goal is to have them grow and earn investors a capital return. This process takes a couple of years hence it is suited to people with a long-term approach.
Over the last 19 years, the portfolio has outperformed the market 4 to 1 as shown in the diagram above.
The Motley Fool Rule Breakers
It is a paid newsletter run by David Gardner. It is also focused on hyper-growth stocks that can beat the market.
Each stock on the portfolio has to meet the following requirements:
- It should be from an emerging industry with a first mover advantage.
- Have strong leadership.
- Demonstrate strong past price appreciation
- Have a strong consumer appeal.
Motley Fool also offer several other premium services like Everlasting Portfolio, Rule Your Retirement, Everlasting Stocks and Blast Off.
How Does The Market Pass Work?
Michael perfectly sums up how the service works on the order page saying,
Each year, the Market Pass team reviews all the picks in Stock Advisor and Rule Breakers…
Picks what they believe to be the very best stocks – both individually, and as part of a team…
Sprinkles in a few ETFs as needed…
And designs what we consider the “ultimate portfolio.”
It’s meant to be THE one-stop shop for investors looking to take advantage of what Rich and the Market Pass team believe to be the VERY BEST stocks in Stock Advisor and Rule Breakers to build a potentially market-beating portfolio.
The main feature of Market Pass is the Ultimate Portfolio.
He also points out that the Ultimate Portfolio has outperformed the S&P 500 by a more than 2X. It has recorded an average return of 81.2% to the benchmark’s 33.1%.
He even has a chart to prove this:
Since they created the ultimate portfolio in November 2019, they have recommended 39 stocks and ETFs and all but two of them have been in the green. That means they’ve had an accuracy of 95%.
The stock recommendations usually cover a wide spectrum of market volatility.
The typical holding period of these investments is at least three – five years to achieve the expected profit outcomes. Therefore, this newsletter is not built for scalpers, day traders, or other players with a short-term target.
It is designed to help you find out about the latest investing trends in the market and find the right stocks to buy.
What you get when you join Market Pass
Market Pass falls into the category of Motley Fool premium investment research services that build on other services.
Market Pass is all about picking stocks out of a collection of stock picks on both the Stock Advisor and Rule Breakers portfolios.
Obviously, this investment service comes with a subscription and registration process.
Once you have successfully completed the registration, you will gain immediate access to what they call the Ultimate Portfolio.
Market Pass gives you Tom Gardner’s and David Gardner’s latest monthly stock recommendations, albeit indirectly because as I’ve mentioned severally thus far, with the subscription, you will get access to two of the Motley Fool’s best Stock Picking Services, namely Stock Advisor and Rule Breakers (I’ve already reviewed these two programs individually and you can find more information about them by following the links I’ve provided).
Other benefits of a subscription include:
- Access to the Motley Fool Stock Portfolio Framework
- Unlimited Access to Special Reports
- Regular updates and time-to-time recommendations on the best-performing stocks
How much does it cost to join Market Pass?
An annual subscription to the Motley Fool Market Pass costs $1,499.
The justification for that is that you have to consider the values of each of the services that are part of it, broken down to Motley Fool Stock Advisor ($199), Motley Fool Rule Breakers (a $299 value), and Ultimate Portfolio for 2021 (a $999 value)
They don’t offer refunds, as Michael explains,
Now, I must note that since Market Pass is a unique solution designed to give you access to research developed across the full portfolio of stocks that will all be delivered immediately…we simply cannot offer refunds on this offer.
You see, we built Market Pass for investors who are committed to building forward-looking portfolios with the right strategy.
So if a group of short-term traders was able to gain access to Market Pass, they could quickly trade on its recommendations and then cancel without paying their fair share.
They could potentially push up prices of the stocks and do a huge disservice to investors who are committed to this strategy for the long run.
They still allow you to cancel your membership through their satisfaction guarantee
According to the Motley Fool’s Satisfaction Guarantee,
If for any reason you’re not completely satisfied with Market Pass, the Ultimate Portfolio, access to Rule Breakers and Stock Advisor, asset allocation guidance, continuing recommendations, and market updates in the next 30 days…
Then simply contact our helpful customer service team, and they’ll happily work with you to provide a credit to one of our other portfolio services.
In place of a money-back guarantee, they have one of those cranky satisfaction guarantees where they keep your money.
- It includes a suite of Motley Fool’s best Stock Picking Services.
- It whittles down the approximately 200 combined stock picks of two of their most popular services to a more manageable collection of stock recommendations.
- The registration process is easy and hassle-free.
- If you are looking for an informative service complete with updates, recommendations, and expert’s opinions on the best stock picking options at once, then you will find it helpful. It makes you a better investor overall.
- If you are searching for short-time money making strategies that can offer you returns within a few days or months, then Motley Fool Market Pass may not be apt for you. As per the strategy, the investments should be made for at least three – five years.
- The newsletter does not have a money-back guarantee.
Is Motley Fool Market Pass Legit?
Yes, it is totally legit.
The main reason I think it is genuine is because it is offered by Motley Fool, which is a legitimate firm.
Once you subscribe to it, you gain access to Motley Fool’s suite of stock picking services. These stock picking services are meant to help you make the right investment decisions by placing your wealth on the right stocks.
Of course no stock pick is guaranteed to make money, just like no investment can be guaranteed. You still need to understand the risks involved.
Motley Fool Market Pass Verdict
Motley Fool Market Pass is made for people who are already proponents of The Stock Advisor and Rule Breakers service because most of the stock recommendations you get are based on those two newsletters.
Positions are typically maintained for 3-5 years as per the strategy and the market volatility can affect your profit outcomes at times.
Personally I like that the investment strategy is based on a longer term hold. These days newsletters are mainly focused on making fast gains in the market and often this usually backfires. So it is nice that the Motley Fool can be honest and say that you will need to hold these investments for a few years at least to see them play out.
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