It's Finally Time to Buy These Stocks

Stay away from small-cap bank stocks.

Nearly 18 months ago now, Tim first dished out that advice. Though these stocks looked cheap at the time, writedowns were happening across the industry, making financial institutions nearly impossible to value. On top of that, the economy was showing signs of sputtering, with no resolution in sight.

Not much has changed
It's hard to believe, but the current economic downturn is nearly two years old now -- and it's gone from bad to worse. Notwithstanding the recent rising tide in the market, stocks have gotten "cheaper," writedowns have gotten bigger, and the federal government is throwing Hail Mary passes in the hopes of averting further crisis.

And while big financials such as Lehman, AIG (NYSE: AIG  ) , Fannie Mae, Freddie Mac, and Citigroup (NYSE: C  ) have dominated the headlines, small financials have been hit just as hard. In fact, it's gotten so bad that former mid-cap banks are now de facto small caps: KeyCorp (NYSE: KEY  ) and Comerica (NYSE: CMA  ) have lost 60% or more of their value since this crisis began in late 2007!

In short, it's still not time to start buying small-cap banks.

It may, however, be time to start looking hard at something a little off the beaten path: small-cap value.

What's the difference?
Small-cap value and small-cap banks often get conflated -- and for good reason. As Brian noted last year, the Vanguard Small-Cap Value ETF (VBR), like most small-cap value indexes, has substantial exposure to small banks. For the quarter ending March 31, small financial-services companies accounted for 34% of VBR's holdings.

But although small-cap value stocks have been 2009's worst performers, Russell Investments recently released a report suggesting that "they could emerge as the frontrunners if the economy stages a recovery."

So while you don't want to buy small-cap banks, you do want to buy small-cap value net of banks because, as Mark Hulbert noted in a New York Times article at the end of 2008, these historical outperformers "produce their most explosive gains right at the start of a bull market."

But let us be clear
Neither we nor Hulbert are predicting that we're at the start of a bull market. Instead, we're noting that:

  • Small-cap value generally outperforms.
  • Small-cap value outperforms by a particularly wide margin coming out of a bear market.
  • This is certainly a bear market.

And thus: Now is a good time to start buying small-cap exposure for the long term.

After all, a little exposure to this market segment gives you the chance to take advantage of this historical trend -- and puts you in position for significant outperformance whenever this bear market turns for good.

What next?
But Hulbert's recommended small-cap value investment vehicle, while low-cost, is imperfect -- because he advised investors to "buy and hold an index fund benchmarked to the sector and to ride out the market's turbulence."

We see two main issues with that approach. First, as we mentioned previously, your run-of-the-mill small-cap value index has nearly 35% exposure to financial companies -- a sector that has been and will continue to be rocked by government intervention, regulatory changes, and low interest rates.

Second, just as an S&P index fund is skewed toward ExxonMobil (NYSE: XOM  ) , the largest U.S. company by market cap, small-cap value indexes are heavily weighted toward the larger likes of $4.2 billion Seagate Technology (NYSE: STX  ) , limiting the ability of smaller -- but perhaps better -- companies to have an effect on your returns.

Here's what we'd do
If you want to take advantage of this sector -- and we think you should -- then you ought to build your own diversified collection of superior small-cap value stocks that don't carry dangerous financial liabilities on their books.

That way, you can weight your portfolio toward high-quality businesses with entrepreneurial managers who treat their shareholders with respect, rather than toward either small-cap banks or the small-cap value stocks with the largest market caps, as any passive index fund will do.

If that sounds appealing and you'd like some stock ideas and additional guidance on how to unearth the best in small-cap value, join our Motley Fool Hidden Gems service, which just started building a new real-money small-cap portfolio.

You can see the team's real-money picks and position your portfolio to ride those "explosive gains" in small-cap value when this bear market finally turns. We offer a free 30-day trial without obligation to subscribe -- just click here to get onboard today.

Already subscribed to Hidden Gems? Log in at the top of this page.

Tim Hanson does not own shares of any companies mentioned. Brian Richards doesn't, either. The Motley Fool owns shares of the Vanguard Small-Cap Value ETF. The Motley Fool has a disclosure policy that has 19 minutes to spare before midnight.


Read/Post Comments (59) | Recommend This Article (239)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 08, 2009, at 7:33 PM, xetn wrote:

    Ho, hum, another day, another sales pitch for yet another Fool product. Go figure. It seems to me that my subscription is nothing more than paying for these sales pitches for other products.

  • Report this Comment On June 08, 2009, at 8:15 PM, LastOne2Know wrote:

    Seems as though I have paid for a subscription that has the sole purpose of teasing me to buy other subscriptions. I agree with XETN and the others that have had similar comments. Motley Fool is not what I remember and I doubt that I'll be renewing, either. My subscription price would have been better invested in GM.

  • Report this Comment On June 08, 2009, at 8:22 PM, chonglh wrote:

    I agree. I feel like I have to keep throwing money at them for their "teaser" stock advices. I am honestly pretty sick of fool subscription. It has been pretty useless. They are milking us like crazy. Disappointing.

  • Report this Comment On June 08, 2009, at 8:29 PM, wbeale wrote:

    As a new subscriber I expected information but all I get is a tease to get me to buy another service. This has turned out to be VERY disapointing. I see no renewal in sight!

  • Report this Comment On June 08, 2009, at 8:33 PM, AZDoc23 wrote:

    Yes, it seems every financial newsletter spends more time pushing their other products, than giving us what we truly want...advice. After falling inline with just about every financial newsletter, I have narrowed it down to one. The Motley Fool has proven to me they know how to find the stocks we can capitalize on and increase our net worth. This year they are the only newsletter I am subscribed to; and so far I have done very well with some of their recommendations.

    What I would like to know is why MF hasn't recommended stocks such as Tenaris(TS), Quicksilver(KWK) and Conagra Foods(CAG). All these stocks have excellent balance sheets, and all have given me double digit gains; and all were purchased in May 2009. These were picks I came up with based on my research, and all are doing extremely well, thank you. So, what does The Fool have against these solid stocks? On the Penny Stock side, Tata Motors(TTM) is producing a $2,000 car in India, with plans to export them to the USA. Accuray (ARAY) has developed the first and only laser that kills cancerous tumor cells without damaging healthy cells. Both are selling for under $10/share; and they have huge potential. With Accuray's laser, which costs $1.5 million; they have the institution sign a service agreement with the company. No one else is allowed to touch the equipment. By doing so they are establishing a constant cash flow of residual income. More and more hospitals are buying them, and a few have already purchased their second units. What could be better than to invest in a company that is curing cancer patients on a daily basis. I'm a bit biased being a physician; but if I can invest in a company that is doing wonderful things for patients that may have given up all hope; I'm buying and accumulating shares. I'm curious to know what MF thinks?

  • Report this Comment On June 08, 2009, at 10:13 PM, ChuaHLam wrote:

    We subscribe for all the sales pitch. You think we shall renew? FAT HOPES!

  • Report this Comment On June 08, 2009, at 11:21 PM, paultaut wrote:

    The Title is Hype to get one to read on. Is business really that bad.

  • Report this Comment On June 09, 2009, at 11:55 AM, tgalbraith wrote:

    Does anyone in charge read these comments?

    I agree with all the previous comments,this is nothing

    but a continuous sales pitch.

    Please cancel my service I DO NOT WANT TO

    RENEW !!!!!!!!!

  • Report this Comment On June 09, 2009, at 12:34 PM, TMFBrich wrote:

    Thank you all for reading, and for taking the time to post comments.

    I wanted to address a few of the concerns that've been raised.

    This article is from our free Fool.com site. These articles are free to anyone -- including, of course, subscribers to our premium services. (If you aren't sure what you're subscribed to, go here: http://my.fool.com/.)

    Let me provide some context, which I hope explains where we're coming from.

    Again, this column is from our free Fool.com site. We know a couple of things about delivering free content. First, online advertising does not come close to covering the cost of articles. The experience of getting inundated by pop-up ads seems suboptimal (and it is also unlikely to cover our editorial costs), as is the idea of charging for access to what is currently free Fool.com content. Instead, we publish 50-60 free articles per day, with a minority of them containing plugs for our premium newsletter services (including this one).

    These free articles are economical because of the two to three sentences at the end -- a plug for services that offer a free month with no obligation to subscribe.

    This is our approach to writing as many free articles as possible -- which takes investment talent, research, financial editing, and copyediting. The product plugs -- which appear in only a few articles -- allow us to pay our writers, editors, utilities, etc.

    Our goal as writers is to deliver on what we promise in the headline. Tim and I feel that we made a case for small-cap value (ex. banks), and that we have provided useful information for investors -- whether or not they have any interest in a free trial.

    One of our core values is honesty, and so I've tried to be as transparent as possible, so that you will see this not as some sort of dishonest technique but as a necessity driven by the marketplace. If you are a subscriber already, or have no interest in becoming a subscriber, the core argument should still stand.

    We hope you'll continue being a capital-F Fool.

    Best regards,

    Brian Richards

  • Report this Comment On June 10, 2009, at 7:29 AM, chonglh wrote:

    I did not receive from free Fool.com, it came to my inbox because I subscribe to basic stock advisor and it seems that this level of subscription is pretty worthless because everytime i open up the emails from you guys, I have to subscribe to more expensive membership to read it, in this case "Hidden Germs",. It seems that this type of "teaser" stock advice happens a lot and it is very frustrating. I know, you are in to make money too. But I am also sure that there are many subscribers that feel like me, a little cheated after signing on.

  • Report this Comment On June 10, 2009, at 2:45 PM, MORK000 wrote:

    I agree that the motely fool is fooling thereselves with their advertising stature and teasing their customers. I only get there newsletters. I remember when it was fun and exciting reading this now just delete when I see it?

  • Report this Comment On June 10, 2009, at 2:57 PM, TMFBrich wrote:

    Chonglh and Mork000,

    Thanks for your comment. I want to clarify that these free articles are *not* affiliated with your newsletter subscription. If it was sent to you in an email, it's because it was included in one of our free emails (FoolWatch Daily or FoolWatch Weekly).

    You can view/manage your email subscriptions (the free ones as well as the emails associated with your newsletter subscription) by going to My Fool:

    http://my.fool.com

    Then click on "Account Settings":

    https://www.fool.com/Account/Index.aspx

    And then click on "Email and Other Communications":

    https://www.fool.com/Account/FreemailSubscribe.aspx?ReturnUr...

    You can unsubscribe by unchecking any of the boxes....

    Hope that clarifies. Fool on,

    Brian Richards

  • Report this Comment On June 11, 2009, at 9:51 AM, IgnorantFool77 wrote:

    I cancelled my Motley Fool Newsletter membership because it was like playing with those wooden russian dolls, you know, the ones where you open up the doll and there is another one inside, and then another, etc... You subscribe to say, "Hidden Gems," and after a while they say to you, "now, Hidden Gems is fine, but if you really want to make money, then subscribe to this Sub-newsletter, called "Pay Dirt."....Then after a while they say, "now, if you REALLY REALLY want to make money, subscribe to our extra special, super serious Real Money Portfolio!" How many freakin' newsletters and secret fool stock societies do you have to belong to in order to get the straight poo?

  • Report this Comment On June 11, 2009, at 9:58 PM, Varchild2008 wrote:

    I applied for a writing job at Motley Fool telling them that Motley Fool does "Teach" but instead stock picks.

    They still don't teach and they didn't select me as a writer.

  • Report this Comment On June 11, 2009, at 9:58 PM, Varchild2008 wrote:

    Oops typo.. I mean they don't "teach" how to invest..

  • Report this Comment On June 12, 2009, at 12:12 PM, Babylon76 wrote:

    I really liked the concept and the principles that TMF is based on but I too have become disillusioned by the amount of sales emails I received.

    My main interest was in the discussion boards, as none of my friends really talk investment, so I thought I'd enjoy the community side of things. Most of the discussion I found on the boards was worthless. Example: I wanted to discuss the merits of Garmin shares. All I could find was people arguing the merits, or otherwise, of Garmin satnav units!

    I unsubscribed from the service I signed up for.

  • Report this Comment On June 12, 2009, at 12:13 PM, MrMystery44 wrote:

    Learn how to use your subscriptions. Cancel the automated emails. Only read the articles you choose via Yahoo or whatever search engine you use to keep track of your companies.

    The articles ARE mostly advertisements... and often don't jive with the official views of the different MF newsletters, which although confusing to new members is actually good... it's cuts down on cheerleading. That said, there is useful information in many of the articles... for FREE.

    The value of MF is in the boards, where you can have discussions with intelligent people and get honest answers.

    Learn to use the boards, and prosper.

  • Report this Comment On June 12, 2009, at 12:41 PM, Jonesicus wrote:

    Great article, Brian and Tim!

  • Report this Comment On June 12, 2009, at 1:35 PM, multi007 wrote:

    Sorry to be in the posting minority here but I like these emails, sometimes. And when I dont, I delete them. If I get annoyed with them to the extent that i must voice my strong opposition here, I would unsubscribe. If only people thought like me....

  • Report this Comment On June 12, 2009, at 2:03 PM, irapm wrote:

    Some days you bite the dog and some days the dog bites you. OUCH!

  • Report this Comment On June 12, 2009, at 2:28 PM, johnunc wrote:

    I signed up for Hidden Gems about nine months ago.

    Bought about fifteen of their recommendations. I'm still down 40%. These guys are part of this whole stock market Ponzi Scheme. They just happened to hit a market sweet spot when they started. what a joke.

  • Report this Comment On June 12, 2009, at 2:48 PM, hogsucker wrote:

    It would be nice if they let you know it was just a sales pitch... So people don't spend 5 or more minutes reading something just to realize halfway or more through it's a sales pitch.

    I've been considering the "hidden gems", but from the comments above it appears it would be just a waste.

  • Report this Comment On June 12, 2009, at 2:56 PM, TMFBrich wrote:

    hog,

    This article is not "just a sales pitch." Please note that of an 800-word article, only three sentences mention a product at all. The article still stands otherwise -- Tim and I believe that small-cap value (ex. banks) is a compelling place to be looking right now.

    Also, if you really have been considering Hidden Gems, you can try it free of charge for a month and decide for yourself.

    Best regards,

    Brian Richards

  • Report this Comment On June 12, 2009, at 2:57 PM, h2ound08 wrote:

    AZDoc4U, for what its worth, TS was a TMF recommended stock. I believe it was listed in their "Top Stocks for 2009" or something like that. Not sure about the other ones, but TS definitely was.

    As for the Fool, despite a sales pitch at the bottom of every article, I have found the information and stock ideas presented extremely valuable, and a great deal of what I now know about stocks and investing I have learned here, in articles, boards, and CAPS. Thanks TMF, fool on.

  • Report this Comment On June 12, 2009, at 3:00 PM, hogsucker wrote:

    Wow - Thanks for the quick response!

    I might take you up on the 30 day trial.

  • Report this Comment On June 12, 2009, at 3:06 PM, gohansan wrote:

    What a joke, this FOOL is....I am so tired of opening these daily airhead solicitations. Guess I need to be the responsible adult and unsubscribe....

  • Report this Comment On June 12, 2009, at 3:18 PM, marcfool100 wrote:

    I am also one of the graduating class of 2009 leaving the Fool behind. I remember figuring I would give it a try at the introductory offer to learn about the ONE stock you should buy.....turnes out to have been Whole Foods Market and am I glad I ignored that one. I know a few people who didn't.

    marcfool100

  • Report this Comment On June 12, 2009, at 4:12 PM, WalterMiddy wrote:

    Brian:

    Nice article and valiant attempt to respond to the naysayers. Amazing how many times you have to explain the obvious to some folks.

    I like the newsletters I get, have unsubscribed to the ones I didn't feel were useful to me, and rarely read the emails because I know they will be a sales pitch. I don't get the anger: Don't like emails, don't read 'em! Cancel them. And then lighten up, folks!

  • Report this Comment On June 12, 2009, at 4:21 PM, badgerlandmark wrote:

    This is the first time I have looked at any of the comments. I shouldn't have been but was totally surprised to see everyone else sees this as a pitch to buy something else. I did in fact take out a subscription but found I was inundated with requests to buy more information. I too have taken to deleted everything they send me without reading it. I actually opened this one by accident. I thought the fees paid for the service. They simply pay for the option of paying more. When my subscription is done, so am I.

  • Report this Comment On June 12, 2009, at 5:14 PM, Zoot1960 wrote:

    As a new investor, I have found the free newsletters very helpful. I have had a few flutters with some of their recommendations and so far, so good. A couple of their recent (free!) recommendations have delivered double digit returns each month since I bought them (March), overall I am up 154% since January. If left to my own devices, I would have blown £10,000 - as it is, that £10k has grown to £25k and growing. I regret sitting on the fence on a few of them, but so far I'm happy. I bought their investing book, which was very useful and I am definitely going to try a couple of the free trials for the more detailed newsletters. But then I didn't expect to make a lot of money, so I'm pleasantly surprised!

  • Report this Comment On June 12, 2009, at 6:37 PM, jmk909er wrote:

    Please stop with the bait and switch! If you are going to give us advice, which we are paying for by the way, like "It's Finally Time to Buy These Stocks" at least say what stocks you are talking about. The Fool is turning into a big junk mailer. If you are going to email us give us some good meat, not just another come on. Otherwise please stop mailing this junk out and just send the stuff that I subscribe to ONLY.

    JMK

  • Report this Comment On June 12, 2009, at 7:10 PM, mamillstx wrote:

    More sales speak and teaser offers - I've yet to get any real valuable insight from this service that isn't already available from my broker or obvious from the financial news, what disappointing performance...

  • Report this Comment On June 12, 2009, at 7:26 PM, TMFBrich wrote:

    badger,

    <<I thought the fees paid for the service. They simply pay for the option of paying more. When my subscription is done, so am I.>>

    I respectfully disagree. Our newsletter services are of an extremely high quality, and deliver stock ideas (in the form of vetted recommendations) every month. We then track the performance of those picks and provide updates on each of them. Toss in online exclusives and members-only boards, too.

    This article is from the free Fool site. If you're unsure as to which product(s) you're paying for, I encourage you to go to "My Fool":

    http://my.fool.com

    Then click on "Account Settings":

    https://www.fool.com/Account/Index.aspx

    And then click on "Email and Other Communications":

    https://www.fool.com/Account/FreemailSubscribe.aspx?ReturnUr...

    You can manage your settings and, if you'd like, unsubscribe to any of the emails then and there.

    Alternatively, if you'd prefer to correspond with/speak to someone, you can direct subscription questions to membersupport@fool.com or 1-888-665-3665 (from 9 a.m. to 5 p.m. ET, Monday to Friday).

    Best of luck in your investing.

    Regards,

    Brian Richards

  • Report this Comment On June 12, 2009, at 7:35 PM, TMFBrich wrote:

    jmk,

    <<Otherwise please stop mailing this junk out and just send the stuff that I subscribe to ONLY.>>

    See my above remarks to badger for managing your settings via My Fool or our customer service team.

    <<Please stop with the bait and switch! If you are going to give us advice, which we are paying for by the way, like "It's Finally Time to Buy These Stocks" at least say what stocks you are talking about.>>

    We were talking about small-cap value stocks, excluding banks. I don't believe we've engaged in a bait-and-switch -- we lay out a case for small-cap value, why it's time to buy them now, and why we didn't hold this opinion 12 and 18 months ago.

    The small-cap value ETFs are a logical choice, but as we point out, VBR has some 35% exposure to small financial companies, so beware.

    This article is from our free Fool.com site, by the way. It's not part of your paid membership to a newsletter advisory service.

    Best regards,

    Brian Richards

  • Report this Comment On June 12, 2009, at 8:03 PM, DrQuien wrote:

    Hoowee, what a bunch of testy people! I wonder if the numbers and comments could be quantified and serve as a leading indicator of recession/recovery? And who doesn't spend half their time deleting email messages they don't want? Comes with the territory.

    Meanwhile, I don't see how anyone could not come away with some good information from this article. How small cap value funds are constructed, knowing which piece is "bad" and why, giving the obvious idea that one could build their own, better small cap fund, etc. I felt that email was well worth opening.

    My only suggestion is that the article should have been titled "Whatever You Do, Don't Buy These Stocks!" as that's what is was really about: Don't buy small-cap bank stocks. Thank you very much.

    Unfortunately, what I think it comes down to is that a lot of people want to get something for nothing (i.e., specific stock recommendations), and are disappointed when it doesn't happen. Well, duh.

    If you subscribe to a particular newsletter, set up your email to only pick that up and screen out the rest (which the Fools have kindly told you - step by step - how to do). Then you won't have to be irritated by opening something you don't want.

    To infinity, and...Fool On!

    Damon Fool

  • Report this Comment On June 12, 2009, at 10:02 PM, jofris wrote:

    One of my favorite websites is stockgumshoe dot com. He takes teaser e-mails and than figures out the stocks they want to tell you about if only you sign up for a subscription. You can even send in a teaser you get and he'll figure out the stock.

    Look it up, you'll love it.

  • Report this Comment On June 12, 2009, at 11:07 PM, seniorbuyer wrote:

    Yeah nuts for butts Hey mf what the hell are you doing for the common investor???? I wasted my money on you and you give me zilch=h!!!!

  • Report this Comment On June 12, 2009, at 11:41 PM, tatabob wrote:

    I let my subscription lapse in my MF dividend issue after losing over 77,000.00$ on ACAS. They repeatedly recomended this stock and assured their membership of it's continued safety. As I read other free tidbits here and there about how there "could" be some problems on the horizon, I returned to my $500.00 "expert" advise and rode it to a hugh loss. You guys are not selling ANYTHING but heresay and you no longer have time to do your homework...SHAME!

  • Report this Comment On June 12, 2009, at 11:51 PM, JFR101 wrote:

    as a former subscriber, the reccomendations never seemed clear....also, they never said what price to buy at.......and their buy in price was always less than the current market price (at least by the time I recieved the newsletter).

  • Report this Comment On June 12, 2009, at 11:55 PM, gaahdaah wrote:

    On June 08, 2009, at 8:33 PM, AZDoc4U wrote:

    " Accuray (ARAY) has developed the first and only laser that kills cancerous tumor cells without damaging healthy cells. Accuray's laser, which costs $1.5 million; they have the institution sign a service agreement with the company. No one else is allowed to touch the equipment. By doing so they are establishing a constant cash flow of residual income. More and more hospitals are buying them, and a few have already purchased their second units. What could be better than to invest in a company that is curing cancer patients on a daily basis. I'm a bit biased being a physician; but if I can invest in a company that is doing wonderful things for patients that may have given up all hope; I'm buying and accumulating shares. I'm curious to know what MF thinks"

    I am a MF dropout. I never had much luck with MF selections. I do better finding stocks by myself. I found Nuance, Intuitive Surgical and IRobot long before they were mentioned in MF. I also found Accuray by myself as, apparently, you did. I could not agree with you more on what you have pointed out about Accuray. It and Intuitive Surgical are my 2 most favorite stocks.

    The 4 companies above have 10-20 years of High growth in them.

  • Report this Comment On June 13, 2009, at 2:12 AM, fmndds wrote:

    I have been a humbled fool who has come back. I tried to ride the easy fence and use the free stuff and avoid the cost. I did a couple of 30 day trials and was irritated like everyone here.

    the reality is we are in the information age. I put all the Fool recommendations on a watch list that the Stock Advisor had recommended back when I was seeing it. they pretty much mostly have gone up and if I had invested, I would be better off than I am now reading all I could on my own.

    The simple fact is that once you get one reasonable, honest natured newsletter like I consider these guys, they are not going to be perfect, but I am doing a lot better just reading the newsletter and taking it serious, and using the free sight for my personal research and info.

    I believe that if they would eliminate the flippant approach and teasers, they would keep more people and do better, but I couldn't do better alone, so it is a compromise and I appreciate their expertise.

    fwiw

    fmn1116

  • Report this Comment On June 13, 2009, at 2:18 AM, JEPAFF wrote:

    Brian, Tim,

    Please, reread the article above.

    Here is the Title "It's Finally Time to Buy These Stocks"

    Now, read the article. Do you, anywhere in the article, tell anyone which stocks you're recommending?

    You say, "Look at small cap value" That's a terrificly broad statement, and only in the most tangential way does it apply to the headline. My wife says the same thing, "Buy low, sell high." Whoa, great advice. Also, useless.

    In fact, these teasers are classic bait and switch -- make a promise of free STOCK suggestions with a reason why, but then only provide the suggestions after signing up for a subscription. Yes, there is a small nugget of advice, but it's sooooo miniscule within the sales pitch, it's practically non-existent. And yes, I can cancel within 30 days. And we all could cancel AOL, too. It's damn difficult

    You defend it by saying, "Well, you don't have to get the newsletter." Yes, you're right. We don't. I don't have to answer the phone to hear telesolicitors, either. Point is, you are PROMISING one thing, providing another. One day, I keep thinking maybe, just maybe, the teaser headline will be followed by a real article.

    Damon, you're saying people want something for nothing. Maybe. A list of twenty stocks and things to look at make us all do our own homework, without really be "free" advice. Point is, if Safeway offers free ice cream with every chicken, and then says you can only get it if you subscribe to chicken-per-month -- that's not the same thing. And TMF constantly "offers" this way.

    Note that I was a subscriber to Hidden Gems. Lost money on Stanley Furniture at the start of the turn. But I didn't feel that badly about it, Hidden Gems suggested it and after research I agreed. It's not a perfect world.

    Still, you're right, I will cancel any TMF emails, and move on.

  • Report this Comment On June 13, 2009, at 5:07 AM, hb009 wrote:

    I do not like the teaser articles. I now use Wallstgrand.com

    They give good real free advice in their newsletters. I am up over 300% for the year from their picks.

    Why waste your time with sales pitches when you can get an actual stock pick to research.

  • Report this Comment On June 13, 2009, at 8:11 AM, chiro85 wrote:

    I'm a previous "Hidden Gems" subscriber. I didn't do well with it and I'm not a huge fan. HOWEVER, this free article many of you are bashing contains really good advice. The message is accurate and timely. My portfolio is right now about 25% small value stocks that I found myself. I invested in them because they fit the research I had done. That part of my portfolio has risen 200% in the last 2 months. I expect it to continue that way for quite a while based on history. The answer is learn the lessons but pick your own stocks! Learning is more valuable than stock picks by far. I've learned a lot from these free-bees.

  • Report this Comment On June 13, 2009, at 1:01 PM, debo54 wrote:

    Add me to the list of people tired of the "tease" headlines. Seems that all these articles are simply advertisements to get me to buy more "teaser" subscriptions so that I can receive more teaser articles. I've gotten to the point that I delete almost all MF emails. Keep hoping that one of them will actually provide me with some "real" advice. Count me as one who will not be renewing.

  • Report this Comment On June 13, 2009, at 1:59 PM, dmccomas wrote:

    Too many teasers guys. JEPAFF is right. And to chiro85, I don't think you should think your gains in small cap value should continue as they've done in the last two months. If the global economy does not stumble on its way back to more prosperous times, you'll be fine, but there's a lot in that if and I'm not convinced you should put your confidence in this bounce off of extremely oversold conditions.

  • Report this Comment On June 13, 2009, at 11:23 PM, RiverRover wrote:

    I am really tired of all the Motley Fool bashing. I started my portfolio last Sept-Oct (08) with all Motley Fool recommendations and I am up 47% since then. TMF has made all the difference in my investing. Someone has to pay the bills and if pitching their subscriptions is what they have to do, then so be it. How do YOU ALL earn your money???

  • Report this Comment On June 14, 2009, at 12:08 AM, bikingdoc wrote:

    Well fair enough Brian Richards. However the problem is that the marketing pieces are cleverly headlined and designed to closely resemble the informational pieces. This is damaging to MF's credibility.

    Nothing against marketing but it should be clearly identified as such up front so that it can't be confused with objective investment information.

  • Report this Comment On June 14, 2009, at 4:43 AM, foolshand wrote:

    HELLLLLLLLLLLLLLLLLLLLLLLLLLLO , IGNORANTFOOL77,, I AM HAPPY TO SAY THAT YOUR COMMENT SHOULD HAVE MANY GOLD RATING STARS FOR IT... BUT I HAVE TO BE HONEST ALL THESE OTHER FOOLS COMMENTS HAVE TO HAVE GOLD STARS TOO..

    FOR ME TO BECOME ANOTHER ONE OF THESE FOOLS IS WHEN I CLICK SEND EMAIL ADRESS AND WHILE SEND YOU OUR THREE TOP PICKS!

    AND EVERY SINCE THAT DAY I'VE BEEN OPENING THOSE WOODEN RUSSIAN DOLLS, BUT I STARTED OUT WITH THE 50 FOOT WOODEN BACHT@#@,. BECAUSE THAT ALL I GET EVERY DAY IS ANOTHER TO OPEN.

    WHEN THE MAIN FOOL WRITES, OH COME ON STOP GETTING SPLINTERS IN YOUR FINGERS AND TRY THIS GOLDEN DOLL FOR FREE FOR 30 DAYS, I SAY AHH LET ME CHECK THIS OUT AND AFTER THE VERY LONG PAGE IT HAS SIGN HERE WITH CREDITCARD.. IT'S NOT FREE WHEN I CHARGE IT..

    ANYWAY, THATS ANOTHER STORY I JUST WANTED

    TO WRITE STOP GETTING SPLINTERS IN YOUR FINGERS!

    SINCE, I SEE THAT THE MAIN FOOL DOES READ WHAT YOUR FOOL DO WRITE, MAYBE,JUST MAYBE HE WILL READ AND CONSIDER THIS SUGGESTION.

    WHEN YOU SAY TRY FOR 30 DAYS FREE, THEN MAKE IT FREEEEEE, NO CREDIT CARD, NO CANCEL BEFORE A SO DATE OR YOUR CARD WILL BE CHARGED,, NO FOOL TRICKERY, JUST DO IT LIKE THIS,,,

    SIGN UP TO EMAIL, LOGIN, SPECIAL WEB PAGEOR WHAT EVER YOUR FOOLS THINK OF AND LET US NEW FOUND FOOLS TRY IT FOR REALLY FREEEE FOR 30 DAYS AND IF WE LIKE IT THEN WE GIVE OUR HARD EARN DOLLARS AND IDENTIY TO YOU..

    IN THE MEANTIME YOU CAN BE PROMOTING ALL THE OTHER WOOODEN RUSSIAN DOLLS TO US..

    ONE LAST THING, I AM NOT A FOOL, BUT I HAVE BEEN THINKING ABOUT BEING ONE FOR A LONG TIME, EXCEPT FOR THE LAST FEW WEEKS I'VE BEEN THINKING OF STOPPING INCOMING FOOLS TO MY EMAIL, BECAUSE I REALLY HAVEN'T SEEN ANY JESTER THAT MAKES ME WANT TO BECOME A FOOL.

    I READ MANYCOMMENTS OF NEGETIVE RATHER IT BE ON THE FOOLS STOCK PICKS OR THEIR BASHING, IT'S BEEN MORE NEGETIVES THEN POSITIVES FROM ANY OF THEIR AT ARTICIALS.

    WHEN I READ THE RUSSIAN DOLL, IT SUM IT ALL UP, YOU HIT THE JESTER RIGHT IN THE FACE WITH A PIE, I EVEN THINK THAT YOU MIGHT HAVE CAUSE HIM TO TRIP OVER HIS OVER SIZE POINTY SHOES AND CAUSE HIM TO RESPOND TO ALL THESE FOOLS COMMENTS.. I'M CONVINCE I WILL NOT BE ANOTHER FOOL AND LIKE TO SAY THANKYOU AND TO ALL THE OTHER FOOLS THAT CLEARING MY FOOLISH MIND..

    ALL I CAN SAY IS I WISHING YOU LITTLE FOOLS THE BEST AND MAYBE THE JESTER WILL DO SOMETHING EXTER GOOD FOR YOU...

    THEN AGAIN, YOU MUST HAD SOME THOUGHTS ABOUT THEIR NAME,, MONTY'S FOOLS????????

    WELL, YOU CONVINCE ME TO NOT TO BECOME ONE..

  • Report this Comment On June 14, 2009, at 4:56 AM, foolshand wrote:

    HELLLOOOOOOOOO, JEPAFF,,,,,,,

    5 BRAND NEW GOLDEN POINTY SHOES FOR YOU, GREAT JOB FOOL ON YOUR COMMENTS AT 2:18 AM JUNE 13... 1ST CLASS, NOT A MEANTION OF 1 STOCK TO BUY..

  • Report this Comment On June 14, 2009, at 9:28 AM, snakeflake wrote:

    Am I the only one who believes results speak for themselves. If MF's payservices are making people money, then that alone should increase their subscriptionn rate. I am not saying that they should not advertise, but I must admit that even though this email had some information that I could ponder and research, I too, am a little turned off by the endless self promotion. I realize this is a free email. I have never paid for anything from MF, but when I see real comments from several people on how "Hidden Gems" made Joe Investor $XX,XX.00 dollars, that is the day I subscribe.

  • Report this Comment On June 14, 2009, at 10:53 PM, thequickfix wrote:

    While advertising is a necessary evil, it is a sin to waste our time with hidden advertising! Yes, I know its the trend in the magazines and even newpapers, but please TMF listen to your customers and keep the ads separate and clearly marked. Doing that will go a long way towards stopping complaints including mine!

  • Report this Comment On June 14, 2009, at 11:59 PM, KingofSnow2 wrote:

    Brian and other MF team members:

    I am a subscriber of the SA service, and unlike some of the "good soles" here I found it certainly valuable ( come on guys ! if MF is such a crap how comes you are still hanging around here?...). However, from this point of view I must join the vast majority of the responders and tell you that this sale overdose does not do good for your organization, especially for subscribers like me that heard many times already about your service options. Newsletters are great, but put them where they belong in your site, either in the free or premium sections. Once in 6 months or so U can send an email describing your new or existing service options, but pleasssseee stop the email spamming. Also, you HAVE TO avoid the misleading titles like "time to buy these stocks", when there are no real stock recommendations in the article. Thx

  • Report this Comment On June 15, 2009, at 11:52 AM, Coffeeman66 wrote:

    I'm getting in here late, but I have a take. Overall, this one did steer me away from index funds that are 35% weighted in small cap banks, which is valuable in itself.

    While I can agree with others that the pitch is predictable and therefore a bit annoying, it is the 'lesser of two evils' so to speak. No details necessary - its been said above by the author. I quickly scan these things for the nuggets of info and ignore the rest, and I suggest others do the same.

    I'm paying for the overall experience, including the message boards, mailed items as well as these 'free articles'. I appreciate the tradeoffs you have to make, and consider the service more than worth it.

    Thanks.

  • Report this Comment On June 16, 2009, at 4:32 AM, thisislabor wrote:

    I think there is alot of whining children on this board who need to be a little more empathetic of the position of the motley fool staff. If you dont like what they write, dont read it! but dont whine about it in the comments sections. I read the comments section for other "free" reflective advice in hopes to learn something. When I do have more money and become more serious I will pay for higher level of "service" or for information that I feel empowers me to make a better choice. Until that time I will read the "free" information without complaining and being understanding of the motley fool staff that does not have too nor should be writing stuff for free or without purpose.

    just my 2 cents though.

  • Report this Comment On June 16, 2009, at 4:39 AM, thisislabor wrote:

    well the post comment button deleted my comments, which is probably a good thing in reflection.

    The posting members of this letter by and large tend to whine a lot and act like children for the most part. It's a free newsletter. If you dont like it unsign up for it, but dont complain. Your wasting space I have to read through to find useful reflective advice posted in the comments section.

    As far as the newsletter goes, thanx motley fool staff for making it free. I tend to find at least one or two interesting ideas and reflective thoughts in each one of your free newsletters. This costs me nothing which, atm, is what I can afford.

    Man, I guess I'm just sick of hearing people whining instead of reflecting and discussing. I think they call that the "socratic method" or something like that? I dont know.

  • Report this Comment On June 17, 2009, at 12:43 PM, rainbosk8r wrote:

    As a past subscriber of the Newsletter, the Hidden Gem, the MDP (million dollar pro) - I had to cancel them all, since I couldn't afford the subscribtion any longer.

    FOOL ON

  • Report this Comment On June 30, 2009, at 10:35 PM, BiloSelhi101 wrote:

    I'm sure I am late to these comments and few will see this..., but if you want to experience bate and switch at it's finest check out Eagle Financial... those three guys never ever give you a straight line and their fees are 10 times what you pay with MF. Marketing is what it is and good advice is priceless, but a more definitive line between the two would go a very long way to retain customers.... rather than always trolling for new ones.

  • Report this Comment On July 06, 2009, at 2:57 PM, 123spot wrote:

    Hey guys, Good job on the article. You have saved me a fortune with these freebies. I was about to buy a small cap value and small cap growth ETF awhile back when you informed me of the high percentage of financials they held. I'm a MF SA member , partly out of a responsibility to pay you something for all of the education you generously provide free to so many. Don't let the same old grumps who write time and again ( apparently after they have read the articles and taken from them something) ruin it for the rest of us who look forward to these lessons, many of whom can't afford a subscription. Fool on, and don't let the buzzards get you down. Thanks for all you do.

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