If you've spent any time in Fooldom lately, you're probably aware that your friend The Motley Fool has developed a suite of investing newsletters. But you may be wondering -- quite reasonably -- whether they're any good and which one(s) would serve you best. (Hint: They're pretty impressive indeed -- keep reading.)
After I wrote an article a while ago about investing and plumbing (of all things!), I heard from a reader who asked me how to go about choosing one or more of our newsletters. As I replied to him, it occurred to me that many others might have the same questions, wondering what the differences are between our offerings and whether their performance is really any good. I suspected that more than one person might be interested in my answer, so I've expanded it here. Please keep reading, because you can try these newsletters for free and there's a good chance you can benefit greatly from them. Really. So give me a chance to tell you more about them.
The rundown
First, here's a quick look at each newsletter:
Rule Your Retirement : This newsletter, headed by longtime Fool personal finance expert Robert Brokamp, is critical for most of us. You may be investing in some terrific stocks and funds, but if you're not investing enough, or are investing inefficiently, you're at best leaving some money on the table and at worst setting yourself up for a bumpy retirement. This newsletter can help you get on track, planning and preparing for a comfortable retirement. It covers lots of financial planning and personal finance topics. Robert and his guest writers offer specific stock and fund recommendations, along with guidance on Social Security, pensions, asset allocation, diversification, and other critical topics.
Rule Breakers : Headed by Fool co-founder David Gardner, Rule Breakers is not the best choice for beginners. This is aggressive investing and should be only a part of a portfolio, if you do it at all. That said, when Rule Breaker investing pays off, it tends to do so in a big way, rewarding investors handsomely. It just won't always pay off. Last time I checked, one Rule Breakers recommendation, TaserInternational, was down 69%, while another, Archipelago Holdings (NYSE:AX), was up 95%. The newsletter pays special attention to biotech companies and early adopters. It's where you may run across articles on exciting new fields, such as nanotechnology. Overall, its recommendations were beating the S&P 500 handily, with total average returns of 14%, vs. the S&P's 4%.
Hidden Gems : This newsletter could serve you quite well. Know that it focuses on smallish companies, which can be a bit riskier than their larger counterparts, but their size also means they can grow more rapidly. Last time I checked, the total average returns for Tom Gardner and his guest analysts were 31% and 36%, respectively, compared with 10% for the S&P 500. The newsletter features a watch list of intriguing companies, as well as a section on "Tiny Gems" with a lot of promise. Tom also includes many investing lessons in his writings for the newsletter. Of the first 52 picks, eight have more than doubled in value, with three more than tripling -- for example, cooking equipment maker Middleby (NASDAQ:MIDD). Some 23 are up more than 20%.
Inside Value : Value investing pays particular attention to paying a good price for investments, so you may find a greater margin of safety in these recommended stocks. This newsletter is not a bad choice at all for beginners -- and everyone else, too. Lead analyst Philip Durell fills each issue with close examinations of undervalued and attractive companies, explaining his thinking about their business, risks, competition, and valuation. He also maintains a watch list and offers educational articles, such as one on the effect of employee stock options. His total average return is 13%, compared with 6% for the S&P 500 over the same period. Six of his first 24 picks are up more than 20% since he recommended them -- including gambling technology giant GTECH Holdings (NYSE:GTK) -- and four have advanced more than 40%. Only six have fallen in value.
Income Investor : This newsletter represents, in some ways, a more conservative approach to investing, as you earn dividends or other income from your investments while you also hope that many of them will increase in price. The newsletter is especially worth checking out for beginning investors, though we can all profit from it. If you choose to invest via Drips -- dividend reinvestment plans -- then finding healthy, growing companies that pay significant dividends is extra valuable. The newsletter is capping its second year, and the total average return of its picks (regular common stocks and REITs, mostly) is 17%, vs. 11% for the S&P 500. Of lead analyst Mathew Emmert's first 48 picks, only five have lost money, and recently, about 16 were up 25% or more. Five were up more than 40% -- such as Alliance Capital (NYSE:AC), which sports a dividend yield north of 6%.
Champion Funds : If you have an interest in mutual funds -- and they make a heck of a lot of sense for most of us, especially those who'd rather not spend hours studying and selecting individual stocks -- this newsletter is well worth considering. It's true that most mutual funds don't do as well as index funds -- but that doesn't mean there aren't outstanding funds out there. This newsletter is more than a year old, and its total average return is 13% vs. 7% for its benchmarks. In Champion Funds, lead analyst Shannon Zimmerman will introduce you to many great investing minds -- ones who can invest your money for you via their funds. He even maintains some model portfolios, listing appropriate funds for conservative, moderate, and aggressive investors. Only two of his picks have lost ground, and those are down less than 2%. Nearly half are up more than 15%, and seven are up more than 20%, which is darn impressive for mutual funds. One pick, Dodge & Cox International Stock (FUND:DODFX), is up 42% in a little more than a year.
Stock Advisor : This newsletter, our oldest (launched in April 2002), offers a nice mix of approaches, with both Tom and David recommending stocks in it. David tends to favor smaller, more aggressive investments, while Tom looks for more established good values. The overall average return for each brother was recently more than 50%, compared with 18% for the S&P 500 in the same period. Tom's big winners include health-care information manager Quality Systems (NASDAQ:QSII), which he recommended twice and which has more than quintupled in value each time since being recommended. David has recommended Netflix (NASDAQ:NFLX) several times, closing out his first position in it after it tripled in value. (Of course, there are inevitable losers, as well, which you're likely to find among any newsletter's recommendations.)
Other extras
You get more than monthly stock and fund picks with these newsletters. You'll also get access to an online nook maintained for each one, which features a scorecard for picks, articles and interviews by and with our analysts, dedicated discussion boards where you can interact with our analysts and other readers, and special reports and updates. One such special report for Income Investor readers is "Dividend Time Bombs," profiling seven prominent but risky high-yield firms. Champion Funds readers can enjoy "Slam-Dunk Mutual Funds," while Rule Your Retirement readers can learn to "Supercharge Your Retirement."
Why we charge, and don't
If you're bummed, thinking that it's annoying that you have to pay for all this great information, here are some things to consider:
- We're a business. We have to charge for something if we want to keep the lights on. (Few people bought our Motley Fool Cheese, so we're putting out newsletters instead.) That said, we're taking our responsibility seriously, working hard to offer you superior investment ideas that are well worth what you pay for them. Spend $100 or several hundred on our newsletters, and we'll be trying mightily to help you make several thousands of dollars -- if not more -- in return. So yes, they cost money, but they should prove well worth it. We aim for them to pay for themselves in short order.
- We don't charge you for everything. Our website is full of free guidance and education and even some investing ideas (make this page a favorite and check it regularly for our news stories). You can learn some basics in our 13 Steps to Investing Foolishly and in our Fool's School area. You may also find this page useful, though it has a lot of resources on it. I created it for teens, but it should serve post-teens just as well.
Just try one
Whether you're now sold or are merely curious, you owe it to yourself to at least give one or more newsletters a whirl. Take advantage of some free trials. We make it very painless and you'll be able to see many of our stock and fund recommendations and how they've done. I wouldn't subscribe to all of them -- that would be information overload and you might find yourself paralyzed by too many options. Instead, take some time to get more comfortable with investing and decide which approaches make sense to you.
Here are some additional related reads of interest -- they're some of the many, many articles on our website, all available for free:
- What Retirement Will Cost
- Rule Breakers and Inside Value Teams Debate
- Beat the Street With Value
- Mutual Fund Market Beaters
- Extra Dividends, Extra Growth
- The Rules of Rule Breaking
This article originally ran on Feb. 18, 2005. It has been revised and updated.
Selena Maranjian's favorite discussion boards include Book Club , The Eclectic Library , and Card & Board Games . She owns shares of Netflix. For more about Selena, view her bio and her profile. You might also be interested in these books she has written or co-written: The Motley Fool Money Guide and The Motley Fool Investment Guide for Teens . The Motley Fool is Fools writing for Fools.
