They are two of the most popular investing services out there, but what sets Motley Fool and Morningstar apart? Today, we’d like to focus on the similarities and the differences between these two big boys.
As you know, it’s not always easy finding a good stock advisor. Most platforms are either overpriced or downright ineffective.
Therefore, before you make that final decision, it’s always wise to do a bit of research. Here’s what you need to know before settling for any of these two.
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This company has been around since 1993. Worth noting, however, is that their highly popular Stock Advisor service was officially launched in 2022.
One thing you need to know about this firm is that once you opt-in to their stock advisory, they typically enroll you for a monthly newsletter. The newsletter is emailed to you containing two stock picks along with an in-depth explanation of why they are “hot picks.”
The Motley Fool Stock Advisor has been quite successful (if the company’s published historical data is anything to go by). And so, if you’re looking for a service that makes good calls, this would be a good platform to belong to.
Did you know that “the Fool” saw potential in Gilead, Amazon, and Costco before anyone caught on?
Morningstar was there long before Motley Fool. It’s 9 years older to be precise. To date, the company has seen its asset management business grow to more than $220 billion (under the company’s management).
The Illinois based financial services provider reportedly raked in 1 billion in revenues in 2018 alone.
Worth noting is that this firm has made huge strides in the mutual fund management sector. However, with the advent of the internet, Morningstar has metamorphosed to provide coverage on individual stock analysis.
Ask anyone who used to trade in the 90s and they’ll give you stories of how they used to make trips to the library to read Morningstar’s publications.
Thanks to the fact that this company was created a long time ago, they’re quite popular. And that indicates that they’re quite reliable. Had they been dubious, they’d have gone under by now.
The Similarities You Need to Take Note Of
Of course, the first obvious similarity between these two companies is that they’ve been around for quite some time. These guys have survived everything from the Great Recession of 2007 to 2009 to 9/11 and the 2011 free fall of the Bank of America.
The next similarity is that the two firms specialize in the provision of stock analysis. So, if you’re looking for the latest insights and buying advice, any one of these two companies has got you covered.
On top of that, the two firms have features that are worth paying up for. Of course, since these two are not Siamese twins, they also have their fair share of differences.
Motley Fool vs. Morningstar: The Differences
There’s no doubt that both companies have helped investors conduct research and invest for many decades now. But when it comes to the specifics, some glaring differences set the two apart.
1. Investment Portfolio
First off, Morningstar has a wide and dynamic investment portfolio. Their daily updates cover everything from EFTs, Mutual Funds to individual stocks.
As such, we think that this would be a good investment advisor to work with if you aren’t fully into stocks. If you’re open to the idea of trying out new stuff in your investment journey, Morningstar should be your go-to platform.
The Motley Fool Stock Advisor, on the other hand, is a stocks-only platform. The good thing with having a highly specialized advisor like this one is that they have the ability to dig deeper and provide you with highly refined insights.
The “Fool” is a monthly newsletter that brings you up to speed with just 2 stocks deemed to be of the highest potential at that given time. Unlike Morningstar, they don’t provide insights on EFTs and Mutual Funds.
If you’re looking for daily insights, or if you prefer to open new trades every other day, Morningstar might be what you need. The advisor provides you with daily insights. Lots of them.
So, all you need to do is choose whatever appeals to you. The company basically lists down their top picks without providing much background information, though.
Fortunately, they do share lots of insights through their free-for-all articles. So, you can combine their premium suggestions with the insights from their free-for-all articles to make informed decisions.
The Motley Fool stock advisor, on the other hand, is a monthly publication. With just two stocks being highlighted per month, this is the kind of platform you need if you only open new trades once every so often.
One thing we really like the Fool for is that their newsletters are quite in-depth. They don’t just list down the stocks for you, they also educate you on the reasons for picking them.
3. Extra Discovery Tools
Much as the picks made by Motley Fool are quite detailed, the company doesn’t provide extra research tools. By “extra research tools” we’re referring to news updates, daily updates, live-trading, or any other tools that would help you discover new stocks all by yourself.
So, if you want to get fully immersed in the world of trading. Or if you’re just wishing for a hands-on approach to trading, the Fool might not cut it.
We think that Morningstar provides you with lots of research tools. You can find detailed news items and lots of fundamental information in their recommendation lists.
Their free-for-all content is typically accompanied by an analyst report which you can find quite helpful. Above all, the firm provides a “fair value estimate” to all its premium subscribers. This estimate can prove highly helpful when you want to get a rough idea of the potential gains from a given investment.
4. Track Record, So Far
Before you decide which platform you work with, it makes a lot of sense to want to find out how they’ve been performing so far. How accurate have their past data proven to be?
Well, Motley Fool has been quite successful. The Stock Advisor has, so far, been beating the S&P 500 hands down.
In fact, the company claims to have beaten the S&P 500 index by Dow Jones by a factor of 4. And that’s based on data from the last 17 years.
Morningstar, on the other hand, has no calculable historical performance. Why so? Because the data they share is solely meant to help investors build their own investment portfolios. So, it’s not realistic to try and calculate performance since the picks are made by investors who build their own portfolios which may be highly successful or downright pathetic.
The Stock Advisor from Fool.com costs $199 per year. The flagship service is ideal for anyone wanting to make the most of the opportunities in the world of stocks.
But in case you’re looking for more than just that, you’d probably need to invest in the Rule Breakers tier which goes for $299 per year. This tier enables you to get access to David Gardner’s very own handpicked stocks.
The Rule Your Retirement, Market Pass, and Options plans also exist at an extra cost.
Its arch-rival, on the other hand, is available on a free-trial basis. After that, all you need to do is pay 24 bucks per month or $199 per year for a premium subscription.
In our view, none of the two companies is exceptionally expensive except for the fact that Motley Fool provides you with a lot more pricing variety to choose from.
Is Motley Fool for Me?
Experts generally recommend the Fool for anyone interested in a semi-active trading style. In particular, this kind of service works best when one is interested in a highly specialized stock picking service.
We think that Fool.com would be a great place to start from if you’re a complete beginner. But if you’re already experienced in stocks and are willing to experiment with new stuff, the Stock Advisor might be quite limiting.
You might need to consider doing for the company’s Options tier which goes for $999. If that sounds like a lot to you, then Morningstar is your knight in shining armor. Read on.
Is Morningstar for Me?
Even though it’s the more diverse one of the two, Morningstar premium is primarily meant for a self-directed style of trading. It doesn’t provide you with the real picks. Just a long list of suggestions which you should dig deeper and choose on your own.
If you’re looking for a roboadvisor kind of service, Morningstar might disappoint you. That said, it does provide you with the research and tools you need to make some decisions on your own.
Best of all, there’s a free-trial available. So, if you’re on a budget and simply want something to test-drive, this might be something worth sampling out.
To this end, we’re of the opinion that both services are great. But if you’re looking for cutting-edge information on stocks and don’t want to suffer from informational overload, we’d highly recommend going for the Motley Fool Stock Advisor.
The Fool has a pretty decent track record. Plus, the company’s in-house experts do actively invest in the trade picks they make. And that explains why this company has historical data while Morningstar doesn’t have.
When you join Motley Fool, you become part of a family. You enjoy shared success. But when you go with Morningstar, you’re left to hustle on your own, fail on your own, and above all take full credit for any wins you might make.
Blake is a self-made online day trader with a knack for adventure. On his free time, he loves reading and learning new methods in the trading as well as improving his jiu-jitsu skills. He currently resides in New York City.