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Motley Fool Pro - Only a few will be able to underperform the market...



July 24, 2013 – Comments (5) | RELATED TICKERS: TMF , PRO

A year ago, I wrote a post "Motley Fool Pro (what am I missing here)" wondering why would anyone want to join Motley Fool Pro at a cost of $2,000 per year when at that time Motley fool Pro was only matching the market's (S&P500's) return (click here to see the original post).

I just took another look at Motley Fool Pro's performance on the TMF's home page and I see that right now Motley Fool Pro is pretty severely underperforming the S&P500:

Motley Fool Pro return (since inception) +69.44%,   S&P500's return (during the same time frame) +77.57%.

Basically, for the last 12 months, Motley Fool Pro has underperformed the market by 8% (and we are in a bull market). 

I don't know how many of you remember, but a year ago this site was flooded with Pro ads like "65,000 are interested but only a few will be able to join" promising that they will help people become rich, retire early, etc.

I wonder now how many of those few that did join a year ago did actually renew their subscription this year. I know thet didn't lose any money (as the market's up), but to pay $2,000 to underperform the market is a pretty bad deal to me.  

5 Comments – Post Your Own

#1) On July 24, 2013 at 10:28 PM, HarryCaraysGhost (87.19) wrote:

Hey Dragon, blesto does a weekly FF5C on the Randomness board-

Extrapolate the numbers how you wish, but I still say it's a nifty contest I'm running...


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#2) On July 25, 2013 at 2:49 AM, talotu (< 20) wrote:

From what I've seen as a former Pro member, the retention percentage is very good, especially considering how pricey the service is.

 TMFPro makes it very clear that their goal is not to try and match the S&P500, either for volatility or in yearly returns, but get approximately the same long term returns with substantially less volatility.

 When that is your goal, underperforming in a bull market is exactly what would be expected. This is explained pretty well in the BRK annual reports. (As an aside BRK has underperformed the market as well over the last 5 years).

 What's particularly impressive about TMFPro is how they managed to stay more or less even with the S&P bull run, despite having a lower risk profile.

That being said I am a former member (the exception rather than the rule) because I feel like I was as good (or better) at portfolio allocation. I've had similar results on my own (matching the S&P with about half the volatility). 

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#3) On July 25, 2013 at 10:06 AM, dragonLZ (88.64) wrote:

talotu, thank you for providing insight into TMF Pro. I didn't know Pro's goal was to "match market's return but with less volatility".

I thought they called it Pro based on the known fact that most of the pro's on Wall Street actually underperform the market most of the time. (Just kidding). :)

Thanks again. 

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#4) On July 25, 2013 at 10:24 AM, dragonLZ (88.64) wrote:

Harry, I didn't know about your contest. I guess you started it when I wasn't visiting this site (for a few months).

Very nice. I like contests. Will try to participate in the next one.

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#5) On July 25, 2013 at 11:49 AM, talotu (< 20) wrote:

I'd remove the "Just kidding" unless you mean outperform for their own wallets.




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