Motley Fool

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The Motley Fool is a commercial website about stocks, investing, and personal finance. The Alexandria, Virginia-based private company was founded in July 1993 by co-chairmen David Gardner and Tom Gardner. Via its long-time Fool.com website and a portfolio of media assets, the company mission is "to educate, to amuse, and to enrich the individual investor." It has approximately 200 employees.

Contents

1 History
2 Community Discussion Boards
3 The Motley Fool vs. Wall Street
4 The Foolish Four
5 The Motley Fool Today
6 External links
7 See also

History

In August of 1994, the Gardner brothers parlayed their one-year-old investment newsletter into a content partnership with America Online. The Motley Fool gained renown for its early support of the stocks of America Online and Amazon.com, among others, including a cover story for Fortune magazine (1996) about their recommendation of Iomega and the emergence of online interactive discussion as a new form of investment research.

In early 1997 the "Fools," as the site's enthusiasts refer to themselves, migrated their home page off of AOL and onto the Fool.com website permanently. Also in 1997, the Motley Fool established a website in the UK (see external link below).

The Motley Fool is also exposed to the public by its podcast, nationally syndicated newspaper column and by its long-running radio show on NPR. The Gardners have written several bestselling books on investing, mostly penned from 1996-2002, the best known of which is The Motley Fool Investment Guide, which in 2003 was called the #1 All-Time Classic by investment club members of the NAIC [link] . Despite their penchant for the stock market, the Gardners are famous for their view that, for the majority of people who have little time to keep track of stocks, the best investment strategy can be summed up in four words: "Buy an index fund." That said, they generate most of their revenue advising people who are interested in the stock market how to pick better stocks.

The company ran into some trouble in 2001 with the significant declines in the stock market and especially Internet-based stocks, arguably the cornerstones of the Motley Fool's strategy. That year, The Washington Post reported on the company's significant layoffs [link]. The company also closed its nascent operations in Germany and Japan at that time.

Today, the company earns money primarily through subscriptions to its investment advisory services. The services, which combine a traditional paper newsletter with interactive electronic discussion boards and other tools, cover a range of styles from mutual funds to small caps to technology stocks. The company also provides additional services outside its primary stockpicking focus, like retirement planning. Advertising to its monthly website audience of several million, while no longer still the primary business model, continues. Signs that The Motley Fool is growing strong again became apparent in a December 2005 Washington Post article, detailing its recently signed 10-year lease for new offices in Old Town Alexandria, Virginia, taking over space vacated by Time Life. [link]

Community Discussion Boards

The Motley Fool hosts on-line discussion boards for the purpose of helping each other make better financial decisions. One such discussion board is the Motley Fool Mechanical Investing board.

Mechanical investing involves completely mechanical ("rule-based") investment decisions, which (it is hoped) outperfom the most widely-known market indices. The board began shortly after a series of columns in the Motley Fool authored by Robert Sheard. He explored a variety of techniques, often involving the Dow 30 stocks. As an English professor, he often performed research in his university library, where he discovered the weekly stock newsletter, "Value Line." He began exploring various subgroups in Value Line's ranking system and published some of his observations in a book in the late 1990's, called "The Unemotional Investor." Members of the Mechanical Investing board assembled a collection of Value Line data (mostly in discs) for exploration. These historical data are collected and arranged in "backtesters" that can be accessed on the Internet (some open to the public, some only by invitation).

The Motley Fool vs. Wall Street

While it does not occur today with as much fervor as it once did, The Motley Fool and the financial services industry have traded criticisms over the years. A fundamental disagreement between the two centers on the company's belief that average people are "qualified" to take charge of their own financial lives. The Motley Fool promotes managing one's own money, avoiding the conflicts of interest that can plague financial advisory relationships. Wall Street firms like Merrill Lynch, on the other hand, have traditionally contended that financial management is the work of professionals and should be left up to them. It's worth noting that Wall Street firms do not criticize Internet-based financial advice as much as they once did; likewise, the Fool does not take as many shots at Wall Street as it did in the early Internet years.

The Foolish Four

In 2000, the Motley Fool ran into controversy with its eventually-discredited Foolish Four investment theory [link]. The theory had been constituted squarely on the shoulders of the Dogs of the Dow analysis popular at the time (and still used by some today). Motley Fool writer Ann Coleman admitted in 2000 that the Foolish Four method "turned out to be not nearly as wonderful a strategy as we thought." [link]

The Motley Fool Today

Following the 2000-2002 downturn of the stock market and the Internet, The Motley Fool shifted away from a primarily educational mission toward providing subscription services that provided investors with direction. Beyond a range of investment styles (from value-based small cap stock investing to growth & technology stocks to dividend investing), the company also provides services on picking mutual funds, and better retirement planning. As of April 2006, Alexa.com lists the company's registration-required flagship Web site, www.Fool.com, as the Internet's top 498th most popular destination.