Motley Fool
From Wikipedia, the free encyclopedia
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. The company employs approximately 200 people.
Contents |
[edit] History
In August 1994, the Gardner brothers parlayed their 1-year-old investment newsletter into a content partnership with America Online. The Motley Fool gained renown for its early recommendations of stocks, such as that of America Online (AOL) and Amazon.com, and was featured in a cover story for Fortune magazine (1996) about 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 AOL and onto the Fool.com Web site permanently. Also in 1997, the Motley Fool established a site in the UK (see external link below).
The Motley Fool also is available to the public by its podcast, nationally syndicated newspaper column, and radio show on National Public Radio. The Gardners have written several best-selling books on investing, mostly penned between 1996 and 2002. The best-known of these is The Motley Fool Investment Guide, which in 2003 was called the “#1 All-Time Classic” by investment club members of the NAIC [1]. Despite their penchant for writing about the stock market, the Gardners rarely follow their own advice. For instance, the Gardners claim that the Fools invest for the long term, but their track record shows otherwise. The Gardners also are famous for their view that, for the majority of people who have little time to keep track of stocks, the best investment strategy is to "Buy an index fund." That said, they generate most of their revenue by advising people who are interested in stocks on stock-picking. They also use index funds to track the viability of an investment, often claiming "If you can't beat the index after all costs are deducted, you've blundered."
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 [2]. 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 stock-picking focus. Although no longer the primary business model, advertising continues on its Web site, which is visited by millions. Signs that The Motley Fool is growing strong again became apparent in a December 2005 Washington Post article[3] , detailing its recently signed 10-year lease for new offices in Old Town Alexandria, Virginia, taking over office space vacated by Time Life.
In September 2006, the company unveiled its newest beta offering, Motley Fool CAPS [4].
[edit] Community discussion boards
The Motley Fool hosts on-line discussion boards for the purpose of helping people make better financial decisions. By subscribing to the boards, people can get access to all non-newsletter boards that cover a variety of stock, personal finance, and investing concepts. The discussion boards are used heavily to recruit future Motley Fool staffers, with frequent posters first awarded free subscriptions to their favorite newsletters, to eventually receiving a small stipend and "TMF" username moniker to patrol the boards.
[edit] The Motley Fool versus Wall Street
The Motley Fool and the financial services industry have traded criticisms over the years, though not to the same extent as in the 1990s. Fundamental disagreement between them centers on the company's belief that average people are qualified to guide 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, on the other hand, have traditionally contended that financial management is the work of professionals and requires a commensurate level of skill. A number of customers now complain that The Motley Fool, with seven newsletters, looks and behaves very much like a Wall Street firm.
[edit] The Foolish Four
In 2000, the Motley Fool ran into controversy with its eventually discredited Foolish Four investment theory [5]. 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." [6]
[edit] The Motley Fool today
Following the 2000-2002 downturn of the stock market and the Internet, The Motley Fool started to offer more services, such as a range of investment styles from value-based small cap stock investing to growth & technology stocks to dividend investing. As of April 2006, Alexa.com lists the company's registration-required flagship Web site, www.Fool.com, as the Internet's 498th most popular destination.
