Evaluating the performance of the motley fool's stock advisor

Greg Filbeck, Alexander Lyon, Xin Zhao

Research output: Contribution to journalArticlepeer-review

Abstract

Since March 2002, The Motley Fool's founders, David Gardner and Tom Gardner, have published monthly stock recommendations under Motley Fool's premium Stock Advisor service. In this paper, the authors investigate whether analysts' recommendations can add value for investors by examining the performance of portfolios constructed based on Motley Fool's recommendations. They evaluate the announcement effect on share price corresponding to the publication of stock recommendations. Additionally, the researchers examine holding period returns for a portfolio imitating the actions of Stock Advisor. They find portfolios composed of recommendations through Stock Advisor added value initially upon recommendation and across extended holding periods. Additionally, the authors find that the Stock Advisor sample outperforms other sample portfolios on a risk-adjusted basis and over several subperiods. The findings contribute to the literature on the usefulness of analysts' recommendations in adding value to investors' portfolios.

Original languageEnglish (US)
Pages (from-to)280-290
Number of pages11
JournalInvestment Management and Financial Innovations
Volume14
Issue number3
DOIs
StatePublished - 2017

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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