In this Motley Fool vs. Morningstar Review, we compare two popular premium investment services to help you decide which is right for your investing toolkit.
Quick Comparison:
|  | |
Overall Rating:
| Overall Rating:
| |
Investing Tools |
|
|
Stock Recommendations | No explicit stock recommendations | 2 Stock recommendations per month |
PROs |
|
|
CONs |
|
|
Pricing & Value | Free content available, but premium services like real-time data, advanced tools, and ad-free experience require subscription. | Free articles available, but key services like investment recommendations and premium reports are subscription-based. |
Promotions | 14 Day Free Trial | $79 for first year |
What is Motley Fool?
The Motley Fool is a widely recognized investment research service that provides stock recommendations and analysis.
Motley was founded in 1993 by brothers David and Tom Gardner. Their goal was to provide ordinary individuals with uncommonly good financial advice, dispelling the myth that only Wall Street insiders could profit from the stock market.
How Does Motley Fool Work?
The Motley Fool provides extensive investment resources, including podcasts, indicators and simulators, books, a radio show, and stock picks through Motley Fool Stock Advisor, their flagship premium stock-picking service. A Stock Advisor subscription provides you with two stock recommendations per month.
What is Morningstar?
Morningstar is a renowned investment research company that provides data, analysis, and tools to individual investors and financial professionals. Over the years, Morningstar has become a staple of individual and professional investors and is often considered one of the top investment newsletters.
It offers various services, including mutual fund and stock research, portfolio management tools, investment analysis software, and, most famously, its Morningstar Star Rating system.
Morningstar is well-known for its independent and objective approach to providing quality investment research.
How Does Morningstar Work?
Morningstar is a leading provider of independent investment research. Their primary function is to compile and analyze financial data to provide investors with detailed reports and ratings on stocks, mutual funds, bonds, and exchange traded funds (ETFs).
Their research into investment picks is based on a deep understanding of the fundamentals of each investment. They examine factors like a company’s financial health, its management’s strength and strategy, and its competitive advantage, which Morningstar refers to as an “economic moat.”
Morningstar uses a star rating system known as Morningstar Ratings for its fund analysis. One star is the lowest rating, and five stars is the highest.
These ratings serve as a quick, easy-to-understand indicator of Morningstar’s assessment of the particular investment risk-adjusted performance relative to its peers.
In addition to their investment research, Morningstar provides various tools and software for investors.
Morningstar Portfolio X-Ray is a tool that gives investors a comprehensive view of their portfolio’s asset allocation, sector weightings, stock holdings, and more. This tool can help identify areas of risk and opportunity, aiding investors in making more informed investment decisions.
While some basic services are free at Morningstar, a Morningstar Premium subscription, now known as Morningstar Investor provides access to more in-depth research and tools.
- Proven track record of returns: Investments have outperformed the S&P 500 4-fold since inception
Promotes Long-Term Investing: There is no get-rich-quick scheme, and Motley Fool acknowledges this by promoting a long-term investing strategy.
Motley Fool: PROs and CONs
PROs
- Proven track record of returns: Investments have outperformed the S&P 500 4-fold since inception
Promotes Long-Term Investing: There is no get-rich-quick scheme, and Motley Fool acknowledges this by promoting a long-term investing strategy.
CONs
- Lack of Portfolio Building Tools: No insight on how to build a portfolio out of all their monthly recommendations
- No recommendations on Valuations: Buy picks are only justified by generalizations about the role said the company would play in shaping their industry in the future
- Not for Passive Investors: While useful for active traders, the real-time news feed may not be necessary for passive investors or long-term holders who don’t need to respond quickly to market events.
Morningstar: PROs and CONs
PROs
- Powerful Analytical Tools: Morningstar offers a range of analytical tools, such as the Morningstar Rating and Morningstar Style Box, which enable investors to assess investments based on performance, risk, and style.
- Portfolio Management Solutions: Morningstar provides tools for investors to track, analyze, and optimize their portfolios. These tools provide insights into portfolio performance, asset allocation, and risk, aiding investors in managing their investments effectively.
CONs
- Limited Coverage Small Cap Investments: Coverage of smaller or niche investments is relatively limited.
- Potential Information Overload: With vast data and research available, investors may face the challenge of information overload.
Who Should Use These Platforms?
Below we identify some users who may be a good fit for Morningstar and Motley Fool.
Motley Fool is Good For…
- Long-Term Investors: The service particularly benefits those focused on long-term wealth growth. Focusing on companies with sustainable competitive advantages and potential for long-term growth.
- Investors who want explicit stock recommendations: A Motley Fool Stock Advisor subscription provides members with 2 stock picks per month.
Morningstar is Good For…
- Active Investors: Morningstar shines for individual investors who want to be hands-on with their investments. Its vast database of mutual funds, ETFs, and stocks, combined with analyst ratings and detailed reports, make it a must-have in your investing toolkit.
- Advanced Investors: Investors who advanced investing tools at their disposal but want to form their own investment thesis.
Motley Fool Investment Tools
Motley Fool is a stock-picking service, and Morningstar is more of an analytical and research-oriented platform.
That said, Motley Fool doesn’t offer stock screeners and analysis tools. While they offer some tools, they’re not as useful as Morningstar’s, which include stock screeners, portfolio analysis tools, and a portfolio manager tool to view all your investments in one place.
Motley Fool’s Stock Advisor offers some investment tools, but they’re not as useful compared to Morningstar’s
Its main tools include:
- Probability Simulator
- Potential Growth Indicator
- Portfolio Allocator
Probability Simulator
See the probability that a portfolio would have made money while holding a given number of stocks based on the historical performance of random Motley Fool stock picks, using equal weighting.
Indicators
The Potential Growth Indicator measures the cash sitting in taxable money market accounts versus the total value of U.S. stocks. It tells us how hesitant or eager investors are to invest money in the stock market.
Portfolio Allocators
Every portfolio is different. Motley Fool Stock Advisor offers model portfolios based on various risk tolerances and time horizons. This helps investors understand the different ways a portfolio can be constructed, which can be useful for beginner investors.
Motley Fool also offers other investing tools like financial calendars, watchlists, and detailed financial data.
Morningstar Investment Tools
Morningstar offers a wide range of investor tools, including Portfolio X-Ray, Portfolio Screener, Portfolio Manager, plus charting features. In addition, Morningstar recently launched an AI Research Bot that can search Morningstar’s extensive database to help answer any questions you may have.
Compared to Motley Fool, Morningstar’s Tools are way more advanced and helpful, whereas Morninstar’s are fairly basic.
Portfolio X-Ray
Morningstar’s Portfolio X-Ray is a powerful tool that aggregates data for all your holdings in a portfolio to give you a picture of your portfolio’s overall characteristics.
X-Raying your portfolio can help alert you to potential trouble spots, such as an over-allocation to one part of the style box, to a particular stock sector, or to a region of the world. It also helps you figure out just how much you are paying, in terms of dollars and cents, to have your money managed rather than just showing you the expense ratio for each of your holdings.
When you look at data for a stock, mutual fund, or ETF can tell you about its composition and performance individually, but the X-Ray tool aggregates this data for all the holdings in a portfolio to give you a picture of the portfolio’s overall characteristics
This tool can help identify the strengths and weaknesses of individual stocks.The strength of Portfolio X-Ray lies in its ability to dissect a portfolio and present a granular view of its components. It presents data in a structured manner, revealing aspects of your portfolio that may not be apparent at a surface level.
Screeners
Morningstar’s Screener is a robust tool that allows investors to screen and filter investment options based on their specific criteria.
With the premium fund screener and customizable filters, investors can refine their searches by asset class, investment style, performance metrics, expense ratios, and more.
The Portfolio Screener boasts an extensive database of fund managers covering various investment vehicles, including mutual funds, ETFs, stocks, and closed-end funds, ensuring investors can access diverse options.
Portfolio Manager
Morningstar Portfolio Manager is a dynamic tool designed to empower investors to monitor and manage their investments efficiently.
The Portfolio Manager offers a comprehensive view of your investments, including stocks, bonds, mutual funds, and ETFs.Consolidating all your investments into one location makes it simple to see a complete picture of your financial status.
A standout features of the tool is its ability to track the performance of your investments over time. It shows both the total and personalized returns, which consider the timing of your purchases and sales, providing a more accurate reflection of your actual investment performance.
Motley Fool Stock Picking
Motley Fool markets itself as a stock-picking service, providing subscribers with two new monthly stock picks and “Top 10 Best Buys Now.”
Meanwhile, Morningstar does not provide explicit stock picks but does provide comprehensive reviews of stocks, including their Morningstar Star Rating, Moat Rating, and Fair Value Estimate.
A Motley Fool Stock Advisor subscription provides subscribers with two monthly stock picks
Each of these picks results from thorough analysis and research conducted by the Motley Fool’s team of investment analysts. They sift through numerous stocks to find companies that have strong fundamentals and the potential for excellent growth over the long term.
These recommendations are presented in a detailed report, including:
- Overview of the company
- Financial Health
- Competitive Position
- Potential Risks
Who the stock is good for and not good for
This comprehensive approach ensures subscribers know which stocks are recommended and why they are considered good investments.
Morningstar Stock Picking
Unlike Motley Fool, Morningstar does not provide explicit stock recommendations, but does provide detailed research reports. The company’s analysts conduct in-depth research and analysis, offering insights into investment strategies, market trends, and individual securities.
- Quote: Contains bid/size, ask/size, day range, volume / avg, year range, forward div yield, market cap, investment style, price/sales, beta (5-year), consensus forward P/E, price/book, a snapshot of Morningstar analysis, analyst note, view report archive, company profile.
- Price vs. Fair Value: contains price vs fair value chart.
- Trailing Returns: contains trailing returns chart (daily, monthly, quarterly).
- Financials: contains valuation, growth (3-year annualized), financial health, profitability, income statement, balance sheet, and cash flow.
- Valuation: contains valuation chart.
- Operating Performance: contains fiscal chart, financial leverage chart.
- Dividends: contains dividends & splits chart, ex-dividend date, payable date, divided type, amount, dividend yield (TTM), and dividend reinvestment plan.
- Ownership: contains ownership data for funds and institutions.
The analyses are detailed, grounded in a solid understanding of market dynamics and the company’s financial health.
They examine the management’s competency, a company’s competitive advantage (the “economic moat”), fair value estimates, growth prospects and more. This thorough approach makes Morningstar a highly reliable source for investment advice.
Pricing and Plans
Morningstar and Motley Fool offer “free” versions of their services, but to really take advantage of the best features (like Motley Fool’s Stock Picking Service), a paid subscription is required.
Luckily, both platforms usually offer a new subscriber discounted price; let’s look below:
Motley Fool Pricing and Plans
- Retail Price: $199/yr with a 30-day Money Back Guarantee
- New Subscriber Promotion: New subscribers can get a full year for just $79
$79 for a year is pretty decent. You can also put a reminder on your phone to cancel in one year if you don’t like it.
Morningstar Pricing and Plans
Morningstar offers premium subscription services that provide access to more detailed research, advanced analytics, and additional tools. Morningstar’s premium features come at a cost.
While the quality of the analysis and the depth of information provided justify the price for serious investors, casual investors or those with a tight budget may find the cost prohibitive.
Morningstar Premium Membership:
7-day free trial
- $34.95/month
- $249/year: Save over 41% compared to a monthly subscription
Bottom Line: Which is Better?
In reality, Motley Fool and Morningstar target two separate types of investors. Motley Fool focuses on providing individual stock picks, for those who don’t have the time or wherewithal to do their own research.
Meanwhile, Morningstar provides a vast array of portfolio analysis tools and analyst research reports aimed at helping investors do their own research and make their own investment decisions.
That said, neither Motley Fool nor Morningstar is considered the “better service”, but instead comes down to identifying what kind of investor you are – a DIY’er or(Morningstar) or hands-off type(Motley Fool Stock Advisor).
Either way, Happy Investing!
