EVALUATING THE PERFORMANCE OF THE MOTLEY FOOL’S STOCK ADVISOR™

Open Access
Author:
Lyon, Alexander John
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Greg Filbeck, Thesis Supervisor
  • Diane Parente, Honors Advisor
Keywords:
  • finance
  • investing
  • The Motley Fool
  • Stock Advisor
  • stock recommendations
  • announcement effect
  • holding period returns
  • portfolio
  • matched sample
  • S&P 500 index
  • excess return
  • t-test
  • event study
  • abnormal return
  • risk-adjusted measures
  • regression
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, we examine the performance of these recommendations. We evaluate the announcement influence on share price corresponding to the publication of stock recommendations. Additionally, we examine holding period returns for a portfolio imitating the actions of Stock Advisor™. We find portfolios composed of recommendations through Stock Advisor add value, initially and across extended holding periods. Additionally, we find that the Stock Advisor sample outperforms other sample portfolios on a risk-adjusted basis over several periods.