Welcome to Market Mood, your lighthouse in an ocean of stock market news. 🌊

SPOTLIGHT: THE MOTLEY FOOL 🃏

If you’ve invested in stocks, then you’ve definitely heard of The Motley Fool. It’s basically every Gen-Xer’s favorite market news outlet. A staple of the news landscape.

Most famous for their $39/mo stockpicking email service (Motley Fool Stock Advisor, which touts +415% returns all-time), their website is also well-known for pumping out tens of relatively informative (yet somewhat click-baity) articles about which stocks to watch each day:

So, being the ~astute~ (and cheap) market news monitors that we are, we wondered: How good is The Motley Fool’s free news site at picking stocks?

Like sure, you can go pay the hundreds of bucks per year to subscribe to their premium Stock Advisor Service, but what if you don’t have the cash? Can you still make decent money trading solely on their freebee’s?

We decided to do some quick analysis & test it out. Here’s the methodology:

• We combed through all of the Fool’s free articles written over the past 6mo (a few thousand in total)

• Then we parsed out which stocks were mentioned in each article, and analyzed the sentiment expressed about each (positive or negative on a scale from -100% to +100%)

• Finally, we picked out the top 30 most bullish & bearish stocks based on average sentiment (min of 30 mentions), and calculated each stock’s corresponding returns from their first mention on the Fool’s website to today.

Here’s what we found:

Analyzing The Fool’s News Articles 🔎

Over the past 6 months, The Motley Fool’s most bullish picks have performed roughly even with the market (which isn’t saying a whole lot, considering the S&P has returned less than a percent over the 6-month window).

But more enlightening is that The Fool’s most bearish picks have actually beaten the market by an average of ~10%. Not too shabby. Some specifics:

• Takes tended to be slightly more bullish than bearish (89 bullish picks vs. 78 bearish picks), but overall pretty neutral

• Directionally, they called 14 of their top 30 most bullish picks correctly (~46%), but got 18 of their top 30 most bearish picks correct (60%).

• It tended to get the big bear picks right, generally calling Bed Bath & Beyond, Rivian, Nikola, AMC, Skillz, and Lucid Motors correctly.

• A few of it’s worst bull-leaning takes were on Ocugen, Datadog, & Bill.com

• It's worst bear-takes were cruise liners Carnival, and Royal Caribbean.

THE TAKEAWAY:

Overall, I’d say I’m relatively impressed with The Fool’s performance here! I had my doubts, but overall the sentiment & results show that it’s a source worth keeping in your bookmarks. 📑

Sure, they don’t get *everything* right, but no one does. What matters is that they got the singles and doubles mostly correct, even if they missed on a few big ones. For, I’d give em a solid B+

SOME CAVEATS

Now, before we get ahead of ourselves here, there are few things worth mentioning:

1. This analysis is obviously somewhat limited in scope. We picked a methodology that was easy to pull off and that we think gives a good overview of The Fool’s directionality here, but it’s certainly not all-encompassing.

2. This also isn’t to say that The Fool is the *best* free news source to be paying attention to. Next we’ll have to run some numbers for other sources to compare. Eventually it would be fun to do a leaderboard of all news sources 👀

3.  The Fool’s free stuff is clearly more for infotainment purposes vs. their premium Stock Advisor service. The primary goal is to keep people informed with some pizzazz, not to explictly tell you if you should be buying/selling.

That said, if you thought this was interesting, have any ideas for other sources we should analyze, or ideas for how we can improve the analysis in the future, LET US KNOW BELOW. 👇

Also happy to share the article dataset used here if anyone’s interested :-)

Share this newsletter with a friend to unlock two FREE months on Babbl:

How would you rate today’s post?

1. Incredible 🔥🔥🔥🔥🔥

2. Considerably decent 😺😺😺

3. Not your best bro 👎

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

SENTIMENT KEY: 🟢=bullish, 🌑=neutral, 🔴=bearish