Motley Fool vs Zacks

For investors who like to play the market by investing in individual stocks, choosing the best market research platform is important. The research platform you choose can make the difference between beating the market and severely lagging it.

Motley Fool is Better for:Zacks is Better for:
Moderate-Risk InvestingHigh-Risk Investing
Medium Term InvestmentsShort Term Investments
Qualitative AnalysisQuantitative Analysis
Simplified Monthly PicksAdvanced Scoring System
Growth Stock InvestingMomentum Stock Investing
Stock AnalysisStocks, Mutual Funds, and ETFs
Low PriceProduct Bundles

When deciding between research platforms, you should evaluate what they cost and how well they cover your needs. But with a lot of this information only available to their paying customers, it can be difficult for individual investors to decide which platform is best for them without subscribing to all of them.

Motley Fool and Zacks are two of the best research firms in the stock-picking business. In many ways, their services are the same. In a few ways, they are different. Examining these differences can help you determine which one of these services to go with.

Let’s look at some comparisons:

Motley Fool Zacks
Annual Subscription Fees Basic Service

Stock Advisor $199 (steep discount for the first year with Modest Money)

$249 for Zacks Premium

Annual Highest Subscription Cost

$13,999 for Motley Fool One

Zacks Ultimate cost is $2,995

Securities Analyzed

Stocks

Stocks, Mutual Funds, ETFs

Investing Approach

Qualitative/ Quantitative

Quantitative

Horizon Considered

> 5 years

1 year

Best Use

Moderate Risk Takers

High Risk Takers

Current Promotion

More Info

More Info

Modest Money Overall Rating
4.9 rating based on 5 ratings
4.3 rating based on 5 ratings

Modest Money assesses that Motley Fool’s qualitative approach to long-term investing is suitable for more investors than Zacks short-term quantitative investment analysis.

Zacks VS Motley Fool: Determining Factors?

Motley Fool is a research firm while Zacks can refer to a research firm, Zacks Investment Research, or its subsidiaries, Zacks Trade and Zacks Investment Management, all of which were founded by economist Len Zacks.

Since we are reviewing investment research firms, when we use “Zacks” in this review, we will be talking about Zacks Investment Research and not the brokerage platforms Zacks Trade and Zacks Investment Management.

Like most investors, you probably don’t have all day to read and learn everything about the stock market, which is why choosing the best market research firm is important. You need to be able to get impactful information that suits your investment preferences and style.

So, between Motley Fool and Zacks Investment Research, which one is more likely to suit your investment goals?

Factor 1: Investing Styles

One of the things that sets research firms apart from one another is the type of investment mindset they espouse. Let’s face it, there are many ways to invest in the stock market, from day trading to value investing and everything in between.

Research on stocks tends to be opinionated, which helps you understand whether you should invest in a particular security. They are typically written from the point of view of a particular investing style.

Motley Fool’s Investment Style is Preferable to Zacks

  • Motley Fool advocates buy and hold
  • Zacks provides near term analysis
  • Modest Money prefers long-term over short-term investing

Motley Fool Investing Style

Motley Fool’s strategy, in its own words, is “long term, buy and hold.” They want you to hold all their stock picks for at least five years. They note that market corrections can and do happen, but the stock market eventually drives higher. By holding stocks for a long time, you amplify your chances of great returns while minimizing your risk.

Motley Fool gravitates to growth stocks. These are stocks investors make money from selling after they appreciate or “grow” in value in contrast to dividend stocks, which offer consistent cash flow.

Motley Fool is one of the most well-known subscription services on the Internet. It has several subscriptions geared towards different types of specialized investing, but its flagship subscription is Stock Advisor. Stock Advisor offers subscribers analysis of its market-beating stock picks that have moderate volatility.

Stock Advisor presents subscribers with two stocks to buy each month, along with their rationale about why these might be good picks.

This review conducts a deep dive into Motley Fool’s stock pick performance including showing how some of their picks have returns in excess of 20,000%. It also explains Motley Fool’s proprietary “crushability scale,” which is what Motley Fool uses to assess the volatility of its picks.

Motley Fool is perfect for long-term investors who are willing to take measured risks by investing in individual stocks that are likely to grow in value over a medium-term horizon. Investors who are not willing to accept the risk of investing in an individual stock would be better off sticking to portfolio investing or well-diversified exchange-traded funds (ETFs).

Motley Fool combines qualitative and quantitative investment analysis but leans more heavily towards the former. Its picks are mainly based on the assessments of individual human analysts.

For all its picks, Motley Fool recommends having at least 25 separate stocks and holding them for at least five years.

Zacks Investing Style

Zacks offers a similar stock-picking service to Stock Advisor. Known as the Zacks #1 Rank list it’s Zacks stock advisor version, these are the picks that Zacks believes are at the top 5% of the market (Zacks strong buys), and which have the most long-term potential.

Zack’s also allocates “style scores” to their stock picks, which analyze a security’s value, growth, and momentum. In addition to these style scores, they will also combine them into a “VGM” score, which is a weighted combination of these scores.

The idea is to pick a stock that is both on Zacks’ #1 Rank list and has strong qualities in one or all these categories. This presents a very flexible approach to investing style.

If you, as an investor, like trading on momentum, i.e., the idea that the price of a security will continue to move in the same direction it is already headed, Zacks style scores can help you follow your preferred investing style without having to crunch the numbers yourself.

While Motley Fool specializes in long-haul picks, Zacks Investment Research focuses on short-term picks. Its flagship Zacks #1 Rank list is expected to pay off over an investment horizon of one to three months.

Zacks Recommendations is another list of stocks that have a longer-term horizon of six months or more. Zacks Investment Research also offers the Focus Report, which is a list of 50 top long-term stock picks they believe will out-perform the market over the next six months.

Zacks picks securities based on quantitative models. In addition to stocks, they offer mutual funds and ETF research.

Motley Fool Has a Preferable Investing Style

Modest Money prefers Motley Fool’s investing style over that of Zacks Investment research. For individual securities investing, you expose yourself to far less risk with investment horizons of five years or more instead of those as short as one to three months.

Factor 2: Cost

Once you start making millions of dollars off your stock investments, you may not care about how much you pay for research services, but until then your finances might be too constrained to pay for the most expensive research options.

Between Motley Fool and Zacks, which is more cost-effective? It depends on what you buy. Both research firms have products available for different costs.

Motley Fool’s Basic Subscription Costs Less Than Zacks

  • Motley Fool’s Stock Advisor is $199 annually
  • How much does Zacks Premium cost? $249 annually
  • Motley Fool’s basic subscription costs less than Zacks

Motley Fool Costs

Motley Fool’s cheapest subscription, Rule Your Retirement, costs $149 per year. Its most expensive subscription, which gives you access to all their analysis, weighs in at a hefty $13,999 per year.

This shows you the diversity of Motley Fool’s customer segments, which includes both beginning and high net-worth investors.

Motley Fool’s signature subscription, Stock Advisor, costs $199 per year, though if you buy it here, you will receive a steep discount for the first year. Stock Advisor has a track record of 20+ years and an average return of around 500%, or four times that of the S&P 500.

Another subscription to consider is Motley Fool’s Rule Breakers, which costs $299 per year. This subscription focuses on stocks that are slightly riskier, but which might make even greater gains. Rule Breakers picks have historically trumped the S&P 500 two to one.

Zacks Costs

With Zacks, you can’t subscribe to one product. All its subscriptions are bundles containing multiple products. Here’s how much these products cost:

  • Zacks Premium costs $249 per year and includes Zacks #1 Rank, Equity Research Reports, Focus List portfolio of 50 longer-term stocks, and premium screens.
  • Zacks Investor Collection costs $495 per year and includes Stocks Under $10, ETF Investor, Income Investor, Value Investor, Zacks Confidential, Zacks Premium, and Zacks Top 10 Stocks.
  • Zacks Ultimate costs $2,995 per year and includes Black Box Trader, Blockchain Innovators, Commodity Innovators, Counterstrike, ETF Investor, Headline Trader, Healthcare Innovators, Home Run Investor, Income Investor, Insider Trader, Large-Cap Trader, Marijuana Innovators, Options Trader, Short Sell List, Stocks Under $10, Surprise Trader, Value Investor, TAZR, Technology Innovators, Zacks Premium, Zacks Confidential, and Zacks Top 10 Stocks.

It’s a bewildering list, to be honest, and while the research might be great, it could overwhelm the average investor. You can find out more about these Zacks Investment Research offerings by clicking here.

Motley Fool Has Lower Cost Options

Motley Fool’s Stock Advisors is cheaper and easier to digest than any of the products by Zacks. At an investment of only $89 for the first year, this is one of the best research options on the market.

Factor 3: Upselling

There is no greater turn-off when choosing an investment research company than by signing up for one service only to be constantly spammed by emails attempting to upsell you to another. I hate being cajoled into signing up for a new service.

Zacks Has Less Upselling than Motley Fool

  • Motley Fool sends lots of emails for its products
  • Zacks sends fewer upselling emails
  • Zacks has the upper hand when it comes to sending less emails

Motley Fool Upselling

Motley Fool is one of the best stock research firms out there, but its approach to getting you to sign up for more of their products can be downright spammy. From the time you sign up for their service, you become inundated with emails promising the next best thing.

Fortunately, you can tweak your settings to significantly reduce the upselling. Once you subscribe to one of their services, go to “Email Settings” under “My Fool” and opt out of “Free Email Subscriptions” and update your “Promotional Communications Preferences.”

It takes a few minutes to set up, but if you hate upselling emails, it’s worth it. Of course, you might miss out on some discounted rates for other products.

Zacks Upselling

Zacks does a lot less upselling of its products than Motley Fool, although they do, according to their website, “rent” out their direct mail list of 1.5 million subscribers to advertisers.

Zacks Emails You Less than Motley Fool

From our experience at Modest Money, along with user feedback, it seems that Zacks Investment Research will bombard you with fewer upselling emails than Motley Fool.

Factor 4: Performance

When considering investment research firms, you probably want to know their respective track records. After all, the best research firm for you comes down to performance.

For our performance analysis, we will be comparing Motley Fool’s Stock Advisor with Zacks #1 Rank. The figures used in this analysis are from data released by Motley Fool and Zacks themselves. It has not been independently verified by Modest Money.

Modest Money Rates Stock Advisor Higher than Zacks

  • Stock Advisor has achieved 4 times market gains since 2002
  • Zacks #1 Rank has doubled market returns since 1988
  • Stock Advisor appears to have greater returns than Zacks

Motley Fool Stock Advisor Performance

Since it began in 2002, Motley Fool’s Stock Advisor picks have generated an average return of around 500% as of the date of publication. This is over four times the rate of the S&P 500 in the same time frame.

With its style of recommending only two stocks a month, Motley Fool has been able to achieve this return by narrow, targeted research. There is a lot less static inherent in Stock Advisor compared to other research firms, and a lot less tendency to drift away from their core proficiency of profitable stock picks.

This is how Motley Fool has been able to achieve its decades-long high-performance record.

Zacks #1 Rank Performance

Is Zacks worth it? Since 1988, Zacks #1 Rank strong buys have achieved an average annual return of nearly 26%, as of the date of publication. This is more than double the average annual returns of the S&P 500 and very respectable for short-term investment opportunities.

Modest Money Awards Better Performance to Motley Fool over Zacks

Comparing overall returns to annual returns is apples to oranges, especially when we don’t know how long the stocks are being held, but Modest Money prefers the medium-term approach of The Motley Fool vs Zacks, so we will award the performance points to Motley Fool.

While Motley Fool has been able to achieve four times the S&P return, it is important to note that Zacks has been able to steadily beat the S&P since 1988, almost twice as long as Motley Fool’s successful track record.

Motley Fool vs. Zacks: The Bottom Line

So, is Zacks or Motley Fool the way to go? Modest Money does love well-diversified portfolio investing based on computer algorithms, but we are not fans of quantitative model investing for individual securities. These are almost always short-term investments, which exposes them to a lot of risks, both systematic and idiosyncratic. In other words, it exposes your wealth too much to unpredictable factors like market crashes or one bad earnings report.

And we don’t hate individual stock-picking either, especially not when it is done in the same responsible matter as Motley Fool advocates, holding more than 25 stocks at any given period and each stock over a horizon of at least five years.

If you can afford one investment research company, go with Motley Fool.

Motley Fool is Better for:Zacks is Better for:
Moderate-Risk InvestingHigh-Risk Investing
Medium Term InvestmentsShort Term Investments
Qualitative AnalysisQuantitative Analysis
Simplified Monthly PicksAdvanced Scoring System
Growth Stock InvestingMomentum Stock Investing
Stock AnalysisStocks, Mutual Funds, and ETFs
Low PriceProduct Bundles

Motley Fool

With Motley Fool, you expose your portfolio to some risk, sure, but if you follow their recommended diversification rules, you have a much lower probability of incurring losses.

Within the Motley Fool portfolio, the subscription that investors are most likely to find beneficial is Stock Advisor. And that’s also the one you can subscribe to here for only $89 for the first year, a savings of 55%.

55%* discount based on $199/year list price. Introductory promotion for new members only. Membership will automatically renew at then current list price.

Make sure you follow Motley Fool’s advice to hold 25 or more stocks, and each one for at least five years, to maximize your risk/reward ratio.

Learn More

Zacks

Is Zacks better than Motley Fool? On the other hand, if you thirst for research on mutual funds and ETFs as much as research on stocks, then Zacks Investment Research might be the research firm for you.

They are more expensive, and their quantitative-driven picks might be difficult to understand, but they have doubled the markets in terms of returns over the past 35 years.

If this sounds good to you, you can subscribe here to one of the products at Zacks Investment Research, starting at $249 per year.

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Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. After working many years in the website marketing industry, he decided to take on blogging full time and also get his finances headed in the right direction. Also check out his contributions to Equities.com and Benzinga.