Review of the Motley Fool Hidden Gems
By Chandler Lutz
I really believe Motley Fool Hidden Gems is an excellent service for investors regardless investment experience, but I only tenuously recommend this newsletter to investors and click here to register.
Obviously the performance of Hidden Gems recommendations speaks for itself. Since its inception Hidden Gems has more than doubled the returns of the S&P 500. However, the benefit of the Hidden Gems service does not stop there. Hidden Gems also provides many other great sections of the newsletter. These sections include “Tiny Gems,” “Tom’s Watchlist,” “Best Buys Now” and an article on investment advice. These sections vary from issue to issue but the format is generally the same. Despite the benefit of these sections, I believe the biggest attribute of the Hidden Gems service are the discussion boards. On these boards you can ask questions that will be answered by other Hidden Gems members as well as Motley Fool employees. Additionally, you can see the questions other people ask and the research they have done. I believe these discussion boards are the most valuable part of the Hidden Gems Service.
The Hidden Gems service has a lot of advantages and this has caused many investors to sign up. With so many subscribers, the Hidden Gems newsletters are no longer hidden (sorry, bad joke). When one of the writers at Hidden Gems recommends a company, the stock usually sees a two percent or more rise in the stock price. In fact, in the April 2007 issue of Hidden Gems the writers highlight how day traders use certain techniques that cause a sudden jump in the stock price. In that issue, the Motley Fool changed the format of the newsletter to try and hinder the day trader’s activities which they did not continue in later issues. These ascents in share price is one reason I only “tenuously recommend” instead of giving the Hidden Gems service a full recommendation. As more and more people sign up for the Hidden Gems service this problem will only become worse and worse. To fix this problem I believe that the Motley Fool has to either close the Hidden Gems service to new members and/or increase the prices; neither of which is an appealing solution for both subscribers and the Motley Fool.
Overall I believe that Hidden Gems is a great service, but potential subscribers must understand the effect of Hidden Gems’ popularity and understand that they may not achieve the “advertised returns.”