I’ve been writing about my experiences with Motley Fool Premium and over the past several months we’ve discussed the basics of using Motley Fool Premium services. A lot of people write about companies like Fool.com, discussing what happened when they took the investment advice of the company. I’ve done my own version of this, and others do too.
One blogger posted about her experiences investing in a company called Zoom Video on a Fool.com tip back in 2019. This is the company–you might have heard of them–responsible for Zoom video conferencing. They were selling stock at $90 in 2019. The price dipped to $76 in October…and then when the pandemic hit the price surged to over four hundred dollars.
Motley Fool Stock Picks
Nobody is claiming that Fool.com could see into the future. But one thing you can take away from this is that past performance is no indicator of future profitability. That’s an Investing 101 type observation to make, to be sure. But it’s so often disregarded that it needs to be repeated again and again.
The Zoom story is indicative of investing in general in one important way–it reveals what smart, experienced investors have learned over the years. Stock investing advice can be useful, profitable, and beneficial to the new investor. But one thing that this advice should always include? An awareness that the rules of investing change when there are variables introduced–variables like the coronavirus pandemic.
It’s one thing to recommend a stock when things are “normal”. You get your Fool.com premium services which include monthly Motley Fool Stock Picks. These are recommendations based on a variety of factors such as a stock’s 52-week average, recent and historic investor behavior regarding the stock and others like it, plus variables that might affect a stock’s value such as a profit-and-loss report, developments that affect the company’s supply chain or distribution network, etc.
Investing During Troubled Times
A peanut butter manufacturer might suffer a temporary dip in stock price if there is a publc-and-messy dispute over a crucial ingredient (in this case, palm oil–which has had its share of supply-and-demand woes in recent times)…
But when a global pandemic hits, you can’t read the same stock advice in the same way, nor should it be delivered “business as usual”. When you read today’s advice from Fool.com, the pandemic variable must be respected–investors are not dealing with investments as usual, and it’s wise to factor in current events and how markets are responding to them as part of what drives your investment strategy.
One thing Fool.com does extremely well in this area? The basic, new-to-investing advice is repeated again and again. The Fool’s best advice, outside of specific stock picks and trend observation? Keep your investment portfolio as diverse as possible as a hedge against any single type of risk whether that is cryptocurrency, riskier or more volatile stocks, etc.
Fool.com was speaking specifically of cryptocurrency in the quote below, but it is outstanding advice for anyone new to investing also trying to navigate the pandemic while setting their financial strategy. A smart investor will read and heed the following advice from the Motley Fool:
“Before you invest any money, think about your tolerance for risk. If you have money to burn and are willing to risk it, it may be worth the gamble.” But for most investors, in today’s uncertain times, playing it safe may be the best policy.