The Motley Fool, an Alexandria-based global investment and financial advisory services company, launched a new online service this week that offers investment advice based on analyses from both professional and novice investors.
The company developed the free service, which assigns each stock a rating based on input from investors, as a way to pull together information from a variety of sources, said John Keeling, senior vice president of community intelligence for The Motley Fool.
“People tell us on a daily basis that they’re overwhelmed with the disparate amount of information out there,” he said. “This makes it easy to gather as many opinions as possible … we’re forming a partnership with the community to develop the stock ratings database.”
The service, CAPS, works like this: Investors visit the Web site and make predictions on how well specific stocks will perform. Each opinion receives a weighted score depending on their experience — a professional investor would receive more weight than a novice investor — and a rating is generated for each of the 1,100 companies in the system.
Visitors can search for companies using a variety of categories, as well as look at individual investor’s analyses.
The service will help investors track companies that are not covered by professional analysts, Keeling said. Professional analysts only cover about 65 percent of public companies, according to figures from Reuters and NASDAQ.
“CAPS has the potential to provide that breadth of coverage,” he said. “The only way you’re going to be able to make those early-stage investments is if you’re aware of the company.”
However, some analysts are questioning the viability of taking investment advice from potentially inexperienced investors.
“I don’t know if groupthink has ever been proven as a way to pick stocks,” said Adam Ritt, editor of Better Investing Magazine, a publication of the nonprofit National Association of Investors Corporation. “It might be a point of interest if you want to see what’s going on [in the stock market], but in terms of if this will help you make an investing decision, my feeling is it wouldn’t.”
Representatives at Motley said the service “evens the playing field” and allows non-professional investors to make equally informed decisions.
“By tracking the ideas and analysis of Wall Street professionals as well as individuals,” said David Gardner, co-founder and co-chairman of The Motley Fool. “CAPS enables anyone to find better stocks and follow the best investors.”
