Why I’m done reading The Motley Fool

I got caught up in the euphoria of investing in the stock market in the late 1990s just like everyone else. One of the best sources of information for investment advice at the time was The Motley Fool website. I was a regular reader of the Rule Breakers and Rule Makers articles, and found great strategies discussed in their forums/message boards, specifically those involved with mechanical investing.

Over the past decade the amount of content I have read on The Motley Fool has diminished, but I still continued to occasionally come back to the site for news and investment advice even after I found their blind faith in the U.S. stock market no longer the best strategy for my money. That blind faith was recently illustrated in an article titled The Ultimate Safe Haven Investment.

As I would have guessed, the ultimate safe haven investment spoken about in the article is gold. The first half of the article makes the case for gold increasing in price in the near future. The author even states that “I believe conditions look very favorable for gold to outperform the U.S. stock market in 2009 and over the next three to five years.” But the very next sentence says that “investing in gold isn’t without its challenges” and states that the challenge is how to value gold. The remainder of the article then asserts that because gold produces no income, it can’t be valued using cash flow methods. Therefore the article suggests that you should invest in “gold standard” stocks from defensive industries such as Pfizer, Merck  and Philip Morris.

Talk about a bait and switch. This article lured me into reading it with the prospect of reading more about gold but instead turned out to be beating the same tired drum of investing in large cap U.S. stocks. Merck lost about 50% of its value in the past 12 months. How can that be seen as a safe haven? The only true “gold standard” investment is gold itself.