Fool's Gold


	In Shakespearean drama, the Fool was the only character who told the truth. Beyond the high jinks and fools' caps, the twentysomething Gardner brothers Dave, left, and Tom, offer sound investment advice to 40,000 followers on America Online. (Photograph by Dirck Halstead)

f you've made it to age 30, you've probably embraced -- and discarded -- dozens of crazy ideas for making it big. Glass toasters? A feminist moon map suitable for framing? Sound crazy? Stranger things have happened. Tom and David Gardner, the twentysomething duo, started an investment newsletter, based on the simple premise that you can beat the market by, well, just doing your homework.

Sometimes it helps to be a little crazy -- and in this case, to see before anyone else how online media is changing the landscape of opportunity. When Tom, 27, and David, 29, started their printed newsletter The Motley Fool in 1994, they attracted a total of 340 subscribers -- mostly sympathetic friends and family. But since linking up with America Online several months later, the brothers have hired 20 full-time staffers to keep up with as many as 40,000 people a day who log onto The Fool to seek investment advice and exchange views on the market.

There's no fee for users. AOL makes its money on its subscribers hook-up time, and The Motley Fool earns a bounty whenever someone logs onto the service.

The Fool uses a unique approach to investing. "We have a get-rich-quick scheme. It's called 'homework.' We tell individual investors they can beat the market, and then prove it by trading in our own real-money portfolio," says Tom. The results are nothing to laugh at. The Fool's portfolio currently outperforms all major indexes. In 1995 it rose 82 percent compared with NASDAQ's 36 percent and the S&P 500's 33 percent, according to The Economist.

The Fool's success is tied to its online advantages. With practically no lag time between when columns are written and read, The Fool's advice is timely. With low or non-existent paper, printing, distribution, and advertising costs, more resources are allocated to the product that attracts AOL subscribers in the first place -- valuable information.

But Erik Rydholm, a partner in the company, says that the most important reason for The Motley Fool's success is that it gives readers a chance to talk back to the publishers. "More than half of our content is supplied by the tens of thousands of investors who follow companies for their living, livelihood, or lark. This constant feedback allows us to keep improving what we do."