*** UPDATED with Stock Returns as of Friday, March 18, 2022 ***
Previously, I reviewed the Motley Fool’s Stock Advisor service and hopefully answered most of your questions. If you missed it, you can catch it over here.
Today, I’m doing a Motley Fool Rule Breakers Review. Again, I’ll dive into the details of this “newer” service. I will tell you how it has performed over the last 5 years, how it compares to Stock Advisor, and tell you if it is worth it.
HINT: The fact that you are here researching Rule Breakers indicates you are already ahead of the crowd…
My Rule Breakers Experiment with My Real Money
Just as I did with my Motley Fool Stock Advisor subscription, in January 2016 I opened a new ETrade account dedicated to the Motley Fool Rule Breakers service and bought about $2,000 of each of the Rule Breakers stock picks. That is 24 picks a year so as of today, March 18, 2022 I have purchased over 144 stocks in that ETrade account, and sold the 8 that they recommended selling.
Here’s a summary of that account’s performance for their 2016-2021 stock recommendations. Obviously 2022 isn’t over yet so I am NOT included those stocks picks in the AVERAGE performance because the Fool says you need to be patient and plan to own their picks for at least 5 years. But rest assured, their 2022 picks are doing well with many already with double digit returns. For example, their January 27, 2022 pick of SQ is already up 30%.
As you can see, these 144 stocks from 2016-2021 have crushed the SP500 by 83% over this 5 year period. Keep in mind that most of the 2021 stocks don’t even have 12 months of performance yet.
Also notice that 62% of the picks are profitable, but 43 have more than doubled and 20 are up more than 4x.
What this means is you must do what I do: buy even amounts of all of their picks because you never know which one is going to be one of the ones that doubles, triples or even goes up 36x like one of their picks did!
In the far right columns you can also see the MAXIMUM and MINIMUM returns. Clearly the gainers far exceed the losers so the averages are all very positive.
This review is based on my real experience and I will share just the FACTS about the Rule Breakers service and its performance over the last 5 years and add my insights. For example…
Rule Breakers FACT: The average return of their 144 stocks picks from 2016 thru 2021 is 150% compared to the SP500’s 67%; and 63% of their stock picks were profitable.
Rule Breakers FACT: Here is a screen print showing the Fool recommended ETSY in December of 2019 and again in August of 2020. I bought about $2,000 each time it was recommended and now my 2019 shares are up 554% and my 2020 shares are up 124%.
Another Important Rule Breakers FACT: More impressively, 43 of these 144 stock picks have more than doubled–that is almost a third HAVE DOUBLED or more!
And Another Rule Breakers FACT: Note that the longer you hold them, the better they perform–in a BIG WAY. EACH year their returns are better and better. Their average returns from 2016 is 481%. Also note their MAX returns–they really did pick a stock that is up 3611%. That stock was SHOPIFY!
Finally, throughout this review, I will show you how the Motley Fool Rule Breakers service performs versus the Fool’s Stock Advisor service.
I’ve compiled a couple of questions that I’ll answer in full detail. If I missed anything, please be sure to leave a comment so I can update it. I took questions from users and investors just like you who wanted to know more about the service.
Final Rule Breakers FACT: This service is extremely affordable and given their superior performance, well worth it. The normal subscription fee is $299 a year. There’s no risk as they offer 30-day money back guarantee. Their current discount promotion is this:
Motley Fool Rule Breakers Summary
- 2 new picks a month
- Goal is to find high growth stocks in high growth industries
- Launched in 2004; over 100,000 subscribers
- Average return of the 144 stocks recommended 2016 to 2021 is 150% vs SP500 67%
- Success Rate: 63% are profitable
- Retail price is $299 a year
- Introductory Offer for New Members Only: Get the next 12 months of their stock recommendations & full access to all recent stock picks for just $99 on this promo page.
- Next stock picks come out Thursday, August 11, 2022
What is the Motley Fool Rule Breakers?
Now that I have captured your attention by showing you how the service has performed over the recent years, let me back up a step and explain the service.
The Motley Fool Rule Breakers is a stock advising service that is tailored for users looking for high-growth stocks in high growth industries.
This means that they are not looking for high dividend, slow growing stocks. They are not looking for stocks to day trade or swing trade. Rather, they are trying to find the best growth stocks in the fastest moving industries. These stocks don’t always go up immediately, but the longer you hold them, the better they perform. This shows that they are definitely finding stocks ahead of the crowd–and that is exactly what you want when you are building a portfolio. And, as I said before, they want you to plan on holding these stocks at least 5 years.
Their advertisements feature impressive stats like this:
Seeing their ads in 2015 I was skeptical so that is why I started this test with my real money, and I am glad I did.
Like their Stock Advisor service, they recommend 2 specific stocks every month and provide a set of “starter stocks” as well.
As of March 18, 2022, the Motley Fool Rule Breakers recommendations since January 1, 2016 have given me an average return of 150%.
This beats their other more popular service Stock Advisor’s performance over the same time period, which was 117% (see Stock Advisor table below). 63% of the Rule Breakers stock picks were profitable compared to 62% for Stock Advisor.
My Stock Advisor returns…
My RULE BREAKERS returns…
As you can see, the average Stock Advisor pick is up 117% which is great, but Rule Breakers is better at 150%. Remember, this is the average return of all of their most recent 144 stock picks.
That $240,000 that I have put into that ETrade account ($4,000 a month for 60 months) is now worth over $600,000 because of the Rule Breakers 150% return.
Based on my experience, Rule Breakers delivers exactly what they say. Over these 5 years, almost a third of the picks (43 out of 144) have more than doubled. In fact, one of their picks from 2016 is up 3,611%!
On the down side, Rule Breakers has picked some big losers each year. So, what you see, is the greater returns and greater volatility with Rule Breakers. So if you are going to subscribe, you need to make sure you buy every stock they recommend, because you would hate to miss out on that one that was up 3,611% (SHOPIFY).
But first, how does the Motley Fool Rule Breakers service work?
What Exactly Do You Get?
Every Thursday, the Motley Fool Rule Breakers will update their site and you will receive an e-mail with their new recommendations:
- Second Thursday of the month: They release one specific New Stock Recommendation
- Third Thursday of the month: They release their 5 Best Buys Now
- Fourth Thursday of the month: New Stock Recommendation
- So their next scheduled release date is : August 11, 2022
5 Best Buys Alerts
For every new “Best Buys Now”, users will get 5 stocks to buy now which are chosen from their previous Motley Fool recommendations that they feel still offer significant upside. This email looks like this:
Specific Stock Recommendations
Twice a month you will also get brand new stock recommendations.
The “New Stock Recommendation” are the days where David Gardner and his team will present a new stock pick and provide you all of their analysis. This email looks like this:
(Notice this email was sent on February 14, 2019 when the stock GH was trading around $43. At the end of that day, it closed at $48.87 so it was up $5 just because the Fool recommended it. As of December 24, 2021 the stock closed at $198 for a gain of 120%. That is typical for their Rule Breaker stock picks from 2019 as those 24 picks from 2019 have an average return of 112%.
As with the most of the Motley Fool services, Thursday is the important day when you will get an email on their new stock recommendation.
Always be ready with cash in your portfolio and make the purchase as soon as they recommend it. There is definitely a “Motley Fool Effect” that their recommended stock goes up $2-$3 within the first few hours of their picks being released.
I can assure you that the team is very consistent. They never miss a day. Much like Warren Buffet’s daily routine. Every day, Buffet goes to McDonald’s, grabs breakfast with a Coke and eats it at his desk.
So, How Have Their Stocks Performed?
As you saw from the chart above, since 2009 the Motley Fool Rule Breakers stocks have consistently outperformed the market. They have accomplished this by picking many stocks that double or triple each year. Take a look at some of their best all-time picks:
Since we are subscribers, we have full access to all of their picks.
We have confirmed these picks and the percentage returns. Shopify has really gone up 7,036% since they recommended it (see my portfolio before where it is now up 3,611% for me).
And here is my chart again of how the Motley Fool Rule Breakers stocks have performed for me over the last 6 years:
Notice that over the last 5 years for the 2016-2020 stocks:
- 90 of the 144 stock picks are up for a 63% accuracy rate
- 43 out of 144 have more than doubled
- 28 have more than tripled
- 20 of 120 have more than quadrupled
- each year there are a few big losers
- but the average return for the Rule Breaker stock picks is 150% which beats the SP500 by 83%
- that compares to Stock Advisor’s average return of 117% over the same time period
- Here is my Stock Advisor summary:
- While Stock Advisor crushed the market too, they didn’t do as well as Rule Breakers over the past 6 years.
- Notice that Stock Advisor has a few losers each year but not as bad a the Rule Breakers losers.
So there you have the most important comparison data you need to decide if Rule Breakers is better than Stock Advisors. My answer is absolutely YES.
My final last 2 bits of advice to you is don’t miss out on their next stock pick, which comes out every Thursday. And don’t pay the full price of $299 if you don’t have to. Click on the link below to make sure you get their next stock pick…
Rule Breakers New Subscriber Offer: Try it now for just $99 and get the next 12 months of their stock recommendations PLUS immediate access to all their recent stock picks.
Specific Examples of How Have Their Recent Picks Have Performed
Here are some of the Rule Breakers recent picks that have contributed to their amazing overall performance, returns as of November 6, 2021.
- August, 2021 pick Cloudfare is up 61%
- June, 2021 pick of Datadog is up 96%
- May, 2021 pick of Snowflake is up 49%
- April, 2021 pick of Coupan is down 30% (oops)
- March, 2021 pick of GoodRx is up 20%
- February, 2021 pick of Axon is down 10% (oops)
- January, 2021 pick of Moderna is up 48%
- August, 2021 ETSY is up 102%
- June, 2020 pick of HubSpot is up 299%
- April, 2020 DocuSign is up 195%
- February, 2020 pick of SEA is up 693%
- November, 2019 ETSY is up 521%
- October 2019 Datadog is up 470%
- August 2019 Fastly is up 103%
- April 2019 Shockwave Medical is up 518%
- March 2019 ROKU is up 350%
This is their pattern year after year. They pick a few stocks that lose 10-20%, but they pick a few stocks that double or triple or quadruple each year.
So again, to be successful with their stock picks, you need to plan on buying equal dollar amounts of all their picks and hold them for a few years.
What about the Last 6 Years 2016 to 2021?
My results of 5 years of being a subscriber to the Motley Fool Rule Breakers service is as follows:
- Their 24 picks from 2020 are basically unchanged.
- Their 24 picks from 2019 are up an average of 64% compared to the market’s 61%
- Their 2018 picks are up an average of 117% compared to the market’s 74%
- Their 2017 picks are up an average of 263% compared to the market’s 88%
- And their 2016 picks are up 481% versus the market’s 129%
- I PROMISE I AM NOT MAKING THIS STUFF UP!
NOTICE–THE LONGER YOU HOLD THEM THE BETTER THEY PERFORM.
So is it worth $99? ABSOLUTELY! The service is doing exactly what they say they will do–find the leaders in new markets. They get these great returns by picking a few stocks each year that double or triple, and they do pick a few losers. But the winning returns far exceed the losers.
How Is it Possible Their 2016 Picks Have Average Return of 800+%
I know you are probably wondering how their 2016 picks are up an average of 481%. On February 24, 2016 they recommended SHOPIFY when it was at $21 and it is now up 3,611%. So the 50 shares I bought for $1,050 is now worth $30,000.
Overall, 19 of their 2016 picks are up, 16 out of 24 have more than doubled, and 13 have more than tripled.
In addition of the SHOPIFY pick:
- other picks from 2016 are ICE up 153%, PLNT up 559%, WDAY up 278%
- they re-recommended SHOP and it is up 5640% from that date
- AX up 139%, AVGO up 282%, FIT down 49%, NTS up 176%, CMG up 356%
- TEAM up 1162%, ETSY up 1551%, UI up 469%
- TWLO up 1113%, TTD up 2023%, etc.
- Those are all from 2016.
Rule Breakers New Subscriber Offer:
(there’s no risk, they offer 30-day money back guarantee)
So, What’s the Downside?
This Motley Fool Rule Breakers review would not be complete if I did not discuss the downside. Just like anything in life, there are risks.
The Motley Fool Rule Breakers service has much more volatility than the Stock Advisors service due to its focus on growth companies.
When they get it right, their stocks skyrocket as you saw above. And when they get it wrong, they pick some real losers. Their 2018 loser is down 88% and their 2017 loser is down 92%.
In fact, we see that each year for the last 5 years, the Rule Breakers BEST STOCK PICK percentage return is higher than the Stock Advisor’s Best Stock Pick return. BUT, we also see that Rule Breaker’s WORST STOCK PICK percentage return is worse than the Stock Advisor’s Worst Stock.
They say that they try to find companies that “are poised to become tomorrow’s market leaders”. They are usually right, but each year about 1-5 of their 24 stocks have been losers.
Overall, however, the average return of the Motley Fool Rule Breakers 24 stock picks for 2016 and 2017 and 2019 is better than Stock Advisor’s. For 2020 and 2018 the Rule Breaker’s picks are just a little behind.
The Rule Breakers service performs so well because it looks for stocks with six unique investing criteria:
- They look for top dogs and first movers in important emerging industries.
- They seek out companies with sustainable advantage gained through business momentum, patent protection, visionary leadership, or inept competitors.
- Hone in on strong past price appreciation, because the best growth stocks continue rising. Their advantages allow them to sustain remarkable earnings and cash flow growth and to win new converts among the ranks of investors.
- They Look for good management and smart backing.
- Hunt for strong consumer appeal, often in the way of a strong brand that can reinforce itself and make sustaining extraordinary growth that much easier.
- Zero in on stocks that are considered grossly overvalued, according to at least one significant constituent in the financial media. This is one way we weed out the “obviously great” companies that are overvalued. We love when a major media source says it doesn’t like a stock.
The Rule Breakers service pointed out a couple of stocks before they were mainly known to Wall Street investors. Here’s a couple of examples:
I am sure you have heard of both of these stocks. Now don’t you wish you would have purchased them years ago?
I started testing the service and so far, so good. You can read more on our best stock newsletter review !
What’s included with Motley Fool Rule Breakers (platform, list of stocks)?
The platform looks almost the same as the one for their Stock Advisor service.
Both platforms are friendly and easy to use. You will mainly use the “Home” tab, which presents all the updates and active stock recommendations.
The “Home” page also has key information such as the overall performance of the service, the upcoming schedule for stock picks, the latest articles, etc.
“But… what if I want to know more on one of these stocks?” Glad you asked.
If you would like to more about a company and why it was recommended, you can simply click on the stock’s logo.
You will be re-directed to the Fool’s Premium analysis page. Fool users get a detailed analysis of all the suggested stocks going from the fundamentals to ratios & charts.
Note that you have an option to “Choose what you want to do with this stock”. This feature will allow you to receive notifications whenever the Motley Fool Rule Breakers team recommends buying or selling the stock.
Next, we have the “My Favorites” page, which is used to track stocks that you are interested in. You’ll receive alerts whenever the team suggests a buy or sell. This is a very interesting feature because you will be notified whenever:
- They have a new buy alert
- It is time to sell
- Large price fluctuations.
This feature is exactly the same as the one presented in our review of the Stock Advisor service. However, I felt it was good circling back on this due to its efficiency on receiving alerts on your favorite stocks.
The “Rule Breakers” performance page displays ALL the stocks that were recommended. The table goes all the way to inception in 2004. You can click on any ticker to see the coverage on the stock.
You can even add these stocks to your favorites so that you will be alerted if there is any news on the stock. Finally, you can also view their ratings in terms of risk and how they measure risk.
The thing I respect the most about the Motley Fool and their services is that they are fully transparent on their stock recommendations.
They disclose their open and closed recommendations on their site for viewing. Whether the stock was closed with a gain or loss, they will disclose the complete list of Rule Breakers stock picks.
Going down the list, we can see some large digits over time.
Can you imagine if you placed $5,000 on NetEase back in 2004? 14 years later, you would have gained nearly $5,000 * 1615.8% = $80,790! (Cha-ching!)
Ok, now back to reality.
I only wish I was smart enough to make that trade in back in 2014.
However, I do have many of my own winning trades thanks to Rule Breakers. (Can anyone say Baidu? 🙂
The fact that you are reading this Rule Breakers Review means there’s still a chance to hop in and get in on the action.
Now, of course I must point out that there is a couple of stocks with negative returns. As usual, my personal advice would be to set up stop orders so that you can moderate your losses appropriately.
However, I do believe that Motley Fool Rule Breakers does provide good stock recommendations for the long-term.
Other Noteworthy Features
The “Research” section contains reports and articles that you can read to have a better understanding on investing themes such as technology.
For example, a lot of Apple analysts are seeing a growing demand for Apple iPhones. Just a quick observation around us can support this opinion.
Although the Motley Fool is recommending Apple in many of their services, they also offered other stocks that will be indirectly impacted by the sales of iPhones. Buying these stocks will create a strategy that is more under the radar and indirect rather than buying shares of AAPL.
The “Rule Breakers Community” page allows you to communicate and share ideas with other Fool members. Like you, these members all have a general ambition to invest, better. To make things easier, the site has company-based discussion boards. This is exclusively available for premium Motley Fool members, which includes subscribers of Rule Breakers and Stock Advisor, for example.
The “About Rule Breakers” page contains all the resources to get the most out of the Motley Fool’s Rule breakers. As an example, you can find more information on their risk ratings and how their it is defined.
What are Rule Breakers Current Top Stock Picks?
Unfortunately, I’m not allowed to share the recent 3 month’s Rule Breakers stock picks publicly. It’s against the Fool’s policy. But 98 out of 120 of the Motley Fool’s Rule Breakers 2016-2020 stock picks are up.
However, I can tell you that the service usually costs $299 a year, but right now they will let you try the service for only $99. I don’t know how long this promo will last, so …
Rule Breakers New Subscriber Offer:
(there’s no risk, they offer 30-day money back guarantee)
What is the Motley Fool Rule Breakers podcast? But wait… what is a podcast?
Good question. A podcast is a series of digital audio or video files that a user can download and listen to.
What I like about podcasts is that if you’re subscribed to them, they can be automatically downloaded to your computer and/or your mobile device when a new episode is available.
This is useful if you maxed out your data and you’re in for a very long bus ride. But ultimately, it is very valuable if you want to listen to insights and learn more on things that interests you.
For example, Terry Crews often starts his day by training and listening to podcasts/audiobooks at the same time. Now I’m not saying that you’ll get jacked like Terry, but you’ll definitely enjoy and learn with podcasts!
The Motley Fool Rule Breakers Investing podcast is a series of audio episodes with David Gardner, co-founder of the Fool. David is a very successful stock picker and is notoriously known in the finance community. Every week, David shares his ideas on today’s most innovative and disruptive public companies. He also advises on how to profit from them using his “Rule Breakers Investing” principles.
In David’s most recent podcast (< https://www.fool.com/podcasts/rule-breaker-investing/2018-10-31-october-mailbag-it-s-all-treats/>.), he opens with a Halloween story from his youth and explains some tricks on how to tackle the current scary market. He routinely responds to tweets that are posted on the podcast’s twitter page (@RBIPodcast).
For example, David Garder is known to say, “let your winners run”. He’s also known for saying “please take this moment to make sure that your portfolio is diversified enough that no one stock’s bad day will not keep you up at night”. A user asked David to explain how an Investor can apply both these two concepts because they seem contradicting. David clarified that investors need to find a compromise between these two concepts and shared with us some of his past experiences. For example, he recalled AOL’s glorious days and what happened in the early 2000s. For more information on what he learned by investing in AOL, click here.
What does Reddit say about the Fool’s Rule Breakers?
There’s many Reddits and SubReddits that discusses the Motley Fool’s Rule Breakers. I’ll try to resume the most popular ones and be fully transparent as well.
- What’s the conclusion?
- A lot of users think it’s a scam.
- Their assumption is that if someone holds private information that a specific stock should blow up, they shouldn’t sell that knowledge. Also, there was a user who argued that even the most knowledgeable investors cannot reliably beat the market.
- What do I think about this?
- I must admit I was a bit skeptical before signing up with the Motley Fool. As I am testing and paper trading their recommendations, I am now confident the Fool is not a scam but rather an excellent source of stock advice.
- I believe they have the total right to believe this. I mean if I knew Stock ABC was going to the moon, I probably would have kept it for myself. It’s also true that no one can perfectly time the market:
However, the world of investing can be rough, especially when you do not know where to start. It is usually best to have a starting point so that you will be able to find your own path as time goes on. I believe the Motley Fool fits right into this niche market where they are one of most profitable and leading advisory services for the everyday investor.
- What’s the conclusion?
- The feeling is negative, and users suggest that there’s no value to it and it would be better to apply your own critical thinking on other free sites’ content. There was a lot a user who replied that all three Motley Fool services (Inside value, Rule Breakers and Stock Advisor) are all top ranked in Hulbert Financial Digest’s rankings of investment advisory services: http://www.wsj.com/articles/SB10001424127887323997004578642030536573020
- What do I think about this?
- I think it is a good idea to apply your own critical thinking and collect your own data from different reliable sources. However, how would you do this if you are busy and working in a field that is not related to investment advising or trading? What companies should you focus on? What’s the catalysis for Stock XYZ? Where should you start looking for data? For these questions, I think the Fool’s subscription services will have the right answers and get you started on the right foot. We are not suggesting that ALL the stock picks are great. But you will have better insights and have the option to pinpoint the companies to focus on to start your own due-diligence.
How much does the Motley Fool Rule Breakers cost?
The Motley Fool dropped the price of the Rule Breakers subscription in 2019. I have paid $299 a year for it since 2016.
BUT, if you are new subscriber, they frequently run specials on this page…
Motley Fool Rule Breakers vs Stock Advisor. How do they compare?
OK, so here is the most important part about this Motley Fool Rule Breakers Review. How does it compare to the Motley Fool’s Stock Advisor service? The overall platform is quite similar for both services. However, there is a couple of crucial differences that depends on the Investor’s preferences
The overall percentage returns of the Rule Breakers picks is higher than the Stock Advisors picks for the last 5 years. But while Rule Breakers did pick a stock that is up 5000% and 65 of those 120 actually doubled, they also picked bigger losers. This caused the variance of the Rule Breakers stock picks to be higher, which most investors don’t want. The risk with Rule Breakers is that if you aren’t disciplined, don’t have the cash, and don’t buy every stock when the they recommend it, you might miss out on a few of their best picks. Missing out on just 4 stocks over the 4 years could have brought the performance back in line with Stock Advisors’ return.
The Stock Advisor service is more focused on well-known stocks and is more oriented for investors who prefers lower volatility. On the other hand, the Rule Breakers service has much more volatility and is focused on companies with high growth potential.
The Stock Advisor service offers 12 stocks per month and the Rule Breakers offers 12 stocks per month. It is also important to note that two teams are part of the Stock Advisor service. Both co-founders Tom and David Gardner offers recommendations in the Stock Advisor service. The Rule Breakers team is overseen by David Gardner only, who is the main advisor of the service.
Conclusion of this Motley Fool Rule Breakers Review
My conclusion of this Motley Fool Rule Breakers review is that the Rule Breakers service is an exceptional source of stock picks and is well worth the $299 fee; and it is a no brainer at their New Subscriber rate of $99. Regardless of whether you are a beginning investor or have years of experience, we all want the same thing–stocks that go up more than the market. From the weekly podcasts to their stock recommendations, the Rule Breakers team always had interesting insights and excellent stock ideas to present to their subscribers.
To summarize this Motley Fool Rule Breakers Review, if you are a long term investor with cash to invest each month, then you should prefer Rule Breakers over Stock Advisor. This service’s stock picks are beating the market as follows: their 2016 picks are beating the market by 777%, their 2017 picks by 386%, their 2018 picks by 188% and their 2019 picks by 112%. So, the longer you hold them the better they are! That is EXACTLY what you want.
In order to get those returns, you MUST buy every single stock they recommend because in each year there is always one or two stocks that are up 400-1000% after 2 years. If you missed just one stock, you might not have had the same results.
As I mentioned in my review for the Stock Advisor, an Investor must always do their own due-diligence. You should always do your own research to understand what the assumptions were behind a statement. You will learn not only how to analyze stocks, but also develop your own trading strategies. With that being said, I would suggest signing up for the trial and see for yourself how they perform. During the process, you will understand what to look for in an investment and ultimately, invest better.
If you have any comments or questions about this Motley Fool Rule Breakers Review, please leave them below! Click here if you want to learn more about the Rule Breakers Service.
Also, if you want more information on the Stock Advisor’s service, read my full review on the Stock Advisor service.