*** UPDATED with Stock Returns as of Friday, November 11, 2022 ***
Today, I’m doing a Motley Fool Rule Breakers Review, their 2nd most popular stock picking service which has been around since 2004. I already reviewed the Motley Fool’s original service, Stock Advisor, and hopefully answered most of your questions about that Motley Fool newsletter.
The fact that you are researching Rule Breakers indicates you are already one step ahead of the crowd. Keep reading and I will tell you why!
Like I did in my Motley Fool Stock Advisor Review, I also subscribed to the ‘Rule Breakers’ service in January 2016 and have purchased about $2,000 of each of these picks since 2016. In this review I will tell you how it has performed over the last 6 years, how it compares to Stock Advisor, and let you decide if it is worth it.
You have probably received emails from the Motley Fool or seen their ads promoting this service that is up 191% vs the market’s 98% (as of November 11, 2022):
HINT: You can save $200 when you CLICK HERE to go to their PROMO page to try it for $99!
Their performance, as well as the SP500, has been down significantly over the last few months as the market borders on recession. But as many stock market gurus are saying: Now just might be the right time to start buying stocks! For example, Jeremy Siegel, on October 25, 2022, was on CNBC telling investors it’s a great time to get in the market:
So, if now is the time to start buying stocks, the question that everyone asks is ‘what stocks should I buy?’
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 December 31, 2021 I had purchased over 144 stocks in that ETrade account, and sold the 8 stocks that they recommended selling.
Here’s a summary of that account’s performance for their 2016-2021 stock recommendations as of December 31, 2021. Obviously 2022 isn’t over yet so I am NOT included those stocks picks but I will update this chart in early January, 2023. As you review this chart, keep in mind that the Motley Fool says you need to be patient and plan to own their picks for at least 5 years. So as you can see, the market downturn at the end of 2021 hurt their 2021 performance, but the stocks from 2 to 6 years ago are extremely profitable and easily beating the SP500:
Remember, to get these returns, I tried to buy EQUAL dollar amounts of every stock recommendation.
As you can see, these 144 stocks from 2016-2021 have crushed the SP500 by 165% over this 6 year period. Keep in mind that the 2021 stocks didn’t even have 12 months of performance by December 31, 2021.
Also notice that 75% of the picks are profitable. More importantly, note that 52 have more than doubled and 35 more than tripled.
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 one that doubles, triples or even quadruples like some 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 those 6 years and add my insights. For example…
Rule Breakers FACT: The average return of their 144 stocks picks from 2016 thru 2021 was 242% compared to the SP500’s 77%; and 75% of their stock picks were profitable as of December 31, 2021.
Rule Breakers FACT: Their July 14, 2022 pick of UBER is up 41% as of November 11, 2022. Unfortunately I didn’t buy it until July 18th as you can see below, so it is only up 28% for me.
and their ANET pick is up 32.99% for me as of November 11, 2022:
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.
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.
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, but right now it is heavily discounted. 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
- 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, December 8, 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 is the Motley Fool’s 2nd newsletter. It was launched in 2004 and is managed by David Gardner, on of the 2 founders.
Specifically, to become a Rule Breakers stock recommendation, the stock must:
Be a Top Dog and First Mover in an Important, Emerging Industry
Have a Sustainable Advantage Gained Through Business Momentum, Patent Protection, Visionary Leadership, or Inept Competitors
Show Strong Past Price Appreciation
Have a Good Management and Smart Backing
Offer Strong Consumer Appeal
The stock picks they pick from this service are very unique. 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, as you can see from my returns, 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 charts like this from 2021:
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 December 31, 2021, the Motley Fool Rule Breakers recommendations since January 1, 2016 have given me an average return of 242%.
Rule Breakers vs Stock Advisor
That 242% return as of December 31, 2021 beats their other more popular service Stock Advisor’s performance over the same time period, which was 171% (see Stock Advisor table below). 75% of the Rule Breakers stock picks were profitable compared to 73% for Stock Advisor.
My STOCK ADVISOR returns…
Again, my RULE BREAKERS returns…
As you can see, the average Stock Advisor pick is up 171% which is great, but average Rule Breakers pick is up 242%. 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 242% return.
Based on my experience, Rule Breakers delivers exactly what they say. Over these 6 years, almost a third of the picks (35 out of 144) have more than doubled.
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 those that double or triple.
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:
- First Thursday of the month: RoundTable discussing overall market and recap of recent picks
- Second Thursday: They release one specific New Stock Recommendation
- Third Thursday of the month: They release their 10 Best Buys Alerts
- Fourth Thursday of the month: New Stock Recommendation
- So their next scheduled release date is : December 8, 2022
10 Best Buys Alerts
For every new “Best Buys Alert”, users will get 10 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 April 25, 2019 when the stock SWAV was trading around $39. As of November, 2022 the stock is around $250 for a gain of 500+%. That is typical for their Rule Breaker stock picks from 2019 as many of those stocks have more than doubled.
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 as of end of 2021.
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 Stock Picks Have Performed
Here are some of the Rule Breakers recent picks AND some of their best over the last 6 years, returns as of November 11, 2022.
- October, 2022 pick up 15.23%
- September, 2022 pick up 4%
- July, 2022 pick of UBER up 41%
- June, 2022 pick of XBI up 11%
- May, 2022 pick of ANET up 24%
- July, 2020 pick of WING up 31%
- June, 2020 pick of HUBS up 53%
- November, 2019 pick of ETSY up 176%
- October 2019 DDOG up 154%
- July, 2019 pick of RGEN up 119%
- April, 2019 pick of SWAV up 540%
- January, 2019 pick of NEE up 100%
- July, 2018 pick of MDB up 204%
- May, 2018 pick of HUBS up 160%
- April, 2018 pick of AXON up 325%
- February, 2018 pick of PANW up 186%
- February, 2018 pick of MDB up 446%
- October, 2017 pick of ABMD up 118%
- May, 2017 pick of TTD up 847%
- April, 2017 pick of MELI up 328%
- February, 2017 pick of TTD up 1,322%
- March, 2016 pick of SHOP up 1,405%
- February, 2016 pick of SHOP up 1,776%
These examples of their stock picks are typical for the Motley Fool Rule Breakers. They manage to find a few spectacular stocks each year, and a few losers as well. But their winners of 2x, 3x, and greater easily outweigh their losers each year. This is just math. The most you can lose is 100%, but when many stocks earn 2x and 3x and more (like 1,322%, 1,405% and 1,776%) THAT is how you profit big over the long term and EASILY beat the SP500.
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.
How Is it Possible Their 2016 Picks Have Average Return of 400+%
I know you are probably wondering how their 2016 picks are up an average of 400+% as of December, 2021. It is because their picks included stocks like SHOP, ICE, PLNT, AVGO, IT, ETSY and WDAY–all of which are up 2x or more.
Overall, 19 of their 2016 picks are up, 17 out of 24 have more than doubled, and 10 have more than tripled.
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. 2During these 6 years, they have had some big losers down 60, 70 and 80%. And THAT is why I keep reminding you that you must buy equal dollar amounts of ALL of their recommendations.
In fact, we see that each year for the last 6 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 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 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.
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?
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.
As you can see, the “Rule Breakers” performance page displays the current allocation of the portfolio, as well as 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.
The “Home” page also has key information such as the overall performance of the service, the upcoming schedule for stock picks, the latest recommendations, 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.
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.
However, I do have many of my own winning trades thanks to Rule Breakers. (Can anyone say Baidu? 🙂
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.
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 6 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. As of December 31, 2021 this service’s stock picks are beating the market as follows: their 2016 picks are beating the market by 607%, their 2017 picks by 277%, their 2018 picks by 97% and their 2019 picks by 37%. 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.