*** UPDATED January 2, 2021 with Stock Returns as of Thursday, December 31, 2020 so this is the YEAR END SUMMARY ***
Previously, I reviewed the Motley Fool’s Stock Advisor service and hopefully answered almost all your questions (don’t worry, 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 and give you exactly what you need to know about this service.
And remember, just as I did with my Motley Fool Stock Advisor subscription, in January 2016 I opened a new ETrade account dedicated to Motley Fool Rule Breakers service and bought $1,000-$2,000 of each and every one of the Rule Breakers stock picks. That is 24 picks a year so as of today, January 2, 2021 I have purchased 120+ stocks in that ETrade account, and sold the 5 that they recommended selling.
So this review is will share just the FACTS about the Rule Breakers service and its performance over the last 5 years. For example…
Rule Breakers FACT: Five of their stock picks (PINS, SE, QDEL, DOCU, TDOC) from 2020 doubled. It was almost 6 stocks as HUBS finished the year up 97.40%.
Finally, at the bottom, I will show you how the Motley Fool Rule Breakers service performs versus Stock Advisors.
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.
If you are impatient and want to see the returns of the Rule Breakers, you can just scroll down to the bottom now.
So, let’s get started!
What is the Motley Fool Rule Breakers?
The Motley Fool Rule Breakers is a stock advising service that is tailored for users looking for high-growth investments. They recommend 2 specific stocks every month and provide a set of “starter stocks” as well.
As of December 31, 2020, the Motley Fool Rule Breakers recommendations since January 1, 2016 have given me an average return of 318% versus the market’s 57%.
Sounds GREAT, right? Let's take a look…
Based on this chart below, their stock recommendations have done very well since 2009. How did they do it? We analyzed their performance and found out how they have done so well for the last 10 years.
But first, how does the Motley Fool Rule Breakers service work?
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 for January 2021 that will be Jan 14th, 21st and 28th.
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:
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 31, 2020 the stock closed at $129 for a gain of 163%. That is typical for their Rule Breaker stock picks.)
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. Their 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, as of January 2, 2021:
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 5,285% since they recommended it (see my portfolio before where it is now up 5,200+% for me).
So if you had put just $1,000 in each of these 3 stocks, then that $3,000 would be worth $281,000!
And here is how our Motley Fool Rule Breakers stocks have performed for me over the last 5 years:
Notice that over the last 5 years for the 2016-2019 stocks:
- 81 of the 96 stock picks are up for a 84% accuracy rate
- 58 out of 96 have more than doubled
- 36 have more than tripled
- 22 of 96 have more than quadrupled
- each year there are a few big losers
- but the average return for the Rule Breaker stock picks is 318% which beats the SP500 by an AMAZING 262%
- that compares to Stock Advisor's average return of 209% over the same time period
- Here is my Stock Advisor summary:
Rule Breakers New Subscriber Offer:
(there's no risk, they offer 30-day money back guarantee)
So How Have Their 2019 Picks Performed?
Here are some of the Rule Breakers 2019 picks and their performance as of December 31, 2020. Since these stock picks are all from 2019 they have all had at least 13 months of performance. I will share a few 2020 picks below also:
- January 2019 pick Skechers SKX is up 44% since their recommendation date.
- January 2019 pick NexEra Energy NEE is up 78%
- February 2019 pick GH is up 163%
- March 2019 pick Redfin RDFN is up 243%
- March 2019 pick Roku, ROKU is up 437%
- April 2019 pick Five Below FIVE is up 31%
- April 2019 pick Shockwave Medical SWAV is up 169%
- May 2019 pick Salesforce CRM is up 42%
- May 2019 pick UBER is up 26%
- June 2019 pick NVCR is up 184%
- July 2019 pick of ROKU is up 217%
- Their August pick of FSLY is UP 256%
- Their September picks of TDOC and ZUO are up 189% and down 12%
- Their October pick of DDOG is up 202%
- Their November pick of ETSY is up 325%
- Their November pick of PTON is up 371%
- Their December picks PODD and FRPT are up 38 and 145%
So as you can see just from their 2019 picks, they have only one loser. But you can also see that the gains on their winners more than offset any losses.
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 each year.
What about the Last 5 Years 2016 to 2020?
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 up an average of 57% compared to the SP500's 20%
- 18 of 24 are up and 5 have more than doubled.
- Their 24 picks from 2019 are up an average of 154% compared to the market's 33%
- 23 of 24 are up and 15 have more than doubled and 7 of those have actually tripled!
- Their 2018 picks are up an average of 176% compared to the market's 44%
- Their 2017 picks are up an average of 359% compared to the market's 58%
- And their 2016 picks are up an WHOPPING 584% versus the market's 92%
That means the Rule Breakers' service has BEAT THE MARKET BY 37, 121, 132, 302 and 492% for the last 5 years respectively!
NOTICE–THE LONGER YOU HOLD THEM THE BETTER THEY PERFORM.
So is it worth it? HELL YES! 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.
I know you are probably wondering how their 2016 picks are up an average of 600%. On February 24, 2016 they recommended SHOPIFY when it was at $21 and it is now up 5,285%. So the 50 shares I bought for $1,050 is now worth $53,000+ since it closed above $1131 on Friday.
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 82% 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 are 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 started testing the platform 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.
Just today I was walking near a high school and saw almost all the kids texting with the latest iPhones. Did you know that there is even a dog that owned 8 iPhone 7s back in 2016?
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 this month's Rule Breakers stock picks publicly. It's against the Fool's policy. But 18 out of 24 of the Motley Fool's Rule Breakers 2020 stock picks are up; 9 are up more than 50%, 5 have doubled, and 1 has tripled. If you keep reading, you will see some of their 2019 stock picks below.
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 $19. 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 are the stock picks of Rule Breakers performing? Is it worth it?
OK, thanks for reading this Rule Breakers Review this far. I will now tell you want you really want to know.
For the past 5 years, I’ve been a paid subscriber to both Rule Breakers and Stock Advisor.
I started out buying the 2 specific stock recommendations in a virtual trading account. From the initial results I saw, I was so impressed that in 2016 I started buying $1000 of each of their stock picks in my real ETrade account.
As of December 31, 2020 here are my results:
- Overall, for the 24 picks a year times 4 years (2016-2019), the Rule Breakers average stock pick is up 318% compared to 209% for Stock Advisors
- That means that Rule Breakers has beaten the SP500 by 262% and Stock Advisor by 151%.
- The 24 stocks picks from Rule Breakers from 2016 are up 584% compared to Stock Advisors 342%.
- The 24 stock picks from Rule Breakers from 2017 are up 359% compared to Stock Advisors 181%.
- For 2018, Rule Breakers picks are up 176% vs 200% for Stock Advisor.
- For 2019, Rule Breakers picks are up 154% compared to Stock Advisors 112%.
- For 2020 Rule Breakers stock picks are up 57 vs 78% for Stock Advisor.
So why does Stock Advisor get all the attention? Because overall it's returns and stock picks are more consistent. Stock Advisors had more winners and fewer losers, but Rule Breakers winners were really winners. For example, one of Rule Breakers 2019 picks is already up 437%; one of Rule Breakers 2018 stock picks is up 1015%; one of 2017 picks is up 2,235%; and one of their 2016 picks SHOPIFY is already up 5,285%.
This means that if you had missed out on buying just 2 of these top performers over the last 4 years, your Rule Breakers results would be in line with Stock Advisors.
How much does the Motley Fool Rule Breakers cost?
The Motley Fool dropped the price of the Rule Breakers subscription in 2019. I paid $299 a year for it in 2017 and 2018, and it is currently listed as $199 a year.
BUT, if you are new subscriber, they frequently run specials like “50% OFF” or “TRY IT FOR JUST $19.”
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 some stocks that are up 1100% and 500%, then also pick bigger losers. This caused the variance of each of the 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 fee. 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 492%, their 2017 picks by 302%, their 2018 picks by 132% and their 2019 picks by 121%.
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.