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So, are you thinking about whether you should join Motley Fool Rule Breakers?
Is Motley Fool Rule Breakers legitimate?
And can it really help you improve your investment returns and make money from the stock market?
Is Motley Fool Rule Breakers subscription really worth it?
Are there better alternatives out there?
These are all valid questions that you ought to ask before you decide to commit to a stock picking service because you could be investing your hard-earned money in some of the stock recommendations they make.
In this Motley Fool Rule Breakers review, I am going to share with you everything after trying out Motley Fool Rule Breakers myself, so you can make an informed decision.
What Is Motley Fool Rule Breakers?
Motley Fool Rule Breakers is one of Motley Fool’s most popular stock picking services.
It was started in 2004 by David Gardner, to help people find market-beating growth stocks.
First of all, who is David Gardner?
David Gardner is one of the three founders of the Motley Fool, one of the leading stock analysis and research websites in the world.
He started Motley Fool together with his brother Tom Gardner almost 30 years ago.
They both began investing at a very young age, and have been offering investment advisory services for almost 30 years.
Also, they wrote a few best-selling investment books:
“The Motley Fool Million Dollar Portfolio: How to Build and Grow a Panic-Proof Investment Portfolio”
“The Motley Fools Rule Breakers Rule Makers: The Foolish Guide To Picking Stocks”
“The Motley Fool Investment Guide: How The Fool Beats Wall Street’s Wise Men and How You Can Too ”
“You Have More than You Think: The Motley Fool Guide to Investing What You Have”
David Gardner also makes frequent appearances on CNBC to share his views on the stock market.
So, you are actually taking investment advice from well-recognized investment experts.
Lastly, Motley Fool was highly recommended by the most trusted names in the financial industry.
Motley Fool Rule Breakers Investment Strategy
So, what is the investment strategy behind all the Motley Fool Rule Breakers’ stock picks?
The Motley Fool Rule Breakers investment strategy is focused on uncovering the hidden gems in the stock market.
So, it’s not the mainstream stocks (i.e. IBM and Apple) that everyone is following, but little known stocks that have great potential to be the market leader in the future.
Think “Amazon” and “Netflix” that were recommended by Motley Fool Rule Breakers many years ago.
So, how exactly does the Rule Breakers team find these “hidden gems”?
What is their investment strategy?
What do they look for in a high growth stock?
Here are the five things that they look for in a good growth stock:
- Innovative Company (i.e. it must be an innovative company that is making waves in emerging industries)
- Competitive Advantage (i.e. it must have competitive advantages over its competitors. For example, patents, proprietary technology and etc)
- Sustainable Business (i.e. it must be a business with good long term prospects and are unlikely to get disrupted by new technology)
- Good Management (i.e. it must have a good management team and strong leadership)
- Strong Consumer Appeal (i.e. it must have strong branding and strong customer interest)
For almost 20 years, Rule Breakers’ investment team have been making stock recommendation based on these sound investing principles.
Just recently (June 2021), David handed over the reins to his Rule Breakers team who have been working alongside with him for a very long time and actually have been doing most of the Rule Breakers stock picks.
So, I think you would be in good hands.
Now, where do they find these high growth stocks?
Generally, these growth stocks will be stocks that fall into the following categories:
- Stocks in emerging countries (e.g. China, India, South Africa, South Korea, Mexico, Thailand, Indonesia, etc)
- IPO stocks (i.e. newly listed stocks on the stock exchange )
- Stocks in fast-growing and emerging industries (i.e. Cyber Security, Big Data, Cloud Computing, 3D Printing, etc)
- Stocks of future technology companies (e.g. Internet of things, 5G, Artificial Intelligence, Blockchain, etc)
Motley Fool Rule Breakers Performance
When you choose a stock picking service, one of the most important things that you should consider is their track record.
So, how have Motley Fool Rule Breakers stock picks performed over the years?
Can it really help you beat the market?
Okay, let’s first take a look at the latest performance comparison between Rule Breakers and S&P 500.
If you had invested $10,000 in the Rule Breakers stock picks since 2004, your investment would be worth more than $120,000 as of June 2021.
On the other hand, if you had invested the same $10,000 in the S&P 500, your investment would only be worth slightly over $40,000.
You can see that Rule Breakers beat the market by roughly 3 times.
Okay, the overall performance of Rule Breakers looks impressive indeed.
But, what about the performance of each individual stock pick?
Because you don’t necessarily buy every single Rule Breakers stock recommendation.
So, let’s take a look at the performance of individual Rule Breakers stock picks.
As of June 2021, there are 191 stock recommendations with more than 100% returns.
Here are some examples of Rule Breakers stock recommendations:
- Amazon: it’s up 15,295%
- Netflix: it’s up 18,410%
- MercadoLibre: it’s up 10,923%
- Shopify: it’s up 4,914%
- Tesla: it’s up 9,424%
- Intuitive Surgical: it’s up 3,553%
- Salesforce: it’s up 3,176%
Let’s take a look at one of the stock picks.
MercadoLibre is a formidable e-commerce operator in Latin America, offering an online marketplace and related services, like e-payments.
Would I have noticed MercadoLibre by myself?
I am really not sure because I don’t use any e-commerce platform in Latin America.
Would I have bought MercadoLibre shares by myself?
I highly doubt so because I cannot possibly follow every industry and every emerging market.
That’s exactly why I joined the Motley Fool Rule Breakers.
Because I don’t want to miss any great high growth stocks, especially those from emerging markets and emerging industries.
So, if you are looking for the next ten-bagger stocks (i.e. at least 1,000% return), then I would highly recommend Motley Fool Rule Breakers.
Motley Fool Rule Breakers Vs S&P 500 For Past 5 Years
If you had followed Motley Fool Rule Breakers’ recommendations since its inception, you would be looking at very substantial investment returns.
What about investors who joined Rule Breakers in the past 5 years (from 2016 to 2020)?
Have they benefited from its stock recommendations?
Now, let’s how Motley Fool Rule Breakers compares against the S&P 500 each year for the past 5 years.
By the way, Motley Fool is very transparent with its performance.
As a Motley Fool Rule Breakers subscriber, I have access to the performance of every single stock pick all the way from 2006 (e.g. date of recommendation, buy price, risk level, % return, vs S&P 500 return, etc)
|Year||Average Return of Rule Breakers Stock Pick||S&P 500|
Out of all the 120 stock picks in the past five years, the BEST performance is 4,303% while the worst performance is -92%.
So, you can see that while you can achieve massive returns as high as 43 times, the downside is that the losing picks can go down by a lot as well.
This is true for high growth stock investing.
With high returns, it also comes with high volatility.
So, how do you effectively manage your risks when you invest in high growth stocks recommended by Rule Breakers?
One way is to spread your investments across as many different stocks as possible.
If you don’t have the money to invest in all the Rule Breakers stock picks, you can choose to buy the stocks with lower risk ratings.
For all the Rule Breakers stock picks, they will go through a “Crushability” test.
So, what is a crushability test?
Every “No” answer to one of their risk questions is a point.
The fewer points a stock accumulates, the harder they believe it will be to crush under the pressures of doing business in an unpredictable world.
|Number of “No” answers||Crushable like a…|
For example, if you are a moderate risk-taker, then you should avoid stock picks with a risk rating of 15 and above.Depending on your risk preference, you should always choose the stock recommendations that match your risk profile.
Motley Fool Rule Breakers Stock Picks Performance 2020
What about the performance of all the latest Motley Fool Rule Breakers stock picks in 2020?
Each month, there will be two stock recommendations issued to you on the first Thursday and the third Thursday.
The returns are measured as of 20 Nov 2021 from the day they were recommended in 2020.
For January 2020 stock picks, one stock pick is up 84% while the other is up 103.4%.
For February 2020 stock picks, one stock pick is up 589.5% while the other is up 31.8%.
For March 2020 stock picks, one stock pick is up 32.8% while the other is up 62.6%.
For April 2020 stock picks, one stock pick is up 122.6% while the other is up -21.4%.
For May 2020 stock picks, one stock pick is up 38% while the other is up -22.1%
For June 2020 stock picks, one stock pick is up 318.4% while the other is up 85.7%.
For July 2020 stock picks, one stock pick is up 50.1% while the other is up 29.5%
For August 2020 stock picks, one stock pick is up 125.5% while the other is up 41.6%.
For September 2020 stock picks, one stock pick is up 10.4% while the other is up -11.7%.
For October 2020 stock picks, one stock pick is up 99.2% while the other is down -2%.
For November 2020 stock picks, one stock pick is up 35.6% while the other is up -62.7%.
For December 2020 stock picks, one stock pick is down -34% while the other is up -37.7%.
In 2020, there are 18 winning stocks out of a total of 24 stock picks from Motley Fool Rule Breakers.
That’s an impressive win ratio of 70.8%.
The biggest gainer for the year 2020 Rule Breaker stock picks is 589.5%, while the maximum loss is -62.7%.
Also, there are five stock picks that more than double in price with two of them more than tripled in price.
If you had invested just $1,000 in each Rule Breakers stock pick, your $24,000 investment would be worth $40,684, up 69.5%.
On the other hand, if you had invested the same amount in the S&P 500, your investment would be $36,273, up 51%.
Again, Motley Fool Rule Breakers beat the market by almost 20%.
Motley Fool Rule Breakers Stock Picks Performance 2021
Now, let’s look at the most recent Motley Fool Rule Breakers stock picks performance.
The returns are measured as of 20 Nov 2021 from the day they were recommended in 2021.
For January 2021 stock picks, one stock pick is up 57.6% while the other is up -21.5%
For February 2021 stock picks, one stock pick is up -14.3% while the other is up -41.3%
For March 2021 stock picks, one stock pick is up 12% while the other is up -37.6%
For April 2021 stock picks, one stock pick is up 5.6% while the other is up -36%.
For May 2021 stock picks, one stock pick is up 113.7% while the other is up 62.1%.
For June 2021 stock picks, one stock pick is up 101.7% while the other is up 107.8%.
For July 2021 stock picks, one stock pick is up -22.7% while the other is up -61%.
For August 2021 stock picks, one stock pick is up 77.7% while the other is up -5%
For September 2021 stock picks, one stock pick is up 46.1% while the other is up -32.7%.
For October 2021 stock picks, one stock pick is up 0.4% while the other is down -4.1%.
In 2021, there are three Rule Breakers stock picks that have already doubled in price in just less than 4 months.
The biggest gain is 113.7% while the biggest loss is -61%.
As you can see that, Rule Breakers stock picks are all high-growth stocks with very high volatility.
In other words, the gain can be very attractive but at the same time the loss could be big as well.
I am fully aware of the potential risks as well as the potential rewards, so I am only allocating a small part of my investment portfolio to these high growth stocks.
The main reason why I am subscribing to Motley Fool Rule Breakers is that I am looking for the next 10 baggers or even 50 baggers (e.g. next Amazon) and I can get many potential high-growth stock ideas from Rule Breakers.
If you are looking for high growth stocks with potential massive upside potential, you could consider trying out Motley Fool Rule Breakers.
What Do You Get From Motley Fool Rule Breakers Subscription?
Now, let’s see what is included in your Motley Fool Rule Breakers subscription:
- You will receive two stock recommendations every month, as well as their monthly “Best Buys Now” from Rule Breakers’ investment team
- On the first Thursday of the month, you will receive your first stock recommendation
- and on the second Thursday, you will receive first 5 New Best Buys Now
- On the third Thursday, you will receive second stock recommendation
- and on the fourth Thursday, you will receive another 5 New Best Buys Now
- You will receive a real-time email notification when it’s time to sell, so you are never left wondering what to do
- You gain instant access to all the previous Motley Fool Rule Breakers recommendations
- The Motley Fool’s Best Buy Now
- The Motley Fool’s Starter Stocks (which is great for new investors who are looking for stock ideas to build their investment portfolio)
For all their stock recommendations, they will walk you through the buying case for a stock, spelling out exactly why a company might be a good addition to your portfolio, as well as the potential risks.
On top of that, they will continue to monitor and track the recommended stocks and send you updates whenever there is any.
When they decide that it’s no longer a stock that is worth holding, they will send you a “Sell” alert as well.
So, you don’t have to worry about when you should sell your stocks.
This is a very important factor to consider when you choose a stock picking service.
You DON’T make money by just buying the stocks.
You only realize a profit when you SELL the stocks.
So, you have to know when to buy and also when to sell it.
That’s also why I like Motley Fool because its stock-picking service is much more than just recommending the best stock to buy right now.
Try out Motley Fool Rule Breakers For 30 Days Risk-Free
How Much Does Motley Fool Rule Breakers Cost?
So, how much does it cost?
Motley Fool Rule Breakers‘ annual subscription used to cost $199 per year.
But, right now, it is just $99 a year to join Motley Fool Rule Breakers as new member, which is just $1.9 a week.
Is Motley Fool Rule Breakers worth it?
For $1.9 a week, personally I think it’s a steal.
What’s more, there is a 30-day money-back guarantee.
What that means is that If you decide Motley Fool Rule Breakers isn’t for you, simply cancel your 1-year subscription within the first 30 days, and you’ll be refunded 100% of your membership fee immediately.
Who Is Motley Fool Rule Breakers Right For?
Both Rule Breakers and Stock Advisor have recommended Amazon before.
The difference is that Rule Breakers recommended Amazon much much earlier than Stock Advisor when Amazon was still in its early growth stage and when e-commerce was just starting to gain popularity.
But, both Rule Breakers and Motley Fool Stock Advisor‘s subscribers who took their stock advice have made a lot of money if they hold it until now with Rule Breakers subscribers seeing much greater returns with their investment.
So, I think that Motley Fool Rule Breakers is great if you have extra funds for risky stock play and are looking for growth stock recommendations with massive returns over the long term.