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So, are you thinking about whether you should subscribe to Motley Fool Rule Breakers?
Is Motley Fool Rule Breakers legitimate?
Is the Motley Fool Rule Breakers subscription really worth it?
Are there better alternatives out there?
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.
Motley Fool Rule Breakers Investment Strategy
Motley Fool Rule Breakers is one of Motley Fool’s most popular stock-picking services.
It was started in 2004 by David Gardner, one of Motley Fool’s founders, to help people find market-beating growth stocks.
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 was 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 has been making stock recommendations 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 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 Stock Picks
Let’s see how the Motley Fool Rule Breakers team applies their investment strategy in real-life.
One of their favorite places to find high-growth stocks is IPOs.
In 2009, when ShockWave Medical went IPO in March 2019.
Motley Fool Rule Breakers recommended it in April at the price of $38.54.
Right now, the share price of ShockWave Medical is $209.90, which gives you a return of 444.63%.
Why did the Rule Breakers team recommend this stock?
The team thinks that ShockWave has developed a unique technology for safely breaking up calcium in arteries.
It radically improves the treatment of the calcified arterial plaque that causes cardiovascular disease, giving it the potential to upend a multi-billion-dollar market.
Given the shortcomings of alternative procedures, the team believes that ShockWave has a great chance of finding a large opportunity and perhaps even becoming the new standard of care.
With a market cap of just 880 million at the time of Rule Breakers’ recommendation, the team thinks there is a long way up if ShockWave gets even a fraction of the multi-billion-dollar market.
Motley Fool Rule Breakers Performance
When you choose a stock picking service, one of the most important things that you should consider is its track record.
So, how have Motley Fool Rule Breakers stock picks performed over the years?
Below is the performance comparison between Rule Breakers and S&P 500 as of 11th Oct 2022.
As you can see, Motley Fool Rule Breakers beat the market by almost 2 times during the same time period.
Now, what about the performance of each individual stock pick?
As of 12th Oct 2022, there are 130 stock recommendations with more than 100% returns.
Here are some best-performing stock picks by the Motley Fool Rule Breakers team of analysts.
- MercadoLibre: 5,589%*
- Tesla: 14,656 %*
- Shopify: 39,116%*
- The Trade Desk: 16,918%*
- Intuitive Surgical: 5,232%*
- Meta (Previously Facebook): 1,143%*
- Etsy: 979%*
- Hubspot: 514%*
- Monster Beverage: 1,441%*
- Universal Display: 1,464 %*
[*Returns as of 27th Jan 2022 since it was first recommended. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.]
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 out on any potential high-growth stocks, especially those from emerging markets and emerging industries.
Motley Fool Rule Breakers Vs S&P 500 For the Past 6 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 2021)?
Have they benefited from its stock recommendations?
Rule Breakers Average Return | S&P 500
Average Return |
Rule Breakers Picks that Doubled or more | Rule Breakers Picks that Tripled or more | Rule Breakers Picks that Quadrupled or more | Max Return | Min Return | |
2016-2021 | 150% | 67% | 43 | 28 | 20 | 3611% | -92% |
[Note: the data is as of March 2022. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.]
Out of all the 144 stock picks in the past six years, the BEST performance is 3611% while the worst performance is -92%.
So, you can see that while you can achieve massive returns as high as 36 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… |
0-5 | Diamond |
6-8 | Marble |
9-11 | Jawbreaker |
12-14 | Coconut |
15-18 | Glass bottle |
19-25 | Egg |
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.
Why I Subscribe To Motley Fool Rule Breakers
Motley Fool 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.
If there is a bear market like just now, you would see that quite a number of recommended stocks are down for the year 2022.
However, there is also another way to look at it.
The bear market gives one of the best opportunities for investors to load up on good stocks at a very cheap price.
Why?
Markets go up and down.
Stocks would eventually recover after some time.
Of course, you should also remember that there are always risks involved in investing, especially in high-growth stocks.
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.
By a small part of my investment portfolio, I mean less than 10%.
Why do I want to have some exposure to highly volatile high growth stocks?
The main reason is that I am looking for the next 10 baggers or even 50 baggers (e.g. next Amazon).
One of the best ways to get many potential high-growth stock ideas is by subscribing to Motley Fool Rule Breakers.
Did you know that if you had invested $1,000 in Amazon.com 20 years ago, you would have approximately $218,793.08 today?
Your downside is just $1,000 (if Amazon goes bankrupt) while your upside is unlimited.
I simply love this idea!
If you are looking for high-growth stocks with potential massive upside potential, I highly recommend that you try out Motley Fool Rule Breakers.
Check out the latest promotion for NEW Motley Fool Rule Breakers members here
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 the first 5 New Best Buys Now
- On the third Thursday, you will receive a 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 are 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.
Here’s why.
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 a 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 membership-fee-back guarantee.
What that means is that If you decide Motley Fool Rule Breakers isn’t for you, simply cancel your subscription within the first 30 days, and you’ll be refunded 100% of your membership fee immediately.
Check out the latest promotion for NEW Motley Fool Rule Breakers members here
Who Is Motley Fool Rule Breakers Right For?
Both have recommended Amazon before.
The difference is that Motley Fool Rule Breakers recommended Amazon much earlier than Motley Fool Stock Advisor when Amazon was still in its early growth stage and when e-commerce was just starting to gain popularity.
Check out the latest promotion for NEW Motley Fool Rule Breakers members here
Conclusion
So, I think that Motley Fool Rule Breakers is great if you have extra funds for risky stock play and are looking for high-growth stock recommendations with potentially massive returns over the long term.
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