DISCLOSURE: THIS POST MAY CONSTAIN AFFILIATE LINKS,MEANING I GET A COMMISSION IF YOU DECIDE TO MAKE A PURCHASE THROUGH MY LINKS, AT NO COST TO YOU. PLEASE READ FULL DISCLOSURE HERE
So, are you trying to decide which one is better for you, Motley Fool Stock Advisor or Rule Breakers?
In this detailed comparison review, I am going to share with you everything you need to know to help you make an informed decision.
History & Background
So, let’s first compare the history and background of Motley Fool Stock Advisor and Rule Breakers.
Both Stock Advisor and Rule Breakers are two of the most popular stock-picking services offered by the Motley Fool.
Stock Advisor was started in 2002 while Rule Breakers was started in 2004.
So, who is the stock picker behind Stock Advisor and Rule Breakers?
Both Tom Gardner and David Gardner and their team of stock analysts are the stock pickers for Motley Fool Stock Advisor.
On the other hand, David Gardner and his team are responsible for the stock picks in Rule Breakers.
Now, who is Tom Gardner and David Gardner?
Both Tom Gardner and David Gardner are the founders of the Motley Fool.
Motley Fool has been around for more than 30 years with offices in the US, UK, Canada, HK, Australia, Japan, and Germany.
It’s one of the leading financial websites for stock analysis and research.
So, are Tom Gardner and David Gardner qualified to give you investment advice?
First of all, both of them have decades of investment experience under their belt.
Also, they are authors of several best-selling investment books.
Now, do their investment expertise actually translate into great investment returns for their clients?
After all, results is what really matters.
Now, let’s take a look at the performance of all their stock recommendations?
In terms of performance, which stock picking service is better, Stock Advisor or Rule Breakers?
First of all, as Stock Advisor was launched two years earlier than Rule Breakers, it would not be fair or accurate to compare their performance directly.
However, what we would do is to use the S&P 500 as the benchmark, and see how Stock Advisor and Rule Breakers fare against the S&P 500 respectively.
So, let’s first look at the performance of Motley Fool Stock Advisor.
As of December 2020, the returns of Motley Fool Stock Advisor‘s stock picks are 546%.
On the other hand, the returns of the S&P 500 over the same time period are just 111%.
That’s more than 5 times the returns of the S&P 500.
You’ve probably known that investing in the stock market index ETFs such as S&P 500 is one of the safest investment strategies.
Over the long run, it would almost certainly go up.
But the downside of investing in index ETFs is that you are buying almost every single stock that is included in the stock market index.
In other words, you are buying both the good ones and also the bad ones.
For example, because of the coronavirus crisis, the airline stocks, cruise stocks and hotel stocks have gone down significantly.
When you buy market index ETFs such as S&P 500, you are buying these stocks too.
That’s the exact reason why I don’t want to blindly dump my money in index ETFs anymore.
Instead, I want to be more selective when it comes to choosing stocks for my investment portfolio.
This is because that’s the only way to get much higher than average investment returns.
Below is the performance of individual stocks picks recommended by Motley Fool Stock Advisor:
Now, let’s look at the performance of Rule Breakers compared against the S&P 500.
As of Dec 2020, the returns of Rule Breakers’ stock picks are 334%
On the other hand, the returns of the S&P 500 over the same time period is just 96.6%.
Just like Stock Advisor, Rule Breakers also outperformed the S&P 500 by a lot.
So, what does this mean?
If you had followed the stock recommendations of either Stock Advisor or Rule Breakers, you would have increased your investment portfolio by a lot more than if you just invested your money in stock market index ETFs such as the S&P 500.
In terms of investment strategy, there is a key difference between the Motley Fool Stock Advisor and Rule Breakers.
The Motley Fool Rule Breakers investment strategy is focused on finding high growth stocks.
So, what are high growth stocks?
“A high growth stock is a stock of a company that is expected to increase its earnings at a faster rate than the average company within the same industry.”
These stocks are not the well-known blue-chip stocks (e.g. Apple and Google), 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.
By the way, here are the returns that you would have gotten if you bought these stocks based on their recommendations:
- Amazon: it’s up 15,295%
- Netflix: it’s up 18,410%
Here are more examples of high growth stocks that were picked by David Gardner and his investment team:
- 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%
So, what is their investment strategy for finding high growth stocks?
Here are the 6 things that they look for in a good high growth stock:
- Innovative Company (i.e. it must be an innovative company that is making waves in fast-growing and 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 Rule Breakers stock picks, the potential returns are much higher, but the volatility (i.e. risk) is also much higher.
The reason is that “high growth” stocks are stocks that are usually priced much higher by investors due to their higher-than-average earnings growth.
As “high growth” stocks, they don’t yet have an established earnings history and are still in the “growth” stage”, unlike blue-chip stocks.
For example, McDonald’s has a proven history of positive earnings since 1965.
Although you won’t see double-digit growth in its earnings, you are unlikely to see a big drop in its earnings either.
So, its stock price would not be as volatile as high growth stocks.
With high growth stocks, anything can happen.
If its impressive growth cannot continue as expected, you would probably see its stock price nose-dive.
On the other hand, if it can keep growing, you would probably see its stock price skyrocket.
As a result, when you invest in high growth stocks, you must be prepared for the volatility in your stock portfolio.
Now, let’s look at the investment strategy behind the Motley Fool Stock Advisor.
For Stock Advisor, there are two teams picking stocks – Tom Gardner’s Team & David Gardner’s Team.
Every month, you will receive one stock pick from Tom’s Team and one stock pick from David’s Team.
Yes, they are keeping scores.
So far, as of December 2020, David’s Team has an average return of 841% while Tom’s Team has an average return of 298%.
Now, how do they pick stocks?
For Tom Gardner, he looks for companies that have a great business model, good financials, and are undervalued.
Simply put, he follows the value investing approach that was made famous by Warren Buffet.
So, you can expect that Tom Gardner’s stock picks are usually fundamentally strong companies with good growth prospects in the long term.
For David Gardner, he is always looking for companies that have growth potential and are (or are going to be) the market leader.
Now, you must be wondering if you would be getting the same stock picks from David Gardner in Stock Advisor and Rule Breakers.
The short answer is No.
David Gardner’s growth stock picks for Stock Advisor are NOT high growth stocks, so they are less risky and volatile.
Also, you won’t find most of Rule Breakers’ high growth stock picks in Stock Advisor.
So, which one is more suitable for you, Stock Advisor, or Rule Breakers?
Which One Is Right For You?
This really depends on your risk appetite, investment experience as well as your investment objective.
If you are a beginner investor, I would highly recommend Stock Advisor because it’s very beginner-friendly.
Inside Stock Advisor, you will get Starter Stock recommendations to help you build your investment portfolio from scratch.
That’s really helpful for investors who don’t really know where to start.
On top of the Starter Stocks, you will also get “Best Buy Now” as well as the latest stock recommendations from both Tom and David.
If you are an experienced investor, you can also benefit from Stock Advisor.
No one can possibly analyze and research every single stock on the stock market.
Also, no one has in-depth knowledge of every industry out there.
So, there is a possibility that you might miss out on a lot of great investment opportunities by doing everything on your own.
By joining Motley Fool Stock Advisor, you could leverage their investment expertise and experience.
Personally, I subscribe to Motley Fool Stock Advisor for these exact reasons.
Now, does that mean that Rule Breakers is not good?
No, Rule Breakers is good for experienced investors who want some exposure to high growth stocks in their portfolio and are comfortable with taking the risks.
Generally, these high growth stocks are risky.
But, with high risk comes high returns.
So, you will likely find potential ten-bagger stocks in Rule Breakers that could really exponentially grow your investment portfolio.
So, how much is the Stock Advisor subscription and Rule Breakers’ subscription?
Let’s first look at Motley Fool Rule Breakers‘ pricing.
Its annual subscription used to cost $199 per year.
But, right now, it is just $99 a year to join Rule Breakers using this link, which is just $1.9 a week.
If you are looking for high growth stock picks with a proven track record, then I would highly recommend David Gardner’s Rule Breakers.
Now, what about Stock Advisor?
Before we look at the prices, let’s look at what you get from your Motley Fool Stock Advisor subscription:
- You will receive two stock recommendations every month, as well as their monthly “Best Buys Now” from legendary investors Tom and David Gardner
- On the first Thursday of the month, you will receive Tom Gardner’s stock recommendation
- On the second Thursday, you will receive Tom’s 5 New Best Buys Now
- On the third Thursday, you will receive David Gardner’s stock recommendation
- and on the fourth Thursday, you will receive David’s 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 past Motley Fool’s Stock Advisor recommendations
- You gain instant access to all of their stock reports
- The Motley Fool’s Top 10 Best Stock to Buy RIGHT Now report that features some of their recent picks that still offer the best potential return.
- The Motley Fool’s Top 5 Starter Stock features the ideal stocks that should be the foundation of new investor’s portfolios.
Now, consider the fact that many investors have made many profitable investments by following their stock advice, how much would they value Motley Fool Stock Advisor subscription?
If they have made tens of thousands of dollars based on their stock tips and recommendations, would they mind paying them hundreds of dollars or even thousands of dollars for their knowledge and expertise?
They most probably won’t mind at all.
Here’s the fact.
Motley Fool Stock Advisor does not cost thousands of dollars.
It does not even cost you a few hundred dollars.
So, how much does Motley Fool Stock Advisor cost?
Its annual membership is only priced at $199 a year.
Right now, there’s a special discount of 50% OFF on the annual membership when you click the link here to try it out for 30 days 100% risk-free.
So, for $99 a year- that’s just $1.90 a week – you can gain unlimited access to their library of expert stock recommendations which are carefully selected to help you grow your wealth.
Try Stock Advisor For 30 Days Risk-Free Now