Motley Fool Rule Breakers Review
Motley Fool Rule Breakers is one of the most popular stock picking services around today. The program features stock picks from David Gardner who works with his investment team to uncover high-growth investment opportunities. Is the subscription worth the cost? Read our review to find out.
About The Motley Fool
The Motley Fool is an online publication and investing advice company run by Tom and David Gardner. The company was founded in 1993 and is now one of the most influential brands in the world of investing. The Motley Fool’s popularity can be attributed to the company’s approach to investing. The company and its editors aim to provide financial advice that resonates with casual investors. Their goal is to simplify investing instead of clouding it in jargon and overly complex strategies.
We recently did a Motley Fool review that focused on the Stock Advisor program. The Stock Advisor program is the company’s most popular premium stock picking service. Since the time of our initial review, we’ve had a lot of readers request reviews of other Motley Fool services. In this review, we are going to be looking at Motley Fool Rule Breakers.
Keep reading our Motley Fool Rule Breakers review to see how this service compares to other Motley Fool services and whether or not it is worth paying for.
Motley Fool Rule Breakers Program
Motley Fool Rule Breakers is a stock picking service that is very similar to its sister service, Stock Advisor. The service aims to help investors beat the market by providing them with access to great stock picks and investing education. Here is what members get:
- Two new stock picks every month
- A list of the best stocks to buy right now
- A list of starter stocks to build a strong stock portfolio
- Educational resources and community access
While the service offers a handful of benefits, there’s no doubt that the main benefit is the stock advice. When you sign up for Rule Breakers, you are paying for stock recommendations that are intended to help you beat the market.
These stock recommendations are provided by Motley Fool co-founder, David Gardner. David Gardner leads a team of analysts who are on the hunt for disruptive growth companies. This is one of the main differentiators between Rule Breakers and Stock Advisor (which we will discuss more later). Rule Breakers is focused on very specific types of companies. The stock picks are focused on innovative companies that are set up for massive growth. These companies may be innovators in emerging industries or established companies with strong brands and management teams.
Let’s take a closer look at these stock picks.
Motley Fool Rule Breakers Stock Picks
As a Motley Fool Rule Breakers member, you will have access to a few different types of stock picks. The Fool’s investing methodology is built around building a diversified portfolio with at least 15 stocks. Here’s how that portfolio may look:
- 25% Best Buys Now
- 25% Starter Stocks
- 50% Fresh Recommendations
Let’s have a look at each of the categories.
Best Buys Now
Best Buys Now are stocks that you should add to your portfolio today. These are usually stocks that were previously recommended by the service and still offer great investment opportunities. At the time of writing, there are seven stocks in the “Best Buys Now” category (blurred in the image below out of respect to paying subscribers).
Starter Stocks are designed to provide a strong foundation for your investment portfolio. These are mostly big companies that have established sales channels and revenue streams. These types of stocks may add some stability to your portfolio.
Rule Breakers Stock Picks
The last category of stocks is the actual stock picks that Rule Breakers recommends every month. David Gardner provides two new stock picks every month. These picks represent new buying opportunities for investors who want to diversify their portfolios and maximize their returns.
Each stock pick is backed by a full research report that explains the investment thesis. The research reports are short and sweet. They provide all of the information you need to make an investment decision without getting bogged down by overly complex financial jargon. The research reports explain key company information, why the recommendation was made, and potential risks. The reports are both interesting and insightful. While you could blindly follow Motley Fool stock alerts, responsible investors will appreciate having an understanding of why they are buying a particular company.
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Is Motley Fool Legitimate?
If you are just discovering The Motley Fool, you are probably wondering if the company is legitimate. The truth is there are a lot of sketchy stock newsletters and investment advisory services out there. Motley Fool is not one of them. Motley Fool has been in the business for decades and has a great reputation. I’ve personally been paying for their services for years.
The company’s track record says it all. Let’s have a look.
Motley Fool Rule Breakers Performance and Track Record
Rule Breakers subscribers have access to a list of every stock recommendation that David Gardner and his investment team have ever made.
The Motley Fool is fully transparent in its track record. Members can see both winning and losing stock picks.
So, how does the Rule Breakers service perform? Let’s take a look.
Since the program’s launch in 2004, Rule Breakers stock picks have returned 277.7%. During that same time period, the S&P 500 returned 88.4%, meaning Rule Breakers beat the market by 189.3%.
- Rule Breakers Returns: 277.7%
- S&P 500 Returns: 88.4%
While most mutual funds don’t even beat the S&P 500, David Gardner’s stock picks were able to beat the market by a whopping 189.3%. These investment returns are highly impressive.
The pitch for the service is as simple as that. 189.3% would make a huge difference in your investment portfolio.
For those interested in more details, we will have a closer look at some interesting statistics related to the Rule Breakers portfolio of stock picks.
Whenever we review a stock picking service, we like to dive deeper into the data to make sure the performance is legitimate and sustainable. We reviewed the performance of all active stock recommendations (excluding closed positions).
Here is some of the interesting information we found during our Rule Breakers review.
- The company issued over 200 stock recommendations
- ~84% of the stock picks yielded positive returns
- The highest return on a stock pick was 9,339%
- 23 stocks yielded returns over 1,000%
- 128 stocks yielded returns over 100%
- The average return of a winning stock pick was 589%
- ~16% of stocks yielded negative returns
- The lowest return on a stock pick was -78%
- 12 stocks yielded returns under 50%
- The average return of a losing stock pick was -34%
Overall, these stats are pretty impressive.
What Type of Investor is Motley Fool Rule Breakers Best For?
In the world of investing, there is no universal strategy or piece of investment advice that is perfect for everyone. We all have different financial situations and investment goals.
Motley Fool Rule Breakers is best for long-term investors with “buy and hold” strategies. The stock picks are designed for investors who intend to buy and hold positions for at least five years. Rule Breakers is focused on uncovering growth stocks of companies with long-term growth potential. If you want to maximize on this growth potential (and your own personal returns), it is advised that you hold these growth stocks long-term.
It should also be noted that Rule Breakers is not intended for income investors. If you are looking to build a portfolio of dividend stocks that provide predictable yearly income, Rule Breakers isn’t your best bet. While some of the stocks have nice dividend yields, the stock recommendations are more focused on actual returns from increases in stock prices. This is how the stock picks have yielded such impressive returns over the past 15 years.
These stock picks are suitable for investors at different stages of their investment journeys. If you are young and brand new to investing, Motley Fool stock picks will help you build a strong portfolio that will yield exceptional returns. If you are close to retirement, these picks can help you maximize your retirement portfolios.
Of course, individual investors should have their own risk management strategies. While 86% of the Rule Breakers stock picks were winners, there were still a few losing picks. Young investors may be able to stomach a 30% loss, whereas retirement investors may not. If you are particularly risk-averse, you should take a proactive approach to risk management by cutting losses early. This can help you maximize the upside of your portfolio while controlling the downside.
You may also consider using a service like Motley Fool Options to hedge your positions with options contracts.
Is Motley Fool Rule Breakers Worth the Money?
It is clear that the Rule Breakers stock picks have impressive returns. The company has a 15+ year track record of beating the stock market by considerable margins. So, is it worth paying for a subscription to Rule Breakers?
The short answer is yes!
A Rule Breakers subscription will usually run $299 per year. It is currently on sale for $99 per year for a limited time (new members only).
At this price, the Rule Breakers subscription is a no-brainer. Most investment newsletter services charge far more than $99 for a yearly subscription (some charge more than that per month). At $99 per year, you can easily make back the cost of the subscription with a single stock recommendation. I think most investors would agree that it’s worth paying $99 to beat the market 3-to-1.
Annual subscriptions are backed by a 30-day money-back guarantee. If you are unhappy with the subscription after the first 30 days, you can contact customer service for a full refund. The 30-day money-back guarantee allows customers to buy with confidence and we respect that the company believes in its service enough to back it with a guarantee.
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Motley Fool Rule Breakers vs. Stock Advisor
Motley Fool offers over a dozen premium investment services but Stock Advisor and Rule Breakers are easily the most popular. So, which one is better?
First, we should note that Rule Breakers and Stock Advisor are not competing services. While they both provide investment advice and stock picks, the two services work well together.
Both services make stock recommendations that are designed to help you achieve exceptional investment returns. The main difference comes from the investing methodology.
Rule Breakers is focused on a very specific type of stock. David Gardner and his investment team are looking for high growth stocks with innovative business models and strong management teams. These growth stock ideas are a bit more niche-focused, whereas Motley Fool Stock Advisor recommendations are more general (read our full Stock Advisor review here).
If you are choosing between the two services, you can’t go wrong with either. That said, the services work very well together. As a member of both services, you will have access to more investment ideas that can help you build a diversified portfolio. If you are looking to build a strong portfolio of growth stocks, tech stocks, and momentum stocks, you may consider signing up for both services. I personally use both services so I can build a diversified portfolio with a broad range of stocks.
Motley Fool Rule Breakers Review: Final Verdict
Motley Fool Rule Breakers is one of the best stock picking services on the market. The company has a stellar reputation and a track record of beating the market by a considerable margin. If you’re looking for a stock newsletter and alerts service, you can’t go wrong with Rule Breakers.