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 your looking for.
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 are from users and investors just like you who wanted to know more about the service.
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 advise 7 picks every month and provide a set of “starter stocks” as well.
As of right now, the Rule Breaker service returns 144% versus the market’s 67%.
Sounds GREAT right?
So, how does the service work?
Every Thursday, the Fool will update their site and you will receive an e-mail with their new update:
- First Thursday of the month: New Best Buys Now
- Second Thursday of the month: New Rec
- Third Thursday of the month: New Best Buys Now
- Fourth Thursday of the month: New Rec
For every new “Best Buys Now”, users will get 5 stocks to buy now which are chosen from over 200 stocks.
The “New Rec” stands for “New Recommendation”, where David and his team will present a new stock pick.
Like the Stock Advisor service, Thursday is the day you will get an update on new stocks.
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, what’s the downside?
Just like anything in life, there are risks.
The Rule breakers service is much more volatility and risky than the Stock Advisors service due to its focus on growth companies.
These companies that “are poised to become tomorrow’s market leaders”.
The Rule Breaker service lives for the following 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 paper trading down here (trust me, you don’t want to miss it)!
What’s included with a Motley Fool Rule Breakers login (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 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 article 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 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 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 that information publicly. It’s against the Fool’s policy.
However, I can tell you that right now the service is only $19/month (It used to cost double). I don’t think the deal will last long, so click here to subscribe now to see their top picks. (there’s no risk, they offer 30-day money back)
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’s Rule Breaker 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 Breaker 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 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 affordable and efficient personal stock advisor.
- 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?
For the past month, I’ve been paper trading the recommendations from the Motley Fool’s Rule Breakers. Using the Stock-Trak platform, I created a portfolio and simulated trades using real-time prices to define if it was profitable or not. The trading was performed casually where I might have placed an order for a suggestion the day after the update. Whenever the order was filled immediately, I would place an 8% trailing-stop order right after to minimize my losses. The portfolio has a default $10 commission charge on all trades as well. It may be early to have any conclusions, but I will share what I have so far.
I started trading on the 11th of October 2018. Here’s a summary table of the current values for our “Rule Breakers” portfolio:
|Portfolio||Starting Portfolio value or Stock Price (10/11/2018)||Latest Portfolio value or Stock Price
So far, the portfolio is beating the market where my two biggest gainers were Baozun (BZUN) and Nutanix (NTNX). These stocks returned (19.33%) and (25.58%), respectively. My two biggest losers where EA (-8.19%) and GoDaddy (-2.34%). EA sports were closed using a trailing-stop order. I must say I am impressed by its performance in a time where the market is very scary. October was always known for two scary things: Halloween and stock-market crashes. Luckily for us, the Rule Breakers was able to generate a decent return in a time of fear.
Like the Stock Advisor portfolio, the Rule Breakers portfolio was able to beat the market. As mentioned earlier, it might be too early to judge due to its short-lived existence. However, the fact that it was able to conquer the month of October makes me conclude that it might be worth starting your stock analysis/due-diligence with these stocks.
Let’s talk money. How much does the Motley Fool Rule Breakers cost?
The Rule Breakers subscription costs $19 a month or $99 a year. Which ever option you choose, you have the right to cancel at any time within the first 30 days of your subscription. It normally costs $299 but it is now heavily discounted just for you. With a 30-day money-back guarantee, it is worth testing it out for yourself to see if you like it. Click here to sign up to the Rule Breakers!
Motley Fool Rule Breakers vs Stock Advisor. How do they compare?
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 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 whereas the Rule Breakers offers 7 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 recommendation 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
Like the Stock Advisor service, I believe the Rule Breakers is a useful tool to have as an investor. From the weekly podcasts to their stock recommendations, the Rule Breakers team always had interesting insights and ideas to present to their userbase. Although the service was able to beat the market in a time of fear, I would suggest using this service along with another recommendation tool. For example, I would pair it with the Stock Advisor service so that you can efficiently manage your portfolio based on your risk aversion. Personally, I prefer playing it safe, so I would probably focus more on the Stock Advisor service due to its lower volatility. If you are new to investing or simply looking for less risky investment ideas, I would suggest looking at the Stock Advisor service.
As I mentioned in my review for the Stock Advisor service, 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, please leave them below! Click here if you want to learn more about the Rule Breakers Service.
Also, read my full review on the Stock Advisor service review