Motley Fool Rule Breakers Review
Quality of Research
Motley Fool’s Rule Breakers program provides stock recommendations for investors aiming to diversify their portfolios. The program has consistently beaten the market for the past 15 years. Should you sign up? Read our review to learn more.
About The Motley Fool
The Motley Fool is one of the biggest financial media companies in the world. The Virginia-based company was founded in 1993 by David and Tom Gardner and now employs over 300 people. The Motley Fool, sometimes referred to as “The Fool,” provides a handful of free and premium services, all of which are related to stock news and analysis.
The main site features investment news, research, and guides for investors aiming to achieve market-beating returns. One of the most refreshing elements of The Motley Fool’s content is how focused it is. Whereas similar financial news sites venture into unrelated sub-topics of investing, The Fool stays focused on what it does best – investment advice.
The Motley Fool Rule Breakers is a unique stock advisor service for investors who want to find high-growth stocks that will outperform the market. It serves as a complementary service to Stock Advisor, The Motley Fool’s flagship stock picking newsletter.
Before we get started with our Motley Fool Rule Breakers review, let’s look at the masterminds behind the company.
Who Are David and Tom Gardner?
You should always consider the source of investment advice before making any financial decision. So, who is behind Motley Fool Rule Breakers?
David Gardner and Tom Gardner are brothers and co-chairmen of The Motley Fool enterprise. In 1993, the Gardner brothers came together to create The Motley Fool’s website. The idea was first conceptualized by David who launched an investment newsletter that struggled to gain traction. Tom, recognizing the opportunity, jumped on board and helped promote the newsletter on America Online (AOL). The newsletter began to gain traction and the brothers continued working together in a humble office located in the shed behind David’s Virginia home.
The Gardner brothers continued to grow the newsletter by writing articles and providing market insights to average investors. Keep in mind, this was before the internet became what it is today. Whereas you can find millions of articles on investing now, that wasn’t always the case.
The Motley Fool helped pave the way for the average investor by sharing investing insights for casual investors. From day one, the Gardner brothers wanted to empower the little guy by democratizing access to investment resources. Of course, this begs the question of why Tom and David Gardner were qualified to provide investment advice in the first place.
The brothers both did well in school and both seemed to take an interest in writing, but what truly made them a force to be reckoned with was their investing prowess. The Gardner brothers started building a portfolio of stocks with the goal of beating the market. In their first year alone, the Gardners’ portfolio outperformed the S&P 500 by 40 points. The Gardner brothers continued to beat the market and share their insights. By 1996, their site was one of the most popular investing sites on the web.
The Motley Fool quickly developed a reputation for being a leading financial consulting service, but readers wanted more. While many readers were interested in the methodology behind the Gardner brothers’ investment strategy, some preferred more guidance. To meet this demand, The Fool launched two popular stock picking services in the early 2000s.
The Motley Fool Stock Advisor program was launched in 2003, followed by The Motley Fool Rule Breakers program in 2004. Stock Advisor was co-managed by Tom and David, while Rule Breakers was solely managed by David and his hand-picked team of analysts). Check out our review of the Stock Advisor program for more details about that service.
Since these first two newsletters, the company has launched many other premium services such as Motley Fool Options and Everlasting Portfolio. David Gardner stepped back from day-to-day operations at The Motley Fool in 2021. However, the team of analysts he built remains in charge of Rule Breakers and the “Team David” picks for the Stock Advisor service.
What is Motley Fool Rule Breakers?
The Motley Fool’s Rule Breakers newsletter is run by David Gardner’s hand-picked team of investment analysts. Their aim is to discover the disruptive growth companies that will outperform the market for years to come.
The Fool’s team of analysts looks for “under-appreciated” companies that are set up for explosive growth in the future. Rule Breakers members get access to two new stock picks every month, as well as a list of starter stocks for new members. The analyst team also shares their “best buys” and offers new growth stock ideas every month.
Ultimately, Rule Breakers is all about providing easy-to-follow recommendations for market-beating growth stocks to buy.
Rule Breakers Pricing and Discount
Right now, a Rule Breakers subscription can be purchased at a discounted annual rate of $99 for the year (new members only). After the first year, an annual subscription costs $299.
The subscription is backed by a 30-day money-back guarantee. If you are unhappy with the service for any reason, you can get your money back by contacting the company.
The money-back guarantee gives customers peace of mind, but you’re unlikely to need it (as you will see soon).
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While the two services have a lot in common, The Motley Fool Rule Breakers has a slightly different investing approach from The Motley Fool Stock Advisor.
The Motley Fool Rule Breakers investment strategy is focused on finding hidden gems in the market. David Gardner’s analyst team looks for high-growth investment opportunities that are set up to generate massive returns. The growth stocks that Rule Breakers recommends may have high price-to-earnings ratios, but the service makes the case that the market still isn’t seeing their future potential. Of course, it’s still important for investors to diversify and follow strict risk management protocols.
Here are some of the elements of Rule Breakers high-growth stocks:
- Innovative companies making moves in emerging industries
- Companies with competitive advantages such as momentum, intellectual property rights, respected leaders, or market share dominance
- Companies with strong management teams and supporters
- Companies with strong consumer appeal and branding
- Companies with sustainable business models and strategies
This investment strategy is best illustrated by an example.
In February of 2017, The Motley Fool sent out a stock recommendation for The Trade Desk (TTD), a self-service online advertising platform. The Rule Breakers team justified the pick by pointing out that the company was a) a pioneer in the space, b) avoiding the mistakes of rival companies, and c) already profitable with growing revenue.
At the time of the recommendation, TTD’s stock price was $3.40. Today, the stock is priced at $43, which means the stock pick had a return of over 1,200% in the past five years.
This wasn’t just a single lucky pick, either. Rule Breakers has a history of picking high-performing growth stocks with big returns.
Motley Fool’s Track Record
One of the great things about The Fool’s investment advisory services is that they are transparent. After you sign up for a subscription, you can find a record of every stock pick the company has made since the inception of the program.
This allows you to analyze the Rule Breakers’ performance over any time period. You can find a list of all of the growth stocks recommended by the company (many of which are still great investments).
The stock picks are organized in a chart with information on the stock’s risk, return, and benchmark performance.
The table includes both winning and losing stock picks and, to date, the program has a cumulative return of 185%. This is nearly double the 95% return of the S&P 500 during the same time period.
The Motley Fool’s record speaks for itself. If you’re still not convinced, you can go back and review every stock pick and see when and why the particular stock was recommended. Each pick is backed by a comprehensive research report outlining the rationale behind the investing idea.
This type of transparency is essential when choosing a stock picking service. If you are going to take stock advice from a team of experts, you should make sure they are actually experts.
What Rule Breakers Members Get
By this point, it should be clear that The Motley Fool is a reputable investment advisor with a unique investment strategy. So, what exactly do Rule Breakers members get?
The Rule Breakers members area has a handful of features ranging from educational articles to stock trading tools, but the main stars of the service are the stock picks and research reports. Rule Breakers members get lists of the best stocks to buy every month. If you are a new member, you can review the “best buys” and “starter stocks” and start investing right away.
These lists are great for investors who want to start building a diversified investment portfolio. The starter stocks are strong stocks that can be used to build a strong foundation. The Best Stocks to Buy are the best opportunities as of the current date.
Motley Fool Rule Breakers Stock Picks
As discussed above, members get instant access to starter stocks to start building a portfolio. Members also get access to fresh stock picks monthly (which is what keeps them subscribed to this stock picking service).
The stock picks are the star of the Rule Breakers service. Rule Breakers members get two new stock alerts every month. Rule Breakers stock picks are backed by comprehensive research reports (which we will discuss next).
The stock picks are diversified across a variety of sectors and there are picks for every type of investor. As mentioned above, members also have access to a list of every stock recommendation the Rule Breakers team has ever made. These stocks comprise the Rule Breakers portfolio, and many of the recommendations are still good buys after the stock recommendations are initially made.
I found this to be particularly beneficial because it allowed me to do a bit of my own research. The Rule Breakers team aims to find “under-appreciated” stocks, meaning it may take time for the market to recognize the true value of these companies. There can be an advantage to moving late on some of these stock picks – for example, by waiting for a market-wide dip – as you may be able to buy the stocks at an even steeper discount.
Furthermore, by analyzing the Fool’s track record, you can build a diversified portfolio consisting of multiple stocks across multiple sectors. Of course, every stock is backed by a research report for diligent investors who want to understand the rationale behind the recommendation.
Company Research Reports
Tom and David Gardner made their names by providing some of the best investment research and advice in the industry. The Rule Breakers program stays true to the company’s mission by providing in-depth research reports for every stock pick.
Each research report has two main components: the 1-minute summary and the full research report.
The 1-minute summary is a quick breakdown of the research report (for investors in a hurry). This summary explains what the company does, what industry they operate in, why they are set up for massive growth, and why the Fool considers it to be one of the best growth stocks.
The research report provides a more detailed breakdown of this information with a well-written piece explaining the rationale behind the stock recommendations. This report has somewhat of an “expose” format, where the writer shares information on the company’s current standing, the competitive landscape, and future milestones. This research report is particularly helpful for investors who value fundamental research and may want to take a larger, long-term position in a company.
Overall, the research reports provide exactly what you need. You can get a quick summary or an in-depth research report – either way the Rule Breakers team delivers.
Rule Breakers vs. Stock Advisor
You’ll find a lot of similarities between this review and our Motley Fool Stock Advisor Review. That’s because there really is a lot that the two services share in common. They both offer two new stock picks per month, similar-looking research reports, and lists of “best buy” stocks.
So which one should you choose?
To be frank, The Motley Fool Stock Advisor Program is the company’s flagship offering. If you’re torn between the two services, the Stock Advisor subscription is your best bet. You get investment advice from both Tom and David Gardners’ analyst teams, and the stock picks have generated returns of 332% since inception (vs. Rule Breakers 185%). With these numbers in mind, it would seem like only a fool (pun intended) would choose the Rule Breakers program over the Stock Advisor program, but that’s not the case.
While we recommend the Stock Advisor program over the Rule Breakers program, the services shouldn’t be looked at as alternatives for each other. In fact, the services are complementary and it can make sense to sign up for both.
Rule Breakers and Stock Advisor are rooted in the same principles and utilize the same platform, but they rely on different investing methodologies. Whereas the Stock Advisor program is simply focused on finding the best stocks to buy at any given moment, the Rule Breakers program is focused on a very specific type of stock (high-growth companies). There’s little-to-no overlap in the stock recommendations made by both services.
If you’re just looking for a few monthly stock picks, Stock Advisor is your best bet. If you’re looking to expand and diversify your portfolio with a broader range of unique companies, the Rule Breakers subscription can unlock a lot of long-term opportunities that you won’t have access to with the Stock Advisor subscription alone. Helpfully, The Motley Fool offers the Epic Bundle package, which includes both Stock Advisor and Rule Breakers as well as the Everlasting Stocks and Real Estate Winners services, for $499 per year.
Check out our full Stock Advisor vs. Rule Breakers comparison to learn more.
How Credible is The Motley Fool?
The internet is teeming with scams and so-called “experts” who want to sell you something. It can be difficult to separate the wheat from the chaff.
The stakes are even higher in the world of stock market investing. If you pay for advice from the wrong expert, you can lose money in two different ways. First, you wasted money paying for useless advice. Second, you could lose money from the advice you’ve been provided. A bad stock pick has the potential to cost you a lot of money.
Fortunately, the Gardner brothers and the team of analysts they’ve assembled are credible. This isn’t some pop-up service from a couple of brothers who had a good year in the market. The Fool has been beating the stock market for over 25 years, and they’ve been doing it publicly. There’s a record of every stock pick they’ve ever made, and this record paints the picture of an exceptional trading strategy.
Of course, new investors shouldn’t get carried away and expect to find overnight wealth. Not every pick is a winner, and not every winner is a home run. While some of the picks have yielded returns upwards of 1,000%, these are the outliers and not the norm. You won’t get rich from Rule Breakers overnight, but you will have the potential to beat the market year-over-year by tapping into an investment strategy that has a proven track record of success.
Who is Rule Breakers Best For?
There is no universal investment strategy that is ideal for every investor. We all have different investment strategies, goals, and risk thresholds. We also think in different ways. Whereas some investors want to be told what to do, others prefer to do their own research. For this reason, we always like to discuss who a service is best for.
Rule Breakers is best for intermediate investors who are looking to diversify their portfolios and tap into new investment opportunities. If you’re just getting started and need a few stock picks, stick with a service like Stock Advisor. If you are looking for general financial advice, consider Motley Fool Rule Your Retirement. If you’ve already built a portfolio and would like to add outperforming stocks every month, the Rule Breakers program is a great option.
Is Rule Breakers Worth the Money?
In the world of investing services, “value” is based on the price of the service itself as well as the impact of the service on an investor’s returns. Cheap isn’t always cheap and expensive isn’t always expensive. A seemingly cheap service can leave your portfolio in the gutter and a seemingly expensive service can return the cost of the subscription and then some. As part of our Motley Fool Rule Breakers review, we wanted to help investors determine whether or not the service is worth the money.
Motley Fool’s Rule Breakers provides the best of both worlds. At $99 for the year, it’s hard to find a more cost-effective investment advisory service. Furthermore, you get access to stock picks from some of the best minds in finance.
We can easily say that the Rule Breakers program is well worth the subscription price. You could make back the cost on a single stock recommendation, as many members have reported. There is relatively low-risk involved in signing up since annual members can take advantage of the 30-day money-back guarantee. That said, once you see what Motley Fool Rule Breakers has to offer, you’re unlikely to ever look back.
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- 15-year history of beating the stock market
- Two new stock picks every month (growth stocks)
- Exceptional research reports
- Transparent track record
- Low subscription cost
- 30-Day Money-back guarantee
- Lower lifetime returns than the Stock Advisor program