Motley Fool Rule Breakers Review – 2016 Stock Picking Performance Review

By TraderHQ Staff

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How did the 2016 Motley Fool Rule Breakers Picks Perform? It's time to look back at the 2016 performance of the Motley Fool Rule Breakers service and analyze all the stock picks measuring short and long-term performance 4 years later. For this review we'll analyze the performance of recommendations including the worst performers. We'll break down the performance by the 3 recommendation types to get a complete picture on the Motley Fool Rule Breakers way of investing so you can better decide if the service is right for you.

Types of Recommendations

  • New Recommendations: These are high growth recommendations which they release two of them monthly. On occasion they are re-recommendations of a past pick when their conviction level is extremely high.
  • Best Buys: These recommendations are released bi-weekly and they feature 10 timely recommendations which are believed to be the best stocks from all active recommendations current and past.
  • Foundational Stocks: Sometimes called "Starter" stocks, these 10 stocks are released at the beginning of the year and are designed to provide maturity, stability and growth to new and established portfolios.

In general, the Motley Fool recommends a portfolio construction of at least 25 stocks to have adequate diversity and the foundational stocks are meant to provide a base on which you begin purchasing new recommendations, building up over time to a portfolio of at least 25 holdings.

Probability of Positive Returns

The Motley Fool analyzed Stock Advisor performance from March 31, 2002 – November 19, 2021, using an average portfolio from an average month during that time period to help determine the optimal number of holdings and holding period. They found that the optimal number of stocks to hold is 25 and the optimal minimum holding period is 5 years which produced a 98.4% likelihood of positive returns with an average return of 89.6%.

2016 Rule Breakers Performance

Long-term Performance1 Year2 Years3 YearsAs of (3/21/22)
New Recommendations39%102%142%482%
Best Buys23%62%68%197%
Foundational Stocks20%45%48%605%
Blended Average27%69%86%428%

New Recommendations produced a 482% cumulative return to date. Best Buys produced a 197% cumulative return to date. Foundational Stocks produced a 605% cumulative return to date. Blended Average produced a 428% cumulative return to date.

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Best Rule Breakers Picks of 2016

Best Picks from 20161 Year2 Years3 YearsAs of (3/21/22)
#1 Best Pick198%552%792%3,151%
#2 Best Pick158%441%669%2,509%
#3 Best Pick30%245%226%984%
#4 Best Pick15%220%318%861%
#5 Best Pick77%191%384%610%

If $5000 Invested: $4,784, $16,492, $23,890, $81,157

The best Rule Breakers pick from 2016 produced a 3,151% return by the 4th year, making a $1000 investment worth $32,514. A $1000 investment in each of these picks would have returned you $81,157 by the fourth year. That's the power of compounding returns. That 32x return on one stock would cancel out 32 other equal weighted investments that go to zero. That is the power of asymmetric risk. You can only lose 1x the money you invested, while you can gain 5x, 10x, 100x or more. That's asymmetric returns and the primary draw of stock picking and the value of services like the Motley Fool offers.

Click Here to See the Latest Rule Breakers Picks (as part of the Epic Bundle)

Rule Breakers Perform vs Stock Advisor

While Rule Breakers performance was great, Stock Advisor out-performed in many categories. Stock Advisor had... - 327% higher 3-month returns - 12% more 15%+ first-year returns - 10% higher 6-month returns

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Stock Advisor + Rule Breakers + Everlasting Stocks + Real Estate Winners. 1 Year for $319

Worst Rule Breakers Picks from 2016

Worst Picks of 2016As of (3/21/22)
#1 Worst Pick76%, 64%, -48%, -67%
#2 Worst Pick45%, 127%, -2%, -66%
#3 Worst Pick-52%, -14%, -35%, -36%
#4 Worst Pick33%, -7%, -11%
#5 Worst Pick45%, -64%, -52%, 10%

If $5000 Invested: $6,472, $6,057, $3,635, $3,301

The worst Rule Breakers pick from 2016 was down -67% by Mar 21, 2022 making a $1000 investment worth just $332. A $1000 investment in each of these picks ($5000 total) is worth $3,301 as of Mar 21, 2022. Based on equal weight investing, the 5 best picks returned 45x more money than the losses from the 5 worst picks in 2016.

5 Best Picks by the Charts

  1. Best Rule Breakers Pick from 2016
  2. Best Rule Breakers Pick from 2016
  3. Best Rule Breakers Pick from 2016
  4. Best Rule Breakers Pick from 2016
  5. Best Rule Breakers Pick from 2016

Short-term Performance

Short-term Performance3 Months6 Months9 Months1 Year
New Recommendations2.06%17.97%24.49%38.78%
Best Buys3.88%10.43%15.33%22.72%
Foundational Stocks7.62%12.55%6.05%19.82%
Blended Average4.52%13.65%15.29%27.11%

New Recommendations produced an average return of 2% at 3 months and 24% at 9 months. Best Buys produced an average return of 4% at 3 months and 15% at 9 months. Foundational Stocks produced an average return of 8% at 3 months and 6% at 9 months.

Click Here to See the Latest Rule Breakers Picks (as part of the Epic Bundle)

Rule Breakers 2016 Win Rates

Win Rates15%+ Returns at 1 Year50%+ Returns at 1 Year3x Returns10x Returns
New Recommendations70%43%35%9%
Best Buys63%48%17%3%
Foundational Stocks56%33%3%

New Recommendations had 70% of picks with 15%+ returns in the first year and 43% with 50%+ returns. So far to date, 35% have had 300%+ returns, 8.7% have had 1000%+ and one pick with an amazing 3,151% return. Best Buys had 63% of picks with 15%+ returns and 48% with 50% returns at one year. Foundational Stocks had 56% of picks with 15%+ returns and 33% with 50%+ returns at one year.

Rule Breakers Performance Review by Sector - 2016

SectorInformation TechnologyFinancialsConsumer DiscretionaryCommunication ServicesHealthcare
Annualized Returns157%39%78%82%9%

The top performing sectors were information technology, financials, and consumer discretionary with information technology yielding the highest return of 157%. The average sector weight was 19% with the largest sector accounting for 39% of the picks.

Performance vs. The Market (Annualized)

1 Year2 Years3 Years
New Recommendations39%51%47%
Best Buys23%31%23%
Foundational Stocks20%22%16%
Blended Average27%35%29%
S&P 50012%17%7%

Click Here to See the Latest Rule Breakers Picks (as part of the Epic Bundle)

Conclusion

The stock picks from Motley Fool Rule Breakers in 2016 strongly outperformed the market in nearly every category. The annualized returns on the new recommendations beat the market by 559% in the 3rd year and the Best Buys beat the market by 216% in the same period. Rule Breakers continue to prove itself to be an invaluable source for oriented growth investing recommendations. And each year they continue to add exponentially more value through all the additional resources like daily market briefings, webcasts, market research, and more frequent updates and coverage on new and past recommendations. For serious investors just getting started or those with years and decades of experience, we believe Rule Breakers is a great investing companion well worth the $99/year (for new members). Additionally, the Motley Fool has a similar service called Stock Advisor which in many categories has out-performed Rule Breakers. You can see our yearly reviews of that service here. We actually advise people to try both services together as they are very complementary to each other and provide 2x the stock recommendations and they come with a 30-day membership back fee guarantee.

Bundle Offer:

Stock Advisor + Rule Breakers + Everlasting Stocks + Real Estate Winners. 1 Year for $319

More Stock Market Resources:

  • Best Stock Advisor Websites & Services
  • Motley Fool Stock Advisor
  • Motley Fool Epic Bundle
  • Motley Fool Discounts
  • Best Stock Picking Services
  • Best Investment Advice Websites
  • Motley Fool Rule Breakers
  • Best Stock Analysis Websites
  • Motley Fool Investing Services

Did you know that...

  • Long-term investing aligns with the principle of patience, emphasizing the idea that wealth is built over time, not overnight?
  • Overconfidence bias can lead investors to overestimate their knowledge, underestimate risks, and subsequently make suboptimal decisions?
  • Passive investing involves tracking a market index rather than actively selecting individual stocks or timing the market?
  • Some investors intentionally bunch their itemized deductions in certain years to maximize tax benefits?
  • A 'wash sale' involves selling a security at a loss and then repurchasing the same or a substantially similar security shortly after, which can have tax implications?

Quotes of the Day:

"The four most dangerous words in investing are: 'this time it's different.'" - Irving Kahn

"The most important thing in investing is to have patience." - Carl Icahn

"The best investment you can make is in a good company at a fair price." - Marty Whitman

"The best thing you can do is learn from other people's mistakes." - Charlie Munger

"The biggest risk in investing is not taking any risks." - Thomas Rowe Price Jr.

Committed to Smart Long-term Investments. Here are some of our best resources: