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Motley Fool Rule Breakers Review – 2016 Stock Picking Performance Review

- TraderHQ Staff

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 recomendation 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.

For those unfamiliar Rule Breakers has three types of recommendations which are...

  1. 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.
  2. 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.
  3. 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 based 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% likelyhood of positive returns with an average return of 89.6%.

Probability of Positive Returns

So without further ado let's dive in and look at the performance of Rule Breakers in 2016.

How did the 2016 Rule Breakers Picks Perform Long-term?

Long-term Performance1 Year2 Years3 YearsTo-Date
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% cummulative return to date.
  • Best Buys produced a 197% cummulative return to date.
  • Foundational Stocks produced a 605% cummulative return to date.
  • Blended Average produced a 428% cummulative return to date.

Bundle Offer: Stock Advisor + Rule Breakers + Everlasting Stocks. 1 Year for $299

The Best Rule Breakers Picks of from 2016

Here are the 5 best Motley Fool Rule Breakers stock recommendations from 2016.

Best Picks from 20161 Year2 Years3 YearsTo-Date
#1 Best Pick:198%552%792%3,151%
#2 Best Pick:158%441%669%2,509%
#3 Best Pick:30%245%226%984%
#4 Best Pick:15%220%318%861%
#5 Best Pick:77%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.

Thats 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 asymetric risk.

You can only lose 1x the money you invested, while you can gain 5x,10x,100x or more. That's asymetric 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 (Sep 22nd, 2022)

How did 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

Bundle Offer: Stock Advisor + Rule Breakers + Everlasting Stocks. 1 Year for $299

The Worst Rule Breakers Picks from 2016

Here are the 5 worst performing Motley Fool Rule Breakers recommendations from 2016 to date.

Worst Picks of 2016
#1 Worst Pick:76%64%-48%-67%
#2 Worst Pick:45%127%-2%-66%
#3 Worst Pick:-52%-14%-35%-36%
#4 Worst Pick:33%-7%%-11%
#5 Worst Pick:45%-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.

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5 Best Picks by the Charts

#1 Best Rule Breakers Pick from 2016

5 Best Picks by the Charts

#2 Best Rule Breakers Pick from 2016

5 Best Picks by the Charts

#3 Best Rule Breakers Pick from 2016

5 Best Picks by the Charts

#4 Best Rule Breakers Pick from 2016

5 Best Picks by the Charts

#5 Best Rule Breakers Pick from 2016

5 Best Picks by the Charts

How did the 2016 Rule Breakers Picks Perform in the Short-term?

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 (Sep 22nd, 2022)

Rule Breakers 2016 Win Rates

Now let's look at win rates and see what percentage of stocks produced a 15%+ and 50%+ return in the first year.

Then let's look at the unicorns and see how many 3x and 10x stock picks so far to date.

Win Rates15%+ Returns
at 1 Year
50%+ Returns
at 1 Year
3x Returns10x Returns
New Recommendations70%43%35%9%
Best Buys63%48%17%3%
Foundational Stocks56%33%3%

How did the 2016 Rule Breakers Picks Perform in the Short-term?

  • 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

Sector
Information Technology157%39%78%
Financials82%9%41%
Consumer Discretionary80%30%40%
Communication Services62%9%31%
Healthcare36%9%18%

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)

Annualized Returns1 Year2 Years3 Years
New Recommendations39%51%47%
Best Buys23%31%23%
Foundational Stocks20%22%16%
Blended Average27%35%29%
S&P 50012%17%7%
New RecommendationsRule BreakersS&P 500Beat Market by
1 Year39%12%222%
2 Years51%17%194%
3 Years47%7%559%
Blended Average46%12%275%
Foundational StocksRule BreakersS&P 500Beat Market by
1 Year20%12%64%
2 Years22%17%29%
3 Years16%7%122%
Blended Average19%12%59%
Best BuysRule BreakersS&P 500Beat Market by
1 Year23%12%89%
2 Years31%17%80%
3 Years23%7%216%
Blended Average25%12%109%

Click Here to See the Latest Rule Breakers Picks (Sep 22nd, 2022)

Conclusion

The stock picks from Motley Fool Rule Breakers in 2016 stongly outperformed the market in nearly every category. The annualized returns on the new recommendations beat the market by 559% at the 3rd year and the Best Buys beat the market by 216% in the same period.

Rule Breakers continues to prove itself to be an invaluable source for oriented growth investing recommendations. And each year they continues to add exponentionally more value through all the additional resources like daily market briefings, webcasts, market research and more frequenty 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 complimentary to each other and provide 2x the stock recommendations and they come with a 30 day risk free period.

Bundle Offer: Stock Advisor + Rule Breakers + Everlasting Stocks. 1 Year for $299

Quotes of the Day:

  • "I think this is also a great time to invest in private equity, helping companies grow from the ground top". - Jim Rogers
  • “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” - Benjamin Graham
  • "Historically, there has been a bull market in the commodities every 20 or 30 years". - Jim Rogers
  • "The biggest risk of all is not taking one." – Mellody Hobson
  • “You make most of your money in a bear market, you just don’t realize it at the time.” - Shelby Cullom Davis
  • "Many people rush into the game of investing thinking they are predators. When they get to the middle of the game, they then realize they are the prey and try to escape but it will be too late. Only the preys with a well defined exit strategy will escape, the rest will be slaughtered by the real predators". - Ajaero Tony Martins
  • "The most contrarian thing of all is not to oppose the crowd but to think for yourself." – Peter Thiel