Motley Fool Rule Breakers Review – 2016 Stock Picking Performance Review
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...
- 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 believedd 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 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% likelihood of positive returns with an average return of 89.6%.
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 Performance | 1 Year | 2 Years | 3 Years | As of (3/21/22) |
| New Recommendations | 39% | 102% | 142% | 482% |
| Best Buys | 23% | 62% | 68% | 197% |
| Foundational Stocks | 20% | 45% | 48% | 605% |
| Blended Average | 27% | 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.
The Best Rule Breakers Picks of from 2016
Here are the 5 best Motley Fool Rule Breakers stock recommendations from 2016.
| Best Picks from 2016 | 1 Year | 2 Years | 3 Years | As of (3/21/22) |
| #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 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 (Sep 22nd, 2023)
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
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 | As of (3/21/22) | |||
| #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.
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
How did the 2016 Rule Breakers Picks Perform in the Short-term?
| Short-term Performance | 3 Months | 6 Months | 9 Months | 1 Year |
| New Recommendations | 2.06% | 17.97% | 24.49% | 38.78% |
| Best Buys | 3.88% | 10.43% | 15.33% | 22.72% |
| Foundational Stocks | 7.62% | 12.55% | 6.05% | 19.82% |
| Blended Average | 4.52% | 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, 2023)
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 Rates | 15%+ Returns at 1 Year | 50%+ Returns at 1 Year | 3x Returns | 10x Returns |
| New Recommendations | 70% | 43% | 35% | 9% |
| Best Buys | 63% | 48% | 17% | 3% |
| Foundational Stocks | 56% | 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 Technology | 157% | 39% | 78% |
| Financials | 82% | 9% | 41% |
| Consumer Discretionary | 80% | 30% | 40% |
| Communication Services | 62% | 9% | 31% |
| Healthcare | 36% | 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 Returns | 1 Year | 2 Years | 3 Years |
| New Recommendations | 39% | 51% | 47% |
| Best Buys | 23% | 31% | 23% |
| Foundational Stocks | 20% | 22% | 16% |
| Blended Average | 27% | 35% | 29% |
| S&P 500 | 12% | 17% | 7% |
| New Recommendations | Rule Breakers | S&P 500 | Beat Market by |
| 1 Year | 39% | 12% | 222% |
| 2 Years | 51% | 17% | 194% |
| 3 Years | 47% | 7% | 559% |
| Blended Average | 46% | 12% | 275% |
| Foundational Stocks | Rule Breakers | S&P 500 | Beat Market by |
| 1 Year | 20% | 12% | 64% |
| 2 Years | 22% | 17% | 29% |
| 3 Years | 16% | 7% | 122% |
| Blended Average | 19% | 12% | 59% |
| Best Buys | Rule Breakers | S&P 500 | Beat Market by |
| 1 Year | 23% | 12% | 89% |
| 2 Years | 31% | 17% | 80% |
| 3 Years | 23% | 7% | 216% |
| Blended Average | 25% | 12% | 109% |
Click Here to See the Latest Rule Breakers Picks (Sep 22nd, 2023)
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 believed 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.
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Did you know that...
- The phrase "sell in may and go away" stems from the historical underperformance of stocks during the six-month period starting in may and ending in october?
- The impact of fees on investments becomes more pronounced over time due to their effect on compounding?
- The 1929 wall street crash, which ushered in the great depression, was partly caused by excessive speculation and margin buying, a reminder of the dangers of leveraging investments?
- Taking the time to understand investment fees can lead to significant savings over the long term?
- The 'top-down' stock picking approach starts with analyzing global macroeconomic factors and then drilling down to specific industries and companies?
Quotes of the Day:
- "The best way to invest is to find undervalued assets and hold them for the long term." - John Paulson
- "Investing is not about being smart. It is about being disciplined." - Michael Burry
- "Investing is not a game of chance, it's a game of skill." - Robert Rodriguez
- "The most important thing is to be able to think independently." - Ray Dalio
- "The most important thing in life is to be a good person." - Charlie Munger
*Disclaimer: Unless noted otherwise all returns are as of Sep 20, 2023. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.
We provide general information, not investment advice. Some of the links on this page are affiliate links in which we receive a commission when a purchase is made.
$89 promotional price for new members only. $110 discount based on current list price of Stock Advisor of $199/year. Membership will renew annually at the then current list price.
$99 promotional price for new Rule Breakers members. $200 discount based on current list price for Rule Breakers of $299. Membership will renew annually at the then current list price.