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Motley Fool Rule Breakers Review – 2017 Stock Picking Performance Review

- TraderHQ Staff

How did the 2017 Motley Fool Rule Breakers Picks Perform?

It's time to look back at the 2017 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 2017.

How did the 2017 Rule Breakers Picks Perform Long-term?

Long-term Performance1 Year2 Years3 YearsTo-Date
New Recommendations37%99%161%290%
Best Buys34%51%90%148%
Foundational Stocks36%29%102%339%
Blended Average36%60%117%259%
  • New Recommendations produced a 290% cummulative return to date.
  • Best Buys produced a 148% cummulative return to date.
  • Foundational Stocks produced a 339% cummulative return to date.
  • Blended Average produced a 259% cummulative return to date.

Bundle Offer: Stock Advisor + Rule Breakers. 1 Year for $199

The Best Rule Breakers Picks of from 2017

Here are the 5 best Motley Fool Rule Breakers stock recommendations from 2017.

Best Picks from 20171 Year2 Years3 YearsTo-Date
#1 Best Pick:41%476%726%1,852%
#2 Best Pick:61%280%481%1,200%
#3 Best Pick:98%191%310%573%
#4 Best Pick:-9%259%315%442%
#5 Best Pick:51%115%159%406%
If $5000 Invested$2,423$13,207$19,904$44,733

The best Rule Breakers pick from 2017 produced a 1,852% return by the 4th year, making a $1000 investment worth $19,522. A $1000 investment in each of these picks would have returned you $44,733 by the fourth year.

Thats the power of compounding returns.

That 19x return on one stock would cancel out 19 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 (May 18th, 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...
  • 10% more 15%+ first year returns

Bundle Offer: Stock Advisor + Rule Breakers. 1 Year for $199

The Worst Rule Breakers Picks from 2017

Here are the 5 worst performing Motley Fool Rule Breakers recommendations from 2017 to date.

Worst Picks of 2017
#1 Worst Pick:-78%-80%-91%-90%
#2 Worst Pick:2%-32%-45%-80%
#3 Worst Pick:-8%28%236%-30%
#4 Worst Pick:-58%-71%-23%-18%
#5 Worst Pick:63%13%46%-13%
If $5000 Invested$4,205$3,589$6,237$2,701

The worst Rule Breakers pick from 2017 was down -90% by Mar 21, 2022 making a $1000 investment worth just $105.

A $1000 investment in each of these picks ($5000 total) is worth $2,701 as of Mar 21, 2022.

Based on equal weight investing the 5 best picks returned 17x more money than the losses from the 5 worst picks in 2017.

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5 Best Picks by the Charts

#1 Best Rule Breakers Pick from 2017

5 Best Picks by the Charts

#2 Best Rule Breakers Pick from 2017

5 Best Picks by the Charts

#3 Best Rule Breakers Pick from 2017

5 Best Picks by the Charts

#4 Best Rule Breakers Pick from 2017

5 Best Picks by the Charts

#5 Best Rule Breakers Pick from 2017

5 Best Picks by the Charts

How did the 2017 Rule Breakers Picks Perform in the Short-term?

Short-term Performance3 Months6 Months9 Months1 Year
New Recommendations19.47%21.73%37.16%37.28%
Best Buys8.22%16.96%34.05%34.46%
Foundational Stocks14.40%24.02%25.07%35.78%
Blended Average14.03%20.90%32.09%35.84%
  • New Recommendations produced an average return of 19% at 3 months and 37% at 9 months.
  • Best Buys produced an average return of 8% at 3 months and 34% at 9 months.
  • Foundational Stocks produced an average return of 14% at 3 months and 25% at 9 months.

Click Here to See the Latest Rule Breakers Picks (May 18th, 2022)

Rule Breakers 2017 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 Recommendations71%48%29%10%
Best Buys68%43%20%
Foundational Stocks78%33%5%

How did the 2017 Rule Breakers Picks Perform in the Short-term?

  • New Recommendations had 71% of picks with 15%+ returns in the first year and 48% with 50%+ returns. So far to date 29% have had 300%+ returns, 9.5% have had 1000%+ and one pick with an amazing 1,852% return.
  • Best Buys had 68% of picks with 15%+ returns and 43% with 50% returns at one year.
  • Foundational Stocks had 78% of picks with 15%+ returns and 33% with 50%+ returns at one year.

Rule Breakers Performance Review by Sector - 2017

Sector
Information Technology250%24%125%
Industrials130%5%65%
Healthcare64%33%32%
Communication Services41%24%20%
Consumer Discretionary22%10%11%

The top performing sectors were information technology, industrials and healthcare with information technology yielding the highest return of 250%

. The average sector weight was 19% with the largest sector accounting for 33% of the picks.

Performance vs. The Market (Annualized)

Annualized Returns1 Year2 Years3 Years
New Recommendations37%49%54%
Best Buys34%25%30%
Foundational Stocks36%14%34%
Blended Average36%30%39%
S&P 50020%6%14%
New RecommendationsRule BreakersS&P 500Beat Market by
1 Year37%20%88%
2 Years49%6%767%
3 Years54%14%275%
Blended Average47%13%252%
Foundational StocksRule BreakersS&P 500Beat Market by
1 Year36%20%80%
2 Years14%6%154%
3 Years34%14%137%
Blended Average28%13%111%
Best BuysRule BreakersS&P 500Beat Market by
1 Year34%20%73%
2 Years25%6%347%
3 Years30%14%109%
Blended Average30%13%125%

Click Here to See the Latest Rule Breakers Picks (May 18th, 2022)

Conclusion

The stock picks from Motley Fool Rule Breakers in 2017 stongly outperformed the market in nearly every category. The annualized returns on the new recommendations beat the market by 275% at the 3rd year and the Best Buys beat the market by 109% 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. 1 Year for $199

Quotes of the Day:

  • “A 10% decline in the market is fairly common—it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealthbuilding power of stocks.” - Christopher Davis
  • "The key to making money in stocks is not to get scared out of them". - Peter Lynch
  • "Historically, there has been a bull market in the commodities every 20 or 30 years". - Jim Rogers
  • "It’s never too late to learn". - Malcolm Forbes
  • "I have found that when the market’s going down and you buy funds wisely, at some point in the future, you will be happy. You won’t get there by reading. Now is the time to buy". - Peter Lynch
  • “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
  • "Returns matter a lot. It's our capital." – Abigail Johnson