Motley Fool Rule Breakers Review – 2018 Stock Picking Performance Review
Related: Rule Breakers vs Stock Advisor
How did the 2018 Motley Fool Rule Breakers Picks Perform?
It's time to look back at the 2018 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 2018.
How did the 2018 Rule Breakers Picks Perform Long-term?
|Long-term Performance||1 Year||2 Years||3 Years||As of (3/21/22)|
- New Recommendations produced a 108% cumulative return to date.
- Best Buys produced a 106% cumulative return to date.
- Foundational Stocks produced a 200% cumulative return to date.
- Blended Average produced a 138% cumulative return to date.
The Best Rule Breakers Picks from 2018
Here are the 5 best Motley Fool Rule Breakers stock recommendations from 2018.
|Best Picks from 2018||1 Year||2 Years||3 Years||As of (3/21/22)|
|#1 Best Pick:||215%||373%||1,126%||1,112%|
|#2 Best Pick:||165%||258%||507%||575%|
|#3 Best Pick:||54%||56%||330%||297%|
|#4 Best Pick:||42%||6%||112%||233%|
|#5 Best Pick:||46%||67%||270%||212%|
|If $5000 Invested||$5,227||$7,613||$23,461||$24,293|
The best Rule Breakers pick from 2018 produced a 1,112% return by the 4th year, making a $1000 investment worth $12,124. A $1000 investment in each of these picks would have returned you $24,293 by the fourth year.
Thats the power of compounding returns.
That 11x return on one stock would cancel out 11 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.
How did Rule Breakers Perform vs Stock Advisor?
While Rule Breakers performance was great, Stock Advisor out-performed in many categories.
- Stock Advisor had...
- 130% higher 4 year returns
- 109% more 3x returns
- 67% more 50%+ first year returns
The Worst Rule Breakers Picks from 2018
Here are the 5 worst performing Motley Fool Rule Breakers recommendations from 2018 to date.
|Worst Picks of 2018||As of (3/21/22)|
|#1 Worst Pick:||-56%||-53%||-63%||-92%|
|#2 Worst Pick:||-9%||-29%||-32%||-87%|
|#3 Worst Pick:||28%||-1%||-13%||-81%|
|#4 Worst Pick:||-43%||-88%||-79%||-77%|
|#5 Worst Pick:||-48%||-30%||17%||-71%|
|If $5000 Invested||$3,723||$2,980||$3,301||$914|
The worst Rule Breakers pick from 2018 was down -92% by Mar 21, 2022 making a $1000 investment worth just $83.
A $1000 investment in each of these picks ($5000 total) is worth $914 as of Mar 21, 2022.
Based on equal weight investing the 5 best picks returned 5x more money than the losses from the 5 worst picks in 2018.
5 Best Picks by the Charts
#1 Best Rule Breakers Pick from 2018
#2 Best Rule Breakers Pick from 2018
#3 Best Rule Breakers Pick from 2018
#4 Best Rule Breakers Pick from 2018
#5 Best Rule Breakers Pick from 2018
How did the 2018 Rule Breakers Picks Perform in the Short-term?
|Short-term Performance||3 Months||6 Months||9 Months||1 Year|
- New Recommendations produced an average return of 8% at 3 months and 21% at 9 months.
- Best Buys produced an average return of 4% at 3 months and 19% at 9 months.
- Foundational Stocks produced an average return of 4% at 3 months and -7% at 9 months.
Rule Breakers 2018 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
at 1 Year
|3x Returns||10x Returns|
How did the 2018 Rule Breakers Picks Perform in the Short-term?
- New Recommendations had 54% of picks with 15%+ returns in the first year and 21% with 50%+ returns. So far to date 8% have had 300%+ returns, 4.2% have had 1000%+ and one pick with an amazing 1,112% return.
- Best Buys had 52% of picks with 15%+ returns and 31% with 50% returns at one year.
- Foundational Stocks had 44% of picks with 15%+ returns and 11% with 50%+ returns at one year.
Rule Breakers Performance Review by Sector - 2018
|Sector||Return||% of Picks||Annualized Return|
The top performing sectors were information technology, communication services and industrials with information technology yielding the highest return of 144%
. The average sector weight was 20% with the largest sector accounting for 46% of the picks.
Performance vs. The Market (Annualized)
|Annualized Returns||1 Year||2 Years||3 Years||4 Years|
|New Recommendations||Rule Breakers||S&P 500||Beat Market by|
|Foundational Stocks||Rule Breakers||S&P 500||Beat Market by|
|Best Buys||Rule Breakers||S&P 500||Beat Market by|
The stock picks from Motley Fool Rule Breakers in 2018 strongly outperformed the market in nearly every category. The annualized returns on the new recommendations beat the market by 383% in the 3rd year and the Best Buys beat the market by 346% 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-fee back guarantee.
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...
- Companies with high levels of insider ownership can be viewed positively as management's interests align with shareholders, but it might also limit stock liquidity?
- These stocks typically reinvest a significant portion, if not all, of their profits back into the business, often forgoing dividends in the short term for potential long-term gains?
- Risk and return are closely linked, and while higher returns can amplify compounding benefits, they also come with increased risk?
- Primary sectors often contain subsectors that might behave differently? for instance, within healthcare, biotech companies can act differently than health insurance providers.
- For volatile investments, understanding both the CAGR and the annual volatility can provide a more comprehensive view of performance?
Quotes of the Day:
- "The key to successful investing is to focus on the long-term and ignore the short-term noise." - Robert Rodriguez
- "The best way to invest is to find undervalued assets and hold them for the long term." - John Paulson
- "The best investment you can make is in yourself." - John Paulson
- "The best way to invest is to learn from your mistakes and not repeat them." - John Paulson
- "Investing is not about making quick profits, it's about building wealth over time." - Steve Cohen
*Disclaimer: Unless noted otherwise all returns are as of Dec 8, 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.