Motley Fool Stock Advisor vs. Rule Breakers: Which is Right for You?

Anybody that has ever spent time on an investing website has likely seen ads for the Motley Fool and wondered what the deal is. In fact, there’s a good chance you have seen a flashing “BUY ALERT” or another similarly urgent message and worried that you were missing out.

Here is one thing that’s not quite as well known: Motley Fool actually offers different services, aimed at different types of investors and risk tolerances. While they have been discussed before, two of them that deserve a direct comparison are the offerings Motley Fool Stock Advisor vs. Motley Fool Rule Breakers.

Breaking it Down

Let’s start with understanding what each offering is. The difference is actually quite straightforward and is hinted at by their names. Stock Advisor is a more conservative stock picking service, focusing on larger and better known stocks that represent a more stable investment. In short, it offers up lower risk but potentially lower reward to go with it.

If after considering all this you decide that Stock Advisor is right for you, now is as good a time as ever to give it a try at 60% off the full price – or $79 for a year of full access instead of $199.

Rule Breakers, as the name will imply, steps a little outside the box and makes higher risk picks with much higher growth potential. These will generally be smaller cap stocks as well as companies that are lesser known and still going through an early growth phase.

Same Idea – Different Outputs

While the individual picks that each service puts out will be quite different, there are a few similarities in how the services work. Both put out 12 picks a year, an average of one per month, and there is overlap in the editorial team behind Stock Advisor and Rule Breakers.

That said, for any investor it always comes down to dollars and cents – which one delivered more? The short answer is that Rule Breakers generates higher returns, but the long answer is that, as is often the case, it’s complicated.

Rule Breakers’ picks resulted in bigger winners than Stock Advisors. Sounds great, except for one thing – it also produced bigger losers. That won’t exactly be a huge shock to anyone familiar with how high risk investing works.

The Clear (as mud) Winner

That makes Rule Breakers the clear winner if you have the cash to pursue all plays that they recommend, at the time that they recommend them. That part is easy. Where it gets more complicated is when you realize that average returns across all picks are not in any way a guarantee of your returns if you are only able to make some of the plays that they recommend. This can go in one of three directions:

1) you may get lucky and your limited number of plays will still follow the averages across all of their picks; or

2) you may get extremely lucky and end up picking more winners than losers in your smaller number of play, producing outsized positive returns; or

3) you may get unlucky and pick more losers than winners in your sample of picks, and see well below average returns.

Consider Your Own Circumstances

This means there are a few factors to consider when deciding between Motley Fool Stock Advisor vs Rule Breakers and determining which is the right Motley Fool service for you. If you are an investor who is comfortable with a high risk-high reward portfolio, by all means give consideration to Rule Breakers. If you won’t be able to sleep at night over sudden swings in your portfolio, the stability of Stock Advisor’s picks may be best for you.

Another thing to think about is your personal capacity – both in terms of time and cash. If you know for a fact that you have the flexibility to pursue each pick they put out, the law of averages shows Rule Breaker will do better for you. But in addition to having financial resources, you also need the finite resource of time – time to research and make sure you are comfortable with their higher risk picks, and time to execute trades when the recommendations come out. If you don’t want to be responsible for a lot of homework and following through on urgent buy signals, Stock Advisor could be a more reliable solution for you.

If you do opt for Rule Breakers, Motley Fool will help you stay on top of everything you need to know – in fact, the frequent “ALERTS” they send out are so excessive that some even consider them a drawback of the service.

The fortunate thing about picking between Motley Fool Stock Advisor vs. Rule Breakers is that you’re unlikely to end up with a lemon. Both services deliver good results, but the individual considerations outlined here will point you towards which one will give you the most personal benefit.