Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 2
Were he used an actual list of stock advisors recommendations from 3/11/2002 to 11/1/2019.
Holding all Stock Advisor Stocks from 3/02 to 11/19 and assuming a 0.3% friction on all buy and
sell transactions results in...

Well, that's obviously cherry picking the start-date and ignoring the previous atrocious performance of the stocks in the RB/RM portfolios during the tech bubble and implosion.

To reiterate what I said 2 years ago:

The Gardners were very clear in 1999 and prior that 'Price/valuation doesn't matter!' in the Rule Breaker portfolios. They thought that paying a ridiculous price for an RB now is okay, because several years later the stock would be worth even more.

Here's what RB staff said in spring 1999 [before your arrival]:
Unlike some of the other portfolios in Folly, the Rule Breaker method does not worry much about current valuation. For those who love finding the disparities between current price and intrinsic value, let me suggest the Boring portfolio. Here in the Rule Breaker portfolio we look at valuation with some sort of vague interest...

The Motley Fool's Rule Breakers, Rule Makers published 1999.
In the book, they tell investors not to pay attention to earnings statements for Rule Breakers. It makes the point that for good companies, you should buy the stocks at any price. There is no discussion of valuation ratios and company fundamentals in the book.

At year-end 1999, they had 75% of their Rule Breaker assets in 3 stocks: AOL, AMZN, and Celera Genomics, mostly in the first two:
AOL fell from $80 to $11 in 3 years.

Amazon went from over $110 to $6 in less than 2 years. They advised selling half in the $11-11.50 range in March 2001! Even though it had crashed to only 6% of the RB portfolio at this point.

They also said this: We don't think that [Amazon] can achieve worthwhile appreciation over the next 10 years or so...Yes, we could have sold it at $100, or $75...We don't worry much about market pricing, however."

Celera was acquired in 2011 at $8 after Rule Breaker bought it at $80 in 1999.

Their 5th biggest holding was At Home which went out of business less than 18 months later.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.