The Motley Fools Rule Breakers Rule Makers : The Foolish Guide To Picking Stocks [Paperback]

David Gardner (Author), Tom Gardner (Author)

Book Description

Series: Motley Fool | Publication Date: January 14, 2000

THE NEW YORK TIMES BESTSELLER

From the bestselling authors of The Motley Fool Investment Guide and its successful, savvy prequel, The Motley Fool's You Have More Than You Think, here's an engaging, humorous, and practical stock-picking guide, packed with Foolish insights, that caps off this invaluable personal finance trilogy from David and Tom Gardner.

The Motley Fool's Rule Breakers, Rule Makers presents the sophisticated, yet easy-to-understand stock-picking methods that have kept the Motley Fool portfolio beating the Standard & Poor's averages by more than 30 percent. The key is investing in small start-up companies that have historically offered the greatest investment returns (the "rule breakers") as well as huge companies that maintain legal monopolies in their fields (the "rule makers"). The Gardner brothers explain

* How to identify the best investments in today's public markets: the rule breakers and the rule makers

* The definition of a "tweener" -- a maturing rule breaker -- and how to detect the Tweener Death Rattle

* When to buy and when to sell, and how to manage your portfolio on a regular basis

In their first two books, the Fools got you started in investing and freed you from the fees and worries that Wall Street's Wise Men have been imposing on investors for decades. Now, by sharing their methods for picking rule breakers and rule makers, they guide you through a stock market that has seen company valuations soar to unprecedented heights and that promises to continue providing roller-coaster thrills. The Motley Fools are the ultimate companions to bring along for a safe, fun, and profitable ride.

Editorial Reviews

Amazon.com Review

For the past eight years, the U.S. stock market has been on a bull run the likes of which few have ever seen, making and breaking records almost every quarter. And for the last four of those years, David and Tom Gardner's self-described market-crushing stock portfolios have made the market's own incredible performance pale by comparison. In their third book, The Motley Fool's Rule Breakers, Rule Makers, the brothers reveal the methodology behind their stock-picking success, which is impressive. The Rule Breaker Portfolio (formerly known as the Fool Portfolio on their Web site) has risen some 650 percent since its inception in 1994, thanks to stocks such as America Online, McAfee, and Wal-Mart, while the Rule Maker Portfolio (formerly known as the Cash King Portfolio) has risen 440 percent on the backs of investments in Microsoft, Cisco Systems, and Intel. Fans of the Motley Fool, who with luck have prospered from the Gardners' timely advice, will no doubt love Rule Breakers, Rule Makers. The book is written in their usual humorous and self-congratulatory style--not only educational, but often aimed at making the pros on Wall Street wince, as they should. However, if you're new to the Motley Fool or to stock picking in general, you may do well by first considering one of their earlier books, You Have More Than You Think and The Motley Fool Investment Guide.

From Publishers Weekly

The sassy creators of the popular personal finance Web site and authors of the bestselling The Motley Fool Investment Guide (1997) now offer advice on how to evaluate the investment potential of specific companies. Here, the Gardners proffer five key principles by which to judge innovative "Rule Breaking" companies. Among them: "top dog-and-first-mover in an important emerging industry" (e.g., Amazon.com and Whole Foods Market); "sustainable advantage due to business momentum, patent protection, visionary leadership, or inept competitors" (Wal-Mart, Amgen); and "smart management and good backing" (Intuit). Yet, while the Gardners tell readers not to pay attention to analysts' expectations and earnings statements, they proceed to break their own rules, explaining that, as companies get more profitable and grow into "Rule Makers," investors should look to more traditional measurements such as sales-to-debt ratios, growth, etc. The book is certainly more fun than most stock-picking manuals, and the insights into company management are amusing. In discussing the poor performance of Boston Chicken, the authors write, "Rather than being inept, Boston Market wound up playing chicken with companies whose managers were smarter and more experienced hands at this game." However, novice investors may find the advice more difficult to follow than previous Motley Fool books. Author tour.
Copyright 1999 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.

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Product Details

• Paperback: 336 pages
• Publisher: Touchstone; First Edition edition (January 14, 2000)
• Language: English
• ISBN-10: 0684857170
• ISBN-13: 978-0684857176
• Product Dimensions: 8.4 x 5.6 x 0.8 inches
• Shipping Weight: 14.4 ounces (View shipping rates and policies)
• Average Customer Review: 3.7 out of 5 stars  See all reviews (82 customer reviews)
• Amazon Best Sellers Rank: #973,446 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

41 of 41 people found the following review helpful:

4.0 out of 5 stars Educational, Enriching, and Amusing, November 26, 1999

By 

David Olschki (Minneapolis, MN) - See all my reviews

This review is from: The MOTLEY FOOL'S RULE BREAKERS, RULE MAKERS: THE FOOLISH GUIDE TO PICKING STOCKS (Hardcover)

The Motley Fool awakened me to the fact that I can effectively manage and invest my money; Rule Breakers, Rule Makers gave me the confidence (and criteria) to choose the companies in which I want to invest. Especially commendable is Tom Gardner's Rule Makers section, which outlines easily understood and applied means by which the business world's "cream of the crop" can be identified-- I've already used it to good effect in my own portfolio. I wouldn't recommend this book to a beginning investor (start with the Gardners' earlier books), but the notion that the individual is capable of and better off managing their own investments is both radical and long overdue. Kudos to the Brothers Gardner.

Now, veering from my review, I'd like to humbly suggest that the reviewer immediately below me missed the point on Boston Chicken, and that the true point doesn't conflict with the Fool's thesis. What David Gardner was saying was that Boston Chicken's business model was flawed, that their main business was lending money to "area developers", who would open Boston Markets in their region; Boston Chicken would then take a slice of revenues and collect interest. However, all this model did was encourage the area developer to open more outlets than the region could support, so that they could generate revenue to pay off their debt. Thus, each Boston Market in the area was eating into the sales of every other Boston Market; same store sales dropped, and the overhead involved in having so many outlets buried the company. The more Boston Markets that were opened in each region, the closer the company came to bankruptcy. THAT was what David Gardner objected to about Boston Chicken, and that's what caused the company's demise. In no way is that model similar to Amazon.com or any other company put forth as a "Rule Breaker" in the book.

Fool on!

37 of 38 people found the following review helpful:

1.0 out of 5 stars When Time and the Market Catch Up With You, August 1, 2002

By 

"kauapea" - See all my reviews

This review is from: The Motley Fools Rule Breakers Rule Makers : The Foolish Guide To Picking Stocks (Paperback)

I was checking the ... site to see if this book was still being offered, and shocked when I found it still is. I have been a Gardner fool (note lack of capital) since 1997 and purchased and read this book when it came out as well as their other books before this one. The reason I am reviewing this book now is the brothers G have changed their investing philosophy and techniques making this book a dinosaur. Many of the stocks that made up the Rule Maker Portfolio have been and are being sold off because they no longer fit the new definition of a Rule Maker. While the Rule Breaker Portfolio has not been changed as much, it is still being carried by two stocks that the Gardners have held for a long time (... being one). The rest of the portfolio continues to meet or under perform the Market. The definitions for the Rule Breakers has always been more subjective, good luck if you try to find this type of stock on your own with the help of this book. It is very interesting that this strategy is thinly followed on their discussion boards. Regarding the Rule Makers, this book no longer reflects that failed strategy.

Because the Gardner Brothers no longer believe in most of the methods outlined in this book, I don't think they could recommend it. I personally can't recommend it, unless you want to read it as a history book, a reflection on stock picking from the late nineties.

As of April 2003 I felt compelled to add to this review; the Gardner Brothers have discontinued their Rule Maker/Rule Breaker online portfolios and for all intents the philosophies that this book presents. I think it is wrong for this book to be in publication and sold by Amazon when it is no longer represents what the authors believe. Please be strongly advised the authors are not practicing what is written in this book and haven't for some time. This is now only a history book, you should not buy it except for that reason.

32 of 33 people found the following review helpful:

5.0 out of 5 stars Stock Picking Quantified, May 10, 2000

By 

Donald Mitchell "Jesus Loves You!" (Thanks for Providing My Reviews over 109,000 Helpful Votes Globally) - See all my reviews
(VINE VOICE)    (HALL OF FAME REVIEWER)    (TOP 100 REVIEWER)   

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This review is from: The MOTLEY FOOL'S RULE BREAKERS, RULE MAKERS: THE FOOLISH GUIDE TO PICKING STOCKS (Hardcover)

Having been disappointed in the earlier investing books by the Gardner's (You Have More Than You Think and The Motley Fool Investment Guide), I found Rule Breakers, Rule Makers to be a solid and satisfying investment book. That was a pleasant surprise.

The first half of the book focuses on Rule Breakers, newer companies that have successfully established a new business model that will emerge as the new standard. The examples are pertinent and interesting to consider. The cases are turned into specific guidelines for you to consider in selecting stocks.

In a time when new business models are created much more frequently than ever before, this is a superb focus for an investment book. I strongly suggest you read and focus on what is said here to select the companies.

The Rule Maker section looks at more mature companies that have such market power that they can create a successful future for themselves. The main benefit is that it may be easier to sleep with a portfolio full of these stocks because they are typically not as volatile and as high priced.

I particularly liked the appendix where 12 companies (AOL, Cisco, Coca-Cola, Dell, Disney, Gap, Intel, Kmart, Microsoft, Nike, Pfizer, and Schering-Plough) are evaluated using the Gardner's methods. This makes it much easier to understand their concept.

People who love the flippant style of the Gardners may not love this book as much as I did. The book is more conservatively written and framed than the usual Motley Fool style.

But where money is concerned, clarity should be selected over humor. I think the Gardner's made the right decision.

If you are interested in stocks that may well grow faster than the market, I suggest this book as a solid way to evaluate the potential candidates. The book compares well to other books that look at this same question, being more specific and helpful.

Well done!