You’ve probably seen the ads. They’re everywhere. Usually, it’s a bright yellow or blue banner screaming about the "next Amazon" or a stock that’s about to "change everything." It’s easy to dismiss it as typical internet noise. But if you've spent more than five minutes in the investing world, you know the name David Gardner. When people ask what is Rule Breakers about, they aren't just asking about a newsletter subscription. They’re asking about a specific, often stressful, and occasionally lucrative philosophy of hunting for "disruptors" before the rest of Wall Street wakes up.
It’s high-stakes stuff.
David Gardner co-founded The Motley Fool with his brother Tom back in the early 90s. While Tom is often seen as the more conservative, "value" oriented investor, David is the one who wants to find the companies that look ridiculous today but own the world tomorrow. That’s the core of the Rule Breakers service. It’s a growth-stock strategy built on the idea that the safest way to invest is actually to embrace the things that look the riskiest to traditional analysts.
The Six Signs of a Rule Breaker
David Gardner didn't just pull these picks out of a hat. There’s a rigid, albeit quirky, framework he uses to identify these companies. To understand what is Rule Breakers about, you have to look at the six specific traits they hunt for. If a company doesn't tick these boxes, it’s not a Rule Breaker. Period.
First, they look for top-dog, first-mover companies in important, emerging industries. Think back to when Netflix was just mailing DVDs. People laughed. Blockbuster laughed. But Netflix was the first mover in a space that was clearly the future.
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Second—and this is the one that scares most people—they want companies with a sustainable advantage. This isn't just a patent. it’s often "moms and pops" brand power or a network effect so strong that unseating them feels impossible.
Third, the stock price needs to have strong past performance. Most investors want to "buy low." Rule Breakers actually prefers to buy stocks that are already going up. They believe winners keep winning. It’s counterintuitive. It feels wrong to buy a stock that’s already up 50% in a year, but that’s exactly what David Gardner does.
The Management Factor
Fourth, they demand excellent management and smart backing. They want founders who are still in the driver's seat. People like Jeff Bezos or Reed Hastings. Fifth, they want a strong consumer appeal. Does the product have "stickiness"? Do people love it?
Finally, the most controversial one: Gross overvaluation.
Seriously.
They actually look for stocks that the media says are "overvalued." Why? Because if everyone thinks a stock is too expensive, it means they don't yet understand its true potential. If the P/E ratio makes a traditional accountant faint, the Rule Breakers team starts getting interested.
Why This Isn't Your Grandfather's Portfolio
Most financial advisors will tell you to diversify and look for "margin of safety." They want you in index funds or blue-chip stocks like Johnson & Johnson. Rule Breakers is the polar opposite. It’s about asymmetric upside.
Imagine you invest $1,000 into ten different stocks. In a "safe" portfolio, you might hope they all go up 10%. In a Rule Breakers portfolio, the goal is different. You expect five of those stocks to do nothing. Two of them might actually go to zero. You lose everything on those. But—and this is the "but" that makes the strategy work—one or two of those stocks might go up 5,000%.
The math of Rule Breaking is simple: Your losses are capped at 100%, but your gains are theoretically infinite.
Real World Examples: The Good and the Ugly
Let’s talk about Tesla. In the early 2010s, Tesla was the ultimate Rule Breaker. It was "overvalued." The "experts" said it would go bankrupt. It had a visionary founder. It was a first-mover in EVs. If you followed the Rule Breakers philosophy, you bought in when it was "too expensive." You held through the volatility. You ignored the headlines about production hell.
But it’s not all sunshine.
Remember GoPro? Or Blue Apron? These were companies that fit many of the Rule Breaker criteria at one point. They were "disruptors." But they didn't have that "sustainable advantage." Competitors flooded the market, and the stocks crashed. When you ask what is Rule Breakers about, you have to acknowledge the stomach-churning volatility. You will see 50% drops in your portfolio. If you can't handle that, this isn't the strategy for you.
The Psychology of the "Hated" Stock
One of the most fascinating parts of the Rule Breakers ethos is the "Spiffy-Pop." This is a term David Gardner coined for when a stock's price grows more in a single day than your original cost basis.
Think about that.
If you bought Amazon at a split-adjusted price of $10, and one day the stock moves up $12, you've made more in 24 hours than your entire initial investment. That’s the "holy grail" of this strategy. But to get there, you have to be willing to look stupid for a long time.
Wall Street analysts are often focused on the next three months. They care about quarterly earnings beats. Rule Breakers doesn't care about the next three months. They care about the next ten years. This "time arbitrage" is their secret weapon. They are willing to wait while the rest of the market panics.
Misconceptions About the Service
A lot of people think Rule Breakers is about day trading. It’s not. It’s actually the opposite. It’s high-growth, long-term holding. You aren't "flipping" these stocks. You’re buying them and, in many cases, forgetting you own them for a decade.
Another misconception? That it’s only about tech. While tech dominates the list, they’ve picked retailers, biotech firms, and even beverage companies. If it disrupts an old way of doing things, it's fair game.
How to Actually Use the Rule Breakers Philosophy
So, you’re interested in the "Rule Breaker" way. How do you actually do it without losing your shirt?
First, you have to accept that you will be wrong. Often. The "batting average" for this kind of investing is surprisingly low. You don't need to be right 80% of the time. You only need to be right 20% of the time, provided your winners are massive.
- Don't bet the farm. This should be your "satellite" portfolio, not your "core." Keep your index funds. Put the "mad money" here.
- The 5-Year Rule. Never buy a Rule Breaker stock with money you need in the next five years. These stocks move like rollercoasters.
- Add on the way up. Instead of "averaging down" on losers, David Gardner often recommends "averaging up" on winners. If a company is performing well and the stock is rising, give them more of your capital.
- Ignore the "Price Target." Traditional analysts give stocks a price target. Rule Breakers generally hates this. If a company is truly changing the world, there is no "ceiling" on what it can be worth.
Final Practical Insights
Investing in disruptors is as much about temperament as it is about math. If you find yourself checking your brokerage account every hour, the Rule Breakers approach will give you an ulcer.
To succeed with this mindset, you need to cultivate a sense of "informed optimism." You are betting on the future. You are betting that humans will continue to innovate and that specific, visionary leaders can build things that didn't exist before.
If you want to start, look for the companies that make your friends tilt their heads and say, "That’s way too expensive," or "That will never work." Look for the leaders who are obsessed with their mission. And most importantly, prepare to be bored. The most successful Rule Breaker investors are the ones who buy great companies and then go take a very long nap.
Start by identifying one industry that is clearly changing—be it AI, synthetic biology, or fintech—and find the company that everyone loves to hate because it’s "disrupting" the status quo. Hold it for five years. That is the essence of being a Rule Breaker.
Check the leadership. If the founder is gone and a "suit" has taken over to "optimize margins," the Rule Breaker era might be over. Move on. Keep your eyes on the horizon, not the ticker tape.
Your Next Steps
- Audit your current portfolio: Identify if you have any "first movers" or if you're stuck in "legacy" companies that are being disrupted.
- Identify your "Risk Tolerance": Be honest. Can you handle a 30% drop in a week? If not, keep your Rule Breaker allocation under 5% of your total net worth.
- Research "Founder-Led" companies: Statistics consistently show that founder-led companies outperform the broader market. Start your search there.