Maybe it was my Catholic upbringing or my no-nonsense parents, but I've always been more of a rule follower than a rule breaker.

Why, then, am I such an enthusiastic advocate of our Motley Fool Rule Breakers service? Because the Rule Breakers strategy of identifying great companies early, then holding them for the long term, is the best way I know of earning huge returns. To see how, let's consider the instructive example of Starbucks (NASDAQ:SBUX) and the Three Stooges.

Nyuk , nyuk, 'bucks
Imagine it's the summer of 1992 and you've just received an inheritance of $100,000. You decide to invest in the stock market for the very first time. To better your chances, you buy a newsletter titled High Growth Investor 1992, and you allocate your money in the following stock picks from the newsletter:

  • Larry'
  • Curly's Computers
  • Moe's Tech
  • Starbucks

After one year, your four-stock portfolio has lost 16%. Three of your four stocks were from the rapidly growing technology sector, but they performed poorly nonetheless. The market punished them when they failed to deliver on their bold promises. Fortunately for you, the flier you took on that obscure coffee company out of Seattle prevented a total meltdown in your portfolio.

Company Investment Value after
1 Year
Larry' $25,000 $5,500 -78%
Curly's Computers $25,000 $10,000 -40%
Moe's Tech $25,000 $12,000 -48%
Starbucks $25,000 $56,500 126%
Overall $100,000 $84,000 -16%

A passive strategy of investing in the S&P 500 would have earned you a return of $9,000 (or 9%) during the same period, so you're understandably a bit disappointed with your initial foray into the markets. Maybe this whole investing thing isn't for you. You do, however, decide to hang in there.

And today, in August 2005, you are glad you did. Alas, three of your companies went bankrupt over the past 13 years, but one of those picks, Starbucks, has more than made up for the failure of the others.

Company Return June 1992
to August 2005
Overall %
Larry' 0 -100%
Curly's Computers 0 -100%
Moe's Tech 0 -100%
Starbucks $953,358 3,713%
Overall $953,358 853%

So Starbucks and the Three Stooges would have made you a millionaire over the past 13 years. Just like Larry Bird and four other guys putting Indiana State into the NCAA championship game back in 1979.

Swinging for the fences
At Motley Fool Rule Breakers, the mission is to find the next Starbucks, although that's hardly the only company that makes the point. Had you chosen Dell (NASDAQ:DELL) instead of Starbucks in your hypothetical portfolio, you would have earned $3,692,708. Amgen (NASDAQ:AMGN) instead of Starbucks? $288,730. And Harley-Davidson (NYSE:HDI) instead of Starbucks? An impressive $471,616.

We're not looking for value or dividends or turnarounds or whatever. In the words of David Gardner, the lead analyst for Rule Breakers, we're looking for the greatest companies of the current (evolving to next) generation.

This is a tall order. And there will be some stooges along the way. But the discovery of just one great company will make it all worth it. To paraphrase Mickey Mantle, we're not just looking to hit home runs in clutch situations; we're looking to hit home runs with every single swing of the bat.

Improving the odds
Isn't it all a matter of luck finding the next Microsoft before it becomes prohibitively expensive? No. We think that with hard work, you can discover the great companies long before the conventional wisdom gives them its blessing. David Gardner has a track record, having touted Yahoo! (NASDAQ:YHOO), McAfee (NYSE:MFE), and Nike (NYSE:NKE) when the experts were laughing at those companies.

But David's not doing this alone. We've assembled a first-class group of analysts to assist him in the hunt for the great ones. Longtime Fool and analyst Rick Munarriz is our in-house expert on emerging technologies and early adopters. Charly Travers covers the complex and potentially lucrative field of biotechnology. If you can't pronounce such words as merimepodib or ribavarin (let alone understand them), but want to profit from all of biotech's possibilities, Charly's your man. Finally, we have enlisted the expertise of Carl Wherrett and John Yelovich, who will keep us abreast of the latest in the nanotech universe. Like biotech, nanotech offers potentially outsized profits for those with a good dictionary and sound guidance.

So there they are, our five-man team. Five men, one goal ... OK, I'll stop with the sports cliches.

Keeping score
So far, our Rule Breakers recommendations are up 13.03% and are beating the S&P 500 by 9.53 percentage points since the first issue in October. One of our picks, an electronic exchange for stock trading, is up more than 90%. On the other hand, a promising biotech firm with a potential blockbuster in its pipeline is down 60%, having been negatively affected by the increasingly cautious regulatory environment.

We provide a scorecard in order to hold ourselves accountable. But picking Rule Breakers isn't about watching a scorecard, is it? How many Red Sox fans (just one last sports reference, I promise) remember that Johnny Damon batted .171 in the ALCS against the Yankees last fall? Now how many fans do you think remember the two homers (one of which was a grand slam) he hit in Game 7 of that series? Many of our selections, particularly in the biotech and nanotech areas, have a long-term investment time frame, and can be quite volatile in the short term.

CNBC in 2015
Ten years from now, a group of CNBC analysts will be sitting around talking about how this or that company defied all the odds and became a world-beater stock. And I'm confident that some of those world-beaters will have been identified long before by one of our Rule Breakers analysts. Curious to see what they are looking at now? Click here to take a risk-free 30-day trial to Rule Breakers. You are under no obligation. I promise.

The conventional wisdom crunches some numbers and then reports back that it is folly to predict the future. We disagree. Sure, no one can accurately see the future, but you can certainly make informed predictions about who will succeed and who will fail. Yes, we respect the numbers, but we also know that the present has much to teach us about the future. As the great poet William Wordsworth once wrote, "The child is the father of the man."

This article was originally published on Jan. 20, 2005. It has been updated.

John Reeves does not own shares of any company mentioned in this article. Dell is a Motley Fool Stock Advisor recommendation. The Motley Fool has adisclosure policy.