David Gardner: Will this be your favorite podcast of the year? And not just for
Rule Breaker Investing. I mean, will this be your favorite podcast of 2018? I can't say.
The heck, I'm going to go for it, I'm going to do my best, but I can't be sure.
But I will share with you my own feeling: this might be my favorite RBI podcast of the year.
Why? Well, one, it's mailbag. I always love responding to your thoughts and questions.
Two: it's all laced with poetry. To every one of the five mailbag items we cover this week,
I've attached a poem, works that have been previously featured throughout the year,
on this podcast, some of my favorite stuff. Creativity, both occasionally silly and sometimes stunning.
Yep, it's the last Rule Breaker Investing podcast for 2018,
your mailbag and our Poetry of Rule Breaker Investing, starting now.
This podcast is brought to you by absolutely nobody.
Yep, that's right. Nobody wanted to advertise during this busy week. This comes
out on Boxing Day, December 26th, the day after Christmas. I can imagine that our sponsors thought,
"Nobody's going to be listening on December 26th." So, in place of our normal sponsorship,
I just want to say thanks for listening! It is a really busy time of year.
But we've never missed a week in three-plus years of doing this podcast, fresh content
every week. We're definitely not skimping with the final podcast of 2018.
I'm not going to thank any sponsor this week, I'm going to thank YOU!
Welcome back to Rule Breaker Investing!
I'm delighted to have you joining with me here, the final week of 2018, a year of market ups and downs.
Since I'm taping this ahead of time – that's right,
my producer Rick Engdahl and I have prepared this for you, but we whipped this up some days back
so that we ourselves could be enjoying this holiday week with our families. In my case,
I'm on the way to London somewhere right around the time that you hear this podcast.
It's the final Wednesday of the month, and that means it's always mailbag here on
Rule Breaker Investing. It'll be a little bit of a shorter mailbag. I just have five items.
But for each of these items, as I mentioned at the top, I've tagged a poem. Now, these poems,
many of them are original. Some original to this podcast. Some written by me.
Some written by you. Dr. Seuss will be making an appearance during this podcast, as well,
so we've got real professionals as part of the Poetry of Rule Breaker Investing.
I'm really looking forward to going through these five and sharing the creativity with you.
Without further ado, let's get started. Rule Breaker mailbag item No. 1. This one
comes from one of my favorite listeners. Kurt Eliea, you've been a wonderful correspondent
over the years. You've shared out some of your own story and some of your thinking.
You've reflected on the podcasts. I know you're a faithful listener. Thanks a lot!
So, sure, I think it's a great way to close out the final episode of the year,
leading off with this mailbag item from you this week. "Dear David," Kurt writes, "as we weather
the current market turbulence, rather than focus on the short-term losses to my portfolio
over the past couple of weeks, I thought it would be more fun and useful to study the
factors that have allowed me to maintain a very satisfying internal rate of return, IRR,"
this is basically his annual performance, "of 15% since I started investing Foolishly
about 10 years ago." 15% annualized. Kurt says that's about 3%
better than the S&P. While 3% may not sound like much in a given year, when you do that
for 10 consecutive years, it starts to look really sweet. Kurt, congratulations!
That's spectacular! He goes on. "As I sliced and diced my portfolio,
I found that several of the investing practices I've learned from The Fool have served me
quite well." Kurt includes three lessons. Lesson one, this is one of the phrases of
the year for this podcast: winners win. Lesson one. "Back in my dark days of investing
before The Fool, I fancied myself a 'value investor.' I enjoy looking for good deals
in my regular purchasing decisions, so I figured it made sense to look for bargains on stocks too.
Sadly, this resulted in a 'water the weeds' investing strategy that led me into
many 'value traps.' Since switching to the Rule Breaking approach of watering my
flowers instead, I've been able to achieve the market-beating results noted above by
adding to my winners. "To test this, I calculated a ratio for
my winning stocks vs. my losing stocks that represented how many times I'd purchased
each stock. As you can see, my better-performing stocks are definitely the ones that I have
also made multiple purchases of more often." He includes a table. I'll summarize it briefly.
Kurt basically shows that stocks that have lost money for him, his bottom 20, he made
1.4 purchases. The exact opposite, stocks with over 100% total return, his top 16,
he'd made 2.3 purchases per stock. It was a pretty even gradient from the bottom to the top.
The better the stocks had done for him, the more purchases of the stock he'd made.
That is, indeed, very Rule Breaker-y of you, Kurt. Very Foolish!
Lesson No. 2, he said, "Pull the weeds, but do so with caution. Like you,
I don't sell stocks very often. When I do, it's usually only when I'm forced to buy a corporate
buyout or when I believe the facts of my original thesis around the business no longer hold true.
Over the years, I've been frustrated by the fact that even when I sell a company
for the right reasons, those stocks continue to rise after I sell them about twice as often as they drop."
I just have to insert here, isn't it wonderful,
by scoring yourself and what Kurt's doing, you can learn so much! You gain so much insight
through the act of reflection. It makes me happy, thinking back to last week's podcast,
where I reviewed two of our five-stock samplers. If you didn't get a chance to hear it,
I hope you'll go back and listen. We're constantly reviewing and reflecting,
not just on the numbers of our performance, good or bad, but specifically on the lessons that
we can learn. We get so much smarter by paying attention and keeping score. Anyway,
let's go right back to Kurt's letter. "So I decided to dig deeper into the numbers
to see if I should just stop selling altogether, and here's what I found. On average,
the stocks I've sold in my portfolio have risen a whopping 53% in price since I sold them.
So far, not good. But then it occurred to me that there were wide variations in terms
of how long it had been since I sold these stocks. So, I calculated the annualized movement
that each stock had made since the date that I sold it. I got 13%. Less painful, but still
pretty close to my long-term portfolio return of 15%." I'm going to abbreviate here.
Kurt then goes on to say that a fair amount of the selling was just in the past couple
of years, which have been really strong. Lesson three, I already spoiled this one.
Lesson three: keep score. Kurt concludes, "This whole exercise has reinforced for
me how important it was that I continue to keep track of all of my past investing decisions
and results so that I can objectively assess what is working and what is not, and hopefully
continue to learn to do more of the former, that is, the working part, over time.
Market volatility breeds emotion, but analysis of my investing statistics breeds rational thought
and learning. Thanks for all you've done and continue to do to make me and my fellow Fools
better investors. Fool on, Kurt Eliea." That note really spoke for itself.
I don't think I have to give much of response, Kurt. I'll just say, Fool on back to you! Thank you!
And you've just triggered our first bit of poetry from the Poetry of Rule Breaker Investing.
I shared this in an earlier episode.
It was Great Quotes Volume 9, which we didn't do too long ago. It's Dr. Seuss. It's the
opening of his book, McElligot's Pool, which was once suggested to me many years ago by
a fellow Fool, one of our members, at a member event. He said, "Have you ever read McElligot's Pool?"
And I think I said at the time, "No, I haven't." I've read Green Eggs and Ham.
Who hasn't read that? I've read -- and frankly, this is a pet peeve of mine, I never
really liked that much Oh, The Places You'll Go. I realize people love the book, and I'm sorry,
but it didn't work for me. But I generally love Dr. Seuss. But I'd not read McElligot's Pool.
And this member said, "You should." And then I did.
Here's the first stanza, page one. "Young man," laughed the farmer,
"you're sort of a fool. You'll never catch fish in McElligot's Pool."
I love that book! It starts right there
with somebody that I think is kind of like you and me. The first time we think about buying
stocks directly, the world, in the form, in this case, of a farmer, somebody older than
we are, presumably wiser, and they're laughing at us. "Young man," laughed the farmer,
"you're sort of a fool." Well, that really works for The Motley Fool.
That line fits really well with you and me, "You're sort of a fool. You'll never catch fish
in McElligot's Pool." You'll never beat the market, laughs the farmer.
And yet, we've found throughout the course of our 25 years as a business, and really
throughout my 52 years of life, and I've had some great exemplars like my father, who
beat the market before me, or how about Peter Lynch, whose books I read and loved,
or Warren Buffett, who's done a pretty good job beating the market – turns out, you can do it.
And it's not even that hard. Whether you're a little boy with a fishing rod,
or somebody a little bit more mature with a brokerage account, I encourage you
to take that risk. Don't listen to the farmers out there. Well, these kinds of farmers.
There's some really good farmers out there, too. Don't listen to people laughing at you, telling you
that this is a waste of time. It really is not. Dr. Seuss knew that, too.
Alright, mailbag item No. 2. Another great note. This one from Ryan Dabieri.
"Dear David, I've been following you, your brother, and Bill Mann since around 2000. The collective Motley Fool
advice came at the perfect time in my life, early 20s back then,
and it's served me well. I have a long-term and consistent investing temperament. I don't get rattled
by the daily business news cycle. I've made it a habit to live below my means. I'm doing
my best to pass this mentality on to my two sons, who are now five and seven.
"The story about your dad giving you your entire inheritance when you came of age struck
a chord with me." I've told that story before. I'm sure I'll tell it again on
this podcast. It was an incredible gift that he gave us at the age of 18 when he said,
"Here you go, David, Tom, and Mackey," our sister. "Here you go. This is all you're
ever getting from me. Anything that I have left when I die," fortunately he hasn't yet,
"goes to your kids. It skips a generation. Be fruitful, multiply, don't screw up this portfolio."
We sure tried not to. It was an incredible gift. That's what Ryan's referring to.
It goes on. "I am blessed with the means
to be able to follow that example so that my sons can start their adulthood debt-free
and with some seed money that they could use to start a business, put down toward a house, etc.
Not only would this provide them options that I never had, but it also would serve
as a constant reminder for me to do my best to encourage them to be good, responsible,
self-sufficient young men who will be properly prepared for this gift and adulthood.
And, if they blow some of it on an expensive sports car, well, I know at least one other who was
able to recover from this sort of indulgent and fiscally irresponsible decision ;)"
He is, indeed, referring to me, and my own admission that one of the first ways that
I spent money was that I bought a sports car in college. While I don't have any regrets
about it, it certainly wasn't the best mathematical move for me. So, cheers and touché, Ryan!
He closes, "If we wanted to do something similar to what your dad did for you and Tom,
what would you say is the appropriate amount in today's dollars? I figure I have about
15 years. How would you suggest I start building up their early inheritance?"
Here's my response, Ryan. It's a simple one. As much as humanly possible,
I would go for it, I would go all out. Now, I realize, some people will be thinking,
"That's not right for me." Or, "That's not right for my family or my kids." We used to have
a wills and estates guy who wanted us to reduce what we were going to leave for our kids, because
he was reflecting on his own kids. He basically was saying, with a smile, things like,
"I don't even trust them with that money." That was his attitude, and I totally understand.
I'm sure that worked for him. That was right for him and his kids.
Ryan, you're going to know best what's really right for you. At least in my case,
on behalf of my kids, as my dad did for me, I would try to save as much as I can and put
it toward their accounts and invest it as well as you can. I'd try to grow it up into
the biggest, most wonderful thing that you can. Admittedly, again, this comes from me.
Part of the reason we were able to start The Motley Fool is because we had resources.
We didn't have to go out and borrow money to start a business. We didn't have to sell off
all of our business to a venture capitalist in year one or two of our company. We benefited
in measurably from the generosity and vision of our dad.
In closing, everybody's different. I truly believe you're going to make the best decision
for your kids. I don't think there's any single number or magic number that would work
for every child in the world where I could give an answer to that question that anybody
could take away and use. My own attitude you just heard, I would say, go for it.
You've put me in mind of something I want to share as our second offering of Rule Breaker Investing Poetry.
Of the five I'll be sharing throughout this podcast, this is the only
one that comes from me. There's a little backstory that I want to share with you.
Again, I have previously shared this on this podcast, but it was a while ago now. As I thought about
what poetry I wanted to feature, this one came back to me. Here it is.
First of all, let me say that it's slam poetry. For anybody who's ever been to a
poetry slam -- I've been to one too, but just one. The one that I happen to have attended
was at the Conscious Capitalism CEO Summit a couple of years back. The person who was
coaching us is actually a very famous slam poet. His actual name is Adam, but his stage
name is IN-Q. I'm going to share with you in just a sec what he said to us to inspire
us to write a slam poem that day, which I will shortly be sharing.
Before I do that, I want to give you a hot tip. If you want to be inspired,
if you want to spend three or four minutes sometime this holiday season on YouTube, and be maybe
a little bit blown away, maybe with a loved one or your family around, I would highly
recommend that you just google IN-Q YouTube. There, you'll find yourself on a YouTube
page with some of the work that he's put up on YouTube. Three, four minute videos.
Two in particular. One, A Poem About Saying Yes. The second is entitled, The Only Reason We're Alive.
The first of those, I should mention,
has about 48,000 views on YouTube, which is a lot more views than I get for my typical podcast
that goes up on YouTube. Good job, IN-Q! That one's pretty great! And it really is.
You're going to enjoy A Poem About Saying Yes. But, the second one has two million views on YouTube.
The Only Reason We're Alive. While it might be a slightly better poem, I'm not even
sure that it's better than the first, it happens to be animated. It's a voiceover
as he reads it. I think what that proves to us is that if you add a little bit of animation
and turn something into a Pixar-like thing, you're going to get two million views on
YouTube, whereas if you just do it yourself on stage at a TEDx talk, you're only going
to get 48,000 views. Both are great! I recommend them to you.
So, what did IN-Q say to us that day? We had about 20 minutes to write a poem. But just before,
he said, "Here's the thing. When you write your poem, you're going to have
20 minutes, and I want you to think about a time where you walked through a door,
something happened, and when you walked back through that door, you were changed forever."
He said, "It's not going to be something that probably happened at the office. I mean,
it could be, but think a little bit bigger. Think outside of your normal space."
So, that's what about 60 or 70 of us did over the course of the next 20 or 25 minutes.
I'm going to tell you, a few of us got up and read our poems. I was not one of them.
I'm certainly raising my hand, but I knew that I could share it one day with you,
my Rule Breaker Investing listeners. So, why be selfish and try to get there in front of the mic in
front of 70 others? But the three people who stepped up,
we had a gentleman who had immigrated to this country and was sharing how he went from a place that
was cold, where he'd been from, and flew right to Houston, where he was going to be living,
and what a different life that was. It was a great immigrant tale. Then, we had
the story of a woman who had lost her voice. She woke up one day and had a malady that
caused her to lose her voice for two years of her life. She reflected, after about
20 minutes of poetry slamming on how that felt, and how hard it was. Then, we had another woman.
This is really going to an emotional place. The poem she slammed down was her lying
in bed next to her second husband, reflecting on the incredibly difficult circumstance of
having to make the decision to pull the plug a decade or so before on her first husband.
You can only imagine how emotional that whole poetry slam coaching session was. It was almost
like one part group therapy and one part extreme positivity around the poems and expressions
that people came up with. Now, I want to share with you my short poetry
slam about a door that I once went through, and when I came back through that door,
I emerged changed forever. It's called, Why Did Everything Stop That Day?
Why did everything stop that day? Because it did. Why did everything stop that day?
In a way, I could say that never, no way, had something like this happened before to me.
What is more, I was sure that it would happen again. When? I didn't know.
But it did. Everything stopped that day. My way of doing what I did before. Selfishness stopped.
Well, some of it. And that was good. As was some of my ambition stopped. Stopping,
dropping to a point where something in me said, I don't care. I don't care about the where of
where we'll live. I don't care about the who of who you'll be. You'll be you. And that is
enough for me. Stopped. Stopped worrying when you'll talk or walk or balk at a boy.
Your first word, your first step, your first day, because everything stopped the day you were born, daughter.
And now, now everything starts. Alright. Not a bad experience, that poetry
slam session. Sometimes I wonder how much better we could have done if we'd spent more
time at it. 25 minutes. But then I think, maybe poetry that comes fast and furious
is the whole idea of a poetry slam. Thanks again to IN-Q. I highly recommend those YouTube videos
Rule Breaker mailbag item No. 3.
This one comes from Zach Thielen. Some people might pronounce it differently. Maybe I should.
But I have a friend, my longtime Motley Fool Rule Breakers friend and analyst, Carl Thiel.
Then, there's Peter Thiel. And they both spell it like that. So, I'll pronounce it like their names.
Zach, thanks for writing this note. "Hello, David! I've been a listener to this podcast
for years with hopes of becoming more and more 'Foolish.' Even though I've listened
for years, I've just recently reached a point in my life in which I'm able to actively invest.
I graduated from college last May. Now with a full time job, I've been able to save up
some money. I started investing in late July of this year, spreading $5,000 across 10 companies or so
using the Robinhood app. Since then, I've been adding money here and there as
I've seen better deals come about. However, the market just keeps on dropping. To date,
I have a total of $11,500 invested with about a 10% drop in value.
"In these last few months, I've learned that there are good times to invest, and there
are clearly better times to invest. Unfortunately, during this time, I've been breaking the rules
of Rule Breaker Investing by adding to my losers, because, well, almost all of my stocks are losers.
And yet, I still believe they are good companies.
"All in all, my question for you then is: when the entire market seems to be dropping
over a long period of time, should we as investors hold for a certain period of time to see how
things play out or continue to buy these great companies at discounted prices? In my experience,
it's not helped to continue to buy in these last few months. But it's gotten my price
per share lower, which is good if and when the market does go up. Thanks for all the
knowledge and wisdom that you share. Fool on, Zach."
Zach, thank you for that note! I'm delighted, first of all, that you've been listening for years,
following along, getting more and more Foolish, graduating college this past May. Outstanding.
I'm also delighted to hear that you landed a job. I bet it's a good job.
I bet your employer's happy that he or she found you. I'm delighted to think that you've already
been saving thousands of dollars and putting those toward companies, I hope some of the
ones that we typically talk about in Rule Breaker Investing. Or, maybe you're a subscriber
to Motley Fool Stock Advisor or Rule Breakers. I hope you own those kinds of companies,
ones that are built to last, ones that innovate, ones that do something great in this world.
That's what we're all about and I've always been about in 25 years of investing right
out front, with anybody who wants to tap in anywhere around the world to our website and
see what we think and what we're doing. It is obviously unfortunate that you started
right as the market started down. If you got to hear last week's podcast, when I was reviewing
some of our five-stock samplers, happy to say they've still been good investments.
But almost every one of those stocks was dramatically higher just a few months ago. We've seen
some of the great companies like Nvidia get cut in half in just a couple of months.
It's obviously bad luck, bad timing, that you were starting your investment career in the teeth
of a market drop. But as I think you already know, if you fast-forward, looking back to today,
you're going to be awfully happy that you rewound your DVR back to where we are here
at the end of 2018. I suspect you're getting some pretty good prices for some of
these companies that you're continuing to buy because you're still saving and you're
still investing more. I'm pretty sure you know about this if you've
listened to podcast for years, which you said you have. I'm pretty sure you know that
we believe in making a lifetime commitment to being an investor. Not exiting the market,
not jumping back in, but saving, as you're doing, with every salary check, and putting
some of that back toward more stocks, sometimes more of the same stocks. We'll talk about
that in a sec. Sometimes more new stocks. Building a portfolio for life.
You're going to be really happy that you started this year. It's tough how that first $11,500 has performed
for you, looking back over the last few months. But I know that you know that the market goes
up over time, and you will dramatically benefit from the effort that you're making now.
The heart of your question is, we don't like to add to losers. I just shared Kurt Eliea's note,
it's all about continually adding to your winners. But when you've only had a losing period,
that's what you've just lived through, then of course I think it's fine for you to
continue to add to stocks that you believe in if you started positions and want to keep
filling them out. I personally think a good aspirational goal
is to get from zero stocks, which is where we all start as new investors, to 15 stocks
as fast as possible. You might have already done that. If you only have eight stocks so far,
I might suggest that with your next $1,000, you buy a ninth stock. Then, with your next
$1,000 after that, buy a 10th stock. I like a minimum portfolio of 15 stocks. As I mentioned
many times before, my portfolio hovers more around 50 stocks at this point in my life.
I know you know the Gardner-Kretzmann Continuum, which gives you a guide, gives us all a guide,
to roughly how many stocks you might want to think about owning at different stages
of your life. To close, given the performance of the stock market,
where pretty much everything has just been down, that's not the "add to losers"
mistake we're talking about on this podcast and at The Motley Fool. The losers by that
definition are typically companies that are failing in some way, shape, or form.
They're hitting new 52-week lows while the rest of the market isn't. But we happen to be living
right now in a market where everything's hitting 52-week lows at the same time. So, I think
it's fine, again, to continue to add to companies, assuming that you're adding to them because
you like their businesses, you believe in their prospects, and whether or not they had
a good or bad earnings report this quarter, you expect better things in the next three
to five years. We're talking about the business performance itself. The stock market comes
and goes up and down, but it's the business performers, that's the winning we're often
talking about with adding to your winners. And yes, indeed, usually winning businesses equals
winning stocks over any meaningful period of time. So, adding to winners almost means
the same thing. I hope I've spoken properly to your question.
It's a good nuanced question. Most of all, I wish you great encouragement here as we
enter 2019 together. Zach, that puts me in mind of another bit
of poetry. This is poem No. 3 for our podcast this week. This one's a short one. It came
a short while ago. It was on a mailbag, written by a fellow, I think a young investor.
His name was Aiden. I think you'll appreciate hearing this poem again.
'Til I am old I will buy and hold.
It may seem quite boring but what fun it is scoring
and not much have I ever sold. The market may change
and others may sell, but I have held on
and I have done well. It's hard for any of us to have done that
well in the last few months of investing. What I really appreciate about Aiden's brief
poem there, 'Til I Am Old, is it almost sounds Seuss-ian. It almost sounds like another page
later in McElligot's Pool. The markets may change, others may sell, but I have held on
and I have done well. I trust that you and that young fellow with a fishing rod in McElligot's Pool
are birds of a feather. Thank you, Aiden, and thank you, Zach, for your note!
I try not to play favorites on this show. But this of the five letters might be my favorite.
Why do I love what I'm about to share with you? It'll become evident very quickly,
but I'll preview it by saying, somebody created something. Some of the poems I'm sharing
with you on the show were creations from our listeners, who sent in their poetry and we got to share it out.
But this is a special creation of an entirely different nature.
This note from Clay McKinney begins, "Hi, Rick," that's my producer, Rick. "David," that's me,
"and Matt Argersinger," who is my longtime Market Cap Game Show sidekick.
Although, in recent times -- in fact, just a few weeks ago -- I welcomed a new
guest star to the show, Emily Flippen, who really did star. Anyway.
"Hi, Rick, David, and Matt Argersinger. I made an online version of the Market Cap Game Show
and I just posted it at marketcapgameshow.com." Pause, right there. First of all, Clay, you rock!
You actually created the software version of this game, and you bought the URL marketcapgameshow.com.
I absolutely love it. Let's return to Clay's text here.
"It has an easy mode for us mortals, a hard mode that follows the rules on the show, stats
[my batting average is less than 200, sadly], and a way to customize the list of stocks
on which it quizzes you. On the About page, I give you credit for making up the game,
and I direct users to the Rule Breakers podcast and the newsletter. Thank you so much for
the inspiration, for the podcast, and for all that extra money in my retirement account
I have from listening to you these past few years. Clay McKinney."
Clay, it goes without a saying, you rock. I've already played the game. I went to your
lovely site. I encourage every listener to go to marketcapgameshow.com and play along.
I went right to hard mode. Easy mode gives some big benchmark numbers like, if it's a
$100 million or $1 billion or $100 billion? Closest gets it. But the hard mode,
that's the heart and soul of what we do on the show. That's where you have to guess the market
cap unaided within 20% either way. Clay, you made that the hard mode. I appreciate it!
I went right to hard mode because that's the only way I'll play this game. You randomized
a stock for me, which is I think how this works, a company I had never heard, Pluralsight,
ticker PS. You even included a little snippet about what the company does. It says,
"Pluralsight Inc. operates as an enterprise software company.
The firm offers a platform that provides technology
skill development solutions mainly by providing various courses for related to technology."
That's a typo, I'm not sure where this came from. "Providing various courses for related
to technology, which include mobile security, IT, and data." I know that's not Clay's fault,
he's just pulling somebody else's slightly miswritten and pretty hazy, I would say non-helpful
business description. I found that a lot of techspeak and business speak that didn't really help.
So, I just thought, "Pluralsight, hmm. Enterprise software company."
So I just tapped in $3.5B. I knew nothing about this company.
And I'm happy to say, winner winner chicken dinner, current market cap is -- you actually give
the full number -- $3,226,844,040. And I haven't even hit the next stock button to go to the
next one, because I might want to immortalize myself as the 1,000 hitter, the guy who went
one for one. There are a few of these, aren't there, in the real baseball encyclopedia?
There might or might not be. At some point in the last 100-plus years of American baseball,
presumably one person got just one at bat and maybe just got one hit.
But I think everyone knows, I'm the game show host for this game, so I'm not expecting
to be the talented athlete that Emily Flippen or Matt Argersinger or many of our listeners are.
I'm just the host. I love being one for one with a company that I'd never heard of.
Half-joking aside, Clay, great job! Really fun! You've created fun that I can now share out
too many of our listeners through this podcast, in the same way that I shared out
IN-Q's URL and YouTube videos earlier. I'm sharing out equally Clay McKinney, who for me,
stands shoulder-to-shoulder with IN-Q in terms of creating greatness on the internet.
marketcapgameshow.com. My 16th favorite website. As I thought about what poetry to include
right after mailbag item No. 4, I thought, yeah, listeners creating stuff for this podcast.
marketcapgameshow.com, now the immortalized Clay McKinney.
How about Andrew vonderLuft,
who earlier this year, knowing my love of language and wordplay, wrote a poem and send it to us
called Word Play. I'm about to read it. But let me say before I do that part of
the beauty of this poem are the puns and the changes in spelling which can't fully be appreciated
by you merely listening to me read this. So, I'm going to ask my friend and producer Rick Engdahl
to include that in our Twitter feed on @RBIPodcast, and just paste it in
so you can see an image and fully appreciate Andrew's poem, Word Play.
With homonymic play I pray you hear
And find if here I write what's right or no. I know in hunter's quest
The deer is dear Not so the useless knot
For those who sew.
Pronunciation plays another game When route may rhyme with either out or suit
Though sounds conflict they signify the same For dialect is seldom absolute.
The play of ambiguity is deaf
When ambidextrous options are in sight The one not chosen on your right is left
But what you choose is on your left and right.
The playfulness of words is quite the school To make of me more of a Motley Fool.
Thank you, Andrew! And finally, Rule Breaker mailbag item No. 5.
This one comes from Wade Cherry in relatively nearby Reston, Virginia. Hello, neighbor!
"You mentioned at one point relating sports and games to investing. As I was thinking
about what you said, specifically about poker, as that's a game I enjoy, I do think there's
a good lesson to be gleaned from the game of poker. As poker is, at its core, a game
of statistics, I like to think about investing similarly. Like placing a bet and not knowing
what the future holds, buying a company is analogous. While you don't know what will happen,
your analysis has convinced you that your play/ investment is, to use a poker term,
a positive expected value. "But even if your analysis is correct,
and you have a high percentage chance of making money/ winning, you may actually lose money.
Just because you lose money on an investment, you should keep in mind that your investment
may still have been the correct decision at the time when you purchased shares.
While you should re-analyze investment losses, don't convince yourself that you must find your
'mistake.' It may never have been a mistake. I believe this is a good lesson to remember."
I'm going to pause there for a sec before going to the end and say, that was a great
point that Peter Lynch made in his book, One Up on Wall Street. He said, just because a
stock went up doesn't necessarily always mean that you had it right. You may have been a
little lucky. And just because a stock went down doesn't mean you had it wrong. For me,
there's always going to be a balance between agreeing with Lynch on that point, while at
the same time, on the other side, making sure that we really do pay attention to outcomes
and respect them. In a broad sense, if it went up, you were right. If it went down,
you were wrong. But in a more subtle and nuanced and true sense, sometimes when we're right,
we didn't necessarily deserve to be right, and sometimes when we're wrong, we didn't
deserve to be wrong. So, great point, Wade! He goes on, "In closing, I've listened to
every RBI episode since day one, and feel that not only do I have a better grasp of investing,
but a better worldview. It's wonderful to be able to listen to you without any political undertones,
something that seems increasingly rare nowadays. I love how you sprinkle literary comments,
and naturally, some Shakespeare into the mix. I must say that ironically,
some of my favorite podcasts have been the ones that aren't about investing. I'm a gamer,
so I enjoy listening to your Christmas board game specials. But your podcast a few years ago
about American values may have been the best. I still remember the values: liberty, enterprise,
justice, resilience, and generosity. "I don't have a question for you, I'm simply
happy to be listening and enjoying your podcast. Cheers, and thank you for suffering a Fool gladly."
From one of my new besties, Wade Cherry.
Well, as I prepare my final bit of poetry to end this podcast, I just want to say,
whether it was the omega of Wade Cherry or the alpha of Kurt Eliea, or everyone in between,
and the many who wrote in and I couldn't feature this podcast, and the many who never do write in,
you just listen, and you learn, I hope, and you share it out. And I hope you act,
and you act better as a consequence of the work that we do on this podcast.
Before I close with what I try to present on this podcast every year, my reading of
another user-submitted poem, Why We Invest, I want to make sure that I thank my producer,
Rick Engdahl. He's an outstanding resource. He's done pretty much every single one of
these podcasts every week. Occasionally, we'll have somebody else talented sub in.
I'm almost embarrassed that I just called Rick a resource, because that's not really how I think about him.
I think about Rick as a friend and somebody who's been at The Motley Fool, it seems like,
almost as long as I have, and somebody with multiple talents, whether he's thinking about
how to do The Motley Fool brand better, how to add fun, he's a musician, he's a great
photographer, he does photo shoots of me; or produce most of these podcasts.
While I don't spend time doing credits and rolling the credits every podcast like some others do,
I want Rick to know, and I know that he's hearing me right now, that I deeply appreciate
his efforts every week to bring Rule Breaker Investing to all of you.
One little admission on my part, which I occasionally mention just talking out the side of my mouth
at a member event, letting a few members know, I constantly start and stop during this podcast.
I do things like this, "Three, two, one. Let's take it again, Rick," because I want to try
to hit the [...] every single time. I think it just leads to a better podcast.
But sometimes, people overrate my eloquence. They think that I speak continuously in full
sentences without ever stopping. The truth is, every single week, I start and stop
a few dozen times. Part of what Rick does is, he pulls out all those starts and stops.
I think one podcast, maybe two and a half years ago, I was listening to it after having done it,
and I heard myself live on that podcast go, "Three, two, one," because Rick,
once out of 10,000 times missed me doing that. And it was hilarious to me to hear, broadcasting
to you on this podcast, I just go "Three, two, one," and restart, right in the middle
of that one podcast. That's part of what Rick does every week. He takes out all my starts
and stops to create the best end product, which is what I'm always shooting for for you.
Three, two, one, go! Every year at this time, I share with you
one of my favorite haikus. It's not just a three-liner, though. It's an extended form
of haiku. It's one haiku after another in stanzas. It was submitted by longtime
Motley Fool member, actually a family -- in fact, I do believe it's a pair of two sisters who
just took the appellation within our community Captain Haiku. Before I launch into their haiku,
Why We Invest, I'll just mention that they were reacting to something that I had
written before, one of the introductions to one of our monthly newsletters at the time,
I think it was Rule Breakers. It was my Why We Invest column. I'm going to just read the
part that they're referencing, pause, and then go right into their poem. And this is
how we're closing out, so let me just say right now, let me be the first to say
Happy New Year, and thanks a lot for listening! Let's have a great year in 2019!
OK, here's what I wrote. I wrote, "Here's why we invest. For our children and grandchildren.
Because our parents and grandparents did and made our lives so much better. Because every
dollar we invest supports the companies and businesses we admire. Because we love and
celebrate ownership and we believe this world will be far stronger for more owners,
not more renters. Because the academics are wrong. Because with Arthur O'Shaughnessy and his ode,
we are the music makers, and we are the dreamers of dreams, investing as our instrument
and making dreams come true -- sorry, Disney -- is a very real Motley Fool goal.
I see it happened with amazing testimonials, bull market or no, every day on our discussion boards."
And now, here comes Captain Haiku.
Sorry, can't truncate. Each word has import and heart.
Not selfish, we build. Many years gone by
hard work, hard times. Good times, too. Haiku needs little.
Why do we invest? So that our hard work endures
beyond our short years. So that our children
start their journeys on a hill and see the mountain.
We build battlements that endure, shelter others
from the worst of storms. We launch sturdy ships,
we will not see the far shore but have no regrets.
We are a small part of all we set in motion
and thus, we invest. As always, people on this program may have
interest in the stocks they talk about, and The Motley Fool may have formal recommendations
for or against, so don't buy or sell stocks based solely on what you hear. Learn more
about Rule Breaker Investing at rbi.fool.com.
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