In this episode of Rule Breaker Investing: November Mailbag, Motley Fool co-founder David Gardner shares some listeners’ stories about how they started their investment journey, the lessons they’ve learned, and the great milestones they’ve achieved.
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This video was recorded on November 25 , 2020.
David Gardner: What do you have to be grateful for? Well, if you’re in the U.S., that’s very much on your mind this week, as in a physically distanced, and no doubt reduced way, you celebrate our holiday of Thanksgiving. And while the celebrations will be smaller, they need not be any less grateful, or energetic, or reflective.
What do you have to be grateful for this week wherever you are, holiday or not? Well, I’m grateful that every month I receive wonderful questions and stories of inspiration from you, my fellow Fools, even sometimes, like this time, maybe a poem. And I get to share it all back out into a monthly mailbag episode.
Only on this week’s Rule Breaker Investing.
Welcome back to Rule Breaker Investing, a delight to have you join me this week, probably a little bit of a shorter show, as boy! Things are busy. Rick Engdahl, my Producer, and I are trying to get a lot of things done before trying to take a little bit of a holiday, but once again, I have some wonderful questions and stories to share, and, yes, as I mentioned at the top, a poem. This was a month of 5-Stock Sampler reviews. 5 Stocks for Conscious Capitalism, 5 Stocks That Got Trouble, 5 Stocks That Let You Eat Cake, which we just closed out for good last week. I also picked 5 Stocks That Will Press On on Nov. 11 podcast, if you miss those five, they’re off to a good start.
Well, as is my want, I like to look at Twitter and kick off with some hot takes for our mailbag from things seen on Twitter. I want to thank Fredtoberfest @Fredtoberfest for this note. “Thank you @RBIPodcast for letting me know about the excellent Millionacres podcast. And for shame on … ” and then he calls out all of our podcasts by Twitter address, ” … for shame on @MotleyFoolMoney @TheMotleyFoolAu [laughs] @MarketFoolery @AnswersPodcast for not promoting it and making me start nine episodes down. #FoolOn #ALLfoolpodcastsaregreat.”
Well, that’s really nice. Thank you so much @Fredtoberfest. And I have to admit, I myself did not know that we had the Millionacres podcast going until I got to point it out [laughs] on this show as it was pointed out to me. So, I’m glad that you’re enjoying it, I’m sorry you started nine down; you’ve got some time to catch up, I hope.
This next one from @JoshKovoor “@DavidGFool listening to your dulcet tones again on this week’s @RBIPodcast — enjoyed the Coolidge quote –” that, of course, 5 Stocks That Press On, that’s the great Calvin Coolidge quote about pressing on, ” … any inclination … ” Josh says, ” … to publish “A Foolish Book of Quotes”? If so, how do I pre-order??”
Well, that has to be tongue-in-cheek, and I really do appreciate the sentiment, Josh. I will let you know that in some ways you can listen to a lot more of it, right, because I think I’ve done now 12 episodes, 12 in my ongoing series of great quotations. So, Great Quotes, I think we’ve done 12 such podcasts. If you Google “@RBIPodcast Great Quotes” you’re going to find a bunch of them. And so, you’ve got me speaking to five quotes in each of those episodes. And of course, there are some of my favorite sentiments and also some of the deepest thoughts that I’ve come across and some silliness and foolishness thrown in as well. So, I don’t think there’ll be a Foolish book of quotes anytime soon, but darn it, you’ve got a lot of content, 12 past Great Quotes podcasts, and I stand by every one of them.
Next one, @SantiSketch, “I get jittery from excitement when a new “campfire stories” episode drops. What an insightful podcast, thanks for sharing as always!”
Well, Santi, I’m always going to try to feature the power of stories in this podcast, because as I’ve often said and as we covered this month, every stock has a story. On the face of it, you’re just looking at a graph, if you like, and you see the ups-and-downs, but if you’ve lived those ups-and-downs and if you’ve gotten to know your company, you can explain, in retrospect, what was happening, and you can give a narrative tilt to it and make it didactic, make it morally instructive, make it helpful for others, maybe kids, as you’re teaching them how to invest. So, there are stories laced in all aspects of the stock market and businesses, and that’s something we love doing here on Rule Breaker Investing.
Matt Rantala @Sisu_Runner says, “Thanks for sharing,” speaking of stock stories, he says, “my stock story starts on February 20th, 2019 (two days before yours) when @MFIndustryFocus podcast discussed NVCR’s [Novocure] unique brain cancer treatment.” Now, Novocure’s ticker symbol is NVCR, it is a Rule Breaker stock pick. “Same day my daughter was diagnosed w/ brain tumor. It was successfully removed @childrensmn … ” that’s Children’s Minnesota, that’s a hospital where Matt lives presumably, ” … & NVCR up 130% since I bought it in July 2019. #blessed.”
Well, that’s probably my favorite thing I saw on Twitter this month. Thank you very much, Matt. What a hard moment and what a wonderful outcome. Congratulations to you and yours!
Next one up, TeddyTalks @TeddyBeingTeddy says, “@DavidGFool, what’s the term for daily price increase of 10X over your cost basis? TSLA TE$LA.” Then he includes the ticker symbol TSLA, which I think a lot of us will recognize as Tesla. Oh, my golly! Teddy, congratulations! And the answer, Sir, is that’s called a spiffy 10-pop. So, a spiffy-pop is when a stock rises more in a single day than your cost basis, than you paid for it way back when, that’s a great moment when you do that for the first time and we’ve had a bunch of those in the past month or so with some amazing stock, I was thinking about The Trade Desk in particular; have at least one note about that this week. But with spiffy-pops in the air, I always say, you never forget your first, but once you start gaining in a single day a multiple of your cost basis. Let’s say, you paid $17 for a stock and it just went from $100 to $134, and so that’s up $34/share, that’s twice your $17 cost basis, that’s called a spiffy 2-pop, and it goes up from there, spiffy 3-pop, spiffy 4-pop. You had a spiffy 10-pop. Congratulations, Sir!
And it is an eyeopener for many of us who may never have understood that such a thing could happen, and yes, it does. It does happen, we’ve done it a bunch of times in Motley Fool services, and more importantly, we want our members to do it. It’s one thing for us to show it on our scorecard, but we don’t make our services for our scorecard, we make our services for you to drive real results in your life, and that is just a fantastic move. Congratulations, Teddy!
We had a lot of fun on Twitter this month, I’m going to do two more. This one, speaking of fun, this is from Mitch Dingwell @Dingwell88. Now, Mitch, at various points here, I wondered if I was being trolled, i.e., if you were putting me on. But after a third reading, I think this is all real. So, let’s do it. “Hey, RBI, just finished listening to the Mental Tools, Tricks, and Lifehacks episode, and wanted to share my own. I’m sure that everyone at some point in their lives has had an embarrassing high-fiving mishap. Yao ming anyone?” And I’m going to admit to that, Mitch. Absolutely. You hit the side of somebody’s hand or you just touch the fingers, but not the hands, so you have to redo. Whatever it is, we’ve had high-fives that don’t work together. So, how are you going to help us? Well, he goes on to say, “There is a tried and true method to avoid these gaffes in the future, simply stare at the other person’s elbow as you go to deliver a high-five and you will generate a perfect connection every time.” Mitch goes on to say, “This is even more important if you want to conduct a Top Gun high-five [laughs] like Maverick and Goose from the movie.”
All right, but Mitch is not done there, “The second … ” he says, ” … is food related. Most people eat an apple from the outside-in, nibbling away until only the core is left. They then dispose of the core. Sometimes they are left trying to find a garbage can or compost bin and instead have to hold on to it or possibly let it sit in their garbage drawing many unwanted fruit flies. Instead, eat the apple from the bottom up. By doing this you can actually eat the entire apple without even realizing that you’ve eaten the core. It sounds crazy, but it’s true.” Mitch says, “It also provides some fiber into your diet and creates less food waste.”
Rick Engdahl, my dear Producer, have you ever heard of such a thing, is this, am I being trolled?
Rick Engdahl: It sounds like it, but I have actually witnessed this happening. I had a friend who was eating an apple in that strange way, from the bottom-up, and I said, what are you doing? [laughs] And they described to me the same thing, he’s like, well, you don’t waste the core that way, you just eat the apple.
Gardner: That is just unbelievable, I’ve never heard of such a thing, but that’s why we have mailbags. Well, let me include his final one, Rick, and any thoughts from you are welcome on this as well. The final one is also food related, “Many people want to keep their bread soft, but also don’t want it to go bad, you could put it in the fridge but that means it isn’t as soft. Instead, assuming you don’t have a breadbox, like people had years ago,” Mitch concludes, ” … put it in your microwave for storage. It will keep significantly longer and stay soft. Fool on!”
So, my initial thought, as I read this one was, but then you can’t use [laughs] your microwave. Rick, what are your thoughts on keeping bread soft by storing it in the microwave?
Engdahl: It sounds to me like a very expensive breadbox, [laughs] why not just go to Amazon and get yourself a breadbox?
Gardner: [laughs] Well, I guess that’s right, Amazon probably does sell breadboxes. It doesn’t occur to most people, I don’t think, me included these days, to get a breadbox. But I really do think Mitch was 100% sincere and smart and eye-opening with his entire direct message sent to us over Twitter. So, I’m going to name this, I’ve already said that Matt Rantala’s tweet was my favorite of the month, but this is my second-favorite of the month. Mitch, thank you very much for sharing.
And the last one from Twitter. This one comes from Dhaval Kotecha. Dhaval, thank you very much for this, you’re reminding us something we talked a few weeks ago about on this podcast, but I want to say a little bit more about it now. So, your tweet is, MercadoLibre (NASDAQ: MELI), ticker symbol MELI “MELI swapped its classic logo of two clasped hands to two elbows touching in March of 2020. The change helps push the importance of social distancing and the fact that everyone’s daily routines will have to be adjusted in order to curb the spread of the disease.” And he’s quoting there, presumably, from the reasoning put forth by the leadership of MercadoLibre, probably through their corporate communications.
Well, I’m raising that one again and resharing, because we had a wonderful moment on Motley Fool Live this week where we had the Head of Investor Relations, Federico Sandler, joining me along with talented Motley Fool analyst Danny Vena, who has followed MercadoLibre for the better part of +10 years. So, it was a wonderful wide-ranging conversation. At the end, I asked Federico, is there an equivalent of the Academy Awards for investor relations officers, whether domestic, here in the U.S. or in Latin America? Because I would like to nominate you for that. He has such deep knowledge of his company. And he modestly then said, yes, there is and I’ve already won. [laughs]
Well, in addition to that sensitivity and forethought on the part of MercadoLibre, much copied, by the way, by some other companies not just in Latin America, but worldwide. I think it’s really bright, if you have a logo that depicts part of the human body and you want to show some distancing, instead of showing shaking hands, we’re going to elbow rub or knuckle knock.
MercadoLibre is also on my mind for another reason this week. The stock for Rule Breaker members on the Rule Breaker scorecard, where it has appeared, where it has lived since February 18th, 2009, I’ve rerec’d a few times since, it crossed over into 100-bagger territory. As we record here Tuesday afternoon, it’s up 10,175%, that is a 102-bagger, last week it was somewhere in the 90s, so a nice week for MercadoLibre. But a reminder, again, of the great benefits of finding great companies and doing what many people have a hard time doing, holding them and letting them show their greatness over time, to your great gains, both, the prosperity gains you make and probably the human gains that you make, benefiting your family, all the learning that comes with that. So, what a wonderful moment for MercadoLibre.
I was thinking about it, because indeed, the very same day we had Federico, which was Monday of this week on Motley Fool Live, Tesla hit its nine-year anniversary on the Rule Breakers scorecard. It’s the second-best performing stock of all time for Rule Breakers. It’s up 82X in value from our cost basis of $6.29, established on November 23rd, 2011. So, nine years to the day, this Monday, Tesla, what a long strange trip it’s been, some up moments and some down moments, but darn it! holding all the way through, and I would still buy shares today, it’s up 82X in value from our cost basis, just weeks after Elon himself came to Fool HQ and gave a stump speech to our employees.
All right, Rule Breaker Mailbag item No. 1 this month. This one comes from Brad Lounsbury. Thank you, Brad. He says, “Dear, David G. and the Rule Breakers team, I’ve recently, in the past couple of months, joined, both, Stock Advisor and Rule Breakers … ” well, welcome, Brad, ” … and I’ve been enjoying the stock picks, articles, message boards, and podcasts.” He says, “So much great content. My wife and I have some rollover 401(k)s, traditional IRAs, and Roth IRAs with an advisor.” Wow! “These are all invested in various mutual funds. We have not been maxing out our Roth IRAs and have decided to set up separate Roth IRA accounts for both of us at Fidelity that we can use to invest in some individual stocks as a way of dipping our toes in self-directed stock-picking. Well, this month … ” and this was written in October, at the end of October, ” … this month was our first month investing in those Roth IRAs. We purchased fractional shares of a smattering of Fool recs; Starter Stocks, Best Buys Now, etc., a few of our own selections too.” Love to hear that, Brad. “About 50 stocks each. Our plan is to continue contributing to these Roth IRA accounts with a $250 monthly contribution each. We’ve been planning on adding to our initial investments in these various companies through our monthly contributions. My question is, do you recommend this strategy or should we consider another strategy with our monthly contributions?”
He concludes by giving his Gardner-Kretzmann Continuum number, which understandably is over one, as is his wife’s. Congratulations, Brad.
I will reexplain the Gardner-Kretzmann Continuum in a later note. I’ll just say for now, that I see two great things here to note, Brad, one of them is that you’ve taken action. You’ve decided after successfully setting up retirement accounts, and several of them, toward funds, you thought, hey, maybe we can do better than funds. And I do indeed think you can, and will. Especially, if you purpose it and you stay on the journey.
Second, I love that we’re now living in a world where people can buy fractional shares and often with no commissions, which is exactly why somebody who’s taking $250 these days can buy 50 stocks. Wow! That would have sounded like a miracle to me 30 years ago, when we started The Motley Fool. And I, as an armchair investor, as I remain today, trying to muddle through and pay as little as I could for my commissions and buy as many stocks as I could to diversify my portfolio. And to think that you have embarked upon that, that the world has made that possible, pinch yourself, talk about gratitude this Thanksgiving week.
In terms of what I think of your strategy, I think it’s perfectly good. I like that you have a broad base of stocks that you’re invested in. With each following monthly contribution, you’re probably going to want to add to some of your winners, that’s what I would tend to do in concert with everything that I say in this podcast. You’ll probably have some new companies, month-in and month-out, that you’d like to add to your portfolio. You could end up with quite a large portfolio, which I think is a great goal to do over the course of your life. After all, you’re doing this toward retirement, and so, it’s great to have a broad base to retire on.
So, I’m excited to hear about you and your wife and the decisions that you make. So, in conclusion, Happy Thanksgiving, Brad Lounsbury and wife!
All right. Now, Rule Breaker Mailbag item No. 2, and I can now officially confirm that my previous correspondent of a few months back, Caroline Smith, is in fact pronounced Caroline. I think I made some jokes about that at the time. I think I interchanged Carolyn and Caroline throughout that previous read. I mentioned Brian Regan, the talented comedian, he does a funny bit about that. But Caroline you have written this one and you’ve ended it by saying. “Thanks so much, Caroline pronounced the way Neil Diamond says it.” Pretty sure that’s Sweet Caroline. So, Caroline, thanks for this note.
You say, “Something a little different for you, David. Can you tell me your five favorite games of any kind, board, card, dice, etc., that are just as challenging and fun with only two people? Really need something new to do with my 14-year-old son as we head into the colder Fall and Winter months.” Thanks so much, Caroline, pronounced the way Neil Diamond says it or sings it.
Well, you know, I love talking about games, and I try not to do that too much from one week to the next, but once-a-year as we arrive to the holiday period, I start thinking about how games make a great gift to put under somebody’s tree or wrap up for somebody for whatever the occasion is. And so, next week will be my Games! Games! Games! episode. I will answer your very question on that episode and talk about some of my other favorites of 2020, and some classics as well. Probably a shorter podcast. A lot of people who tune in to Rule Breaker Investing expecting to hear stock picks and talk about stocks may not want an hour-and-a-half on board games. I could fill up a three-hour podcast on board games. Nope. I’ll try to keep it tighter next week. But we will be focused on Games! Games! Games! Sure, board games, card games, maybe some dice. I might throw in a videogame or two. I play those too; have my entire life. Love talking about them. And it’s a great gift-giving time of year. So, let’s come up with a gift wish list next week on Rule Breaker Investing Games! Games! Games!
All right. Rule Breaker Mailbag item No. 3. This one comes from Joel. “David, I have wanted to write to you for a while, but decided to hold off until I had my first spiffy-pop. I thought that might be a few years away, as I only really got into buying individual stocks three years ago, but today, The Trade Desk, ticker symbol TTD, popped $172/share in a single day, and I had bought it at $126 about 30 months ago. So, I guess I get to write. However, in a highly ironic turn of events today, I had a second not so spiffy-pop in my knee today that will likely require surgery. So, I’m writing this flat on my back, cuddled up with an ice pack, but I digress.” Says Joel.
“My story in a nutshell is this: three years ago, I had a small unexpected financial windfall. And while I’ve always been a faithful saver in index funds, I had dreamed of buying individual stocks, but never taken the plunge. But with this money I didn’t have the day before, I figured what’s the difference if I lost it tomorrow in the stock market, so I bought my first share of Tesla, which … ” he says, ” … has done rather well, up more than 5X in value to be exact. Well, fast-forward three years, I now own 34 stocks, split between 20 … ” what he calls, ” … major leaguers that I’ve added to overtime and 14 minor leaguers, small initial buys I am watching and tracking.” Quick aside here, love integrating the baseball talk into describing your portfolio, Joel. Well played.
“The vast majority have come from Motley Fool Rule Breakers, and a few others I found through other Motley Fool podcasts. 28 of them are beating the S&P 500, which means six are behind. My sixth biggest winner, Netflix, more than covers all the losses of my six losers. And I’m beating the S&P 500 by 90% overall.” That is a great three years, Joel. “If this sounds familiar, it sure sounds eerily like multiple Rule Breaker podcasts I heard, where you breakdown your long-term performance. Frankly, I can’t hear enough of those types of shows, it gives me confidence to stay the course. While the bulk of my investments are still in index funds, what started as a fun experiment now has the possibility to alter the trajectory of my retirement. With any luck, 15 years from now when I retire, I may have to name my boat TTD or TDOC or MELI, because those stocks will have given it to me with just buying and holding for the long term. I wanted to share my individual experience as an unsolicited testimonial that the Rule Breaker way has worked for me nearly identically to what you report. In conclusion, I especially want to thank you for your commitment and integrity to consistently scoring against a standard benchmark and not hiding your losers, that’s especially refreshing in this day and age. Sincerely, Joel.”
Well, Joel, I’m picturing you sitting on the flat of your back, somehow, maybe on a laptop, typing that out, feeling a little bit in your knee, I’m sorry to hear about that unfortunate pop, the other kind of pop, the bad pop. But I am delighted to hear your story and to share with tens of thousands of others who are hearing it right now and gaining inspiration to know they can do it too. I think it’s always worth pointing out that that is a rarefied three-year period. Spectacular performance. The stock market was very strong through those three years, but especially our Rule Breakers stocks. The style of investing and the types of companies we’ve picked, a lot of people have said, have accelerated three years’ worth of gain in six months, and that’s because the world needed them to, because they provide such meaningful help and solutions. I mean, what MercadoLibre is doing for Latin America to get people their stuff delivered to them logistically well on time, at a dark time for many of us, is so important. And that’s why we’re seeing these kinds of companies have their sales grow off the charts and profits too, and their stock prices reflect that.
So, it is a very unusual three-year period, I think you’re aware of that. The numbers you’re reporting are spectacular, they are not sustainable for anybody, not you, not me, not anybody. This kind of thing may recur in future, there are periods like this, but I do want to make sure, especially for new investors, that you know that what we’re experiencing right now is probably unprecedented, at least in my investment career, and a huge delight too. Another reason to give thanks.
All right, Rule Breaker Mailbag item No. 4. This one is just fun. Thank you, Randy Chevrier. It’s entitled, “He’s a what? He’s a what?” “David, it warmed my heart to find yet one more thing that connects me to my favorite Gardner brother. Don’t tell Tom.” Well, we won’t. “Tom is an amazing guy too, but he wasn’t in as many high school musicals as you and I might [laughs] have been in. While I didn’t play Harold Hill … ” and Randy here is referring to The Music Man, a classic American musical. And I happen to mention in a past podcast that my senior year of high school, I had the lead as Harold Hill. So, I was The Music Man. I know there are a bunch of other music men probably hearing me right now, it’s one of those musicals that people will trout out. In fact, it even makes Broadway revivals from time-to-time; once Broadway opens back up. But anyway, Randy says, ” … while I didn’t play Harold Hill, I was on a train with him in 1977. Well, the first scene, the famous first scene of The Music Man is salesmen on a train together and the pitter-patter song that they sing, or chant rather.” Anyway, Randy goes on, “I suspect while you never had a line until the very end of the train ride,” that is true of that character Harold Hill doesn’t speak till the end of it, ” … you could probably recite the banner shared between the businessmen on the train with you while you read your newspaper.”
“Not the Model T at all,
Take a gander at the store,
At the modern store,
At the present day store,
At the present day, modern,
Departmentalized grocery store.
What did you talk?
What did you talk?”
And it goes on like that. That’s actually quoting Randy, who took the time to put the lyrics in this one.
“What I’ve learned after 16 years with The Fool … ” Randy concludes, ” … is that you, for sure, are not a fake and [laughs] don’t know the territory. Anyway, thanks for sharing yet another part of your background, allowing your audience one more point of reference that strengthens our trust in you as a person.”
Well, thank you, Randy. You know, trust means so very much to me. In particular, I think it means so much to our world right now. And indeed, I think the people who are creating trust in the world across so many different dynamics, I especially see it in business, when you have a brand, you have to build a brand as an entrepreneur over time, the best companies have the best brands. Apple would be a great example of that. You have to deliver on that every day, and boy! Is there a lot of trust inherent in doing business well. And if you even think about commerce, about shaking hands, or in this case maybe rubbing elbows, since we’re not talking about [laughs] shaking hands with MercadoLibre this week. But you think about the exchange of the buyer and the seller, there has to be trust.
I remember when eBay first showed up, people thought it wouldn’t work, they’re like, well, how do you know the person is actually going to send you the thing that you bought online on the platform and you paid them, and how do you know they’ll send it to you? Turns out, people did send it, they sent it so often that eBay has grown into a pretty great business over the course of time, even if some of its best days are behind it. And yet, if you’ve checked the stock price recently, you’ll see it hasn’t been a bad performer over the last few years. So yeah, I see trust, especially in business, every day. Randy, I really appreciate you sharing.
Now, Rick Engdahl, I’m about to move on to my next point, but you briefly raised your hand, what do you want to share?
Engdahl: Well, around the same time that you were Harold Hill in The Music Man, since we’re about the same age, I also was in the musical The Music Man. I did not play Harold Hill. I don’t even remember my character’s name to be honest, but I was a member of the school board, which is significant, because we were the barbershop quartet.
Gardner: Of course. No way, Rick, you never shared that with me. I love it. I mean, you’re far more the musician than I am. You actually play instruments, for example, and you’ve been in bands and performed in front of people. After one community theater appearance I made post-college, that was my final production, but you’ve made a lifelong habit of being a musician. I love that you were in the barbershop quartet. They have some great numbers in The Music Man.
Engdahl: It was a heck of a lot of fun.
Gardner: All right. Rule Breaker Mailbag item No. 5. “Hi, David …” This comes from Jim Fury. ” … before getting into my question, I wanted to thank you and the entire team at The Fool for making me smarter, happier, and richer over the years. I discovered The Fool four years ago after I graduated college, started my first full time job, and began investing my paychecks regularly.” Well, good on you, Jim, that’s a hard trick for a lot of people, a lot of people are trying to pay off debts, often it’s student debt, and maybe you were doing that too, but a lot of people unfortunately get into credit card debt and have a hard time pulling out of it until later in their lives. I love that you graduated college and were right away with your first-time job investing your paychecks, that looks like winning to me.
You go on, “I’m a Rule Breaker and Stock Advisor subscriber. I love the content in addition to the stock picks. I often discussed the recent stock picks made by you and your brother with my colleagues at work. And over the years, those colleagues became close friends with whom I will continue to discuss investing when I leave the company to start my new job next month. Well, I’m grateful for The Fool guiding me to stock that have made me richer than I ever thought possible at 27 years old, but I also must credit you for sparking lifelong friendships with people who share an interest in investing in companies that will make the future a better place. Now, for my question … “
But before I go there, Jim, I just want to say, you basically created the equivalent of an investment club, it sounds like, around the watercooler at work. And while investment clubs are a little bit passe, when I was growing up, the National Association of Investment Clubs, the NAIC, was a big and growing organization. I was an investment club myself, I bet a lot of you hearing me right now have been or still are in investment clubs. In a lot of ways, the internet came along and created new virtual investment clubs that made them less necessary perhaps than in the time of the Beardstown Ladies. But I think of your watercooler conversations, then you described the lasting friendships that you’re gaining, that sounds like a pretty cool investment club that, in effect, you were creating. Anyway, congratulations.
He goes on, “I have two accounts within which I invest in stocks. It’s a Roth IRA and a taxable brokerage account, would you discuss your thoughts on how holding stocks in different accounts whose money might be earmarked for different purposes affects the Gardner-Kretzmann Continuum?” He goes on to say, “I own 20 stocks in my Roth, 15 stocks in my brokerage. So, if I look at both accounts as one portfolio, I’m well above the 1.0 recommended score … ” we’ll talk about these numbers in a sec, ” … but I’m below 1.0, if I look at them separately.” And that’s the nub of the question, I’ll just speak to that right now.
So, well, first of all let’s define our terms the Gardner-Kretzmann Continuum was spontaneously born on this podcast [laughs] a few years ago, we didn’t know that it was coming, but my friend David Kretzmann joined me and we invented a ratio together, and it’s a very simple ratio. The idea is that you should have as many or more stocks in your portfolio than your age. So, in Jim’s case, he mentions he’s 27 years old, he has 20 stocks in one account, 15 in another, sounds like they are distinct from each other. So, 35 stocks. So, he’s basically asking, am I abiding by the spirit of the GKC? Am I over 1.0, or if you look at them separately, am I under?
And, Jim, I’m going to come down the side that says, you are doing great. You’ve got 35 stocks spread across two different accounts, you’re 27 years old. You win. I think that’s a great approach, [laughs] you’re already on your way to success. And you could certainly add some stocks over the years. I think most of us who’ve grown up with the GKC, and that means you’ve grown up with this podcast over the last couple of years, know that it’s one part tongue-in-cheek, because there’s no requirement that anybody do this, it’s more the spirit of it, but it’s also one part a joke that becomes real, by making the joke enough and talking about it enough, it has, like a lot of jokes, some seriousness lined into it. And so, seizing upon that, we’re talking about the importance of diversification. You already get that. And so, I think you can give yourself a pat on the back that you’ve done it. But if, in fact, you end up separating those accounts or using them for totally different purposes and you want to maintain more diversification in them, I say bully to you, go ahead and add some more stocks to those, but I think you’re doing really well. Congratulations, Jim Fury.
All right, the last two this week. First one is from Chuck Hill. “Hi, David, love the podcast and everything The Motley Fool stands for.” Well, thank you, Chuck. “I’ve been a Fool since 2004, but the majority of the time, I’ve been foolish about my investing. I have a history … ” says Chuck, ” … of selling after making a small profit. On January 2nd, 2020, Stock Advisor made Tesla its recommendation and also bought Zoom, much to my chagrin, I sold both of them at a nice profit, but lost out on the rest of their recent growth, because I was not mentally prepared for the volatility and had not solidified my investing philosophy in a Foolish manner. Also, in January, my wife showed me her statement for her 401(k) from a former employer. I advised her to move the money out of the market, because “of the election year.” And I forgot about it. Well, in late-March … ” Chuck continues, ” … I was lamenting that I had no available funds to invest in the market crash of a generation.” And by that, you’re referring to the 35% drop in 32 days that all of us experienced earlier this year. Fortunately, the word “crash” almost feels like an afterthought now with the market having snapped back, but that’s where you’re headed and that’s where we’re going, so let me go back to the text here. “When it hit me that my wife’s funds were fully intact from the January “advice” that I had given her. By early April, the funds from the 401(k) were rolled over into an IRA and we purchased 18 of the best companies in the world recommended by Stock Advisor and Rule Breakers, including The Trade Desk, just above these stocks’ March bottoms. It has been an incredible ride during which I have become a complete Fool as an investor. I listened to podcasts, I read news daily, I tuned into Fool Live content on a regular basis. Well, on Friday, November 6th earlier this month, The Trade Desk, purchased for $156/share on April 3rd of this year, it spiffy-popped for us to the tune of … ” already mentioned earlier in this podcast, ” … $172/share in a single day. And that stock became our first 4-bagger. The old me would have sold The Trade Desk for 100% profit earlier in the year and moved on to the next thing. To-date, we have 12 stocks now over 100% since April, and four of them over 200% with no thoughts of selling anytime soon. Winners keep winning. All our stock accounts have been beating the market easily because of The Fool services.” Chuck concludes, “Also, I’ve recently begun fasting on a regular basis, because of the recent RBI podcast mailbag, and I’ve lost seven pounds, LOL. Thank you to everyone [laughs] at The Motley Fool for their calm, sensible, and truly educational service. Fool on!”
Wow! Chuck, thank you for that. And you know, it especially hits me between the eyes, in a good way, when we hear that you’re making gains in other aspects of your life. That’s what we hope for everybody listening to us week-in and week-out. I’ve always said, this podcast is one-third about investing, one-third about business, and one-third about life. And if you’re a working professional, all three of those matter to you a lot. They sure do matter to me. And, Chuck, I’m delighted to hear you’ve made some additional gains. Sometimes, you know, the momentum of succeeding in one sphere of our lives gives us momentum to succeed better in other spheres of our lives. I think we should use that momentum. Congratulations, Sir.
And before I go to our final item this month, I want to go back to Twitter briefly, because there was a great short thread that connects with what Chuck just shared that I wanted to share. This one was the third best thing I read on Twitter this month. This came from Roy, his screen name on Twitter is @invest4decades. I like that a lot, Roy. You wrote, “2 years ago I stumbled upon @RBIPodcast, I can’t express the impact of the life changing lessons I’ve learned from @DavidGFool. The foolish investing style made total sense to me and I committed to sticking to these investment principles. What I never expected though is how much personal growth I’ve had over those two years. Aside from improving my financial health and gaining peace of mind from it, I’ve embraced David’s sense of optimism, focused my free time on personal growth, and been able to be a happier, caring and present husband and father.”
I love it. I’m leaving that one right there.
All right. And to wrap up this Thanksgiving Mailbag this week, a note from Eugene Ng. “Hi, David, I am Eugene Ng from Singapore. I have been a Motley Fool One subscriber for close to four years now.”
That, by the way, is our highest-level service. I know we have Motley Fool One subscribers who are listening in every week to this podcast, but a lot of us may never have heard of Motley Fool One, so we’d want you to know, that’s the one that you’re paying us as much as we ever ask, and we’re trying to give you the best service that we can offer. So, Eugene, thank you for being a Fool One member.
“I’ve been wanting to write to you, spurred on by an earlier mention of my haiku “not intended” in last month’s October Mailbag, and two shared tweets by you. It really gave me the courage to pen this note and to reach out, and hopefully more in time. Over five years ago, I started my search to learn from the best investors in the world to master investing. Your Rule Breaking approaching and The Motley Fool’s really resonated with me. You, together with your brother, Tom, and The Motley Fool team, including Brian Feroldi, Tim Beyers, and so many others have all deeply influenced me on so many levels. You may not know me, but you have been my No. 1 “sensei” [laughs] when it comes to anything all about investing and life. My portfolio returning over 180% versus the market’s 40% over the last +3 years is a true testament to what you and The Motley Fool have helped in shaping a large part of that.
Now, my favorite quote of yours is m”Make your portfolio reflect your best vision for our future.” Your quote and your philosophy on vision truly meant to me so much that I’ve decided to incorporate it in everything I did when it came to investing. And this included my investing philosophy, mission, my recently published book, and my style of investing, … ” which he calls vision investing, ” … and the name of my own fund, which is called Vision Capital, and its mission of investing in companies that reflect the best vision for our future.”
Well, he includes links to a few of these, and I’ll just say, anybody interested in seeing more about Eugene, you can go to VisionCapital.group. That’s right, that’s an internet site, VisionCapital.group, and you’ll see a lot more there if you’re interested.
He closes, “I continue to share with many new investors to spread the word of investing in stocks and refer them to The Fool and to the Rule Breaker podcast. Hopefully, I can play a small part in my own way to give back and to make the world smarter, happier, and richer. Truly, thank you once again, David, for all you and The Motley Fool team have done … “
And I’m so grateful for my team. You know, we have so many people who are part of this team now. Rick and I are part of this podcast, but behind us, what’s running Motley Fool Rule Breakers and Stock Advisor, there are hundreds and hundreds of people that you’re thanking, and we really appreciate this, Eugene.
” … and continue to do. I hope to meet you in-person next time around when I come to Fool HQ or at future Fool events, hopefully soon.” Yeah, let’s hope together, in 2021, we can actually hangout. “And if you ever come to Singapore, reach out any time, I’ll be happy to host.”
“Below is a poem on investing that I have penned.”
And this is how we’ll close this week’s podcast. I should say that this is very attractively set down on paper, this is not a poem that rhymes. Robert Frost sometimes criticized poems that didn’t rhyme, blank verse, if you will, he said, it was like playing tennis without a net. Well, while I do appreciate some good rhymes in my poetry, I also recognize the strength of words well put together, and in many cases, repeating and creating a cadence which is what you do here with our poem together, Eugene. So, thank you for this. It is called Investing in Our Vision.
Find excellence, buy excellence, hold excellence, add to excellence, sell mediocrity.
Think probabilities, not certainties; think possibilities, not certainties; think payoffs, not price targets.
Prefer growth, not declining; prefer growth, not struggling; prefer growth, not turnarounds.
Seek rising revenues, not rising price; seek rising earnings, not rising price; seek rising cash flows, not rising price.
Choose quality, not value; choose quality, not price; choose quality, not others’ opinions.
Find, don’t wait; research, don’t wait; buy, don’t wait.
Buy, don’t sell; hold, don’t sell; add, don’t sell.
Your own research, not others; your own views, not others; your own conviction, not others; your own buy, not others; your own sell, not others; your own miss, not others.
Be optimistic, not pessimistic; be present, not looking back; be forward-looking, for we are here now.
Invest in the world, invest in the future, invest for the better. Invest in your vision.
Stay Foolish. And Fool on!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon, Apple, MercadoLibre, Netflix, and Tesla. The Motley Fool owns shares of and recommends Amazon, Apple, MercadoLibre, Netflix, Novocure, Tesla, The Trade Desk, Twitter, and Zoom Video Communications. The Motley Fool recommends eBay and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.
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