This month’s Rule Breaker Investing mailbag is a celebration of the power of stories. The great stories. The ones that really matter. So what stands out? Where do you see yourself? What do you admire? And what actions will you take as a result of a great story?
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This video was recorded on February 24, 2021.
David Gardner: Tinker, tailor, soldier, sailor, rich man, poor man, beggar man, thief. Combing through mailbag submissions this month, I’ve found a common chord. That usually doesn’t happen. Our monthly mailbag episodes are almost invariably motley with one person’s story, another’s question, a poem from someone else’s suggestion, disconnected from the next. It’s part of the charm of these for me anyway, they are motley. But coming through 32 pages of mailbag submissions this month, I saw a common chord and I wanted that chord to ring out. The way I plan to make that happen is to silence everything else. So no Twitter hot takes, no “How many stocks should I have in my portfolio?”, no “Is the market overvalued?” Nope, not this month. This month, we’re just going to focus on the common chord I saw, and that chord is stories. This mailbag is entirely dedicated to hearing from you and your stories. It will be very personal for the seven fellow Fools who wrote in and will be featured, but for the 100,000+ rest of us, it’s going to be an opportunity to learn and to grow, because I think that’s what great stories do. The great stories inspire us, they may challenge us, and they are didactic, they teach. Are you ready to listen? Do you have a warm or cold drink depending on your hemisphere? Are you ready to empathize and learn from the infinite possibilities and backstories of others? Tinker, tailor, soldier, sailor, rich man, poor man, beggar man, thief, except no thiefs allowed this week. Stories of seven people who you probably won’t ever meet, but who are all bound together by the same thing that binds you and me. That’s a love of the game of investing, a desire toward self-betterment, and a willingness to call ourselves Fools and have fun. Fun for about one hour every week, only on this week’s Rule Breaker Investing.
Welcome back to Rule Breaker Investing. The title of this podcast, Tinker, Tailor, Soldier, Sailor, harkens back to a childhood rhyme that I remember, and at least for me. I think we were trying to figure out who is going to be on the playground, and so you point one person in the circle, you say tinker, and then tailor. The next person is a soldier, a sailor. You end up pointing a thief at somebody and all of a sudden, they’re it, and you race around and play tag. Now, that nursery rhyme has gone through many different iterations as it turns out over the centuries. I will not bore you with how it got started or where we are now, but you are certainly welcome to Wikipedia, tinker, tailor, soldier, sailor, and you’ll learn a lot more. Of course, it was used for the title that John Le Carre spy novel years ago, and since it’s been made into a television series and a movie. But as I looked over the stories I wanted to share with you on this month’s mailbag, it occurred to me that each of them comes from a different type of person. After all, a tinker is very different from a soldier, and a tailor is very different from a sailor, even though those two words understandably for nursery rhyme, rhyme. Each of the seven people that you’ll be getting to meet today and hearing from and learning from is very different from the other.
As I came through and thought which ones do I want to feature this month, I was thinking something else in my head. It came to me through one of the more recent reviews that this podcast has gotten on iTunes, ”Best and cleanest podcast,” it says we have five stars. This came from Investor for Life written on February 12th of this year, earlier this month. Investor for Life said, ”I am an avid podcast listener, I look forward to new episodes of Rule Breaker Investing every Wednesday, David does an amazing job and add so much variety to the podcast.” Last but not least, our correspondent writes, ”He keeps it simple and clean enough that me and my 10-year-old daughter often listened to the podcasts together.” Well, thank you for that, and as occurs to me, yeah, I would love for anybody to be able to have their child with them listening to most of the podcasts that we’ve ever done here on Rule Breaker Investing. I am flattered to have your attention if you’re under the age of 12 years old. If mom or dad or somebody has you listening to us, congratulations. I’m really impressed. I wish when I was eight or 10, or 12 that podcasts existed and that I could have had the experience to learn along with my parents. Thank you for that review, Investor for Life, and it helped me frame up the stories I want to share with you this week because I really think a good story should be shared and enjoyed together, and I really think a great story, and that’s what I’m trying to do this week, present you great stories, are worth thinking through, and talking a little bit about.
In a minute before I get to our stories, I’m going to give you four questions that I want you to think through as you hear each of these stories. If you want to pause the podcast and have a conversation about it with a family member or a friend, somebody older or younger than you, I think that would be a great thing to do this week. Initially, I decided, I wouldn’t go through these four questions each time because I thought that would be repetitive and boring. But then my good friend and producer Rick Engdahl, who’s a songwriter, reminds me of the power of verse, chorus, verse, chorus versus cores, and so darn it, I will briefly repeat each of these four questions at the end of each story so that you have a self-contained opportunity to reflect whether you want to pause things or not, whether you’re by yourself or with someone else. But I’m going to give you those four questions upfront right now. Question No. 1 for each of these stories for the story you’re about to hear. I want you to reflect after hearing the story, what most jumped out to you from the story? What most surprised you? What’s memorable for you about the story you just heard? That’s No. 1. No. 2, what do you see yourself in this story? Now, each of my tinkers, tailors, soldiers, and sailors, this month is not you. They are from very different walks of life. You may see very little in common with that person and yet you will see, I know something of yourself in the story. What is it?
No. 3, what do you most admire about what you just heard, and what can you learn from that? No. 4, do you have any new intention that you will convert to action as a result of hearing the story? Now, if you have a good answer to that last question for any one of these seven stories, that is a great thing to walk away from this week’s podcast with an intention that you will convert to action as a result of one or more of these stories. But for each of these four questions, I’m going to review them very quickly. Once again, I don’t expect you to have a great answer to any of them. But they are wonderful frameworks to use for yourself and reflection or with a family member or friend as you think about the story you just heard. So again, one, what most jumped out to you? Two, what do you see yourself here? Three, what do you most admire and can learn from? Four, do you have any new intention that you will convert to action as a result of the story?
Before we get to story No. 1, how could I not rock one of my favorite paragraphs from all of literature about the power of stories? I probably do this about once a year on this podcast, so here we go for 2021. It’s from Samwise Gamgee from Lord of the Rings, and it’s about the great stories. You might remember this one because a lot of JRR Tolkien’s words couldn’t actually make it into the movies. Otherwise, the movies would’ve been way too long. But this line, this is both in the literature and in the movie, and it was Samwise saying it’s like in the great stories, “Mr. Frodo, the ones that really matter, full of darkness and danger, they were, and sometimes you didn’t want to know the end. Because how could the end be happy? How could the world go back to the way it was when so much bad had happened? Sometimes we think about the last year or two of our lives as we reflect that way. But in the end,” said Samwise Gamgee, “It’s only a passing thing. The shadow, even darkness must pass. A new day will come, and when the sun shines, it will shine out clearer. Those were the stories that stayed with you that meant something even if you were too small to understand why. But I think Mr. Frodo, I do understand. I know now. Folk in those stories had lots of chances of turning back, only they didn’t. They kept going because they were holding onto something, that there is some good in this world and it’s worth fighting for.”
Here we come, seven mailbag items this week, and I will mention in advance that stories No. 1 and No. 7, I intentionally made our bookends because I love the resilience and the underdog nature of both of them.
Mailbag story No. 1. comes from Anthony, by the way. For each of these stories, I’ll just be titling it like tinker, tailor, soldier, spy. I’m going to give you the profession or descriptor for each of my storytellers. So story No. 1 is entitled Jockey. “Dear, David, thanks for the great podcasts. Every time you reference horse racing, I always want to say, “Hey Dave, I used to ride racehorses.” My mom had friends who were avid fans and took us to Los Alamitos Racecourse when I was just a kid. I remember on one occasion the teller saying to my mom that I looked like I could be a jockey. A few years later, my best friend in grade school was an avid fan. His grandfather was also a teller, and would take them to the track every weekend, so I suddenly found myself at either Santa Anita or Hollywood Park every weekend. By the time I got to high school, I was 5’6” and weighed about 103 pounds. Everyone was trying out for football, so the coach told me to eat a ton of food and lift a lot of weights. I tried and couldn’t put on any weight, so I gave up on football. At the end of sophomore year, I got this idea: I wanted to become a race rider. Mind you, I had no real horse experience, and for the most part, was a city boy whose head was filled with romantic notions of adventure and mystery. Sounds naughty, but it was true and I thought that riding race horses would satisfy the pang. What sounds […] is that as soon as I seriously dedicated myself to becoming a jockey, I ballooned to 120 pounds. There I was looking for jockey schools and trying to “pull 15 pounds off my frame.” I did it much to the dismay of my mother. Let me take a serious aside to thank my mother. She came to the states from the Philippines trying to reconnect with my father who had decided he wanted nothing to do with family, but instead live the life of a swinging 60s bachelor in his new home, America. She caught up with him. They argued, made-up long enough for me to be conceived, and then split up again. I was Chicago born, my sister was Philippine born, but we were both U.S.A. latchkey kids. By herself, my mom had to find a way to make ends meet. While I never knew poverty, I was well familiar with making every cent count. My mother made sure to emphasize education. I never had the cool toys, but I did have the dorky private school uniforms, yeah. Salt and pepper corduroys were my thing. I get emotional typing this, knowing how hard my mom worked to put us through school. I mention this because I was going to Loyola High School, an exclusive private boys college preparatory school in Los Angeles. When I got a job to “walk hot” at a small training facility for $99 a week, I had already completed my junior year at Loyola and my stand at the jockey school, so I opted to leave Loyola and live in a barn loft, a top 40 aspiring race horses in San Diego. I don’t know how and why my mom let me do it. Long story short, I rode some really fantastic horses and loved every minute of every experience, even when I fell at Hollywood Park, cracked my acetabulum and ruptured my spleen and liver. What I realized was that while I romanced adventure, I was never going to be a jockey. I don’t have a competitive bone in my body. In stock terms, I am an investor, not a trader. Without getting too political, I also learned that horse racing may be called the sport of kings and regale to some higher form of entertainment. However, for the horses, it’s nothing but a pump and dump scheme. You don’t have to read this on air, but most of the horses end up at slaughterhouses. For this reason, other than my fond memories and love of the horses, I abhor anything to do with it. I finished high school senior year at school near the race track, gallop at Santa Anita and Hollywood Park and then decide this route is not for me. It took me another 18 years to finish college. In this time, I worked as a busboy, a nursing assistant, a private investigator, straight to DVD actor, substitute school teacher, and then a ballroom dance instructor. Here’s how I weave this back to you. My life is filled with experience, but it was not blessed with wealth. I grew up in a time when stocks were only for the wealthy, but I always wondered what that life was about. More romance and adventure? Well, as we all know, the last few decades have made stock ownership not only possible, but welcoming for all interested in creating wealth. I steadfastly, to the point of being irritating, push the notion to invest in the market to everyone I meet. Sure, I made mistakes, but I learned that time is my greatest ally. The only thing I needed to do was pick solid stocks and wait. The only thing is not easy, but it is full proof and proven by Fools, so I knew I had to learn how to pick solid stocks. It was through researching dogs of the Dow back in the day that I found The Motley Fool, I bought your investment guide at a used bookstore. I’ve been an investor for close to 20 years. I’m a Foolish, 57 years old. I have a Roth, a […], as well as some other stuff. My portfolio consists of 50 handpicked stocks. You and the rest of your Fools are always in the background of my mind when I do my evals. My sleep number changes, but I try to keep it in the teens. Take care, my Foolish friend. Anthony.”
I’m going to make only one change to that beautiful story, I’m going to say, take care my Foolish friends, because that wasn’t written for me, that was written for you and for all of us. Let me ask you, what most jumped out to you from his story? What surprised you? What do you see of yourself in his story? What do you most admire and what can you learn from that? Finally, do you have any new intention that you will convert to action as a result of what you just heard?
Mailbag story No. 2. This one comes from Chris. It’s entitled “Film Professional”. “Hello David. I’m a hard working, self-employed, creative type in his late 50s, facing the twilight of an exciting, if not always lucrative, career in the film business. It would be back in the mid 1990s while in my early 30s that I had my eyes open to the amazing potential of stocks and their investing possibilities through a funny looking newsletter I’d stumbled upon from you and your brother. I can say I was not always exactly sure what I was doing in my investment strategy, but through your services on America Online and your radio show, I began to discover the joy of what investing could actually feel like rather than just what it could do for me financially. I hadn’t amassed much by the time I went through a divorce and had to sell most of what I had accumulated, ultimately turning my back on investing in frustration, a reaction that was not, I admit now exactly, Foolish, though it would be in those $2,000 plus I had left in the IRA accounts that in time would come back and truly open my eyes once again to all your words of wisdom. Around when I hit 50 years old, I’d paid a cursory glance to my lonely Roth IRA account and to my surprise saw that the small holdings of Apple stock had grown about six-fold while PayPal accumulated by default when my eBay shares had split, had almost grown 10 times. That seemingly little amount I had left in there had grown into, though nothing to retire on, certainly something to reawaken my belief in the market again. I began on my moderate salary to try and maximize my IRA every year since with a renewed passion. Now, entering my late 50s where I missed many years of being a Foolish saver, I’ve luckily invested most of my life in something else of value, and that is my health. I’ve continued to work out hard five, six days a week since a teenager and I am feeling no urge to retire for a good 10-20 more years. My mother at 80 still enjoys working hard herself. My 99-year-old grandmother even continues to at least work hard around the house. My two important questions for you would be, though I’m near the age where some of your more wealthy followers are probably about to begin relying on their money to support them, can I continue to be more aggressive with stocks at this age? Can I use my timeline of investing rather than my age to determine my investment style? I think of our bodies more like houses, which have an effective age based on the care or lack thereof, rather than simply being judged by the numerical. With any luck my 80s, will still very much be my active years to enjoy the savings. No. 2, when you or others speak of having cash on hand, I get a little troubled by this. I only can afford a few a hundred dollars a month. If I sit there and stare at those lonely $300 or $400 in my cash brokerage account, I keep thinking, why can’t I invest now as we can’t try and predict any downturns, at what point do you recommend I pull these dollars from cash and put them to work in a company or two instead? My inclination has always been to invest the moment that green hits my brokerage firm. Well, hindsight is 2020, as I look back on the changes that were forced on me and the world last year, I am happy to report that I’m smarter, happier, and richer from The Motley Fool services and Motley Fool Live. Because it was so difficult to find a job last year, I decided to dedicate myself to honing my investment philosophy as I learned from all the terrific analysts at The Motley Fool. Even though half of my portfolio missed the 10%-15% of the market drop that happened over the spring and summer of last year, I did end 2020 with a 53% return for the year and I’m thrilled to report that I found a great job in October, and my family is healthy. At this point, gratitude has become a hallmark of the way I view the future. I want you to know that this member is smarter, happier, richer, and grateful because of the Motley Fool’s principles and its team. I wish you all a belated, Happy New Year. All my best. Chris.”
I said at the top, the purpose of this week’s podcast is not to do Q&A, since you did ask two questions directly, I feel like I should briefly speak to them, Chris, of course, I speak to this in other ways, from week-to-week on the podcast. But I would say, first of all, context is one of my favorite words. I believe every context is unique, often very different. Sometimes what I say here may not make sense to you or may make even more sense for him or her, than for you, everything is contextual. You’ve just said a context where you’ve taken beautiful care of your physical health and you’re in a family of people who have a long life. I think without being complacent about it, you should plan for that and yes, I think you can go ahead. Keep making the day-to-day enjoyable and keep thinking you’ll do what my grandfather did, which is keep working for most of the rest of your life. My mother’s father continued to work into his 90s, at the age of 94, he could no longer walk to the office anymore. He was with us till age 98. It would be presumptuous of me, especially given my cholesterol count to expect, I would make it that long or might even want to, but I can tell you, I think you should plan for that and good on you, for all that you’re doing. In terms of having a few hundred dollars sitting there waiting to be invested, I try to stay pretty fully invested all the time.
I’m a fan of brokerage firms that offer no-commission trades where you don’t get nickeled and dimed when you put $300 into the market. Of course, brokerage firms that allow you to buy, increasing numbers of them do fractional shares, so that you don’t have to wait for a particular round number to buy a share of stock in a higher-priced stock, let’s say Amazon, you can just buy a fractional share of anything. Yes, Chris, I’m a fan of putting your dollars to work and not having them sit there staring back at you on a brokerage statement. All right.
Well, that was Film Professional and before we move on to story No. 3, I ask you, what most jumped out to you from Chris’s story? Did anything surprise you? What do you see of yourself in his story, regardless of what age you might be? What do you most admire, and what can you learn from there? Do you have any new intention that you will convert to action as a result of that story? Mailbag story No. 3, and now for something completely different, this one is entitled Czech and I’m spelling that C-Z-E-C-H. This one comes from Erena Birova. She entitled it “My first forget-me pop or what I’ve learned from David G. way ahead of his birthday.” “Dear David, this is my first email to you, but I’ve listened to every single episode of the Rule Breaker Investing podcast. What made me write to you finally? Well, a few days ago, I had my first ever forget-me pop. It wasn’t on a stock recommended by one of my Fool subscriptions, I’m a very happy Stock Advisor subscriber since 2015, and a Rule Breaker subscriber since last summer. But I wouldn’t have logged this 13th, spiffy pop on my Jumia position had I not found The Motley Fool, thanks to you being a conscious capitalism company. I was watching an online course about these and you were featured and learned a ton from the services and amazing podcasts and I listened to all of them including the discontinued Motley Fool Asia and the new Millionacres podcast. The Fool didn’t give me fish, it has taught me to fish. Thank you. Short story long, I first heard Jumia mentioned pre-IPO on the Industry Focus podcast and immediately triggered the Rule Breaker pattern recognition. MercadoLibre,” Erena writes, “is one of my big winners and fit with my wish to get exposure to business in Africa, so I put it on my watch list. Well, the IPO came along, I forced myself to wait for a few earnings reports as you teach to avoid falling into an IPO window dressing trap. Then a short report came and the stock price crumbled. After digesting the short report, I concluded it wasn’t about much else than growing pains of a business trying to blaze a trail. But as the company suddenly wasn’t such an investing sweetheart anymore, I watched their financials more closely because the risk of going under from lack of funding was real. I liked what I saw after that, Jumia announced a change of strategy from a first party seller to a marketplace, and their cash burn significantly decreased, which in their context, meant having more time to do things right. So I finally bought a starter position in April 2020, to which I added several times since then as the stock price kept rising. Thanks to what I learned from The Motley Fool, I knew which numbers I was looking for. I knew what I liked and didn’t like about the company. I could be contrarian when the market was looking for growth rates of gross merchandise volume rather than for a platform being built. I am now up over 1,800%. That’s a 19-bagger on the first Jumia position, it is my biggest winner by far. It’s a bit ironic,” Erena continues, “that I’m writing to you about what I’ve learned from The Fool using a company I’ve held for less than a year for illustration, but I didn’t know what I know now, five years ago. I am still holding my Disney, and Facebook, and Alphabet shares from back then, all starter stocks. If all of the above isn’t enough to illustrate how The Fool is making me and my husband smarter, happier, and richer, here is a bit of my background. I was born and raised and I’m still living in the Czech Republic. My parents grew up under the communist regime and when I bought my first position in a conservative bond fund in 2009, I didn’t have the guts for a stock fund, they thought I was gambling away the money that they saved for me. Buying shares of individual companies is considered completely small and foolish in my family, but I know better. My children, three years and nine months are each holding at least one multi-bagger in their portfolios. As I don’t want to keep your wisdom just to myself with my husband, we’ve converted several of our friends to the Foolish investing philosophy, so you have a growing fan club in the Czech Republic. Investing has become our family hobby, it has brought us closer and it’s made saving money really fun. Thank you, David, for what you are doing and Fool on. Gratefully, Erena Birova.”
Well, I’m honored by that note, Erena, and I know all of us here at The Motley Fool, that is the kind of story we love to share. It is my delight to make that Mailbag story No. 3. I love that you’re doing it for your kids with your husband showing not just family, but friends the positive of saving and investing. You have discovered the promised land and you’re sharing it out with other people and that makes me very happy and I appreciate the irony that your best stock is one that is of such a recent vintage. There will not be many companies or many years where you could turn a legitimate non-penny-stock company into a near 20-bagger inside a year. I know that through your own experience, you are pinching yourself, realizing the great fortune of that. I especially love that it wasn’t a stock of my picking. Although some other Motley Fool fans certainly are strongly behind Jumia, I think of Joey Solitro, I think Brian Feroldi, others have talked about that company, but I’m so glad that you found it and made it your own. Now I ask rhetorically of all of my listeners, all my fellow Fools, what most jumped out to you from Erena’s story? What surprised you? What do you see of yourself in the story? What do you most admire here? What can you learn from and do you have any new intention that you will convert to action as a result of that story? All right, Mailbag story No. 4, and this one is entitled “Financial Advisor.”
“Hello David and the Rule Breaker team, I’m a new subscriber to Motley Fool Stock Advisor and Rule Breaker. I’ve found you through Twitter when someone I respect mentioned you. So there is power in Twitter. I’m a financial advisor for 25+ years.” Says Frank Iryami, who is our correspondent here. Frank says, “I’ve never been one to hold winning stocks as long as you do, not by a long shot. I fit in the mold of wanting to buy value or when something is down, I get more interested. Quick little Amazon anecdote: I was with Merrill Lynch when they came public and I had a client who just inherited low six figures and called me the day Amazon went public, he said, ”Frank, buy me, all you can. It’s going to be huge.” I literally think I felt his saliva come through the phone, LOL. He was so enthusiastic.” Frank writes. “I was 26 years old at the time. Candidly, I had never heard of Amazon and when I did a little research, I came back to them and I said, I can’t endorse this, but do what you want. I think it’s unproven and expensive, etc. Well, he bought $50,000 worth of the stock over the ensuing weeks. I ended up resigning from his account shortly thereafter, we didn’t get along. We parted as friends. Fast forward 20 years, I ran across him. He basically said to me, “Frank, I’m a very wealthy man now.” He went through all the stories about how he kept buying more and more and the rest is obviously history. Maybe he is a Rule Breaker subscriber. I just shook my head as to how someone could actually hold that long through thick and thin. Here’s my question for you. Usually when stocks go down, they go down either due to a big macro event like a financial crisis or recession. Or there’s something negative in the business of the company. When it’s the latter, how do you see through the bad news and maintain that position? Recently I saw you go over how many times and videos went up and down shortly, during some of their drawdowns, there were negative company-specific issues going on and the answer is, you bet there were Frank. How did you see through that? Can you cite some examples where you knew or thought very strongly that the market reaction and those stocks were wrong and that you were right to hold? In closing, I just want to say that your scorecard is unbelievable. If one simply bought and held your stocks and closed their eyes, they would’ve done amazing. I hope to keep learning and developing the skills necessary to hold for longer timeframes. Thanks for reading and Fool on. Frank Iryami.” I will again resist the temptation to make this week’s podcast about anything more real than the stories. Frank, that was a beautiful story. You did ask me, “How do you hold through the phase of bad news, very serious bad news for some corporations?” I will speak to that briefly. NVIDIA is a great example. NVIDIA got caught up a lot several years ago. Its stock being valued off of an expectation that its chips would help power the rather expensive energy drawdown and computing needs of Bitcoin. And as Bitcoin raged in 2017, so did NVIDIA stock and as Bitcoin sold off ’18, ’19, NVIDIA got whacked very badly more than once. Every great stock I’ve held has lost more than two-thirds of its value, NVIDIA is no exception. Netflix, my biggest holding and best stock ever has done that a number of times. In each case, what were the constants? Well, I’m not going to go down a full list, but how about this? How about the brilliant founders? Jensen Huang for NVIDIA, Reed Hastings for Netflix, the brilliant founders were still in place. Think about all it took for them to take companies that they had founded up to the point that they had gone public and done as well as they had for years and years in the stock market. Doesn’t that embolden you to look past a really bad decision in the case of Qwikster for Netflix. But now classic story of the temporary decision to divide up at services between hardcore DVDs and streaming, which caused Netflix stock to sell off more than two-thirds or and videos most recent big sell-off, which I just referenced, but that’s not the only one. Was the management team still in place? And how accomplished and how amazing were those people to even get those companies to the points that they were and they were invested and still in it?
So that would be one thing and just one other thing for this abbreviated list, ask yourself fundamentally, were these short-term developments, short term bits of bad news or systemic, long term, big problems? It’s not to say that every stock that sells off, it’s just a short term move. Sure enough, the world changes. If you find yourself in an old business, let’s think about ice blocks from centuries or so ago when refrigerators started showing up. I don’t think I’d want to be invested for much longer in my Ice Block stock, but for a company like NVIDIA or Netflix that had such futures ahead of them.
These are the kinds of stocks Frank and everybody else listening that we typically favor. We love to find companies that we see expanding in the future. Yes, they’re going to make mistakes, and even if they don’t make mistakes, the market is going to get cut in half sometimes and their stocks along with them. So Frank, I don’t think I have any particular superhero power here. It really is often just laziness or a belief that my money’s already well invested. I wouldn’t want to sell out and find some other company because I can’t find better companies. Sometimes in these really great companies.
Well, before we go on to story No. 5, let me just say that I really love Frank sharing as a financial advisor after all so far, we’ve had a Jockey, a Film Professional, a Czech, and yes, our Financial Advisor. A lot of us find ourselves, especially for new intimidated by financial advisors. We think they must know everything and the coverage that Wall Street gets sometimes only further reinforces the notion that they are experts and we are not but what I love about what Frank has done is he’s been human. He shared an amazingly funny story about somebody who wanted to buy a lot of stock at Amazon and maybe did and might have held it all the way through, which is an exemplar. But if you think about it from Frank’s point of view, he didn’t have to tell that story, but he did, which shows what a secure and good person he is, and also that he’s learning and you and I we’re all learning. All that really matters is not what happened 10 years ago, 30 years ago, or 30 days ago. All that really matters from here is what happens next.
As we move on to story No. 5, I will just ask you, reflecting about the story, just heard what most jumped out to you from that story? What do you see for yourself in Frank? What do you most admire here? What can you learn from that? Do you have any new intention that you will convert to action as a result of that story. Tinker, tailor, soldiers, spy, jockey, film professional, Czech, financial advisor, doesn’t really rhyme.
Mailbag story No. 5, this comes from Steve Hostetter. I’ve entitled it “Firefighter.” “Dear David, I purchased my first subscription to Rule Breaker in November of 2006. I was allured by the amazing returns of the service, but was just interested in the ticker symbol of recommendations. Unfortunately, my journey to becoming a true Fool, buying into the secret sauce that is Rule Breaker, took several years. I’m writing this letter and hope that my story will help your listeners, as well as my local investor compadres, avoid the mistakes I made. I’m a 58-year-old retired firefighter. I’ve been a stock market investor on and off since my mid-20s, but I didn’t have a defined strategy for the majority of my investing years. I was in the “rowboat,” as you describe it in one of your podcasts, chasing stocks up and down, occasionally making money, but often losing it.” In referencing rowboat, by the way, Steve is mentioning rowboat syndrome, which I pulled from Jack Bogle, but the basic concept here is that when you row in a rowboat and you’re paddling down the river of time as an investor, which direction you’re looking is the wrong direction, you’re looking backwards. Let’s make sure we’re not in rowboats. Let’s at least be in a canoe, so we’re paddling for a bit to finish my metaphor and then back to Steve’s note. Possibly, I suggest you get yourself in a sailboat. It’s a lot less work, and the tailwind of 10% compounding market returns is quite a friend to you. Anyway, thanks for that rowboat reference Steve. Pick it right back up there.
“I got aggressive with my so-called BETS during the dot com era, and after the bust, I checked out of individual equities for several years. Fortunately, my employer provided a 457 plan, and I plowed as much money as I could, and mutual funds for several years. Yes, the fees were horrible, and I ignorantly chased the previous years’ high-flying mutual funds, as opposed to just investing in index funds, often with poor results, but I accumulated a significant portfolio over the years, even though I usually lagged the market indices. I also maxed out Roth IRAs for my wife and myself for about 15 years leading up to retirement, jumping in and out of mutual funds and individual equities without a plan or strategy. Some years, I recall making contributions just to bring my balance back to where I started the previous year. I think it would be accurate to state I was a good saver, but a poor investor. Approximately eight years ago, I became more interested in and committed to Fool philosophy, knowledge and psychology. The discovery of podcasts moved me forward exponentially as I listened and learned while working out and doing home projects. The result has been a market crushing success over the past several years. I’ve moved all of my 457 and IRA funds into individual equities, 95% of which are Rule Breaker and or Stock Advisor recommendations. I’m presently in an investment club with a growing group of firefighters younger than myself. Our Facebook group name is Fire on F.I.R.E, Fire On Fire. I also meet with my younger brothers on an investment Zoom call every two weeks. I send my adult sons podcasts and other investment articles to the limit I think that they will tolerate. I share a lot of what I’ve learned from the Fool with my family and friends, and several of them have subscribed to Rule Breaker, Stock Advisor, or both.” Well, thank you, Steve.
“My hope for your listeners and the people in my circle is that they become true Fools as soon as possible and avoid the investing mistakes I made for so many years. I’ve made many, but the three mistakes that have been most devastating to my net worth can be summed up easily, and they are simple to avoid. They are as follows. No. 1, buy several recommendations when you start. Investing in just a few companies increases the probability of hit and miss returns. It will deteriorate your confidence, thus decreasing your interest and your commitment to investing. Conversely, investing in several companies will increase the probability of high returns and your confidence, resulting in more investing and compounding into significant wealth. No. 2, don’t sell without a Foolish well thought out reason. This mistake has cost me dearly. I have a handful of companies on my list that weren’t interesting for a while, so I sold a list that multi-bagged thereafter. I bought Tesla at $31, I sold it at $90. Need I say more? Fortunately, I also have a longer list of multi-bagging Rule Breaking companies that I didn’t sell and plan on holding for a long, long time. No. 3, get started. If you are listening to this podcast, and you aren’t a Motley Fool investor, just do it. Buy a subscription to Stock Advisor and or Rule Breaker. Open a brokerage account, fund it, and invest in 20 or so companies. Start with a small portion of your portfolio, if necessary, until you get comfortable. If I had been a true Fool at the age of 40, instead of 50, I would be significantly more wealthy. If I got onboard even earlier than that, I can’t imagine what fortune I would’ve amassed by now. Please, however old you are, get started the Foolish way now. In closing, I’d like to say thank you for the Motley Fool service. It’s made investing about so much more than just which stock ticker to buy. I love learning about new innovations, business, and a bigger world than I knew was out there. It has most certainly made me and indirectly my family and friends smarter, happier, and richer. Take care and Fool on, Steve Hostetter.”
I love what you did there, Steve, because you basically came up with lessons. In your case, you came up with three Don’ts. There are so many Do’s in your story too. I certainly encourage you to reflect on all the incredible positives and make sure that you feel that and you’re learning and teaching that out too, I bet you do. But sometimes those don’ts, those don’t be like when I was kid, try not to make the mistakes I made, that kind of an attitude can be really helpful and jump out to people, and so I certainly commend you on that. But there’s so much that’s positive here, especially your tendency to want to make account for so many other people besides, not just your adult kids, but your younger brothers on investment Zoom call a week. You’re on a Fire on Fire Facebook group with younger firefighters, and here you are through this podcast, a big platform, and your word is out sir, and thank you for telling your story, Firefighter. Dear listener, what most jumped out to you from Steve’s story? What surprised you? What do you see of yourself in Steve? What do you most admire? What can you learn from that? Do you have any new intention that you will convert to action as a result of Steve Hostetter?
Rule Breaker mailbag story No. 6. This one comes from Justin Mazza. I loved this, Justin, thank you. “I wanted to share my appreciation for all you do, specifically with your ideal blend of investing and simply fun episodes part of Rule Breaker Investing. I’ve been a Stock Advisor member for only under a year now. However, I haven’t missed an episode of any of the Motley Fool shows over the past 18 months or so. Last December, I listened to Games, Games, Games, Volume 2 on this podcast in hopes of finding a challenging game for my board game loving brother, who happens to live on the opposite side of the country at the moment. However, we were fortunate enough to have my brother home for the holidays, and I was glad I purchased Architects of the West Kingdom based on your episode. We played with friends during his time home close to 10 times over a week’s span, which created long lasting and much needed memories during a tough year. I thank you for the quality time I spent with my brother. Thanks to your recommendation on the podcast. In addition, there’s a follow-up to this. Thank you. Because of our love for Architects of the West Kingdom, I went ahead and purchased Raiders of the North Sea, another game by the same company, Renegade Studios. Since purchasing my first home a few months ago, shout out to Millionacres for some insight on all things real estate. Friday night, game night has become a bit of a tradition with a group of friends, and these games have helped bring different groups of friends together. Our group is now in the process of purchasing the expansion packs to these games. The Rule Breaker investing secondary spin on this is that I haven’t stopped recommending the Motley Fool to my friends, both those financially savvy and newbie investors. We now use game nights to bring us together, not only to play, but also to talk about the market, our financial goals, and important notes of interest from Rule Breaker and all associated podcasts. I plan to listen to the other Games, Games, Games podcasts in the coming weeks, maybe to purchase some more recommendations to continue these experiences, and hopefully, there will be more games podcasts in the future. As always, Fool on, Justin Mazza.”
Well, I know I said I love that the start, but did I forget the title it? That one is not hard to title, Gamer. Justin, I really appreciate this note. What most jumped out to you from Justin’s story, dear listener, and what surprised you? Do you see yourself in his story? What do you most admire, and what can you learn from him? Do you have any new intention that you will convert to action as a result of that story? Well, this note in particular highlighted the benefits of gaming, and boy, did he nail it for me? I have played many, many tabletop games up to this point in my life, and I sure hope to play even more than that for the rest of my life. I can tell you why I’m in it to win it every time. I’m not playing it for the Ws. If I were, by the way, I’d be pretty frustrated because I don’t win that often. Nope, I’m there for the camaraderie, the enjoyment. The competition is and can be so much fun. A lot of our games are cooperative games. If you’re a cooperative games fan, well, we’ve certainly done podcasts on that in the past. But if you think about it, a gaming table is really a platform. Depending on your context here, it’s a platform to unite a family to share special times over the holidays that you won’t forget. I love your story with your brother, Justin. Or in another context, that’s a platform for cohesion and social sharing with friends. In this case, friends who also enjoy investing, discussion of the markets and future financial dreams. Thank you, Justin. It’s a word that means so much more to me than most other people who will use it flippantly. This is a deep word. It was my title for your story. Thanks, Gamer.
“It closed this week.” Rule Breaker mailbag story No. 7, I’ve titled this one upfront. I’ve titled it “Winner”. Anybody who’s spent much time recently with me on Rule Breaker Investing knows that part of winning is losing, and the great satisfaction of big wins is often what we went through to get there. I mentioned I bookended this week’s stories with underdog stories that I think we can all especially admire. Jason Moore’s writing from British Columbia, Canada is a great example. “Hi, David. I’m a first-time writer to your program and I feel compelled today to share some of my story with you as you very quickly made an impact on my life. I can start by sharing a bit of my superhero origin story with you.” You know I love that, Jason. It goes on. “I grew up relatively poor. I have next to no financial teaching throughout my youth. At 10, I was briefly homeless as my parents were hard-working, well-intentioned, but far too trusting of others. We were farmers and the only advice that I received from my parents was to work hard and not overspend, which I value today more than ever. I had my first job outside of our farm at nine years old, and I worked through high school without much to show for it. Over the next number of years, I made my way through university and I dabbled in and out of some business ideas, but by my early 20s had not had any success and had a mass quite a debt of credit card and other loans. I was close to $50,000 down. The next couple of years, I was able to work extra jobs, focused and managed to pay my debt-off as I took a more active role in educating myself financially. Two books that helped me find my way back were called The Richest Man in Babylon by George Samuel Clason and The Wealthy Barber by David Chilton. While I know these books aren’t flying off the shelf these days, they were able to shine some light in the right direction for me. However, my problem with those books was that even though I had started to be able to save some of my money, they all talked about the miracle of compound savings with a 7%-10% return. At that point, the only return that I had seen was about a maximum of 3% in the savings account and I just did not see it was possible. I had nobody to tell me any different. Fast-forward to 2020. During the pandemic and the massive sell-off in March, I became convinced that I needed to buy a couple of stocks because they just must be dirt cheap. I found a way to do it online. I bought my first stock, Zoom, and over the course of the next several months, made a bit of money, but did it the hard way by trading rapidly and causing myself lots of stress. I knew there had to be a better way. Foolish side note, I panic-sold Zoom on a dip.” Let me pause for a quick sec. Let you know there’s a happy ending to this as you probably would expect. But before I get to the rest of Jason’s, I just want to ask one more time rhetorically so you’re thinking about it during the story, what jumps out to you from Jason’s story? What surprises you? What do you see of yourself in the story? What do you most admire here? What can you learn from that? Finally, do you have any new intention that you will convert to action as a result of Jason Moore’s story? Thank you for letting me sound that final course. I’m pretty sure you know it by now, so I won’t do it anymore.
Back to Jason’s note, “A couple of the stocks that I bought along the way were actually some of my biggest winners. They were recommendations from Motley Fool articles that I found online. I knew I needed help. So I am proud to say that just over a month ago, I subscribed to both Rule Breaker and Stock Advisor. Now, about the same time I came across your podcasts, I’ve made my way through your 2020 catalog, and then I started from the beginning, and I’m just now entering the 2018s. I have yet to see any big downturns. I’ve been very quick to sell over the course of the past year, but during the last month, I’ve been able to calm my nerves and focus on your core values for investing. You strike me as a man of integrity, my favorite all-time quote is, ‘People with integrity expect to be believed and when they’re not, they lead time, prove them right.'” Love that line. I had never heard that one before, Jason. He concludes, “Although I’ve never met you, I have a lot of trust for you in your fellow Fools. Going back through four years of podcasts, I have the benefit of, in a sense, knowing the future as I listened to your stock recommendations and the way you think about the market. Well, I’m happy to say that my portfolio now has over 20 stocks in it and has been mostly winning. Your book, Million Dollar Portfolio has been helping me adjust my percentages and a highly recommended read to any of your listeners. I am 41 years old now with two boys, and luckily, they will grow up with much more financial knowledge than I ever had. Thank you. I was going to ask some questions, but after looking at how long this note is, I believe I’ll save those for a rainy day. I look forward to foolishly investing alongside you into the future with my hands taped to my sides, not hovering over the “Sell” button. Fool on, Jason Moore.”
So we conclude one of my favorite of the more than 60 monthly mailbags Rule Breaker Investing has brought you over the years, whether you enjoy this one alone on a jog or together with your 10-year old daughter, whether you listened straight through or painstakingly pause this week’s podcast seven times and rode out your best answers and intentions, whether you’ve subscribed to a Motley Fool service, been listening to this podcast for one month, or since a funny-looking newsletter came out in the 1990s, thank you. Thank you for suffering this Fool gladly. Thank you for sharing your stories. Really sharing of yourself, sometimes is very private, always very beautiful reflections of what you did or said or thought, whether in British Columbia, the former communist Czech Republic or after falling off a horse, literally or figuratively. These are great stories.
Tinker, sailor, soldier, spy, jockey, film professional, Czech, financial advisor, firefighter, gamer, winner. It’s like in the great stories, Mr. Frodo, the ones that really matter. These are the stories that stay with you, that means something, even if you’re too small to understand why. But I think, Mr. Frodo, I do understand. I know now. Folks in these stories had lots of chances of turning back, only they didn’t. They kept going because they were holding onto something that there is some good in this world and it’s worth fighting for. Fool on!
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
View more information: https://www.fool.com/investing/2021/03/10/tinker-tailor-soldier-sailor/