Fribble Friday, December 31, 1999

A Fool's Fifth Anniversary: Five Years of Gratitude

By Mike Buckley (M BUCKLEY@aol.com)

When everyone in Times Square, Las Vegas, and everywhere else in the world will be celebrating the beginning of a new century, I will be celebrating the anniversary of a journey toward becoming a learned investor begun five years ago. This end-of-year piece gives thanks to all the people who have helped me on the first leg of those amazing travels, which are rich with financial and personal rewards.

Almost exactly five years ago I stumbled into The Motley Fool. The motley gang I first ran into was a group of Beating the Dow enthusiasts rallying around the work of Ann Coleman, later to become TMF Annc and currently head of Researching the Dow at The Motley Fool. Ann, in the earliest of the online days, helped devise the original, now famous Foolish Four mechanical method of outperforming the broad market. My thanks go to Ann and her gang for demonstrating to me in a meaningful way that the online community of individual investors at The Motley Fool is not a bunch of get-rich-quick hypesters, but is instead a diverse group of caring, sharing people whose ongoing collective research and exchange of ideas can't be matched by the stuff in any magazine, book, or brokerage report on the planet.

Having learned that important lesson about the online community in the beginning of 1995, it was still in that first year of serious study that the Foolish folk taught me most everything I know today about valuing stocks. Even more now than then, I'm concerned about the number of so-called investors who put 10% or more of their net worth into a stock without having an opinion about its fair value. People who wouldn't think of buying an apple, a car, or a home that way buy stocks that way every day. I'll always be indebted to the Fools for teaching me about the many methods of valuing stocks.

All that learning in just one year? Yep, thanks to the Foolish online community. You can understand why my investing diary that puts the spotlight on each year's lessons contains the following note about 1995: "Learned more from Motley Fool this year than previous five years combined."

Armed with the confidence that came with the new-found knowledge, 1996 is the year that my portfolio was for the first time fully invested. You won't be surprised to learn that all the capital was invested in common stocks.

1997 was the year I first developed a portfolio of stocks ranging from small- to large-cap stocks that were hand selected. My learning process had brought me to the realization that though mechanical methods of investing are great for some, the world of hand-selected stocks was to become my cup of tea. I had been following the Fool Portfolio, now known as the Rule Breaker Portfolio, for two years. Thanks to being able to view the portfolio's results in real time, and thanks to the great daily write-ups by the many people who chipped in to help, the highlight of my online learning in 1997 was fully comprehending the lesson that remains most important to me today -- that significant investing mistakes can and probably will be made without causing long-term financial failure.

It's a good thing that concept penetrated my brain in 1997 because it didn't happen a year too soon; 1998 was an awful year for my portfolio. Again, from my diary: "The portfolio dropped 26% in the first three weeks of the year when the S&P went up 5%." Trust me when I mention that it got worse that year before it got better. The details throughout much of the year got so ugly I won't force them upon you. Yet I am certain that I'll look back on 1998 as one of the pivotal years of my journey to becoming a learned investor. That was the year my portfolio took it upon itself to prove that when things don't go the way we want in the short term, long-term financial health remains intact. That was also the year that some very supportive Fools helped me maintain the courage to stay the course.

The other reason 1998 will likely remain a hallmark in my investing career is because that's the year an online Fool introduced me to The Gorilla Game. In that easy-to-read collection of metaphors, the three authors put in context the nearly unassailable power of a company that owns a proprietary technology around which vendors, third-party marketers, and customers rally, doing everything possible to ensure the success of that company's products. Very Foolishly, it's strictly a game of long-term investing. For me, a person with no hint of technical background, Gorilla Game is the first source of any kind that demystifies the mystique of high technology. In the nearly two years since I first thumbed through its pages, the online community at the Fool and elsewhere (no need to mention competitors!) helps me grasp the overview and details of gorilla gaming in ways I simply couldn't achieve on my own.

The fifth year of my journey to becoming a learned investor, 1999, was spent mostly reflecting and refining. Having spent the previous four years learning how to research companies and ultimately doing the research, I'm actually burned out on all of that. This is a year spent mostly in enjoyable communication with my online friends -- and I don't use the term, friend, lightly -- discussing the intricacies and ramifications of gorilla gaming, always remembering that it's very possible, even likely, to make huge mistakes without causing long-term financial meltdown.

In my final tribute to all of you who have helped and continue to help me in my journey, I'm reminded of Jeff Fisher's (TMF Jeff) thinking. By his definition, I'm not yet an "investor" by virtue of the fact that I've been buying stocks for five years and not one of them has been in my portfolio more than three years. Though I disagree with his criterion, I'll give him the credit for reminding me that the goal is to settle on a strategy or combination of strategies that allows us to feel comfortable with our selections over the very, very long haul, certainly longer than three years.

Thanks to all of you, I think I've finally arrived at the fundamental strategies I can live with for decades. Thanks to all of you, it's not a bad position to be in as I hail the beginning of the new century and at the same time celebrate this Fool's fifth anniversary.