Rule Breaker Portfolio
Rule Breaker Information and Principles
Principle 5

By David Gardner
updated March 20, 2001

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Rule Breaker Principles

Our fifth Rule Breaking principle is as follows:

We manage our portfolio under the normal constraints of our personal and work lives. It may shock you how unimpressively normal this is.

At The Motley Fool, Inc., we have four core values that guide us in our daily strivings. They were dreamed up not by me, or by brother Tom, but rather by all of our employees following a weekend of group discussions we held a couple of years back. We had gotten together to determine what we all asserted to be true and important, what we held in common. The very first of our core values is the most important, and it is honesty. Here is the way we put it:

We bring an uncompromising honesty to all our endeavors, great and small.

Given this guiding principle in our day-to-day work lives, you can see why we have fashioned this particular Rule Breaking principle of portfolio management. Here's why: I want to demystify who we are and what we do at Fool HQ.

I'm David Gardner. I have invested my own portfolio in the stock market for more than 15 years now. (That may sound like a lot or a little depending on your own perspective. From my point of view, I'm too old to be a novice and too young to be an "expert." I like it that way.) Years ago, my brother and I started a newsletter to share our interest in investing, and our enthusiasm for it, with as many people as that newsletter could reach. We wanted to reach, to teach -- but to do so in a strikingly original and amusing way (those were the profs we always liked most in our own schools).

Anyway, through a nice mixture of luck and hard work, Tom and I converted our newsletter into an online site, and here you find us today trying to do what we've always been doing: striving to educate, to amuse, and to enrich our readers. We now do this with hundreds of other full-time Fools who are equally dedicated to our mission and to helping you with any questions you have.

We believe people should manage their own money, and that's what we're doing and what we're teaching others to do. One of our primary beliefs is that personal responsibility is not only crucial to the management of one's money, but of one's life! We are here to teach as many people about money as we can, hoping that they will be better off and that society will be better off for them. The more people taking control of their own lives, the less we'll have people looking to their government, or their boss, or their parents or kids, you name it, to do it for them.

At the same time, even as we try to create a better world full of people taking control of their own destinies, alongside that we are trying to create a worldwide community of people united by our beliefs as a form of support system. There was a great void in this, before the Internet came along... but I digress.

I am not an institutional investor. I do not have a Quotron. I do not use a Bloomberg box. I have not met the management of most of the companies I invest in, unlike Wall Street analysts. The information you get from us here in Rule Breaker Portfolio Land is just our own opinions -- although it is informed by what we learn from our community. (We listen very carefully.) So if you're thinking we have any specialized form of information that helps us out -- because we're the Internet finance guys, and we MUST know lots of insiders -- you're wrong. We are quite removed from the businesses we invest in, even though we try to minimize that distance by being familiar with their products and services.

Speaking of being wrong, we're frequently wrong. That has led to a long litany of memorable losers in our portfolio. Part of this is bad thinking, but part of it is also because we don't always have enough time to "do things right." Case in point: In 1997, we lost to the S&P 500. That was largely because we failed to find sufficient time to reinvest the cash that was just sitting on the sidelines in money markets. Long-time readers will know that if we had only taken the time to put that cash in an index fund, we would've beaten the market. Why didn't we? We shake our heads. We're just everyday human beings who simply don't achieve all that we'd like.

If this is sounding like a Jimmy Swaggart "I have sinned" confession, I am sorry! I guess I have sinned. But seriously, for all of us who contribute content regularly to this space, we need you to know that we are not always on top of our own stocks. We don't catch every development as it happens. Your faithful Rule Breaker portfolio managers are not the impressive, impeccably dressed, top-gun, networked geniuses that you might expect of people trying to ply their trade publicly in the investment and media world. We console ourselves about this by remembering that we are not slaves to the Great Market Master, constantly at its beck and call. We're not different from anyone else who taps into our site every day to see how his or her investments are doing and find some new ideas.

We are always looking for new ideas. We have people on the discussion boards who know far more about many more companies than we do. But one thing that unites all of us is that we have limited time for this stuff, limited attention, and we're trying to do the best we can based on the attention and knowledge and spirit that we can bring to the endeavor.

This is uncompromising honesty, to which I want to return in closing because it's the foundation from which all of our business efforts must proceed. And you can help all of us in these efforts. If you ever feel anyone in Fooldom -- and I include every one of our readers, contributors, employees, founders, you name it -- seems to be less than honest, depending on the circumstance, I hope you will either confront them about that quietly, or bring it to the community's attention.

To close, remember this: Common people investing in common stocks. That's the Foolish way, and it starts with this portfolio's managers.