An Appreciation of Fools and Folly

by Jerry Thomas (TMFCheeze)

(August 4, 1999) -- In July 1993, three likeable young men published a newsletter beneath a masthead that read: The Motley Fool. Its sixteen spare pages held a loose hodge-podge of amusing material: From David Gardner, a think piece on college athletics; from brother Tom came a slice-of-life article on the traffic in Boston's Callahan Tunnel. Page ten offered a bit of brief, whimsical correspondence between Fool co-founder Erik Rydholm and novelist Julian Barnes. And on pages thirteen through fifteen was a rudimentary stock portfolio � included because, as the editors explained, "We wouldn't feel good about ourselves if all we tried to do was amuse and inform our readers."

Call it the First Draft of Folly. It brought together many of the elements that characterize The Motley Fool we know today. It had the humor, the whimsy, the sense of fun. There was that spirit that celebrates both literary invention and financial acumen � a love of both art and commerce. It had a naive charm of the sort you might associate with your favorite nephew's lemonade stand. But there was one thing it lacked.

Community.

Let's face it: whatever The Motley Fool has today it owes to you, the Community, that rose to create it. Whatever success we enjoy is due not merely to our own charms � and certainly not because David or Tom Gardner look so good on the cover of a magazine. Our success � which is far and away beyond what anyone would have had any right to expect in those innocent days just six years ago � has come to us because, for whatever reason, investors around the world have found The Motley Fool a suitable place to pool their resources, roll up their sleeves, and do the work that needed to be done. And in order to do that, The Motley Fool had to go online.

In those days, the Internet was still a curiosity, a fad in the making, mostly unnoticed except by the technically minded: hobbyists, geeks. Besides the hundreds of local "bulletin board" services dotting the country, cyberspace was ruled by perhaps a half-dozen larger online services like America Online and Prodigy, each self-contained, each linked to the larger network only by email. Little did anyone suspect at the time that these embryonic networks would soon be at work transforming the Wall Street establishment. Suddenly investors everywhere could pool information, evaluate investment prospects, critique information sources, and argue particulars in a way that had never been possible before. Few, if any, understood the grand shift of power that was about to take place once the hundreds and thousands of investors online united their interests in one great conversation.

Early on, Tom and David discovered that they had a penchant for online message board posting, and the boys devoted endless hours contributing to the discussion groups on AOL and other online services. Long nights were spent in compulsive discussions of the fine art of stock selection, in tweaking and teasing the conventions of the financial services industry, and even lampooning the culture of the message boards themselves. David and Tom's good-natured irreverence, their eye for the judicious prank (see the famously strange saga of Zeigletics), and the Fool's staunch devotion to unblinking common sense soon won them a large following. America Online, always quick to jump in front of a parade, made an offer, and on August 4, 1994 � five years ago today � The Motley Fool Online was a reality.

Our boys shed the dead tree trappings of their off-line newsletter and devoted their attentions to their new enterprise in cyberspace. In its first incarnation the New Fool was as elementary as that first issue of the newsletter. A single "Fool" Portfolio was launched that first day. A game called "Today's Pitch" offered readers a chance to win free online time � a valuable commodity in the days when flat-fee access was unheard of. The single message board earned perhaps 25 posts per day. As beginnings go, it was auspicious enough.

And so, without anybody quite realizing it at the time, the right combination of attributes for the new era had suddenly converged: a savvyness for the new medium, an irreverence for the old order, and a respect for and an advocacy of the interests of the individual investor all wound together in a mix that drew cheerful attention from the investing public � as well as scorn from the halls of the Wall Street elite. Of course, it didn't hurt that the Fool Portfolio (renamed the Rule Breaker Portfolio in 1998) was outperforming the indexes by an astonishing degree. Suddenly, power had shifted away from the towers of Wall Street and into the hands of the people at large, and Fools were there at the scene, applauding, cheering, and hastening the change.

This company, the Motley Fool, emerged at the crest of that wave, and we remain the advocates of the individual investor, a champion of this grand social movement, the custodian of Foolish values.

By now, we can resort to the writer's short cut, and say, "The rest is history." For look at all that has happened since that amazing moment when Fools everywhere got wired: the cost of equity investing has dropped dramatically. ($7 a trade? Are you kidding??) Access to information is free and open to a degree never before imagined. (When was the last time you paid to look at an SEC filing? Or for a real time quote?) Investors are sharing information in ways that were simply impossible before, discussing company performance and investment strategies in forums with like-minded people literally around the world. It is a world where exclusivity is on the run, where privileged access to material information is exposed, where Wise underperformance is increasingly deemed intolerable. It is a world that is, in a word: better.

The Motley Fool cannot claim credit for these changes, but you Fools certainly can, because the principles and technologies responsible for the change are themselves very Foolish. They work, quite automatically, to promote Foolish causes: individual initiative, community participation, and the demise of the cronyism and insularity of the traditional financial establishment. These values existed long before the Motley Fool was ever conceived, and would have been worth promoting even if the company had never been founded. The Motley Fool exists to advance these values, and we are successful only to the degree that we adhere to them. That this company emerged so suddenly is perhaps surprising, but the fact that a company espousing these values and catering to these interests would emerge was inevitable. The social forces in play at that historic moment would have demanded it.

A salute, Fools. This anniversary is yours as much as it is ours.