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The world is getting very Foolish

by David Gardner (DavidG@fool.com)

ALEXANDRIA, VA (Oct. 21, 1998) -- Before I begin tonight's writeup, I want to urge you (if you don't have time to read the whole thing) to skip to the bottom and note a new opportunity we're offering up, which is to help out any of your friends or family who are currently not into investing or money, and whom you would like turned onto this stuff. Again, if you're pressed for time, scroll down to the bottom and check out that little writeup for a way you can begin to change someone else's life.


You know, sometimes it's easy to forget exactly what we've been doing. I forget it. You may forget it. Many people who are new to Fooldom may not yet even know it. So let me now explain it.

Four years, two months, and 17 days ago, we created this space. By space, I mean an online space that anyone can go to from anywhere and find -- for free -- a couple of guys who explain investing as they know it, pick their own stocks, and invest their own real money right in front of you. We began with an outrageous premise: Average investors (us), who do not get to meet with the CEOs of the companies they invest in, who do not rely on any financial professional to call the shots for them, who do not trade frequently, who did not receive any "formal" financial training, and who receive zero "inside Wall Street" info, can and will BEAT the market. We called it Investing Foolishly.

Up to then, a trillion-dollar industry had sprung up based on the notion that you cannot and should not invest your own money. You should give it over to someone else, for fees, because you need a mutual-fund manager, a broker, a planner, or (in some cases, God forbid) a HEDGE-FUND manager to do it for you. A trillion dollars was on the other side of the table, and its marketing and message were ubiquitous. It continues today, as Merrill Lynch got big publicity recently for telling America (through the Wall Street Journal) that the "do-it-yourself model of investing, centered on Internet trading, represents a serious threat to Americans' financial lives."

Then again, Merrill Lynch is now beginning to lay off its own -- 3400 jobs, the latest count. I got an e-mail from a fellow Fool recently who was connecting that move with the revolution we're creating in online finance. He said, "You think so?" I said, "Damn straight!" We're not malicious about it, and we're not directly responsible. But it just stands to reason: Everything The Motley Fool stands for -- you can and should do this yourself -- undercuts everything Merrill Lynch stands for -- you need us. And let's watch together over the next couple of decades who's right!

Exhibit #1: this portfolio. This year, The Motley Fool Portfolio is up an astounding 42.59%. The S&P 500 is up 10.25%. For its history, The Motley Fool Portfolio is now up an even more astounding 378.53%. The S&P 500 is up 133.39%. Those of us who are involved with the portfolio, or who have followed the portfolio for a few years and may own some of its stocks, need to pinch ourselves from time to time because what is going on here is incredible. Do you understand why?

You may think I'm going to start talking about the degree of outperformance. But actually the most amazing reason is just this: It's free. Free! Our stock picks, our reasoning about them, our daily writeups and updates about our stocks and (more importantly) investment lessons in general are free. Consider that a trillion-dollar industry is attempting to sell people on the notion that financial management is and should be expensive. Meantime, we are demonstrating that not only is it too expensive, it's not even good at what it does. We were saying it for years before it became fashionable: over 90% of all equity mutual funds underperform the market averages every year. That's why we teach new long-term investors just to buy an index fund, to bypass the nitwits selling underperforming mutual funds, and the many financial magazines that back them. If you think you can do better than the index fund, buy individual stocks to try to beat the indices. If you don't succeed or don't enjoy it, return to the index fund. If you do succeed, welcome to Foolishness.

As I look over another S&P 500-beating day, I look at our returns of 43% this year and I must admit that even I am quite surprised by how well things have gone. I mean, do you know of a single mutual fund or newsletter portfolio in the world that is up 43% this year? You won't see any financial magazine mention our performance; they'll only write about us (as they have in the past) after a bad month or quarter. "The Motley Fool Portfolio Is Down," their headlines will read, ignoring the historical performance of the the portfolio, and neglecting to point out that we're the #1 site not just for online finance but for creating value for investors the country over -- soon to be the world over, as The Motley Fool UK Investment Guide debuts next month. And just as our 43% return beats every mutual fund in existence this year -- more than 8000 of them (what are the odds?) -- our historical return of 378.53% also beats all mutual funds since we started on August 4, 1994. In fact, if you know of anything that has outperformed us over that period, e-mail me. I'd like to hear it. (And I'd like to hear whether those returns came about through infrequent trading, and whether the information was provided free.)

We do have to toot our own horns, occasionally, because we've discovered with a grin that if we don't do it, nobody in the financial world will! So it's important that everyone know about the value of these portfolios as teaching tools, and the value of Fooldom overall. If you believe in Fools, it's important that you communicate our mission and our values to other people, to help us grow the mission bigger. It's a mission that we share with you -- we're all a part of it. The Motley Fool is the most distinguished online community in the world, and the most active. Just ask Starbucks, which recently opened up its conference calls to all investors following the combined e-mail efforts of The Motley Fool community.

I want to close by saying thank you tonight to you, who understand our mission, and particularly those who let others know about it. Our business -- whose mission is to serve individual investors the world over and, in so doing, dramatically improve the world -- gets stronger every day that you tell someone else about Foolishness. That person may be in credit-card debt, or perhaps just inherited money, that person may have a bad broker, or that person may be a great long-time investor who's looking to have more fun at it. All of those people -- in fact, anyone I can think of, period -- will enjoy and benefit from The Motley Fool, whether it's our Web site, our books, our newspaper column, or our radio show. Because it's all about money -- which touches everyone's life. It's all aimed at helping each one of us make better decisions with our money.

We're announcing tonight that we have now reached 900,000 online Fools. Nine hundred thousand Fools! We're still in the bottom of the first inning in this business, both in terms of the growth of the Internet and in the ways that The Motley Fool will serve you and society going forward. The old Redskin football coach George Allen was famous for a line he delivered before a Super Bowl, as his team huddled around him, "Forty-eight men, working together, CAN'T LOSE!"

My feeling is even stronger: 900,000 Fools, working together, can't lose!

Let's paint the world Foolish.


If you are fired up about Foolishness tonight and want to help someone else get Foolish, click on this link to e-mail Dell Wilkinson right here at Fool HQ, letting her know of any friend or friends in the following situations:

  1. Is in debt and needs help getting out.
  2. Is in mutual funds, and doesn't know about index funds.
  3. Is into the stock market, but could use some Foolish guidance.

Indicate for each friend both his/her e-mail address, and #1, #2, or #3 above, and within 24 hours we will send a friendly and informative e-mail with Foolish help. And if you wish, we'll inform your friend or family member that you requested we send this email to them.

Folly forever!

-- David Gardner, October 21, 1998

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Today's FoolWatch: all the latest in Fooldom.

Bookmark Live Fool Port Quotes

10/21/98 Close

Stock Change Bid ---------------- AMZN +3 1/4 110.00 AOL +4 1/16 107.13 T + 1/4 62.13 DJT +1 3/8 4.88 DD -2 3/16 62.00 XON -1 75.56 INVX - 15/32 10.66 IP - 1/2 48.06 IOM --- 4.19 KLAC +1 3/8 29.44 LU +4 1/4 79.00 SBUX - 1/8 37.25 COMS +2 11/16 32.94 TDFX + 7/16 10.56
Day Month Year History Annualized FOOL +1.53% -0.02% 42.59% 378.53% 45.03% S&P: +0.56% 5.20% 10.25% 133.39% 22.30% NASDAQ: +2.17% -1.13% 6.65% 132.55% 22.19% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 107.13 2845.88% 9/9/97 580 Amazon.com 19.11 110.00 475.59% 10/1/96 84 LucentTech 23.81 79.00 231.82% 5/17/95 1960 Iomega Cor 1.28 4.19 227.04% 8/12/96 130 AT&T 39.58 62.13 56.97% 4/30/97 -1170*Trump* 8.47 4.88 42.44% 2/20/98 200 Exxon 64.09 75.56 17.90% 2/20/98 215 DuPont 59.83 62.00 3.62% 2/20/98 270 Int'l Pape 47.69 48.06 0.78% 8/13/96 250 3Com Corp. 46.86 32.94 -29.72% 7/2/98 235 Starbucks 55.91 37.25 -33.37% 8/24/95 130 KLA-Tencor 44.71 29.44 -34.16% 1/8/98 425 3Dfx 25.67 10.56 -58.85% 6/26/97 325 Innovex 27.71 10.66 -61.54% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 76058.75 $73476.88 9/9/97 580 Amazon.com 11084.24 63800.00 $52715.76 5/17/95 1960 Iomega Cor 2509.60 8207.50 $5697.90 10/1/96 84 LucentTech 1999.88 6636.00 $4636.12 4/30/97 -1170*Trump* -9908.50 -5703.75 $4204.75 8/12/96 130 AT&T 5145.11 8076.25 $2931.14 2/20/98 200 Exxon 12818.00 15112.50 $2294.50 2/20/98 215 DuPont 12864.25 13330.00 $465.75 2/20/98 270 Int'l Pape 12876.75 12976.88 $100.13 8/24/95 130 KLA-Tencor 5812.49 3826.88 -$1985.62 8/13/96 250 3Com Corp. 11715.99 8234.38 -$3481.62 7/2/98 235 Starbucks 13138.63 8753.75 -$4384.88 6/26/97 325 Innovex 9005.62 3463.28 -$5542.34 1/8/98 425 3Dfx 10908.63 4489.06 -$6419.56 CASH $12005.75 TOTAL $239267.22

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