"We manage our portfolio under the normal constraints of our personal and work lives. It may shock you how unimpressively normal this is."
David then explains in the principle how normal this really is. We have no quote machines. No wireless service. No Bloomberg. (Our Fool News team has Bloomberg terminals to help them provide a timely news service, but we don't need up-to-the-minute news to make portfolio decisions, and we trust that you don't either. This is why our Fool News, as timely as it is, is long-term in its analysis, something sorely lacking at most news organizations.) We don't have a charting service. We don't subscribe to any magazines. We don't regularly read financial newspapers. I don't visit other financial sites on a regular basis. We don't have an assistant to help us research stocks. If we wanted to be more active with the portfolio (which we don't), we would need one.
Probably not much different from you, a typical day for David or me doesn't even involve the stock market all that much, and sometimes not at all. Most mornings, I'll check the Fool's Breakfast News around 10:30 a.m. -- rarely earlier -- and then I won't look at the stock market at least until early afternoon, and that's if I have a column to write and don't have a topic.
Rather than "watching the market," days at the office are frequently spent in meetings, at interviews with potential Fools, and sometimes on the phone with journalists. They're also spent answering e-mail (which can eat several hours a day), having periodic conversations around the office about public companies (very rarely with a focus on short-term moves), reading and posting on the message boards, and researching articles. Much of today was spent writing a special on online healthcare that will run later this week. Now at 4 p.m., I've already been writing for several hours (I'm still not finished with the special), but have yet to consider this portfolio. Now at 4:15, I'm ducking into an interview. Luckily, we're long-term investors so our stocks are not a daily focus, and shouldn't be.
[4:40 p.m. Back from the interview.]
I'm busy enough to essentially let the portfolio drive itself for weeks at a time, but next to David Gardner's schedule, I'm an utterly free Fool. David is free in that I don't believe he does things that he doesn't somehow like to do (Foolishness means enjoying what you're doing, and he always seems to), but his time is accounted for almost every minute of the day. Like Tom, David travels probably at least two weeks of each month, and when he is in the office, he's often in meetings for a majority of each day. Many times, when David sits down to write his Rule Breaker columns, he emerges from a meeting just a few hours before deadline, sits in the middle of the second floor at Fool HQ (which is absolutely swarming with people), and commences to write on the spot -- perhaps not unlike young Beethoven trying to compose in the middle of a storm.
Because David will be flying West on Wednesday, today he is trying to write his Tuesday column.
"What is wrong with you Rule Breaker Fools?" you might ask. Maybe you thought that we were "stock people," living and breathing this market stuff and reporting on it every single day.
Nope. This portfolio is managed under the usual constraints and demands of a normal working life away from it. We are investors writing for investors. Everyone is, or should be, an investor. You. David. Paul. Me. We're all investors. However, everyone has lives outside of investing, including us. Most people should have other lives -- absorbing other lives. Relatively few of us should or even could watch stocks every day to make a living at "the market." In fact, the fewer people who do this, probably the better off we'll all be -- return-wise and living-wise.
Stocks and the Day-by-Day
Company stocks rise and fall based on a business's merit in the long run, but on a daily basis the stock market is as random as a roulette wheel. On a daily basis, the stock market rises and falls with reckless abandon. Nobody can predict the market's daily direction, even if the movements occur based on scheduled news events. When you watch the stock market closely every day to see where it's going, you're taking what is -- over the long-term -- a natural progression or regression for a company's stock, and you're turning it into (by watching too closely) something entirely random. Did America Online (NYSE: AOL) deserve to fall from $175 to $80 in five months this year? Did AOL deserve to trade at $175 in the first place? These are only near-term questions and, appropriately, they don't have answers.
On the flip side, if you last looked at AOL on December 31, 1998, you last saw it when it was at $80. If you looked again today for the first time since then, you would see it at $100. This is far from the maddening daily volatility that one has seen during 1999. Instead, it is a peaceful, successful rise for the stock this year. The stock's movement even holds some logic, if looked at this way. AOL added 5.1 million members in fiscal 1999. The stock should, theoretically, rise -- and it has. Sure, there is some coincidence here, but it makes the following point.
Long-term investors, if they're confident in what they own, could have checked in today for the first time since last year and then just as peacefully removed themselves from the daily madness again, perhaps only to return to see the quarterly results next month. That would be Foolish. This is largely how the Rule Breaker operates. As a result, sometimes it is said that we don't talk about our companies enough. I might argue that strong companies don't demand much talking about beyond an introduction and quarterly updates. We enjoy talking about our companies in this column, but we don't always feel the need.
How It Goes Is How It Should
As the Fool has grown, I see David less and less. We keep up-to-date with e-mail and we plan a monthly meeting to talk about this portfolio. The last few times, this has meant a walk to Subway for lunch, and by the return walk we have many of our decisions made. We have some transactions in motion at the moment, but transactions have always taken us some time because 1) we give them in-depth consideration, wanting to be as sure as possible, and 2) we run this portfolio like normal people, focusing on it only after the other more timely responsibilities of full-time work and family are addressed. We're not at all lax, mind you. We just have priorities.
For those of you who may believe that we aren't working hard enough to manage this money, I humbly point to the portfolio's 1,096% return and compare that to the average, very active, mutual funds' few hundred percentage point return over the same period.
(You swim a lake by taking easy strokes, slow and steady. If you thrash about, you risk drowning. And you certainly won't win the race to the other side.)
A Fool's Priorities
It is unfortunate that in many of the world's societies, work is the number one priority. Often, this is necessary for survival. However, better living for everyone is slowly spreading over the world (the world is improving over time, whatever doomsayers claim), and with this improvement in lifestyle comes more choices. The choice to put work first and foremost is one that should perhaps be questioned first.
Many Americans are fortunate enough to have a choice, or are beginning to have a choice: work 60 hours a week, or spend more time with family and friends or on healthy interests outside of work. Given a choice, a Fool would typically pursue the latter. A Fool pursues a rounded life. When in a fortunate position, a Fool can put family and friends first, and still work as if they hadn't. It is in one's mind that one prioritizes, and actions follow the determined mind. If you're determined to have balance and to do exceptional work, too, you can find a way.
As much as I respect the notion of excellent work, I wouldn't say that I put my job first and foremost. It naturally goes after family and friends. As logical as this sounds and whatever people claim in private, this is an unusual practice in America. Stating that family -- or a personal life -- comes first will result in raised eyebrows all down the corporate hallway. This is how the Fool as a company thinks, however, and it is how it actually operates. Rather than making the company weaker, I believe that this philosophy makes it considerably stronger, and enduring.
Hopefully it shows in Motley Fool articles. The Fool's writing aims to be well-rounded and to help readers by acknowledging, if only under the surface, that all of you have a full life outside of investing and your work. We do as well. This is partially why we don't focus on the insignificant small events of the day-to-day. (Every other journalistic offering seems to do that.) It isn't important to us that eBay (Nadaq: EBAY) fell 5% today. eBay's business hasn't changed. Plus, if we cover the stock's move today, we logically must cover it again tomorrow. That's a vicious cycle that benefits nobody, and that instead wastes all of our time.
To close, given that all of us can help one of us much better than one of us can help all of us, the message boards are an ideal place to learn in an efficient and Foolish form. I could have written about one of our companies today, but there is much more knowledge than I can offer about it already on the message boards. It may take some time to read it, but if you want information at this moment, it is out there for the taking. On the best Fool message boards (and they will all become more and more exceptional as the community grows and as Fool techies create great screening tools), you can ask a question and have it answered smartly and Foolishly by several Fools. Then you can get on with your Foolish living.
--Jeff Fischer, September 24, 1999
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