In this episode of Motley Fool Answers, Alison and Robert take their fans behind the scenes at a special Motley Fool member event in Boston. Tune in as David Gardner, Raj Sisodia, and Morgan Housel share their insights on investing, conscious capitalism, and the nature of innovation.

A full transcript follows the video.

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The author(s) may have a position in any stocks mentioned.


This podcast was recorded on Nov. 29, 2016.

Alison Southwick: This is Motley Fool Answers. I'm Alison Southwick and I'm joined, as always, by Robert Brokamp, personal finance expert here at The Motley Fool. How ya doing, Bro?

Robert Brokamp: I'm splendid. How are you, Alison?

Southwick: I'm good. In today's episode, we are sneaking our listeners into a recent member event in Boston so that you can eavesdrop on some of the highlights. We'll also answer your question about how we, personally personal finance. All that, and more, on this week's episode of Motley Fool Answers.


Southwick: It's time for Answers, Answers and today's question comes from Albert. He writes: "I am starting to get proactive about my expenses, but I feel I am still a newcomer. Can you provide advice on what inspires you both to think high-level about your finances in life? I haven't had much guidance growing up and just want to hear what any of your long-term goals are and how you build your plans to achieve them." Any personal examples and obstacles along the way Albert would also like to hear about. Do you want to go first?

Brokamp: I'll go first. It's a very interesting question. I was thinking about how I created my beliefs about money in general, because he talked about expenses, and I've always been someone who was frugal. I was never comfortable spending a lot of money and I guess that comes from my parents, although looking at some of the expenses from other people in my family ... my sisters!

Southwick: Do they listen to the show? Hope not.

Brokamp: I doubt it. A couple of them are more comfortable with spending money than I am, so I don't know if it came from my parents. But we all did go through an experience in high school when my dad's business went belly up and we went through some hard times. I think that was very informative for me. So when I think of my goals as a father, it is to have financial security for my family and that really breaks down into two main categories: college and retirement.

Those are the things that motivate me. Those are the things that whenever ... It was my funny. We were sitting around the table and my wife said, "What if you won the lottery?" She's asking everyone at the table, "What if you won the lottery? What would you spend the money on?" And then she looked at me and said, "You can't say retirement and college. Choose something else."

And how I stay on top of them is basically I do run my numbers at least once a year in terms of whether we're on track to have enough money to do those things. In terms of obstacles, it's really time. So having the time, on the weekend or whatever, to do all the little, silly personal finance stuff that you probably should do to make your life a little better.

Southwick: So I am also a naturally frugal person. Most of my money lessons I learned from my mom and my dad, of course, and they are both completely different. I think I said this before on the show. My mom used to like to say, "Alan, you're good at making money and I'm good at saving money." I think that's what she used to say.

Because my dad is very good at making money, but he's also very good at spending money. He came from a family that didn't necessarily have a lot of money, and rather than becoming frugal as a result, he ended up being the "Who knows about tomorrow? Let's have a good time today and have all these good experiences and spend money." And for most of his life he was very good at making money so it wasn't an issue.

My mom, on the other hand, came from a fairly wealthy family. She was just naturally frugal and I think often lived under the fear that you may not have money tomorrow. And one of her stories that I will retell to you all, and now Mom gets to hear one of her stories told back to her, was that her mother, my grandmother, once joked that she was down to her last $20. My mom, as a child, heard this and got very worried.

And, of course, it wasn't her last $20. Maybe she was just saying it was the last $20 she had in her wallet. It was not their last $20, but for some reason my mom, as a child, thought, "This is our last $20 and we're going to be out on the street." And she was terrified. I think that was kind of an offhanded comment that her grandmother made, but it really affected my mom long-term.

So I learned most of my frugal habits from my mom, but I also think I learned from my dad to also spend money and enjoy yourself, so Ron and I will not hesitate to spend an insane amount of money on a really nice meal, which is probably one of the most ridiculous things you can spend a lot of money on next to like a boat. But that's what we enjoy doing, so we're not afraid to treat ourselves now and then. That's how both my parents influenced my thinking on money. I'm naturally frugal and scared of not having money. I like having money.

Also I would point out that Ron and I have both been very lucky that we've always been employed and we have good health. I think if either one of those went away, we would be in such serious trouble ... not because we didn't make good, sound financial decisions, but just because that can absolutely sink you.

Brokamp: Right. That's true. One of the biggest causes of people who go into bankruptcy is because of medical issues.

Southwick: Right. So on the one hand we try to make a series of one good decision after another. Not spend too much. Live within our means.

Brokamp: And you've been planning for a while. I know both of you have been saving for retirement for a while.

Southwick: Yeah. And I'm not particularly worried, but as far as goals go, I think just not being out on the street is a pretty good one. I guess I was saying that we make one good decision after another and to just be thankful for what we have. That we've been set up to also succeed, as well, thanks to our parents, and our decisions, and luck. I don't know. I don't know what else to say.

I mean, we don't buy anything until we have the money for it. I know that sounds dumb and not terribly profound, but we've been saving up for a new car for like 10 years now. That comes after everything else. The new car fund doesn't get money into it until everything else has money in it, including college fund, retirement fund, blah, blah, blah.

Brokamp: That's impressive, actually.

Southwick: That what?

Brokamp: That you do that. I know it's a crazy thing in America to say this, but that you save until you have the money to pay for something to buy it, as opposed to going into debt to get it.

Southwick: I don't know. Rick, how about you?

Rick Engdahl: I am not on that side of the glass because I am not a frugal person, not particularly disciplined, and I don't have a lot of inspiration when it comes to personal finance. It's not a subject that interests me. Which is why I wholeheartedly believe in automation, because I can set it up so that my check comes in and savings automatically drips into all my various accounts, and that's that. And then whatever is left over I can spend.

Southwick: And do.

Engdahl: And do. Once I paid off my credit card years ago, my rule has just been that when the bill comes in, I pay it in full and that's it.

Brokamp: And you've been an investor for years, and we know, now, that you are saving for your kids' college education, so that's good.

Engdahl: I've always been saving for their educations, but now I'm saving by way of a 529 ... whatever that thing's called.

Brokamp: Yes, right. Yes, that thing. That's the thing you're doing.

Engdahl: But investing for years means I automated that. That's automated, too. Everything is automated, because I don't like to think about it.

Brokamp: That's good advice.

Southwick: I wouldn't say that Ron or I do anything necessarily that's terribly sophisticated or complex. It's just like make money. Be sure you're making money. And then spend less than you're making. And try to make the most out of what you didn't spend.

Brokamp: That's actually a pretty good formula though.

Southwick: We'll see.

Brokamp: We'll see.

Southwick: We've got a few years ahead of us in retirement, so we'll be OK. Villages, here we come.

Brokamp: Here we come.


Southwick: For today's episode we're doing a little eavesdropping on a member event that we just held in Boston for our ONE members. But, even though you're not a member, you're going to get to sneak into the room. It's cool. You're with me. We're highlighting three speakers from the event. Bro, you attend a fair number of member events. Can you set the stage? What's it like?

Brokamp: Well, it's usually in a nice place in a nice city. We often have keynote speakers and then breakouts. We try to bring in prominent thinkers about investing or some aspect of society, so it's not always investing-related. We try to bring in some executives, particularly if it's the executives and companies from recommendations in any of our services. And really the great thing is just to meet all the people who are Motley Fool members.

Southwick: Yeah, they're great.

Brokamp: They are. They're the best.

Southwick: So let's start with a familiar voice. David Gardner was interviewed by Chris Hill, and Chris asked him for some investing tips. David talked a bit about how winners tend to keep winning, so you shouldn't sell your stocks that have experienced huge gains just because the media tells you they can't possibly keep on winning. And then David continued with some additional advice.


David Gardner: I think most people are looking, understandably, at near-term results, both for their own investment portfolios and at the businesses that they own. Looking at the near-term results when, of course, it's the long term that matters for both of those things. I think people are often looking at the wrong things that way.

Another example is for people -- and we all do this -- each of these things is natural. It's also just natural to look at the win-loss record. It's also very natural to look at what's not working and to think that the stock that just lost 25% yesterday is much more important than the stock that you might have purchased 10 years ago and has been a good holding and went up only 3% yesterday. But often the math works out really well. I think you should be focused on your winners, so learning lessons from our winners and not too many lessons from our losers.

Psychologists, too, remind us that the pain of loss is three times the joy of gain, so again it's understandable why people care so much about something that's down, but I much prefer to focus on what's up.

And then maybe a third and final example (I'm going to say these words carefully, just because they matter) is I think most people, again, are looking at the wrong thing. I think many people are looking at the valuations of beaten-down also-rans; and that's where they're fishing, often, for their next investment.

And by direct contrast, looking at the right things, I prefer to look at not the valuation but the performance of not beaten-down also-rans, but the performance of innovative leaders. Those are a few examples.

Chris Hill: The last time you and I were onstage talking, it was FoolFest. You had just had your 50th birthday. Here we are, now. Your service, Rule Breakers, has just had a birthday -- much younger, though -- 12 years. When you think back over the last 12 years, two questions. First, what are one or two lessons that you have drawn from 12 years of rule breaking investing?

Gardner: I think probably the most important lesson that I've learned -- and that we've all learned if you're a rule breaker, or if you followed our scorecard of what we've done -- is learning to fail. In fact, I bounced away from my talk this morning to see a local university that my son is applying to, and one of the things they say at this school is "we're looking for 'risk-takers' willing to fail."

And I think that we have failed grandly and far more often in Motley Fool Rule Breakers than I think any other service at The Motley Fool. And I don't like that. We have 48 stocks that have lost 50% or more of their value. I've picked, with the help of my team, two stocks every single month since we launched in October, 2004, so 12 years ago this month that's 288 stocks. Forty-eight of them have lost 50% or more of their value.

But we're a winning service, and so the important statistic that you need to know, I think, is that the 48th best stock that we've selected as of this morning (pre-market open ... I haven't updated my numbers) is Vertex Pharmaceuticals, which is up 187.4%. So if you do the math with me, I hope you're willing to lose 50% or more 48 times in order that your 48th best pick would be well above 100% gain.

If you do the math with me, you'll see that that's a game you want to play every time, but it's very hard for many people, especially who have just joined Motley Fool services, and that's not true of this august crowd. But many people come and when their first stock drops 10% if it has bad earnings, that's very upsetting for them.

So I think we've learned that lesson. If you're a rule breaker you know it. You're a risk-taker willing to fail, and the good news is our top two picks, alone, have wiped out all of those losses from all the other 48 worst picks we've ever made.

Hill: This may be an unfair question, but I'll ask it anyway.

Gardner: Go for it.

Hill: Go back 12 years in time and think about your mentality, your approach as a rule breaker. Has your approach stayed the same throughout, and if not, in what ways has the rule breaker approach changed for you?

Gardner: Well, ostensibly the rule breaker approach is the same. I mean, of course we're all adapting and evolving constantly, so it doesn't matter whether you're 70, 50, 30, or younger than that. You're going to change again and your mentality will. I can say, ostensibly, we haven't changed because the bedrock of what I wrote in the book Rule Breakers, Rule Makers -- that Tom and I wrote in 1998 -- those six traits that I wrote about then are exactly what we use today in 2016.

The world may have changed some in the last 18 years, but we're still doing the same Fool thing in that way. But at the same time, yeah, my mentality 12 years ago was I didn't quite as much value the importance of culture at companies, where today I know I'm not the only one at the Fool. When I talked about how you're in a room full of people and you're hearing from people today who understand what matters, I think the culture of the institutions matters a great deal; much more than I appreciated 12 years ago.

And I hope I was generally consistent with this 12 years ago, but I am only reminded, more and more today, of how important it is for me that the companies that I recommend in Rule Breakers do things that improve the world. That are admirable companies. When they succeed, I want us all to feel great about it. I want to feel great about that company succeeding.

One thing that I wrote a couple of years ago, which is one of my favorite things that I've written, is just make your portfolio your best expression of your hopes for our future. I think that should be true of the things that you're invested in. When they win, we all win and you feel great about what happened.

Southwick: I love that so much I want to embroider it on a pillow. Isn't it the best? It is. "Make your portfolio your best expression of your hopes for our future." I love that.

Brokamp: My hopes for our future are that everyone goes out and gets Starbucks coffee while they're visiting a Home Depot because those are stocks in my portfolio. And they get surgery from a robot through Intuitive Surgical.

Southwick: Buying some Disney products on Amazon Prime.

Brokamp: There you go. Make sure you check your Facebook.

Engdahl: It sounds like we're going to need a disclaimer this episode.

Brokamp: Every company I just mentioned I personally own.

Southwick: You're making fun of me in seeing this is like a very nice, motivational thing, but I do think it's nice. Like I do like the idea of living in a world where Disney movies exist. I don't know.

Brokamp: That's what's really exciting about David's style. I mean, he really is looking for trends and the ways that the future will change compared to the other companies he mentioned -- the beaten-down has-beens or something along those lines. It can be a successful way of investing, but it's certainly not as exciting as what David does.

Southwick: You're making fun of me for being a little schmaltzy. Whatever.

Brokamp: I'm sure I'll love your pillow.

Southwick: All right. Next up Tom Gardner interviewed Raj Sisodia. He's the co-founder of the Conscious Capitalism movement and author of the book, Firms of Endearment. Raj started off researching marketing and looking at effective ad spending, but he noticed something ... that some companies didn't have to spend much on advertising at all. Hm! Why was that? He spoke with Tom Gardner about what he learned about the common characteristics of conscious companies and how that equates into higher performance.

Raj Sisodia: Well, what about the companies that don't spend a lot and yet have extremely high loyalty and trust? What are they doing? And what can we learn from them? And to me that constitutes marketing excellence. That's the holy grail -- customer loyalty and trust.

And so when we started to identify companies just based on that simple lens, we started to find companies like Whole Foods, for example. Whole Foods, at the time, was spending only 10% of the industry average on marketing. They didn't have a chief marketing officer. They didn't have an ad agency. Ninety percent of what they did spend was spent at the store level, not at headquarters. Ninety percent of that related to their community activities, so they somehow thought of marketing as that.

I said, "That's not what we teach. That's not supposed to be marketing." But marketing was almost an afterthought. Starbucks had never advertised once in their history at that point. I don't think they have even now, as far as I can tell. There was very little of that.

So we started to find these companies. What we soon discovered was it wasn't about the marketing. That for these companies, even their employees were highly loyal and trusting. Their communities deeply embraced these companies and welcomed them. In fact, people waited and camped out in the parking lot before there were new stores or locations opening for some of these businesses.

We found that their suppliers had long-term, stable relationships with these companies. So they were really in a stakeholder frame of operation. In other words, they were looking after the well-being of all of their stakeholders. Not just customers, but employees, suppliers, communities. Even the environment, etc. So we saw they were treating everybody the way customers should be treated. Understanding their needs and really creating value consciously for all of their stakeholders.

And then beyond that, we found that they had a reason for being. It's not just another airline, or just another retailer, or just another furniture shop, or CarMax. They were trying to reinvent, or change the way something was being done. They had a purpose. So it's not a business with a mission. This was like a mission with a business.

Whole Foods was trying to change the way people eat and think about food, and change the way we run our food system, and the health of the planet, and all of that is impacted by the way that they define their business. The Container Store is trying to help you get organized so you can feel less stressed out and more relaxed. Southwest was trying to bring freedom to the skies and enable more people to travel. Make it fun. Make it affordable. Make it accessible. So they all have a reason for being. CarMax was trying to reinvent the used car selling business, which of course, as we know, you feel like you walk in there and you're going to get victimized.

So there was a purpose -- a higher purpose. We discovered that these businesses have a higher purpose. They're stakeholder oriented. And then we also discovered their leaders were different. They're typically, in many cases, still the founders. Even if it's not the founder -- if it's a 100-year-old company -- somebody who has a passion for what this business is about. What they're trying to do. They're driven by service to the purpose and service to the people -- and not so much about power and their own personal ego and enrichment. They're much more, I would say, down to earth. More like servant leaders than your command-and-control, top-down, almost like a legal type of leader.

And then lastly, we found the cultures. The Motley Fool has a fantastic culture. You only know them as clients, but if you go and visit them, they pay a lot of attention to the culture. It's a lot of fun. There's a lot of trust, there's a lot of transparency, and there's caring. There's authentic caring for human beings at the heart of these companies. [Northwest] Airlines -- the stock market symbol is LUV. L-U-V, right? What they talk about is we love our customers. We love. We love everyone to death. It's all rooted in that.

And most businesses, unfortunately, are rooted in fear and stress. They think the way to get people to perform is to just constantly put pressure on them. Carrots and sticks. Think about that. What animal belongs between a carrot and a stick? A jackass -- not a human being. And yet we use that kind of language and people start behaving that way. They're still trying to get the carrot and avoid the stick.

So that's the big difference and those are the four pillars. Let me now describe Conscious Capitalism but they were really uncovered in that book. Halfway through I said it's not about marketing. We're discovering all these people talking about love, and care, and trust, and compassion, and all of that. So I was calling it "Share of Heart" for a while.

And I said, "You know in marketing, we used to talk about share of market and then we had share of wallet." And our editor said, "So now you're talking about share of heart? What comes next? Share of soul?" A cynical view of marketing. Fortunately we didn't stick with that and we ended up calling it Firms of Endearment. Companies that are loved by everybody and how you do that.

And the icing on the cake -- at the end of all of our research and selecting the companies based on these criteria -- we did the financial analysis. And we said, "You know, these companies are paying their people better." Certainly at the front lines. Costco pays double of Wal-Mart. The Container Store pays double the prevailing wage in the industry. They provide much better benefits. Starbucks provides generous healthcare even to part-time employees, for example.

They're taking care of their customers. Providing great customer care. They're not squeezing their suppliers. Suppliers are profitable, and innovative, and healthy. They're investing in their communities. They're investing in the environment. They're paying taxes at an average rate of 34% -- that sample of companies.

We said, "Maybe investor returns are good but nothing phenomenal because they are spending in all these other areas." What we found actually stunned us -- that these companies outperformed the market 9 to 1 over a 10-year period. That would have been 1996 to 2006 because the book came out in 2007. We had 18 public companies in that.

We thought we had made a mistake. We went and redid the analysis. How can this be? Because we still had that zero-sum mentality. That if you need to do more for employees you'll have to take it away from investors. If you want to pay more, maybe your margins will have to suffer. Well, no. Business is not a zero-sum game. It's the ultimate positive-sum game on this planet. I don't think anything else comes close.

You create extraordinary amounts of value when you align everybody together around a shared sense of purpose. So you're excited to go to work on Monday. You don't say, "Thank God it's Friday." Do you know that heart attacks are highest on Monday morning, by the way? Twenty percent higher. Monday morning at 4:00 a.m. is the peak. That's the state of affairs we have.

So what we found is that these companies have broken that trade-off mentality, and when you align everything together you create this virtual cycle of higher performance. And nobody has to suffer in that. Everybody matters, and everybody can win when you do business in the right way. And it's not about making money, and having a bunch of side effects.

These businesses are able to operate with a spectrum of positive effects. It's not just financial. It's intellectual capital. It's social capital. It's emotional well-being. It's spiritual well-being. Physical well-being. Ecological well-being. It has a positive impact on the culture, and those are all the consequences of how we choose to operate.

So as I said, that book turned my life around, because until then I just had a job and a bit of a career in marketing, and now I had a calling. And I still remember sitting in Pennsylvania in the Poconos at some writing retreat and I had tears in my eyes as we were writing some of the stories about these companies, and the deep humanity that exists inside corporations, or can exist if you allow it to.

Because human beings are wired to care and corporations are designed to snuff that out for the most part. You're supposed to leave that at the door. Put on your mask and armor and show up for battle. It doesn't have to be that way. Why can't we combine love and work? Those are the two aspects of being human.

Southwick: As part of my job here at The Motley Fool, I also do media relations and so sometimes that means getting our analysts out there talking about investing. Sometimes it means talking about workplace culture at the Fool. And it's funny to me how there's this tone, generally, that work sucks.

Brokamp: Right.

Southwick: And I guess that it does, and it historically has, really, been hard and difficult work; but many people today, including all of us here at The Motley Fool, have the opportunity to have really rewarding work. And work doesn't have to suck -- but it does suck for many people. I don't know how to reconcile that. Someone's got to clean toilets and I love them for that.

Brokamp: I want a pillow that says "make love and work." That's all I'm saying.

Southwick: You be careful. Christmas is coming up. Be careful what you wish for.

Brokamp: I look forward to it.

Southwick: Love and work on a satin pillow. A gift for you and Mrs. Brokamp. All right. Finally friend of the podcast Morgan Housel gave a speech titled, "You Are Not Too Late." He begins by showing the audience an iconic photo of one of the most momentous events in human history.

Morgan Housel: This is Wilbur and Orville Wright on December 17, 1903. This picture is the first second of the first flight in human history. And we know, in hindsight, that this is one of the most important events in human history.

If you go to the Library of Congress, where I found these papers, you'll find two things that I think are pretty astounding. One is that the first passing mention of the Wright brothers in The New York Times was 1906, three years after their first flight.

Even more astounding, I think, is in 1904 (so one year after their first flight) The New York Times interviewed a European count who was a hot air balloon tycoon of sorts. And they asked him if human flight -- what they called back then the flying machine (that's what they called them back then) -- if flying machines would ever become a reality. And this is what he said.

He said, "In the very, very, far future," said the Count, with a crescendo accent on the "very" and a shoulder shrug that suggested an eternity, "there may be flying machines, but not now. Not now." This was a year after the Wrights' first flight, in the nation's newspaper of record.

There are so many interesting stories that come from the Wright brothers, but to me the most fascinating is this five-year gap between when they changed the world and they convinced people that they changed the world. And I think what's really important is that if you look into it, this is an extreme example, but almost every innovative product throughout time (every big invention that really changes the world and goes on to be one of the most impactful inventions or innovations) is almost never understood at first.

The products that are instantly adored are adored because they're familiar, and they're familiar because they're usually just slight improvements over what's already available. But when you have products that are totally transformational, almost nobody gets it at first. And that process between inventing it and getting people to understand it isn't something that takes months or years. It can take decades.

We know in hindsight that the car was one of the most transformational inventions of the 20th century, but it took us a quarter of a century to figure that out. This is true for TV, too. This is The New York Times in 1927 talking about the first use of television. It says: "Pictures are Flashed by Wire and Radio Synchronizing with Speaker's Voice." That's the clunky way of describing what a TV is.

This is a little different. They were really excited about the TV when it first came out, because it was amazing to watch. But you see this line here: "Commercial Use in Doubt." And here, too, the first TVs came around in the mid-1920s. It wasn't until the 1950s that it was a pretty viable, sustainable commercial enterprise. It took a quarter of a century to get there.

This is really interesting. It was true for penicillin, as well. Alexander Fleming discovered penicillin pretty much by accident in 1928. And if you had to make a list of the most important discoveries or inventions of the 20th century, penicillin would be at or near the top. Depending on whose estimates you use, penicillin saved between 80 to 200 million lives since it was put into practice. It's a huge gap, but whatever the number is, it's enormous.

It wasn't until 1942 -- so 14 years after discovery -- that Merck, the pharmaceutical company, made 10 doses of penicillin and realized that it was actually pretty great. And the first mass-scale production actually came for D-Day in 1944. They made 2 million doses. But that was 16 years after we first discovered it. Here, too, we have more than a decade between discovering something that changes the world and convincing people that it's actually going to change the world.

With any big breakthrough technology I, at least, want to think in hindsight (and I think it's common to think in hindsight) that the gap between invention and adoption is quick. And it almost never is. I think every big innovative technology follows an eight-part path that goes something like this.

First when it's invented people say, "I've never heard of it. Nobody knows about it."

And then after a while, they say, "I've heard of it, but I don't understand it."

And then after a while they say, "I understand it, but I don't see how it's useful."

And then as time goes on, they say, "I see how it could be fun for rich people, but not for me."

And then they say, "I use it, but it's just a toy. It's not practical. It's just fun to play with."

And then they say, "It's becoming more useful for me."

And then they say, "I use it all the time."

And then they say, "I could not imagine life without it."

I think every innovative product goes through this cycle, and the important thing to understand is that this cycle can take decades and it rarely, if ever, takes less than five years. So what does that mean for you as an investor? That's why you're all here. I have two things for you to think about.

The first is that when innovation is measured generationally, results should not be measured quarterly. You can imagine in hindsight going to Wilbur and Orville in 1904, a year after their flight, and saying, "How's revenue? How's net income? How did you perform in the last 90 days?" You can imagine going to Bill Gates in 1979 and saying, "It looks like your growth in the last quarter is kind of slowing down. This is really concerning to me."

It sounds ridiculous in hindsight, because it is ridiculous in hindsight. But people do that today with companies like Google and Facebook -- that are really doing big, innovative things -- but are still judged by quarterly results. A lot of what we call "pessimism" is just impatience in disguise.

This headline I found two days ago. It was perfect timing. It says: "Why the next 20 years will see a lot less technological disruption than the past 20 years." I'm not saying this is wrong. This might very well be true.

But this headline is ubiquitous across time. You could go back 20 or 40 or 50 or 100 years and find the same kind of pessimism. We're always kind of stuck in this idea, this trap that we used to innovate in the past, but we don't anymore. That idea has been around for hundreds of years. It's almost always present. And I think the reason that it feels like we haven't innovated in 20 years is because it takes 20 years for us to notice what we've innovated.

Marc Andreessen, who is a famous venture capitalist who started Netscape (one of the first internet browsers), told a fascinating story recently. He went to Silicon Valley in, I think, 1992. It was really early on in the internet days. And he said that even in the early '90s, there was a palpable sense in Silicon Valley that they missed the internet. That it was too late. That it was something that happened in the previous years, but if you got there in '92 or '94 or '95 it was too late. You missed it.

And in hindsight, we know that's ridiculous because even in 1995 and even in 1999, that was just the early seedling days of the internet. But at the time they had this sense that it was something in the past. That the things that we're making now are not that important. Not having that much impact. That they were too late.

About one year ago, Kevin Kelly, who is the executive editor of Wired magazine (Wired is a big technology magazine) was asked basically that same point ... whether we're too late to invest in technology. We've made so much progress over the last 50 years and built so many great companies: companies like Google, and Facebook, and Amazon. But is it too late? We've missed the boat and it's too late.

And he gave a great three-sentence answer that I'd love to wrap up with today. He said:

"The greatest products of the next 25 years have not been invented. If they have, you might not even know about them yet. You're not too late."

Southwick: I remember when I bought Amazon -- way back in 2014 ...

Brokamp: Wow!

Southwick: ... yeah. I had this fear that I was too late and that I'd already missed my chance. But it's doubled since then! And, of course, for every Amazon in my portfolio I can show you three companies that have tanked, but that's my best example of thinking I was too late and I wasn't too late.

Brokamp: That's a good one.

Southwick: [00:34:25]

Brokamp: That goes back to one of David's points -- that in your portfolio you're going to have losers. You're going to have losers. That's just part of what happens. But ideally you also have the Amazons. I think it was Buffett who said that he thought he was too late to buy Wal-Mart many years ago, and I think he said that he was instead sitting around sucking his thumb because he got around to it too late. He never bought it, and he totally regrets it. And Wal-Mart, at that point, had already been around for probably 25 or 30 years. He said he thought it was too late and he was wrong. So even Buffett does it.

Southwick: We could also put that on a pillow. That's the show. It's edited doggedly by Rick Engdahl. For Robert Brokamp, I'm Alison Southwick. Stay Foolish everybody.