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Rule Breaker's Blast From the Past, Vol. 1: The Story of the 5 Monkeys

By Motley Fool Staff - Updated Feb 6, 2018 at 5:14PM

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Some Foolish thoughts bear repeating, and there’s plenty to be gleaned from this unusual psychological experiment.

Motley Fool co-founder David Gardner has been doing his Rule Breaker Investing podcast for two-and-a-half years now, and while he might wish that his fans listened religiously to every one, odds are that there are more than a few current listeners who haven't heard everything he's had to say so far.

So, in this episode, he's kicking off a new occasional series: Blast from the Past. He'll pick five points to revisit that he's discussed in previous shows -- ones he views as particularly worth a listen, whether you're getting a refresher or hearing them for the first time. In this segment, he harkens back to June 2016 and his discussion on how ideas and patterns -- both good and bad -- can become embedded in a culture and last even after nobody remembers how they started in the first place.

A full transcript follows the video.

This video was recorded on Jan. 23, 2018.

David Gardner: Before I go on to point three, I should mention that one thing has happened in between that hype cycle podcast in 2015 and today, and that is that I recommended Gartner stock in August of 2016. About 10 months later, I started scratching my head asking myself, "If I'm going to value Gartner and its hype cycle, and I think it's a good company, I should research it further." I decided ultimately to recommend it.

So, if you're a Rule Breakers member, you probably know that Gartner is an active Rule Breaker. I'll mention we recommended the stock, whose ticker symbol is [IT], at $90.11. It's up to $138.48 last I looked. That's up 54% since August of 2016. The market up 34%, so I want to thank Gartner, as well, for being an excellent stock that you and I can get invested in. A $13 billion company today.

I guess I would be remiss if I didn't mention that Rule Breakers members should all be pinching ourselves just a little bit. Before I go onto point No. 4, it's rare that I can go back and say that over the last six months of our 12 Rule Breakers picks, half of them are up 40% or more.

Now, again, if you're actively a member of Motley Fool Rule Breakers, I hope you know this. In fact, those six companies include one that I rerecommended just last month and it's up more than 40% as a rerecommendation. But truly, it's an amazing time to be invested in these kinds of companies.

If you're a longtime listener, you and I have already shared some bad times together when, at least for me, my portfolio dropped 25% in three months in early 2016. So, we've seen some tough times. I know it's been a strong market, overall. Whenever I hear that the bull market's been going on for eight or nine years uninterrupted, I always think back to how I lost 25% of my portfolio in three months just about a year and a half ago, or so.

But, back to the main point. If you're not already a Motley Fool Rule Breakers member, I'm going to suggest you take a hard look at the service. You can check it out at

Blast From The Past, No. 3: The date -- June 1st, 2016. Yup, that means it's still above the fold in the last 100. By the way, I should mention what's about to drop off for those who like the accessibility of iTunes. The two that are about to drop off in the next two weeks are How Sports-Talk Radio Makes You a Better Investor. That was a fun, two-part series I did back-to-back just about a year and a half ago. Just plugging that one, that series if you're a sports fan before it disappears from immediate view.

Anyway, back on June 1st of 2016 it was our first-ever Campfire Stories. It was Vol. I of Campfire Stories where I got to tell some of my favorites. I'm not going to tell them here [I'll tell one of them], but ones that I hope you'll go back and listen to if you don't already know are what happened when I did an early morning stint co-hosting CNBC and what I learned as I talked with the hostess off the air. I also got to tell the story of Pixar vs. Disney and how each of the companies framed up the world differently as they competed head to head back in the day with their various animated films. And then there's also a six-card memory trick laced in there as one of my Campfire Stories, which is always a fun psychological point to make.

But speaking of psychology, probably my favorite story from that podcast was my story of the five monkeys. I have occasion to tell this one from time to time. If you remember this from almost two years ago, God bless you! But if not, I'd love to share with you right now the Story of the Five Monkeys. Again, a psychological experiment. Probably never actually took place, but here's the way it reads.

You start with a cage containing five monkeys. In the cage, hang a banana on a string and you put a set of stairs under it. Now before long, a monkey is going to go to the stairs and start to climb toward the banana. As soon as he touches the stairs, what you do in this experiment is you spray all of the monkeys with cold water. [Monkeys don't like cold water.] After a while another monkey makes an attempt with the same result. All the monkeys are sprayed high-powered, cold water. Pretty soon, when another monkey tries to climb the stairs, the other monkeys will try to prevent it.

Now, for the purposes of this experiment, we're going to turn off the cold water. There will be no more spraying of monkeys in this experiment. Further, we're going to remove one monkey from the cage, now, and replace it with a new one. So, the new monkey is going to see the banana, and he's going to want to climb the stairs. To his horror, all the other monkeys attack him. After another attempt, and attack, he knows that if he tries to climb the stairs, he will be assaulted.

Next, remove another of the original five monkeys and replace it with a new one. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment with enthusiasm. Now, again, replace a third original monkey with a new one. The new one makes it to the stairs and is attacked, as well.

Now, two of the four monkeys that beat him have no idea why they were not permitted to climb the stairs or why they are participating in the beating of the newest monkey. After replacing the fourth and fifth original monkeys, all the monkeys which have been sprayed with cold water have been replaced. Nevertheless, no monkey ever again approaches the stairs. Why not? Well, the punchline goes, "Because that's the way it's always been around here."

Such a fun story. Such a compelling point.

One of the things that we do in our organization -- and I've shared that out through this podcast -- and that we look for in other organizations whose stocks we're considering picking is the culture. We pay a lot of attention to culture.

In fact, in some ways you can think of Motley Fool investing, that you and I do, as almost cultural anthropology. You're studying and trying to understand how one group of people thinks and acts vs. another.

And what's so compelling to me about the five monkeys story is that it teaches us the importance of making sure people know the culture and understand the history of it, where it came from, and why we're doing what we're doing.

Now, every organization evolves and changes over time, so I'm never suggesting that culture is just chiseled in stone, is monolithic, and will never change. No, the only constant is change, but another pretty good constant [not 100% like change constant] is the constancy of the purpose of an organization, and the history, and how it got from there to here.

And if you have employees in your life, you owe it to yourself and with that enterprise thinking [that we love to see in all realms of our society], with that enterprise thinking you should do your best to make sure he or she, as they onboard, and throughout their experience with you as your employee, that they understand your culture and that they could do a pretty good job explaining it to the newest monkey to come aboard.

And finally, whoever wants to hear [in any kind of institutional or professional environment], whoever wants to hear the phrase, "because that's the way it's always been around here," unless it's said in a good and positive way? But here, clearly and often that phrase is used by people who have kind of given up and, as the monkeys teach us, sometimes they're not even sure why things have been done that way around here. So, pay attention to culture. Blast From The Past, No. 3.

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