Rule Breaker April Mailbag: Off to College, Growing Old, and the Bears You Meet Along the Way

If it's the last week of the month, then it's time for David Gardner to give his listeners what they want -- literally -- by responding directly to their questions and comments.

In this Rule Breaker Investing mailbag episode, he fields an entertaining array of queries with his customary charm. Some, such as the one asking how Fools should prepare when they feel the hot breath of a bear on the back of their necks, are common. Others, such as the one from a listener in her 90s trying to navigate the shoals of finance in a way appropriate to her age, are not. But whether the questions cover much-trod ground or are from roads less travelled, there's always something new to learn from them. And speaking of learning, we also hear from a couple of listeners who wanted to tell David just how much they've gained from his podcasts and The Motley Fool's services over the years. 

A full transcript follows the video.

This video was recorded on April 25, 2018.

David Gardner: And welcome back to Rule Breaker Investing. Yup, it's that time of the month. It's the final Wednesday of April 2018, and that means it's time for your mailbag. Some great stuff I've got cued up once again this show. Always exciting to see what you're thinking, how you're reacting, what you're wondering about, and how we might be able to help. And yes, as usual, I have a few guest stars who will be making cameos over the course of this time together this week.

I've taken, in recent months, to making the first part of mailbag what I'll call our "Hot Take" section. That's usually just quick tweets and thoughts usually reflecting on the shows that were this April 2018.

Just to refresh, we kicked off the month with Company Culture Tips, Vol. IV. We asked, "What's your motley? What's your motley?"

And then a week later it was time for our Blast From The Radio Past, Vol. I. Bringing in my brother Tom Gardner and our longtime producer Mac Greer reacting and listening to quotes from a decade or more ago from famous people and talking through what they mean today. It was also Tom's 50th birthday the week right after, so it was great to have Tom on and yes, we'll definitely be doing that again.

Then last week it was Five Stocks I Own That You Should Too. We reviewed five stocks I picked last year at this time and saw how those had done. And yes, I picked five new ones, last week. I think it's always a popular episode, so if you missed it and you want some free stock picks, listen in.

So, with that said, some of the Hot Takes. And I have to admit the Hot Takes were dominated by reactions to Blast From The Radio Past. We did receive a few notes about the other podcasts this month, but Brandon Van Zee, @BrandonVanZee on Twitter, said, "Just think. If things would have shaken out as hinted at in this episode, Tom Gardner, @TomGardnerFool, could very well be senior advisor to the president today. Keep up the great work, guys!"

Peter Roegner, @Peter_R_aus_H. "@RBIPodcast. Loved this week's episode. Need more of that. I hope Tom has a great 50th birthday. I will also have my 50th birthday next week." Congratulations, Peter!

Brian Stoffel, @TMFStoffel. "This RBIPodcast episode gets better and better. Mr. Rogers? Are you kidding me? This is gold!" It was a delight to have Fred Rogers joining with me and Tom; and hearing that wonderful Mr. Rogers voice that we grew up with. Maybe you, did, too. How much fun was that?

"Love, love, love the RBI Blast From The Radio Past. Thank you, Jum! Looking forward to volume II." It will certainly be coming.

And thank you for all those reactions. Yes, sometime [maybe late summer], I'll bring back Tom and Mac and we'll go through it again. I think I made it clear that wide and deep vault of audio gold. It will yield many treasures in the coming months and years.

I did get one nice note from Martin Triggs about last week's podcast. "Congratulations, David and the Rule Breaker team for the astonishing achievement of having all your Rule Breaker podcast stock samplers beating the market over the past three years. Bravo! Something truly to celebrate.

You should be on the cover of Barron's. I would bet among those in the financial industry no one has ever come close to matching that sort of stock-picking outperformance. Thank you so much for sharing with us on this podcast your thoughts and secrets on picking and staying with winning businesses. Excellent work. Regards, Martin Triggs." Thank you very much, Martin! I think if they did put us on the cover of Barron's, I might start shorting the market or us at that point. That's my contrary feeling about Barron's, but I certainly accept your compliment. That was very gracious.

That's it for the Hot Takes this week. Let's cue up Mailbag Item No. 1.

Mailbag Item No. 1: This one comes from Tim Menore writing in. "Hi, David. Great show. I love listening to it every week. My question is in regards to The Fool philosophy of buying and holding for many years. I agree with it, for the most part, but as someone who reads a lot of investing articles, the general consensus among the 'experts' seems to be that while we are OK now, within the next couple of years the bull market will end [as they always do at some point], and we will suffer a large crash.

It could be because of various socioeconomic factors, but most say it would be at the point where the Fed raises interest rates too high and the yield curve inverts. My question is if you see all these things happening, would you still just keep holding? Wouldn't it be smarter to cash out and wait for the next market to fall before buying back in at much lower prices? This has been perplexing me, so I thought I would ask. Thank you for reading this and thank you for all that you do. Tim Menore."

Well, thanks Tim! And I'm going to do my best to address your question fairly directly, but in an indirect manner because I spoke to this a few months ago in San Francisco, California. I grabbed the transcript of that, and I'm going to just present some of those thoughts right now.

This feels like a really relevant question I think a lot of people were asking, especially when we were in San Francisco a couple of months ago. It was that week when the market dropped. I think my portfolio lost about 8% in a single week. You may remember headlines like "Dow Drops 1,000 Points," and there was at least one morning where a lot of people were waking up, maybe a little early, to see whether the market would keep on so-called crashing. You might remember that. That was the week that we were in San Francisco, and that was the opportunity that I had to say what I'm about to share with you.

And what I'm about to share I will morph slightly so it sounds like it's for this podcast as opposed to for that audience, but you'll understand that there's a little bit of crossover between those things, and here's my best shot at answering your question about where the market's headed and volatility.

I started by saying it's natural to want to say a few things about the market volatility. I didn't want it to be a theme for the day for that Motley Fool ONE San Francisco audience. I mean, I wasn't letting it preoccupy me and I hope you're not getting preoccupied by this question, as well, Tim, but I do feel a need to speak to that, so I guess I want to say three things.

The first is market volatility. Yes -- yes -- it happens. And yes, it has been volatile. My wife, who is not nearly as interested in the stock market as I am, said to me recently, "You know, isn't it the machine? The machines. They're coming in and they're doing all this trading, and it's creating these crazy, whipsaw motions."

And I said, "You mean, the same machines that were in operation last year?" And last year, as you know, was one of the least volatile years in market history. In fact, programmed trading has been happening for a few decades, so the machines have always been there through volatile and not-so-volatile times.

So, I don't think it's the machines, per se. We've lived through a time of remarkable calm, 2017. My brother's been wont to point out it's natural for the market to drop and so, yes, point No. 1, Tim and everybody, is yes, it has been. It has been more volatile, here, in 2018.

You know, perhaps my most retweeted tweet of the year, so far, is one of my watchwords, and it's "the market always goes down faster than it goes up, but it always goes up more than it goes down." And you have to keep both of those thoughts [somewhat opposed thoughts] in mind to succeed over the only term that counts as investors -- by definition -- the long term.

The reason investing is great is because the stock market always goes up more than it goes down and one of the simplest, best proofs of this is just to step back and look at a graph of the Dow Jones Industrial Average or the S&P 500 over the last hundred years. It's the classic lower-left to upper-right graph which every consultant wants to show you. It's the truth, and it's for logical reasons that will continue to recur, as will volatility.

That was point No. 1 -- volatility, yes.

Point No. 2. It's so short term, a lot of the market reporting that we get. I mean, it's comic. It's bizarre. I like to use sports analogies so imagine if I told you ahead of this coming baseball season [that has now started, the first few weeks, and we're going to aim this at the San Francisco Giants since this was for a San Francisco audience].

Imagine if I told you before the season that the San Francisco Giants would win 100 games and lose 62. There are 162 games in a baseball season, so 100 wins, 62 losses. That's a great season. They might well win the division. If they do that they might win the World Series.

Now, imagine if I told you ahead of time that you can decide to trade in or out of the Giants and their wins and losses at any point during the season. But I'm telling you at the end of those 162 games that they will win two-thirds of the time. Remember that their actual performance from one game to the next is going to be completely randomized -- the W's and the L's occurring in randomized order.

Now, imagine if you decided to trade within that atmosphere. The conclusions that you draw about whether this is a good way to spend your time. The likely results that you would generate. Probably, not very good.

Imagine if I also told you that during the season if you wanted to make those bets for and against the Giants at any point, every time you jump in or jump out, you're going to have to add a transaction fee component, as well. A fee, as well, for doing that. It just doesn't make much sense.

And it makes even less sense when the Giants have a particularly bad day. Imagine if that were a national story. When the Dow Jones drops 1,000 points, that's the big headline for the newspapers that day, even though 1,000 points isn't much in percentage terms, anymore. Imagine if that happened in baseball. Imagine if the Giants lost a game 14 to 2 and the one headline they got the whole season was, "Giants Lose 14 to 2. We're going to have a special CNBC hour tonight to discuss that game."

Meanwhile, largely going unreported are all of the wins, or any context that talks about the season, or how they're doing in the standings; any sense of history about how the Giants have done or other teams that have, say, started with 50 wins and 30 losses. [What] they've gone on to do. Imagine if there were no context at all.

So, the biggest message I think a lot of us get outside this podcast [those of us who follow the financial media] is wow, what a crazy week that was. What a crazy time. The Dow Jones dropped 1,000 points. That's the big headline.

And over the years, Tom and I used to do a lot of media around those kinds of events, and I've just largely stopped doing it because it seems they always want The Motley Fool to trot us out to calm the fears in these times, and it ends up contributing to that in some ways. To make our big appearance every time the market drops; it doesn't make a lot of sense.

You know, the beauty of the market, and what we've been doing together on this podcast, and if you're a Motley Fool member, is that we're finding remarkable companies, often earlier ahead of the mainstream, and no one is wanting to interview us when we pick those stocks in our services.

And then when those stocks hit major milestones [which fortunately a few of them do if they go up 20x in value, or 50x, or 100x], there's no one calling us from NPR or CNBC saying, "Hey, we'd love to have you on to talk about a 100-bagger. A 100x gain in that stock."

And, yet, what really matters? That's why we're here -- both the past reasons that have brought us here and our future expectations as investors and listeners of this podcast -- is it's a bizarre and ridiculous media world that surrounds the stock market and becomes fodder for major, lurid headlines. The few times the Giants lose 14 to 2 en route to [well, if you're a Giants fan, anyway, and I know you're hoping for it] a championship season.

Even our language is wrong. "Correction." And I do rant about this on my podcast. I've done that in the past, so I'm sure you've heard this before. I'm not going to go into a full rant, here, because we need to get to our next mailbag item, but it's always correct [is it?] when the market drops. That's a correction?

I think the most correct thing about the stock market is that it averages about a 10% annual return. That's -- that's -- correct. The notion that, well, anytime it drops that's a correction and now it's even to the point, these days, where there's an official designation of that now codified term. We need it to be exactly at a 10% drop, and then we officially, now, will call that a "correction."

So to me, it's gotten even sillier from when I think 20 or so years ago I started first ranting about this term that we use, correction, which shows a wrongheadedness that I guess we're all repeating back and forth to each other, and tabulating carefully to see if we get a correction, which I guess, as of that week a couple of months ago, we officially did have a correction.

And then the last thing I'll say, Tim, and then, darn it, let's get to the next item [but you can see I care about this stuff]. The last thing I'll say is third, what I'm going to call "volatility navel-gazing," because it can cause us to lose focus on what's most powerful for investors, and that's the persistent and unrelenting force of technological change in the future. Looking backwards now until today, think about your best stocks and my best stocks. A lot of them have benefited because we saw ahead of time the technological change that was coming.

And I think most of all for younger people listening to this podcast, or if you're a parent thinking about your children, or a grandparent thinking about your grandkids, the future matters most of all for younger people. I mean, they're going to be living through more of it than we will; so, the more that we're thinking about the future and focusing them, there, with their dollars, and our dollars, and our thinking the better off we'll all be.

As I've often said, make your portfolio reflect your best vision for our future. Always be thinking ahead. Be optimistic. Think about the world that you want to create, because sure enough your dollars and mine, our capital, is helping shape the world. Every purchase decision you make -- every investment decision you make, nudged up -- was received by somebody who took that money in and prospered because you decided to buy their product or invest with them. Truly we are shaping the world every day with our financial decisions, and the future matters so very deeply.

Tim, I hope those were some helpful thoughts for you as you think about whether there might be a crash a few years from now or not, or a few months; and yeah, as you probably would expect, for anybody who I would say is under the age of 65, I think it's smart to ride out those so-called corrections.

And even when there are crashes [and we've had a few of those in the last few decades], think about it. Take it all in all. We've prospered so greatly over the 25 years of The Motley Fool's history. The 25 years of these markets. We've prospered because we've shown some of the very characteristics that we're constantly talking about here in Rule Breaker Investing. Things like patience. Things like foresight. Thinking about the future. Thinking about who's going to disrupt whom and where we can put our money as we create a better world together. I hope that's helpful.

Mailbag Item No. 2: And now for something completely different. I'm delighted to be joined by Ross Anderson from our Motley Fool Wealth Management team. Ross, how are you doing?

Ross Anderson: I'm doing great! Thanks for having me!

Gardner: Excellent. Thank you! So, I'm going to present a portion of a letter from a much older person who can't probably ride out market waves in quite the same way, and this one touched me because this comes from a personal friend, somebody I will just call Daphne.

Daphne is somebody who I got to know from years ago and dropped me this letter recently. And I thought, "You know, I could take a crack at this, or I could have Ross Anderson in, who has experience speaking to people from all walks of life as they think about how best to steer their little boat, steer [let's mix some metaphors, here, Ross], their nest egg. I want to read a portion of this, Ross, and then I'd love to hear your thoughts.

So, she begins. "I am 94 years old and have memory loss without being totally senile." And because I know this person is a brilliant thinker and actor over the course of her life, I can recognize that she probably does have some memory loss, but she's definitely not senile. This is a beautifully handwritten letter and very thoughtful.

She says, "I'm worried about losing my money. I have about," and I will not include the amount, here. Ross, you and I have looked over this number. It's a very comfortable number, especially for somebody who is 94 years old. "I have such and such amount, and two-thirds of it are with Wells Fargo Advisors, and one-third of it is in the North Carolina State Employees' Credit Union, which pays small interest.

Because of gyrations in the world and national markets, I have gotten very fearful. I contemplate taking all the money in the cash account of Wells Fargo" [which I think is a much smaller amount, but the sort of thing that would be about, let's say, a year's worth of expenses], "take that out from Wells Fargo and put it back with the NC State Employees' Credit Union.

You cannot advise me. I don't want to put that responsibility on you, but I'd love a reaction from you in terms of my age. I have joint pain, I'm losing physical strength [like muscles and eyesight]. My best to you. My love always to you. I'll keep checking in. Thanks, Daphne."

OK, Ross. That is the letter that I received [that's a portion of the letter]. What are your thoughts as I share that?

Anderson: First of all, I appreciate you bringing me on to talk about this, because I think there's a lot of important things in what she asks. And the first thing that really stuck out to me was the very top of her letter, which is a little bit of a legal concern. That if she's starting to have memory loss, to me that really is a legal and an estate planning sort of question.

Having a durable power of attorney -- somebody that can take care of your financial matters if you're no longer able to make those decisions day-to-day -- is, I think, so important to have. So, whether that is a trusted friend, a relative, or even a corporate trustee that can take those instructions as you've written them and execute them on your behalf is, I think, important to have.

Gardner: So, Wells Fargo, for her. Can Wells Fargo fulfill that function as her wealth manager, or do you want somebody separate?

Anderson: As the investment advisor, Wells Fargo probably has corporate trustee services as part of the bank. They're a very large organization, but that's not necessarily the person who's managing the money. This would really be a separate function of making sure that her wishes are being carried out as she would have them.

Gardner: And because I know this person, I know that she doesn't have kids. She doesn't have kids, so there isn't an obvious person to appoint as overseeing and making sure that the money's being well-managed. I'm not even quite sure where the money would go, although it's a generous amount and I know she's a lovely person. How do you think about that, Ross?

Anderson: I think that really is the biggest second part of the question, which is what would she like to see happen? When we're talking about retirement planning considerations, it's really about how much of the money do you need and when do you need it. In this case, if one-third of that money is in a bank account or a credit union and basically risk-free, she can probably live off of that amount.

And the rest -- she has a choice. And the industry, traditionally, has been in a position of constantly de-risking people as they age. So, the glide path on a target-date mutual fund, or anything like that, constantly gets more conservative and, in many cases, I think that can be a mistake, because she's now in a position where two-thirds of her portfolio could have a lot of impact somewhere else. Whether that's a charitable concern or [something else], whatever she wants to see that money do it probably can.

If that means, "Put it on the sidelines. I don't need to take any risk, so why would I," that's fine. But the other side of that could be, "Well, if I've protected my risks, why don't I see what I could do and how big of an impact I could have with those dollars."

Gardner: So, when I think about the amount of money that you and I are aware of from the letter, it's clearly enough to live on for the rest of her life. We hope that she can get to triple digits and keep going, and she would be able to do that. What about the fear part of the question? Ross, the calls that you take through Motley Fool Wealth Management; do you hear this kind of a thing? I just, obviously, spent Mailbag Item No. 1 [arguably I talked too long] about not being fearful about market volatility, but we're all in different situations. How do you speak to the fear?

Anderson: I think the fear is the toughest piece to overcome, and again, it comes back to what do you want to see this money do for you? Because if it's not for your needs in the next one, three, five years, then the volatility doesn't have that much of an impact. I think coming back to what your goals are -- and saying we could see a 10-20% market drop -- if that doesn't change your day-to-day life, and the upside is much greater; I think that's where we have to come back to and focus on what it actually means to you to see some market volatility and if it really is a problem.

Gardner: I hope, my friend, "Daphne," that what Ross has said is helpful and, of course, anytime we're answering something on mailbag, we're not just speaking to you, whoever has written us. We're speaking to all of you. And that idea, Ross, that it's not about the amount, so much. It's about the context. Where we are in life. How much we could afford to lose or not. We're all coming from different places and going different places, so we're trying to be as helpful and relevant as we can.

Ross, before I let you go, could you just tell me briefly the story of where you came from before you came to Motley Fool Wealth Management?

Anderson: I came from more of a traditional investment management platform and financial planning platform. I started my career with Ameriprise Financial. Joined up with a team, there. And then that team transitioned to Morgan Stanley. I've spent a decent amount of time in the big brokerage houses and I was very fortunate to get the opportunity to come to Fool Wealth almost four years ago, really as it was getting started. I was financial planner No. 3, here. I'm super thrilled to be in a place where I'm not working for commissions and really feel like I can embrace our purpose.

Gardner: So, not every Rule Breaker investor probably has wealth management needs at this stage, but for those who are listening who do, if I wanted to reach out to Ross Anderson and the talented team that surrounds him, how do I get in touch with Motley Fool Wealth Management?

Anderson: As a sister company we do have our own website. FoolWealth.com is the website that we live on. [email protected] is the email address that comes right into our team of financial planners, and we can certainly help anybody that's got questions about what we do.

Gardner: Great job, Ross. Thanks!

Anderson: Thank you!

Gardner: Mailbag Item No. 3: You'll notice right toward the end of Mailbag Item No. 2, I asked Ross who he is and where he comes from. And one of the things I love about our mailbag episodes every month is I love to hear your stories; whether it's somebody who works every day with me here at The Motley Fool and I'm still kind of wondering, as we grow as a company, who this person is and where they come from, and what was it about The Motley Fool's purpose that brought them into our Foolish fold.

Or, somebody like our wonderful Major League Baseball groundskeeper who occasionally writes into this podcast and talks about listening to Rule Breaker Investing as he feeds the grass and curates the lawns for a Major League Baseball park. I love hearing where people are as they listen to this podcast, and I love sharing your stories.

That's why the next one up I've cued up from Christopher Olson fits that mold, Mailbag Item No. 3. And I'm just sharing Chris's note, kind of a longer-form note, because I want to highlight, maybe at the end, the five, six, or seven things that he's doing really right. Without further ado, let's get into the life of Christopher Olson.

Mailbag Item No. 3: "Dear David. To begin with, I want to thank you and Tom for the wonderful business you started. I want to thank your dad for instilling the values of investing into you and your brother. I want to apologize for the length this letter is going to be, but I consider it long overdue.

I'll introduce myself. My name is Chris Olson. I've been a member of Motley Fool services for going on seven years. I've listened to every Motley Fool podcast, even before my membership, which that long ago was just Market Foolery and Motley Fool Money.

I'm 36 years old. I'm a dairy farmer and rancher. I'm married and have six kids [four of my own, two step-]. I've heard you say you read every letter [eventually, of course]. I was going to share with you a little bit of my evolution as an investor, and how The Motley Fool has played a role in my life.

I didn't exactly grow up wealthy. My dad had a small construction company. My mom framed pictures in a shop of hers. Gold, guns, and land is the investing mindset, here, in rural Minnesota. Stocks are very contrarian.

I have worked on farms and a few other jobs on and off since I was 14. After high school I went to college for computers because that's what you did for the big paychecks in the early 2000s. After finishing college and working a few internships, I developed a strong distaste for technology. I started working for a dairy that I had worked at in my earlier years. Cattle is a niche I've developed a strong skillset for. I now manage 600 head of dairy cows, nine employees, and I'm working toward being a partner.

We have one of the highest-quality dairies in the state of Minnesota based on quality of milk and industry comparisons on a variety of metrics. I also operate my own small farm where I raise cattle for market at my home and my family's farmlands that I'm fourth generation to inherit. All this jointly with a small-scale egg business."

A quick pause from the text, here. This makes me exhausted thinking about how hard-working and productive Chris Olson is. I'm very happy to note that he's a fellow American. We need as many of these great people as possible. This is remarkable!

"Working in agriculture exposes you to some of the most severe and rewarding prices paid for commodities," Chris goes on. "It's where much of my interest in investing was born. I received Money Magazine at one point maybe 12 or 13 years ago. It was like five dollars for a year, and I figured, 'Why not?' I started reading about the stocks they'd suggest and figured I'd take a try at it. I opened a brokerage and put $1,000 on RIG." That's Transocean, I believe. "That was a Money Magazine rec," he says.

After worrying about it incessantly for a month, I sold the stock at about a $20 gain. I stepped away from the individual stocks for a good four or so years after. At that time my job didn't offer a 401(K), so I started contributing to a mutual fund and a traditional IRA, basically what I could afford, but it wasn't much.

My mutual fund did just fine, especially since I contributed all through the financial crisis, but I wanted more to do with the markets and individual stocks, so I started looking for business podcasts. Some were extremely boring and macro in focus -- not specific to companies.

Then I came across Market Foolery and instantly became a big fan of Joe Magyer's approach. I subscribed to Inside Value. I found The Motley Fool and their resources to be a great fit for me. After realizing value investing wasn't all I was interested in [and Joe moved to Australia], I subscribed to Stock Advisor, and within the past few months I took the plunge and subscribed to Rule Breakers.

The podcasts gave me an opportunity to make use of otherwise mindless time milking cows, feeding calves, hauling manure with the loader, and even driving. For years, now, I've religiously listened to every episode of Market Foolery, Money, Answers, and Rule Breakers. I occasionally don't get to all the Industry Focus, but I always read the title, and if there's a company I own or am looking to own featured, I definitely listen. After hearing many mailbags on your show, Answers, and Market Foolery about portfolio construction, I figured I'd let you know what I've done that works for me. It's certainly a personal decision.

When I first started investing, I'd buy about $1,000 of each company. I figured I had to plop down a chunk each time, and that kinda, sorta worked. I think Amazon is up 600% since that initial investment. I also had a couple go to near zero when oil crashed. Overall, I was up at that point. After reading Peter Lynch's book, One Up On Wall Street, I noticed that he structured his mutual fund with his top 7% of holdings accounting for 50% of the assets, and the top 14% of holdings accounting for 66% of the assets.

Of a 1,400-holding mutual fund..." That's right. Fidelity Magellan back in the day [this is my own editorial comment] had over a thousand stocks, and Peter Lynch was often derided for never meeting a stock he didn't like, which I think was always kind of a good-natured ribbing for one of the most successful mutual fund managers of our time.

Of a 1,400-holding mutual fund, he had 500 holdings that he considered 'secondary opportunities' occupying in total just 1% of the assets of the fund. I found this very interesting, and figured I'd construct my portfolio to reflect my super high-conviction companies. But, I love owning and following companies, so I could have a portion of my portfolio with lower-conviction businesses, and I keep an open mind. There's no reason after following a business I have a small stake in that I can't grow that percentage.

Right now, I own 44 stocks. My top seven [which include Amazon, Markel, Mastercard, Activision Blizzard, PayPal, Disney, and Facebook] occupy 56% of my portfolio. Idexx Laboratories and Match Group are high on my list to move up in percentages, and I've sold off some winners, too. At one point, Amazon was 24% of my portfolio. A good problem to have, but I did bring it down to 14%.

I do not sell on a regular basis. Maybe once or twice a year depending on the coverage of the recommendations. I've been keeping track of my performance since 2012 and have been beating the S&P by 3.5% annually. It doesn't sound like a lot, but over many years it will add up. I do have a 401(K) through my work now, and that's invested in a target-date mutual fund that's well diversified. I found that if you're going to invest on your own, you just need to find what works for you."

A little bit more from Chris, here.

"I found great value in your idea to read only one source of news, weekly. I did get an intro subscription to The Economist and have found much value in it. I'm now a subscriber. I did struggle with news sources, myself, and this idea you had really spoke to me. I feel good about paying a subscription and doing my part to employ quality journalists.

Anyone investing should have a goal in mind. Not a number, but a purpose for the time you spend and the capital you forego. I'd have to say mine is simply options. I love farming, but one day I may not want to do it anymore. Whether it's physical reasons, or just for a change of pace, I want to have the option to run my own business or retire if the time is right.

I strongly believe in Warren Buffett's quote, 'I'm a better investor because I'm a businessman, and I'm a better businessman because I'm an investor.' That rings so true to me, and if it wasn't for The Motley Fool, I may never have come across these sources. There's nothing like reaping what you sow. It takes almost three years for our cattle to propagate genetics -- nine months until birth from conception, another two years from that point until they'd enter the milking herd. My vocation has taught me patience and to take the long-term view. It's a perfect fit for investing.

Being involved with The Motley Fool has also helped me really take action and clean up my personal finances. I have no debt other than my home. It's not how much you make. It's what you do with it. That's a concept very few people I've spoken with understand, and it's unfortunate.

I feed a family of eight with a grocery bill of $400 a month. I raise or hunt all our meat, eggs, and preserve many vegetables we grow. We live comfortably with a modest income, but the comfort mainly comes from the lack of debt and the assets accumulated. We go on about one trip a year. When you milk cows, you can go anywhere in the world, as long as you're back for the next milking.

I find your optimism very refreshing and indispensable. There's certainly a lack of it out there. If The Motley Fool can touch many more lives, the world would be a better place. Financially fit people are less of a burden on society. Politics aside, I strongly believe in economies correlating with peace. War destroys; economic action builds. If more people learn this and can find themselves aligned with The Motley Fool's mission, the better.

My apologies for any rambling or jumping around. I've written this letter, here and there, for about three weeks in my Evernote, where I also keep my investing journal, another pointer I took from you. Hopefully I'll indoctrinate another half dozen little Fools for you. My kids all have custodial accounts and we buy stocks about twice a year. Stockpile.com is great for custodials. My kids kinda sorta get the whole investing bit, but I'm going to make them read The Motley Fool Investment Guide regardless of interest at about 15 years of age. Figured I'll have at least tried my best to stoke the fire.

Keep up the great podcasts and the even better recommendations. I'd say you have a long-term fan, here, but that may invoke annoyance. Ha!" He's making a joke about my whole long-term thing. "I'm a fan of The Motley Fool. If you or any of the Motley Fool team is ever in the Lakes area of Minnesota, look me up. I'll gladly grill rib-eyes. Fool on! Christopher Olson."

Well, Chris, that was a tremendous note! It was my pleasure to read it, and I said I was going to highlight a number of the things you did right there. Anybody who's a regular Rule Breaker Investing listener could do it themselves.

In no particular order, I love that you got started and tried. I love that you were economical and started with a small amount of money. I love that you tested and learned. You even bought your first stock, sold it because you were fretting too much about it one month later, for a small profit.

I love that you've raised a family, and that you're living so economically, and that you're teaching them how to invest. I think it's great that you've continued to stoke your own intellectual fire, picking up books like Peter Lynch's and knowing Warren Buffett quotes.

I think what you're doing on a daily basis is remarkable, and those who work with you are fortunate, and we who enjoy wonderful farm products from the state of Minnesota are grateful as well.

And most of all, I thank you for taking the time to tell us your story. I love to share, at least once each mailbag, somebody's story and it was truly a pleasure to share yours. Keep up the great work and Fool on yourself, Chris Olson!

And speaking of Motley Fool Answers, the podcast, look who I see in the studio. It's Robert Brokamp.

[...]

Gardner: Robert Brokamp, how you doing?

Robert Brokamp: Just great, David Gardner. How are you?

Gardner: I'm doing really well. I don't think you or I has ever met Jeff Powell, our next mailbag item, but he does say he's been a Fool reader for years. He just started listening to The Fool podcast during his daily commute to the Pentagon, which is not far away on the VRE, the Virginia Railway Express, right by our building.

Brokamp: That is true.

Gardner: So maybe, Jeff, if you appreciate Robert's answer, you can come visit us sometime and have a cup of coffee, here, at Fool HQ.

Brokamp: We'd love it!

Gardner: Here's the question. "Hi, David. Hi, Robert," in this case. "I greatly enjoy the podcast. Appreciate the fantastic content you put out every week. For an April mailbag question, I wanted to get your thoughts on a withdrawal strategy for college savings accounts as our kids get close to leaving for school. We have both Coverdells and 529s for both of our kids. Should it be based on returns, alone, for the underlying funds in each account [cash out, for example, the lower-performing funds first, let the winners keep producing better returns until you need them]? Or are there other tax or [here comes an acronym, Robert] FAFSA implications to consider?"

Brokamp: FAFSA.

Gardner: F-A-F-S-A. Thank you. "I've been a Fool reader for years, etc. Jeff Powell and go Navy!" Robert, what do you think?

Brokamp: I should say for the FAFSA, he means the Free Application for Federal Student Aid, so basically, he's talking about some sort of financial aid. He wants to know when he comes to having both of these accounts, should he think about taxes and financial aid implications taking the money out.

First of all, Jeff, let me lay out a couple of assumptions based on what you wrote. You said you have a 529 plan. There are actually two types: the prepaid plan and the savings plan. I'm going to assume by what you wrote that you have the savings plan, not the prepaid, because if you had the prepaid, you definitely would want to do that one first.

Gardner: OK. Probably a safe assumption. Keep going.

Brokamp: And the other one is that you own the accounts, and not relatives such as grandparents, because that would change the answer slightly. I'm going to assume that you own the accounts or your kids own the accounts.

First of all, let me cover just a couple of basics about Coverdells and 529s, at least relative to your question. Both are considered assets of the parents for financial aid purposes. That means it will have a lower impact on the financial aid. The formula that is used will factor in just 5.64% of the parental assets vs. assets owned by the kids [it factors in 20%], so it's good to have money in these types of accounts for financial aid.

Gardner: Robert, did you say 5.64%?

Brokamp: 5.64%.

Gardner: You actually took it out to that extra decimal.

Brokamp: Well, you know, that's the accuracy.

Gardner: You know your stuff that well.

Brokamp: Sort of. A little bit, maybe.

Gardner: I like it. Keep going.

Brokamp: And I have kids, so I'm paying attention to this stuff. So, there's that. And also, for both of them, the withdrawals are tax-free as long as the money is used for qualified education expenses and it is not reported as income for the following year on your income tax return. They both have that in common.

The two important differences, at least relative to your question, is that the investment options in a 529 are limited basically to the mutual funds that are offered within the plan, and you can only make two changes a year. A Coverdell has a lot more flexibility. You can invest in just about anything you want, including individual stocks, and you can make as many changes as you want.

The other big difference is that the money in a Coverdell must be used by age 30, or it gets distributed, taxed, and penalized if not used for qualified higher education expenses. The only way to get around that, really, is then to transfer it to another relative who is not yet 30. With 529s, you can leave the money in there forever, in most cases. If you think you're going to be using it for graduate school, later, you can just let it grow throughout the years.

So given all that [you've got money in both accounts and you're asking what you should tap first], I would say if there's any chance that that money will stay in up until age 30, you would want to take money out of the Coverdell first if you think it's going to be in there and there's no other relative to transfer it to.

The other thing to consider is that because the Coverdell has so much more investment flexibility, I would say as long as you think you're going to use the money, I would tap the money in the 529 first, because you're basically limited to the 15 or so mutual funds that are in the 529 plan.

That's a couple of considerations.

The other thing I was thinking, though, is that if your kids are getting close to going to school, you want to be playing it pretty safe with your investments...

Gardner: And close, Robert. 16?

Brokamp: Yes, and this is an interesting question. Among the Motley Fool advisors, I would say I'm among the most conservative. For example, in my kids' 529 savings accounts...

Gardner: Close is like eight years old.

Brokamp: Not that close, but I do have a sophomore and junior in high school, so I'm playing it pretty safe in their 529 accounts these days. But certainly, by the time they are getting close to being juniors and seniors, a good bit of that should be in cash.

Now, then when it comes to deciding what to sell, that really is up to your own investment acumen to the extent you are comfortable asking which you want to sell now and which you want to hold onto for a few more years.

Gardner: And as I think about that, if I have any value to add on that particular point, Robert, it's just that looking at what you hold, I would ask myself if I am overweighted in anything, and if I am I would probably start chipping away at that, some. If everything seems to be relatively well balanced, then I would just be asking myself, "All that matters is the future, the next five years, so which are the things that I think will do the best? Maybe that will continue to grow or are less mature?"

I would probably leave those positions in place and I would be taking down the things that are more mature. So, if that's helpful at all, Jeff. If you're looking over a Coverdell with individual stock holdings, for example, that's how I think about that.

Brokamp: Right. And I'll just add one more thing, and that, coincidentally is recently on Motley Fool Answers [the April 10th episode], we covered five common myths about paying for college with a couple of experts. I totally recommend that episode if you're getting to that point where you actually have to pay for college.

Gardner: That is awesome. Robert, would you give us, maybe, your best line that was in that episode? Just an excerpt on the show? If you could just recreate your best line right now?

Brokamp: I don't have the best line, because fortunately we invited two experts from the TheCollegeFundingCoach.org. They had all the great lines. One point that they made is first of all, figure out whether you think you're actually going to get aid. There are plenty of tools on the internet where you put in the information and it gives an estimate of how much aid you might receive. Start there, and then strategize on what to do based on how much aid you think you're going to get.

Gardner: Awesome. Robert, thank you for joining in! You know, it's always going to be true on this podcast that the mailbag items are often going to come from people asking [about] real-life financial situations that I don't really speak to on a weekly basis because I'm thinking more about stock selection and where the world's headed, and our culture and technology. That's why it's so great to have you or Ross Anderson earlier -- people who are professionals every day at our company -- helping advise people on all those other things that make up our financial life. Thank you, Robert!

Brokamp: Always a pleasure!

Gardner: One final mailbag item to come. I'll mention right now that next week I'm going to be in Dallas, Texas, and it's going to be time to do Rule Breaker Investing from Dallas. It will be at the Conscious Capitalism Conference. I'll be pulling some of the bright lights of conscious capitalism aside. Gaining some insights from them about conscious capitalism. Especially if you're new to it, I think you'll enjoy it. But beyond just conscious capitalism, about the world at large and especially about the world of business. If you're an entrepreneur, I hope we'll have some good insights for you. I'm looking forward to my trip to Dallas, next week.

Mailbag Item No. 5: And our final mailbag item this week. This is just a feel-good email from Dan Rubin, a longtime friend of The Motley Fool. He's such a fun writer. I just wanted to read his reflections on his 18th Fooliversary. His 18th anniversary as a Fool.

Dan writes, "When I first joined The Fool, I had lost a ton of money investing in a corrupt franchise, and I knew nothing about finance. I assumed I was a creative guy and couldn't learn investing, but you all made it so much fun and so accessible I worked my tail off. Read every Foolish book. Did the Investing Guide Workbook. Posted, and posted, and posted messages on our discussion forums. Read countless books. Watched countless videos. Figured out which Fool analysts felt right for me. Tested picks on CAPS and became truly Foolish. No -- devoutly Foolish. In fact, I'm still studying. I just ordered the workbook again for a redo, and I listen to the podcasts daily.

18 years later, the wife and I are debt-free with the exception of a modest mortgage with a very low rate. Our kids' college is paid for. We have a nice new car that's paid off. We are healthy, happy, and live below our means, but we'll toss in some luxuries when we feel the urge. We are well on track to hit our retirement goals. In short, our financial house could not be more sound.

The quality of our lives is so much better than it might have been had I never become a Fool. In fact, our 25th wedding anniversary is coming up this June, and you know what we're going to do to celebrate? Answer: Anything we freaking want because we can. Because we have lived like true Fools.

Over the years I've written you all many a love letter, but 18 years feels like a long time and I needed to write one more like Stevie Wonder. I'm just writing to say I love you. I really do. Through all these years -- through massive technological changes and times of intense divisions and societal embarrassments too numerous to fathom -- you guys have stayed true. You've remained a motley bastion of dignity, honor, consistency, intelligence, warmth, and decency.

You've made my life much richer than it would have been. You've helped take the stress of financial mismanagement out of our lives. Our daughter will not graduate buried in debt. Your work for us has gone generational. I can't even begin to tell you how many branches of love the Tree of Foolishness has sprouted in my life. I've met a business coach, a financial planner, and even made a successful career change all directly related to Fooldom. Yeah, I said branches of love. It's beautiful. Go with it. In fact, you should name a newsletter that.

It's hard for me," Dan writes in closing, "to climb off my Foolish soapbox, so let me just wrap up by saying yet again, I am so deeply and profoundly grateful for all you do and continue to do. If ever your soul falls into doubt... If markets should tank and hate mail piles up... If you ever wonder if it's all worthwhile, this is my cell number." And in respect of our correspondent, I will not give Dan's cell number over the podcast. "This is my cell number. Call anytime, night or day, and I will sing you a hymn. It will be absolutely awful, but true.

And if you're ever in the greatest city in the world,' Sweet Home Chicago,' and want a home-cooked meal or fancy dinner out, call me. I might even be able to score luxury box seats to the Cubbies. Sincerely, your loyal Foolish brother in arms, Dan [Broadway Dan] Rubin."

Dan, thanks for that note. Fool on!

As always, people on this program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing at RBI.Fool.com.