Pushing the limits of mailbag guests (five) and mailbag items (11), this episode of Rule Breakers Investing is a cornucopia of information on market dips, IPO investing, The Motley Fool's own ETF and more. Tune in to hear Motley Fool co-founder David Gardner's best advice for investors.
A full transcript follows the video.
This video was recorded on Nov. 28, 2018.
David Gardner: It's the week after Thanksgiving here in the United States, a time of plenty, of feasts, despite this fall's market famine. Well, we have a feast of our own this week. It's your mailbag. In keeping with our theme of abundance, I'm going for an all-time podcast record of 11 separate mailbag items. That's right, I can see my producer Rick Engdahl's eyebrows go up ever so slightly, maybe slightly skeptically, that we can, in fact, get through this in an hour or less. We're going to be featuring five superstar guests. We're going to be talking about how to approach market dips how to research private companies, The Motley Fool mutual funds, how to become a true Fool, of course, the Gardner-Kretzmann continuum will be revisited, and a lot more. Yep, we're pulling out all the stops in this festive season of mailbag abundance on this week's Rule Breaker Investing podcast.
Welcome back to Rule Breaker Investing! It's the final Wednesday of the month, it is time for mailbag. I've said we're going to go through 11 items, so I'm not going to waste a lot of time up front. I want to get right into it.
Mailbag, it's your opportunity to write me and my producer Rick and our team here and ask questions or make points or tell stories. We'll be doing some of all of that this particular week of Rule Breaker Investing as, indeed, we do every time it's the last week of the month. Let's kick it off!
Rule Breaker mailbag item No. 1. This one comes from Robert Trap. Robert wrote this nice note. He said, "Hi, David. Your recent podcast about how to begin investing has valuable lessons, even for us 'old timers.' The themes to start early in your life, if possible, and to attain the perspective of a long time horizon, were illustrated effectively by you and your three guests -- Fools Jason, Matt and David."
Robert goes on. "When I first joined as a junior faculty member at a medical school 39 years ago, one of the valuable bits of advice given to me by one of the senior faculty was to choose an investment periodical and read it regularly to begin the process of learning. I learned the concept of dollar-cost averaging with a monthly investment into a mutual fund. My burgeoning interest in investing in individual stocks was reinforced when I discovered The Motley Fool in the mid-1990s and gleaned valuable lessons from the stories about companies recommended for investment contained in the newsletters.
"I now have eight grandchildren, ranging in age from one year to 13 years old. I want to begin teaching them about investing. I'm thinking that a good way to begin is to set up custodial accounts with the brokerage firm I use, which happens to be Schwab. What do you and your panel of Fools think? Do I make all of their individual stock holdings identical? Shall I work with the older children to help them choose their own portfolios? How do I give stocks to them? What are the tax implications of custodial accounts for minor children? Thank you for all you do in the name of Foolish learning. Signed, Robert Trap."
Robert, this was a great one to lead off on. Yes, we did, at the start of this month, Get Started Investing Part II out of two. Tie a bow around that, that's a full series of two podcasts that I really believe, I would hope, you could refer anyone to and say, "Hey, listen!" to get started investing. Parts I and II on Rule Breaker Investing. That should get anybody started investing.
But you've asked a more nuanced and important question. You've asked, what about when you're trying to get kids started investing? I think we should speak to that. I'm looking ahead at the schedule and I see the very first episode of 2019, it's going to be 1/1 -- yep, we'll be publishing on New Year's Day -- and I'm going to make that Get Your Kids Started Investing. I'm going to bring back some of my panel and we're going to dedicate a full episode to getting kids started investing. I totally agree about the importance of that. That wasn't quite the point of our previous series, and I think it's so important. And what a great way to start 2019. So, thanks, Robert, for writing in! And circle your calendars, Fools! 1/1/19, Get Your Kids Started Investing Foolishly.
Rule Breaker mailbag item No. 2. This one comes from Mahmoud from Jeddah, Saudi Arabia. He writes, "Hi, David. Thanks for answering my previous question on when to add to your winners. I was listening to a recent RBI podcast, the one entitled 200 Stock Advisor Picks Later. You were talking about handicaps that you and Tom put on yourself with Stock Advisor -- for example, picking two stocks a month, having a set date to announce these picks regardless of how the market or the stock price is doing, etc.
"This got me thinking," Mahmoud says, "do you think Stock Advisor would have performed better without these handicaps? I believe you said Stock Advisor performed better than many hedge funds because of these so-called handicaps. My question is, what kind of handicap should investors put on themselves to do better? Perhaps not allowing themselves to sell during a 'correction?'" Mahmoud suggests. He puts that word in quotes, and immediately writes, "Sorry, I know you hate that term." And you're right. I've covered that on other podcasts. I never use the word correction. It's almost always used by people to describe a market drop, and that doesn't sound correct to me. If anybody looks at a graph of the Dow Jones Industrial Average over the last century, you'll see what's correct is that the market goes up over time. So, corrections, I think, are misnamed. But you already knew that, Mahmoud.
You go on, "Or maybe forcing themselves to add to a winner on a specific day of every month? Keep up the great work," he says. "Thank you and your team for everything you do. P.S. I actually live in New York, but that's less exciting than having a listener from Jetta, and I am from Jetta. Signed, Mahmoud." Thank you very much for writing in, Mahmoud!
There are three handicaps that I want to speak to that I would recommend that you handicap yourself with. I recommend these handicaps for all investors. The first one is, I'm going to handicap you and me -- and we do this in Stock Advisor and, indeed, the whole Motley Fool business -- with making a lifetime commitment to being an investor. The handicap there is that we're going to be basically keeping our money in the stock market the rest of our lives. At a certain point, as we near retirement, you might start pulling some back out. And no doubt, a lot of our listeners have fixed income or real estate, other things besides the stock market. But handicap No. 1 that we operate with every day here at The Motley Fool -- we're in our 26th year of enjoying this handicap -- is that we're all lifetime committed to the stock market and to investing. A lot of people don't. They jump in, jump out. We're handicapping ourselves against that.
No. 2, I think that regular investing -- as you mentioned, we pick one stock, each brother, every month in Stock Advisor. Our other services act similarly. We're handicapping ourselves by not saying, "We're going to buy three stocks that month, and then this other two months, the market looks high, so we won't buy any stocks." We're not even going to play that game. We're simply going to regularly come in and say, once or twice a month, a lot of us with jobs are getting a paycheck twice a month, so maybe twice a month, you're going to invest that money. It doesn't matter whether you think the market is high or low.
By the way, quick mention that if you do think you're good at timing the market, you may well be better than I am. Perhaps you don't have to handicap yourself this way, Mahmoud, or anybody listening. But this is something that we do at The Motley Fool, and I recommend this handicap to all.
The third and final one is, you don't always have to buy all of a position at once. I'm going to handicap you if you're nervous about entering a stock by saying you're not allowed to buy it all at once. You can't put all the money that you'd want to put in that stock the first day. Here, often at The Fool, through our best buys now and our services like Stock Advisor and Rule Breakers, we give ongoing reasons to continue purchasing winning companies over the course of time. And that handicap has indeed helped us to outperform many others.
I hope that shortlist was helpful, Mahmoud. Thank you for writing in from New York but saying it was still Jetta! We do appreciate that humor here at The Fool.
Oh, my gosh, is it The Motley Fool's chief investment officer who just walked into the studio?! Andy Cross, how are you doing?
Andy Cross: Hi, David! How are you?
Gardner: Really well! Andy, you're here to join in with me for the next couple of mailbag items, but you've also been handicapped with these handicaps over the course of 20-plus years here at The Motley Fool. Do you have any other thoughts?
Cross: I don't consider it a real handicap, David. In fact, I think it brings much needed discipline to individual investors who, if they're taught anything at all, it's about jumping in and out of stocks, maybe investing in penny stocks, maybe investing in the next hot thing they think might go up or down. I think having the discipline of regularly investing in these fabulous companies that you and Tom have found in over 20 years of investing and certainly through Stock Advisor, I think that discipline of investing, whether the market's high or low, whether we're in an election cycle, whether it's Republican or Democratic administration does not matter, whether it's a recession or not, the discipline to investing through all of those times when the rest of the people are focused on other things really brings a value to the way that we've helped investors invest. I think it's a big contribution to our performance.
Gardner: Awesome! I agree, Andy. Yes, you're right. When we were using the word handicap here for mailbag item No. 2, it was generally in quotes, and we're having a little bit of fun with that. It's a really good point that Mahmoud has made -- we think that these handicaps would serve many others if they were similarly handicapping themselves.
Mailbag item No. 3. Andy, let's do it! This one comes from Australia. Colin Anderson writes in, "Dear Motley Fool team, since joining Motley Fool Stock Advisor and Rule Breakers in the U.S. and Stock Advisor and Dividend Investor here in Australia, all Motley Fool services, in the last four years, I've become an educated, enriched, and entertained investor. I'm especially," he's going to keep going with the alliteration here, "I'm especially wiser, wealthier, and wwwwwwwwell prepared [ugh] for market volatility. During the recent bumpy ride through the past few months, I've slept well, been quite relaxed, but a little sad that my liquidity didn't allow me to buy more in the dip." He didn't write "on the dip." Here in America, we say "buy on dips." This is, maybe, an Australian English approach here, buying in the dip.
Cross: Could be!
Gardner: We'll get back to that in a little bit. Let's continue. "Your services point me toward better companies, better investing, and a better future. Thank you for all the fantastic services. Now, to my question. I used to wait until I accumulated about $5,000 before investing in any stock. That was the limit my old broker set before bumping his charges from $50," that's the commission rate, "to 1% of the purchase price. Ouch. My new broker now charges," this is the better world we're living in now, "$15 flat. Still high by U.S. standards, but better." Certainly, we agree.
"Thanks to some great tips from you all, I've started to dollar-cost average my entry into a new stock." We just talked about that. Regular investment, adding to winners. "In my old style, I bought bigger chunks and often added to my weeds as I tried to lower my average purchase price. I lost bigger than I would have lost in the Foolish style of investing. But even with your sage advice, I've only learned the painful lessons of watering weeds this year. I recently started small positions in Intuitive Surgical, Shopify, MongoDB, PayPal, and JD.com. I've added to Shopify and MongoDB. Now, the recent slide in the market has opened up a question: do I buy," here it is again, Andy, "in the dip? Or, would I be watering my weeds again? In my specific case for these current stocks," the ones I just mentioned, Intuitive Surgical, etc., "I have confidence in these companies. The reasons for selecting them have been Foolish, not foolish. The market drop has been a vote against the broader market. I've seen nothing against the weight of these companies. But how do I recognize a dip or distinguish it from a developing weed? Yours Foolishly, Colin Anderson."
Andy, I laid a lot of scaffolding there. Colin shared where he is in his investment journey. But fundamentally, the question is this: when a stock drops that we like, how do we know whether it's just dipping and going to come back or one of those weeds that you don't want to keep watering?
Cross: It's a great question, Colin. Making the distinction between watering your weeds -- and when we say "weeds," we mean, at least I mean, and I hope Colin means this, as well, companies that have a lower stock price, and maybe the business has deteriorated a little bit, and it's a smaller part of our portfolio, so we are dollar-cost averaging our price down a little bit.
Gardner: A lot of people do that!
Cross: A lot of people do it.
Gardner: But Andy, you and I know, the reason we call them weeds is, those are the ones that you shouldn't have done that to.
Cross: That's exactly right.
Gardner: You don't want to water the weeds.
Cross: You don't want to water the weeds. The full saying is "water your weeds and trim your flowers." You actually want to water your flowers, because those are the businesses that are going to continue to hopefully win in life and support the great things they are doing around the world. Also, that's good for shareholders. Supporting those businesses and investing your hard-earned capital into the businesses that are doing well.
Now, to your question, the difference between watering weeds and watering businesses like Intuitive Surgical and Shopify, that have gone down, that have pulled back. The first thing I would say is, has the market pulled back in general? Is whatever general market index you look at -- and certainly, the last couple of months, the S&P 500, the most general market followed here in the U.S., it's different around the world. In Australia, it's the ASX 200. Whatever it might be. The general market, has that pulled back as well? Have my stocks pulled back with that? So, first of all, how has your stock performed against the general market?
Gardner: Right. If the whole market's selling off and your stock's with it, that probably doesn't indicate they're weeds.
Cross: Not by itself, it certainly doesn't.
Gardner: Right. The whole market sold off.
Cross: That's right, exactly! That's the first thing. The second thing is, then, look at the performance of your businesses. Go in and see. You can go on fool.com, the fool.com over in Australia, and pull up a ticker to see if the business continues to grow. If the business seems to continue do well, as Intuitive Surgical is, as Shopify is, as so many of our businesses continue to do, then I would see that as an opportunity to add on that weakness in price. But hopefully, you're adding on the strength of the business. That's the difference.
Gardner: Awesome! Colin, I hope that was helpful.
Let's go to mailbag item No. 4. This one, a horse of a different color. This comes from Brett Wham writing in from Flagstaff, Arizona. Andy, you have to love that last name. Surname Wham.
Cross: I love that!
Cross: It's fantastic!
Gardner: I wish I were David Wham! You should be Andy Wham! We can all be the Wham brothers!
Cross: I would be much cooler if I were a Wham brother!
Gardner: Brett is, in fact, a Wham bro. Let's kick it off. "Hello, David. I'm new to investing in anything outside of a retirement account. I recently discovered the Rule Breaker Investing podcast. I've become more interested in learning about investing in stocks and plan to start with some 'fun money' as my wife and I are in our 30s and have been fortunate enough to max out our 401(k)s and Roth IRAs for a few years now. We have no debt and look forward to an early retirement sometime in our 50s. I'm not a Rule Breakers member yet. Since I'm starting out pretty small, I don't want investment fees to eat too much of my capital just yet. Dropping hints to my wife for an early Christmas membership gift. Our gifts are generally romantic like that," Brett confides. "I enjoy reading Fool articles, listening to your podcasts, as it's in line with a lot of my investment beliefs, such as investing in a business that you know and for the long-term.
"As I try and do research on companies I'd like to invest in, I'm finding that many of them are privately held. Is there a good resource out there to compile and track these privately held companies to know when they might have an IPO?" Brett goes on a little bit more, but he's basically saying he's keeping a list of private companies. It becomes harder to know if an IPO is coming for any of them. He googles some of these, sometimes quite frequently, to see if they might be coming public. This is a guy who's wondering, with his Robinhood account that he mentioned later in the note, where he's getting free trades, will that exciting new private company be coming public anytime soon? Is there a resource, Andy Cross, that you use or that we use that you'd recommend to listeners, a helpful way to track private companies?
Cross: Brett, first of all, congratulations! Not only do you have a cool last name, but congratulations on getting started with investing with the Rule Breaker style. That's fantastic, especially with someone who's in your age bracket. You have many, many years of investing ahead of you. Long-term, patient, business-focused, innovative investing is the way to go. I just wanted to say that. Congratulations on that, Brett!
Second of all, the IPO market has shifted and improved so dramatically over the 20 years -- 22 years now last week -- that I've been investing alongside you here at The Motley Fool. And there's a lot more information. Historically, it used to be very difficult for individual investors to invest in IPOs. When we say IPOs, by the way, initial public offering, for those who are not used to that acronym. It's for private companies that are issuing stock into the public market.
Gardner: When a new common stock is born, something you and I can buy on the New York Stock Exchange or the NASDAQ.
Cross: That's exactly right. Over the years, we've invested in many, many, many IPOs that have gone on to produce great returns for public market investors.
Gardner: And some bad ones, too!
Cross: Oh, I certainly have too, David!
Gardner: Too early and hard on Great Wolf Resorts. I remember that one. But, keep going, Andy!
Cross: The market is now so much better for finding information. I talked to Aaron Bush, analyst with us here at The Motley Fool, a fantastic analyst and researcher. He pointed me to a few resources that I want to share with Brett. The first one is clickipo.com. Mobile-first, friendly application that helps regular individual investors not just learn about IPOs and businesses that are setting up for an initial public offering, but actually invest in them because their online app ties directly into many brokerage accounts. It's really fascinating. In that application, you can sign up for it free, you can find out about companies that are preparing in the registration process to go public, and you can track the information that Brett may be looking for.
Full disclosure, I have not used it. I can't comment on how simple it is to actually use. But the process seems very elegant, and the application is very cool. clickipo.com. It's actually free to buy shares in the offering, if you can get them. It's not guaranteed you can. And the underwriter of the stock actually pays ClickIPO for the service. That's one service that I would certainly suggest Brett check out, is clickipo.com.
By the way, I will say, Brett, you don't have to invest in IPOs. There are plenty of fantastically great businesses out there in the public market that are already public. IPO investing does come with its risks.
Gardner: That's right. In fact, I've never personally bought an IPO -- that is, I've never been invested in a private company that came public. The only stocks I've ever owned or recommended in our services were companies that were already public. Now, some of them were recently public. You could say it was a recent IPO. But none of us here at The Motley Fool, for the most part, in our services, are giving advice to people to get them into stocks that are going to IPO.
Cross: Yes, David, we are not, because even in today's market, it's not guaranteed that you can get shares. It's still a little bit opaque when you buy. Even on ClickIPO, you don't buy shares, you actually put in a dollar amount and they try to allocate accordingly. There are restrictions and eligibility requirements.
Once a stock goes public, there are a lot of things that affect that stock price over the course of a year, including lockup periods from insiders. So, it's a little bit tricky. For a beginner investor like Brett, I personally wouldn't recommend something along those lines. You can invest in so many great, innovative companies that are already in the public markets.
Gardner: That's right, Andy. I think about, here in 2018, remember this IPO? Spotify. It's a big, well known company. A lot of people excited about it. It came public. The stock did pretty well initially. It rose, even though this company's still not making money. But it's a global brand, and a big-time business. But these days, months and months later, it's right back to about the price were it IPO-ed. It sold off. And that often happens with these IPOs. They get hyped up. People get excited about them the first few weeks, the first month, the first day. But six months later, a lot of times, they're back to where they were.
Cross: That's true. The advice I would give to anyone who's looking to get into IPOs, while there are things like ClickIPO and others -- Aaron pointed me to Renaissance Capital and StrictlyVC -- that provide a lot of information about IPOs, a lot of insights and education on the businesses, really, investing in public businesses that are run by visionary founders, that are providing services that are unique in the marketplace, growing exceptionally, and have lots of market opportunity ahead of them, you might avoid some of the more volatile nature that will come with IPOs.
Generally, Brett, fantastic that you're getting invested. Don't feel like you have to go invest in IPOs. You might not even be able to because of some of the eligibility requirements. Generally, you don't have to do it because of the great businesses that are already in the public markets today.
Gardner: Andy, I think we're out of time for this one. Were there any other resources that you have to check out private companies? Anything else you want to mention?
Cross: Quickly, I'll mention Renaissance Capital and StrictlyVC, which is actually a newsletter published for free. It's a daily newsletter published by the Silicon Valley editor of TechCrunch. It provides a lot of insights on companies that are looking to go public, information on those businesses, and the details behind some of their offerings. Renaissance Capital --
Gardner: That's an excellent site that I've used.
Cross: They actually have an IPO ETF for that have come public recently.
Gardner: Everybody's got an ETF.
Cross: It's true, including The Motley Fool.
Gardner: All the kids are doing it!
Cross: Renaissance Capital provides a lot of insights on the market in general.
Gardner: Wham! Alright, Rule Breaker mailbag item No. 5. This one comes -- oh my gosh! This one comes from Chapel Hill, North Carolina! My alma mater, the University of North Carolina Chapel Hill! I don't know Jim Lewis, but Jim, I feel like I know you at least a little bit better now. Thanks for writing in! Jim Lewis wrote this. "Hey, I was subscribed to your Inside Value service for a short time, and through that service invested in a company called Envestnet (NYSE:ENV). The company's done well for me, greater than a 100% return." Well, I'm really happy to hear that! "But," Jim goes on, "since you've discontinued that service, I don't get any updates on the stock. This leaves me feeling like I'm sailing without a rudder on this one. Is lack of updates a reason to sell a stock? Thanks, enjoy the service. Signed, Jim Lewis, Chapel Hill, North Carolina." Well, thank you again Jim, for writing in!
I thought, I need to pull in my friend, Ally Wines, because Ally oversees our U.S. membership business. If you're a member of a service that's in the United States -- for example, Stock Advisor, Rule Breakers -- Ally is the person who's making sure, I hope, that you're well served. Ally, I just shared Jim's thoughts. What are your thoughts back?
Ally Wines: Hi, David! Thanks for having me on! First of all, thanks, Jim! I'm a UVA grad myself. [laughs]
Gardner: I'd forgotten that, Ally! I didn't realize. We're at Lagerheads now.
Wines: Despite the fact that you're from Chapel Hill, I still would like you to have wonderful member service with us. And you're right. Envestnet was an active pick in Inside Value, which we closed earlier this year. When the team closed that service, what they did was they put together a final report. I don't know if you caught it or not. I went back, and I looked at it. I actually saw that they had a list of companies that they thought people should consider selling. Envestnet was one of those. What they said about those was, "These are companies whose prospects we're less excited about." So, if you are thinking about selling any of your Inside Value holdings, this could be one you might consider selling. So, there's that angle.
The other piece is, yes, it's not an active pick among our services. We wouldn't want you to feel rudderless. I don't know if you necessarily agree, David, but based on your risk tolerance and the profile of the company, it's worth checking on any of your holdings at least once a year.
Gardner: I agree with that. That sounds good!
Wines: Given those factors, I did a little digging for you, Jim, in terms of what your options might be here. I looked you up, and I saw that you're still an active member of both Stock Advisor and Rule Breakers. Then, I talked to my friend Abi Malin, who's on our investing team, and asked her, "Jim loved this stock. It gives him exposure to fintech. Do we have any active recommendations in those services that might scratch that itch for him?" It turns out that, David, on your side of the scorecard, you have three picks that she felt might serve that need.
One of them is NASDAQ, which is actually a best buy now of yours right now. That's one that you could consider. You also have CME Group, which was a pick from November 2017. The final one I'll throw out there is the Chicago Board Options Exchange Group.
Gardner: Yep, CBOE.
Wines: CBOE. Another David pick. That's a pick back from January 2014, but it's been a best buy now as recently as November 2017. Even a year ago, you still liked that one.
I don't know if, David, you thought of these three that I pulled out of my grab bag. It might be an interesting thing for Jim to consider that we could keep him up to date on.
Gardner: I love it! I'll just say that I favor all three of those companies. What I like about NASDAQ and CME, Chicago Mercantile Exchange, and CBOE, is that each of them basically is a market platform. You're buying stocks over the NASDAQ. You're trading options over these platforms. And the companies that sponsor them and run them are really great long-term plays in my opinion because it's very hard to compete. If you want to show up and be a new options exchange, there's a big dog that already exists there. It would be hard to replace the NASDAQ, as well. So, I favor all of those.
Funny enough, I don't know Envestnet. I'm really glad, Ally, that you took the time to do some research and tapped Abi for that. I think that's great! I think what we're telling you, Jim, is we're reminding you that the few times we do close services -- which we never like to do. The only reason we ever close a service is if not enough people are using it and we're misallocating our own research efforts. Inside Value is a wonderful service that we're all very proud of, it just didn't have as many members. As we closed it down, we said, "We're going to give you a write-up and a perspective on all of the stocks in the service." And I'm glad that we did, Ally. I hope Jim saw that, and anybody who may have had Inside Value would have had that same experience.
And, you've just pointed out, there are a lot of other stocks and other services besides. Maybe it's time to cash that winner, Envestnet, and reallocate. And those are three perfectly good ideas.
Wines: Great! Thanks, David! For Hoos and Tar Heels alike, there are great stocks out there. Again, I'm just happy that you found another home with The Fool. We're always here to make sure that our members are in great services. Stock Advisor and Rule Breakers, you really couldn't beat that!
Gardner: Thank you, Ally! I really appreciate you coming on! Thanks, Jim for the question!
Rule Breaker mailbag items No. 6 and No. 7. We're going to combine two here because we're about to talk about -- oh, my golly, is David Kretzmann in the studio?!
David Kretzmann: Oh, yes!
Gardner: We're about to talk about the Gardner-Kretzmann continuum.
Kretzmann: GKC, baby!
Gardner: It's one of the most important investment developments of 2018. I think we've talked about that previously on this podcast. Any regular listener knows what the Gardner-Kretzmann continuum is, but I'm sure we have some new listeners this week. David, before I read these mailbag items, can you briefly summarize the GKC?
Kretzmann: All you have to do is take the number of stocks that you own. For example, let's say you own 50 stocks. Divide it by your age. Let's say you're 25. 50/25, your GKC score is two.
Gardner: Which is a huge number. I think most people don't realize that they could own that number of stocks, or they might think it's crazy to own 50 stocks at the age of 25. Although, David, I think you have maybe even a higher ratio?
Kretzmann: I think it's over 70. I'd say my ratio is probably closer to three. The agreement that we've come to over the course of the year discussing after creating the GKC score, David, is that we want your GKC score to probably be at least one or higher. Just a rough barometer to follow as an investor.
Gardner: Love it! That's a quick introduction. Now, mailbag items No. 6 and No. 7. This first one comes from Jeff Brown. Jeff writes, "Greetings. I've enjoyed the RBI podcast along with most of the other Motley Fool podcasts for the last few years since I started listening to podcasts. I have a long commute," Jeff writes, "and they help me pass the time in an informing and amusing way. My one complaint is that I no longer listen to as many audiobooks as I did before podcasts." Hmm. Kind of makes sense to me. There's only so much time.
"I was temporarily relieved to hear about the GKC," Jeff goes on, "as I thought of myself as a hoarder of companies." Best type of hoarder to be, at least! "I'm turning 53 this month. I figured I've probably had investments in about that many companies. I hadn't counted them in a long time as my portfolio grew enough not to worry so much about diversification. I was a bit surprised, though, to count 76 different companies, plus about 15 funds. Most of these were recs from Hidden Gems, Stock Advisor, and Rule Breakers. I still think I have a bit of a hoarding issue, as I love buying into new companies then benefiting from their growth and getting a bit of a kick out of telling my family, 'Hey, we own such-and-such company,' when we come in contact with a product or a service that one of them provides.
"My question is related to adding to winners. I would like to get your thoughts on two common guides mentioned by The Motley Fool and how these relate: adding to winners and buying in thirds." We're going to get to that in a sec. That's one question.
Also to the GKC, mailbag item No. 7, Pedee Ewing coming back, pointing out we may have mispronounced Pedee's name previously. We do make a big effort, David, to nail people's pronunciations.
Kretzmann: We try very hard, but we don't always get it right.
Gardner: It's spelled Pedee. You went with?
Gardner: Right. But we received this mailbag item, and PD is pointing out it's just pronounced like PD. So, that's what we're going with this month.
Here's the question. PD starts, "Thanks for your wisdom and caring. You're truly improving the lives of your fellow man." Well, that's a wonderful thing to hear! Thank you very much, PD! "I'm curious as to the ideal size of a position. I'm on track," PD writes, "to have my GKC index at one with 27 different Stock Advisor starter stocks and new picks. Once I reach this goal, each position will only be one or a few shares for each of those 27. As I add more new picks, what's an ideal approach to position size, etc.?"
Both of these questions are about the GKC. David Kretzmann, illuminate!
Kretzmann: This isn't the best, clearest answer, but I'd say it really does depend on your situation. These two listeners writing in, it sounds like they're at a stage of their lives, certainly in PD's case, where they have years in front of them to invest. They'll most likely be adding new capital to the amount of cash that they're adding to stocks.
Gardner: I also want to say that Jeff Brown, our first guy, is 53. I sure hope, since I'm going to be turning 53 this coming year, that he also has years and years to invest.
Kretzmann: Absolutely, yeah, decades to invest! We're optimistic here. We're talking here about people who will be adding new money to their investments for years to come. In that situation, position sizing today isn't quite as important. If you have new money to add, you can start a smaller position, follow the company and add to it over time. If you're someone who's closer to retirement, or you're dealing with a fixed amount of dollars, you're not necessarily going to be adding new cash to that, then you probably do want to think more about, "I'm going to stick with a specific number of stocks I'm going to target in allocation, whether it's 2% or 5% or 8% for each position." In this case, especially if you're starting out and just adding a couple of hundred dollars a month or every couple of weeks, whether you're trying to save up to invest a bigger amount in one stock or investing a little bit over one or two or three stocks, I'd lean closer to the latter category. Obviously, with my GKC score around three, I must lean in that direction. But if there's a stock that I like, I'll typically start a small position, probably less than 0.05% of my portfolio. A very small percentage of my portfolio.
Gardner: You're just getting in the game, it sounds like.
Kretzmann: Yeah. Getting some skin in the game, following along. And there will be companies where I probably added to them over 10 times over the past 18 to 24 months.
Gardner: That's great!
Kretzmann: And then there'll be some companies where I buy them once and it's like, eh, I'll just leave that, I'm not necessarily going to return to it. It's really going to depend on each investor's circumstances, your risk tolerances. I know, David, in your case, you've recommended some companies like Intuitive Surgical six times, you've recommended others three-plus times. We're not necessarily saying to only buy in thirds. You don't necessarily need to only buy a company three times. Again, it comes down to each person's circumstances, their risk tolerance. I'd say it's good for an investor to reflect on the volatility that we've gone through in the stock market this year. I know I personally have seen some of my bigger positions in my portfolio drop 30-50% over the course of the year. A lot of that happened within the past month or two.
Gardner: Yeah, I feel you.
Kretzmann: Reflect on that, and think, how comfortable are you with a bigger position in your portfolio dropping like that? Do you wince? Do you sleep at night? If so, you probably want to aim for a slightly smaller position size for any given stock in your portfolio. On the other hand, if you're someone who has a stock that's 10-15% of your portfolio, it drops by 30%, and you don't flinch, then you're probably someone who can tolerate a bigger position size. Again, it really is a range for each person.
Gardner: Well put. David, you're in your mid-20s. Talk to me about 2019, if you were just guessing. From your GKC of approximately three, we'll just say you have around 75 comes in your portfolio, with the money that you save next year, how much of that money will go toward existing positions? And how many new stocks do you see yourself buying? I realize we're just making it up, but give us a general guide for how a guy with an extremely high GKC thinks about investing in the year ahead.
Kretzmann: I'd say I'm increasingly prioritizing, adding to existing positions. The majority of the cash that I have available to invest will go toward stocks I already own. In this case, let's say 60% plus of cash next year that I have to invest will go to positions that I already own. Next year will be an interesting year. We have a lot of exciting IPOs on the docket potentially -- Uber, Airbnb, Slack, a lot of higher-profile IPOs coming in 2019, similar to what we've seen in 2018. It'll be interesting to see some new companies hitting the public markets. But yeah, in any case, I would say the majority of the new cash I do have available to invest, I prioritize stocks I already own, but then leave a little bit on the side to start positions in companies that have struck my fancy and maybe hopefully will add to down the road as well.
Gardner: Awesome! There you go, mailbag items No. 6 and No. 7 on the GKC. It's really a story of portfolio crafting. There's no one-size-fits-all, cookie-cutter answer to how to build a portfolio. A lot of it does come down to key factors like your age, your enthusiasm, and how much money you have coming in. Once you do math around those, then you just ask, what am I working toward? What does my portfolio look like 10 years from now? Do I want to be tracking dozens of stocks? Do I like to spread my money out that much? Do I want to focus some? Even the answer that you have today may change 10 years from now. You may have something different in your mind at that point. It's all about evolving and adapting as we go. That's what we're here to help with here at Rule Breaker Investing.
Rule Breaker mailbag item No. 8 -- oh, my golly, is that Emily Flippen here joining us in the studio? Hi, Emily!
Emily Flippen: Hi! How are you?
Gardner: You're here because I want to talk about Chinese ADRs with No. 9. But since you're here, I wanted to share this whimsical question with both of you. Whimsical might not even be the right word. In fact, Patrick in Canada, Patrick Hoffman, who's writing us, is using the word ethical. We'll talk, maybe, a little bit about ethics. Who knows where we're headed with this one? Let's start it off.
He says, "Ethical question from an aspiring investor. As an aspiring investor," Patrick writes, "I'm wrestling with ethical questions I'm hoping you could shed light on. It appears to me that the whole concept of the stock market is based on one principle: that this part of a company that I'm buying today will be worth more later than it is now. But isn't this idea based on the fallacy of infinite growth? It's impossible for a company to continually grow forever. My concern is that in this unending pursuit of growth, are companies not encouraged and rewarded for doing whatever it takes to increase profits, including, maybe, pushing ethical boundaries? Might be a silly question, one I'm seriously wrestling with, though. Patrick in Canada."
David and Emily, I'm really interested in both of your perspectives. All I'm going to add in is this from Hamlet, because how can I read the phrase infinite growth and not think of, "Alas! Poor Yorick. I knew him, Horatio! A fellow of infinite jest, of most excellent fancy, he has borne me on his back a thousand times. And now, how abhorred in my imagination it is." And it goes on from there. One of the most famous scenes of all of Shakespeare. Of course, we're The Motley Fool, so we're going to have this Shakespeare vibe going through this podcast, as we have in the past. A fellow of infinite jest, as Hamlet holds a skull of the court jester of his time when Hamlet was a little kid. And now, all he has is just Yorick's skull that he discovers with the gravedigger. A fellow of infinite jest. A market of infinite growth. Emily.
Flippen: I like to believe that some companies are capable of infinite growth just because I want them to be capable. I think Amazon is a great example of that. But when you look at a company like Amazon, it's hard not to ignore the ethical issues that Amazon has had. While I don't believe that any one company can grow infinitely forever, I do think that the market rewards companies that grow ethically. Companies that are more and more taking an ethical manner to the way that they do business, to the way that they grow, I think, especially as we get further and further into the 21st century, those are going to be the companies that are rewarded.
As an investor, I often think that I'll miss out on amazing growth opportunities because I don't invest in companies that I don't see operating sustainably and ethically. But I think as an investor, you have to make that choice yourself.
Kretzmann: Yeah. It's interesting to hear Jeff Bezos talk about this. Amazon at one point crossed that $1 trillion market cap hurdle. It's still one of the biggest companies in the world, although the market cap has dropped a bit recently.
Gardner: I've noticed!
Kretzmann: [laughs] Yeah, it's a little bit painful. But, he said, the bigger institutions, whether it's governments or companies, they should invite more scrutiny, whether it's from the public, from regulatory agencies, from consumers, all these different stakeholders. As organizations or, in this case, companies get bigger, they will invite more scrutiny. And I think they will be held to a higher standard, whether it's by their customers, their employees, regulators, whatever it might be. I agree with Emily, especially in this day, where you have social media and so much more insight into these companies through the internet and through that connectivity. Companies will need to increasingly operate in an ethical way if they want to survive, let alone grow over the long-term.
There's also a beauty built into capitalism. Theoretically, every company would love to be the one dominant company in the world that does everything, but there's that built-in mechanism of competition among companies. If you go back to 1980 and look at the top 10 biggest companies in the Dow, the biggest companies in the world, I don't think any of those companies are the top 10 today. You have companies like IBM, AT&T, ExxonMobil, which is still a bigger company, but them you have Schlumberger, Shell Oil, Mobil. You really had a bunch of energy companies that were the biggest companies in 1980. Really, the top 10 companies in the Dow or any index actually don't typically have a great track record over the long run --
Gardner: Once they've established that huge size, right. It's just harder to grow those things.
Kretzmann: Right. And we'll see, maybe that changes with the dynamics of the internet and with software, where you don't necessarily need to build more physical infrastructure, more drills or whatever it might be, physical assets to expand. Instead, you can just sell more software, sell more ads. It's a much more scalable and bigger business model. It's an appropriate conversation, probably best for a 02:00 AM discussion in the dorm room or something, maybe with the assistance of some other substances to really get the most out of this. But I think there is some built-in competition there that limits the ability for any one or two or three companies to reach that pinnacle of being one of the biggest companies.
Gardner: I agree, and history proves that. I'm delighted that you brought history into it, David. I will say, just for my own part, that last week's podcast with Paul Rice joining us, improving business through Fair Trade. Paul was talking about how capitalism is changing as we speak. In a way, I do think it's becoming more and more ethical thanks to people like Paul and many others that realize that the best way to grow, as Emily just said, is to grow ethically. When you do so, people want more of that. If a company is growing unethically, that's increasingly unsustainable in this world. I think we all want better from business. We're ask a lot of business. We're asking entrepreneurs like Jeff Bezos to do almost everything. Keep growing, keep innovating, and do everything well, and, by the way, don't make any mistakes or you'll get flamed on social media. It's really quite remarkable what we are asking of some of these great public companies of today.
Patrick, I hope that was helpful. I hope we helped you think through it a little bit. Infinite growth, I will say in closing on that, that a lot of times, people think that you shouldn't hold stocks for a long period of time because it can't keep growing forever. They'll point out how lots of companies aren't around anymore. But what they neglect to mention is, some of those companies that disappeared over the course of time were simply bought by another company. Some great companies. Marvel for me was a great stock. It no longer shows as a stock. It would look like Marvel disappeared if you were looking backward, but all that happened, as we all know, is that Disney bought Marvel. The infinite growth doesn't need to be infinite. We all have finite lives. But some of these companies can be held quite a long time. And sometimes, when they disappear, it's not because they went bankrupt, it's because they got snapped up at a premium.
Alright, Emily, now for something completely different: Christopher Olson writing in. "I can't say enough good things about what you guys and gals do to fulfill your mission at The Motley Fool, but I'll spare that for the time being and pose my question." Christopher, by the way, is @lookfromdwnhere. Thank you for writing in, Chris! He says, "I've owned a few Chinese companies for over six months now. Rule Breaker recs. I had a few small charges to my brokerage, citing something about the ADR. This has been for iQiyi and Baidu. I also own Baozun and JD, but can't recall if I've had charges for those, as well. Just curious if this is the broker charging me. Who's getting this money and why? The charge comes out of my cash in the brokerage account. Thanks, and Fool on."
Well, Emily, it was natural for me to turn to you because you know China a lot better than I do, having lived four years of your college in Shanghai?
Flippen: Yes, four years.
Gardner: Yes. And while I don't think either of us purports to be a specialist on ADRs or charges, I hope you've done a little bit of homework, or maybe you already knew this. Do we have an answer for Chris?
Flippen: We do. I definitely would not say I'm an expert, but I think I know more than the average investor about investing in ADRs. I have a short answer and a long answer.
Gardner: Let's start with the acronym -- American depository receipt.
Flippen: ADR. American depository receipts are essentially a slip of paper that you're going to buy from your broker that says, "I own X number of shares of a foreign company." This is where the fee comes into play. By owning this piece of paper, you don't necessarily own the stocks at the company. You own a piece of paper that says you own the stocks of a company. For all intents and purposes, you own the shares of the company. But what actually is happening is, whenever these foreign companies come to the U.S. and list on the U.S. exchanges, they have to use a depository trust company. This is the person who's going to be owning the shares and then issuing the ADRs, or the global depository receipts if you're international. They sell those to your broker, who then sells them to you.
Gardner: I'd never known how that worked. I've owned ADRs in the past. OK.
Flippen: It's a whole process. Actually, what happened, the reason why you're seeing these fees -- and they're fees that we don't typically talk about because they're very, very small fees. They usually range between $0.01-0.03 per share of the stock. But if you own 500 shares of a stock and it's $0.02 a share, you're paying $10 a year in these fees, so it's definitely worth mentioning. Your broker is not getting this money. This is getting paid to that DTC, the depository trust company that the ADR is using as the listing company. They're called ADR pass through fees, which is coming to you from this system, which is a complicated way of you owning the shares.
What's really interesting is that you can actually pull up the documents and see how these are charged. They're not the same for every company. You'll notice that you'll get a fee for each different company that you own. It might be $0.01 on one company, $0.03 on another company. In the case of Baozun, it's $0.05. A little more expensive there. You can actually go into the SEC's website, they have a search process called EDGAR. You can search for your company, pull up the F-6 agreement. This is the listing agreement for the ADR. If you search through a lot of legalese-it's no fun, I promise you, but I do promise that it's there -- you can find the agreement that they made with the bank. I pulled up Baidu here. I think a lot of people own Baidu, so it's a great example. If you go through and search their F-6 form, you'll see that they actually have an agreement with the Bank of New York, who is the person who's working as their custodian for this. Their agreement is that they can charge $0.02 per ADR at the end of the year. Baozun is $0.05 per ADR at any one point they choose throughout the year. It's different for every company. Long story short, it's a legal process that was recently changed in 2008. It allows them to take a little bit percent shares of any ADR that you own.
Gardner: Very well researched. Thank you, Emily! Very thorough.
Flippen: Long, complicated story.
Gardner: We liked the story! It was very well done. Baozun is trading at about $34 a share, so $0.05 is inconsequential for the most part. But Christopher was, I wouldn't say he was troubled, but I would say he was curious. He was wondering, "What is that money, and where's it going?" And just helped him understand. You helped me understand, too!
Flippen: I hope so. If there's any other questions, Christopher, feel free to reach out.
Gardner: Awesome! Emily Flippen, thank you!
Flippen: Thank you!
Gardner: Coming down the homestretch. It's time for a question about Motley Fool Funds. When I think about Motley Fool Funds, I think about my good friend, Denise Coursey, head of Motley Fool Asset Management. Oh, my golly, look! Denise, you're here in the studio with us!
Denise Coursey: I am! So excited!
Gardner: Is this the first time that we've interacted live on this podcast?
Gardner: And yet, any regular listener will instantly recognize your voice, Denise, because you have been the lead-in for the podcast since week one in July 2015.
Coursey: I have.
Gardner: I think I have to ask you to do it live, if you would, Denise. Could you do that?
Coursey: I would love to. I don't know if I can do it quite as well as that first time.
Gardner: We did tape it and take the best one.
Coursey: Oh, great!
Gardner: This is raw, though. This is real. This is gritty.
Coursey: Yes. OK, here we go. It's the Rule Breaker Investing podcast with Motley Fool co-founder David Gardner.
Gardner: Wow! That was wonderful! After three-plus years, we've never had you do that live! Back in the day, do you remember, "You've got mail?"
Gardner: America Online. Any old hands remember AOL. Elwood Edwards was the guy who said, "You've got mail." And we had Elwood Edwards on our radio show back in the day. Since we occasionally do radio blasts from the past, maybe we want to bring Elwood back. But we thought, "We have to have this guy on our show to interview him about the You've Got Mail thing!" Anyway, Denise, that was wonderful.
Now, pushing all that aside, we have something much more serious and much more important to talk about, which is Motley Fool Funds. But, speaking of serious and important, you have something to say first.
Coursey: I do. I'm going to try and beat Bryan Hinmon, who was on here, at reading this disclaimer. Here we go.
Gardner: Here comes the epic disclaimer from Denise Coursey.
[ ♪ Entry Of The Gladiators begins ♪ ]
Motley Fool Asset Management is a separate sister company of The Motley Fool LLC that manages The Motley Fool 100 ETF. I'm not recommending that you buy, sell or hold any of the companies that I discuss, nor am I advocating an investment strategy for any of you as individuals. You can find our fund's entire holdings on the mfamfunds.com website. These lists are updated daily, but keep in mind that the current holdings are subject to change it anytime. All investing, including ETF investing, involves risk and possible loss of principal. For listeners who are not shareholders of the fund, you should consider the fund's investment objectives, risks and expenses carefully before investing. The prospectus for this and other information is available on the mfamfunds.com website. Please read the prospectus carefully before investing. In addition to normal risks associated with investing in equity securities, investments in the fund are subject to the risks specific to ETFs. Unlike other funds managed by MFAM, this fund is not actively managed. As with all index funds, the performance of the fund and its index may differ from each other for a variety of reasons, and the fund may not be fully invested in the securities of the index at all times, or may hold securities that are not included in the index. Finally, fund shares may trade at a material discount to NAV, and the risk is heightened at times of market volatility. To the extent the fund invests more heavily in particular sectors, its performance will be especially sensitive to developments that significantly affect those sectors. The fund is non-diversified, which means that it may invest a high percentage of its assets in a limited number of securities. As a result, gains or losses in a single stock may have a greater impact on the fund. For these and other reasons, there is no guarantee the fund will achieve its stated objective. For more information on The Fool 100 ETF, please visit fool100etf.com.
[ ♪ Entry Of The Gladiators ends ♪ ]
Gardner: Phew! That was really well done! I was going to say to my producer, Rick, we should just speed it up to keep it moving, but that was not sped up. That was Denise herself able to talk about as fast as -- who did the FedEx ads? Anyways, amazing! You said you were practicing some this afternoon.
Coursey: I was practicing this a lot. My actually answer to the question might not be nearly as good.
Gardner: [laughs] Well, it's important that we say that. That's what enables us to have you on. Denise, thank you so much for your time and your contributions to this podcast. Travis Tunstall wrote a simple note to us for this week's mailbag. He basically said, "If I bought The Motley Fool Fool 100 ETF at age 40, I know you talk about owning one stock for each year of your age." this goes back to the Gardner-Kretzmann continuum from earlier. Travis is asking, might this be a faster way to jump-start that process, by putting his money into the ETF, ticker TMFC? He says, "Thoughts?"
And I thought, here are my thoughts. First of all, I can't necessarily have thoughts, because this is a regulated side of our business. I'm not here to promote or demote. We're just here to share information. But then, my second thought was, let's have Denise on, along with our very talented lawyer, Mary Henderson, who always sits on the other side of the glass anytime we do this, because she'll throw the flag if we do anything wrong here. Now that we've stripped the curtain away and you see how this podcast works, Denise, what do you think of Travis' question? How do you approach a question like that?
Coursey: Well, I would say the short answer is yes, because math. The Fool 100 ETF, ticker TMFC, owns -- wait for it -- 100 stocks, and 100 is greater than 40. Of course, there's a little bit more nuance to that answer. First, for listeners who aren't familiar with TMFC, just a short overview. The Fool 100 ETF is Motley Fool Asset Management's first ETF. It launched back in January of this year. I still get excited when I say that. It tracks The Fool 100 index, which contains the top 100 U.S. companies by market cap in The Fool universe. That means any of the companies that are active buy recommendations in any of The Fool newsletters or are ranked among the top 150 in The Fool IQ.
Gardner: From our analysts, who all contribute their opinions about which stocks they favor the most. That's a system we have here at The Fool called Fool IQ. You're right -- Travis, basically, by buying the fund, would have 100 investments. If he's 40, he ends up with a 2.5 ratio, 100/40. But, it's just a single investment. So, looked at another way, even when you own the Vanguard index fund and you own all of the stocks in the world, that's still just one investment. It could do well or poorly, and it doesn't necessarily constitute comprehensive diversity.
Coursey: That's correct. For one, it's U.S. stocks only. It's large-cap. And as The Fool itself tends to be very consumer-discretionary-focused and technology-focused, the index reflects that. You're getting some very heavy sector weighting in certain areas. There's that. And it is a single investment, so you get to watch one stock go up and down in your portfolio as opposed to that continuum of the individual ones that you pick out.
Gardner: I like the witticism that I think is inherent in the ticker symbol. TMFC, because C, if I remember my Roman numerals, that's 100, right?
Gardner: Now, this is not the only ETF that your team has launched in 2018.
Coursey: No. We actually just launched an ETF at the end of October. It's The Motley Fool Small Cap Growth ETF, ticker MFMS. It's actually an actively managed ETF, so it's going to be a little bit more concentrated. We have between 30-40 stocks that are hand-selected by our team of analysts in Motley Fool Asset Management.
Gardner: I haven't looked, and we're not even talking about performance of these funds. Anybody could look it up. Was the team psyched to be launching it right as the market started caving in because they're getting better prices? Or was this sad because the market caved in right after we launched the fund?
Coursey: Charly Travers is the portfolio manager, and he was psyched that the market was going down and started going down a few weeks before we launched. He was very excited about that. As someone who is responsible for getting people excited about buying this, that was a little bit nerve wracking.
Gardner: I understand.
Coursey: But we've had a lot of interest in it, and we're very happy with the growth of both the portfolio and the interest, in terms of people investing in it in the last three weeks.
Gardner: Wonderful. I hope everything that we do is built to last. Denise, any previews of 2019 attractions for Motley Fool Asset Management? Anything else you want to say before you get whisked off the stage?
Coursey: Well, I can't really preview for next year just yet. But we do have, certainly, different strategies and products that we're thinking about. I would say, check us out at mfamfunds.com. We do have a new website. That's pretty exciting. A little bit more modern, different branding, and a little more focus on our products.
Gardner: Understood. Well, thank you, Denise, for sharing that! Part of the reason we started Motley Fool Asset Management was, the No. 1 reason, when people would call and say, "I want to cancel a Motley Fool service," they would say, "I don't have time. I may like you guys, I may even love you guys, but I'm canceling this or that Motley Fool service just because I can't keep up with it all." So, we started thinking, "Hmm, is there a business opportunity here? Could we launch Asset Management, where people who feel like they don't have time, or have heard about The Motley Fool name and trust it, but just don't want to invest directly in stocks with us? Would they have a solution?" And Denise, you and your team have done an outstanding job creating those solutions for our members.
Coursey: Thank you very much! We appreciate that. We're happy to be doing it.
Gardner: I always try to save the best for last when it comes to our mailbags. Certainly, our mailbag episodes are among our longer episodes. It's just because I love your questions and bringing my guest stars on. It's not just me sitting at the mic, lonely, talking to himself, which is how this podcast is most of the weeks of the month. Nope! This is when I get to bring in my guest stars. Arguably, sometimes we have too much fun. But part of that fun is that, with Paul Harvey, I like inspirational stories to end with.
Mailbag item No. 11, from Dr. Yair Levy, a neuroradiology fellow. Dr. Levy wrote this. "Dear David, I wanted to share with you and your audience how becoming a Fool investor via Stock Advisor and Rule Breakers services and avid Rule Breaker Investing podcast listener affected not only my wealth but other aspects of life. I'll share two examples. First, discussing conscious capitalism helped me to frame in a coherent way what I already believed in." Before I go on with point No. 2, I felt the same way, Dr. Levy, when I first came across conscious capitalism. Whole Foods founder John Mackey came to our office and gave a free talk to our employees about it. Afterward, my brother Tom and I had lunch with John. He said, "Hey, you guys should come to my conference." This is 10 years ago now. And we did, we went to our first Conscious Capitalism Summit. And what I said to everybody in attendance -- and it's a wonderful crowd -- I said, "Wow, this is my tribe! I didn't know that you were all already here." And part of what I appreciate about conscious capitalism is it gave additional language to thoughts that I'd intuitively been operating with as an investment advisor for lo these many years. So, I totally get you with point No. 1, Dr. Levy, that discussing conscious capitalism helps one to frame in a coherent way what one may have already believed in.
Then, point No. 2. Dr. Levy says, "Becoming a lifelong Fool and Rule Breaker, three years ago, my wife had a very lucrative retainer with a start-up company, allowing her to spend little time on work making a high five-figure salary, allowing her to spend time with our kids who, at the time, were two and now are four. That was a golden cage," Dr. Levy writes. "Everyone around us told her that she can't leave that job even if she didn't like it. At the time, I started listening to Rule Breaker podcasts. They changed the way I, a very cautious, risk-averse person, was thinking, leaning toward a more contrarian approach. Long story short, my wife quit her job and launched her online business offering thousands of parents from 45 countries around the world, and counting, peaceful parenting courses. Three years in, her business is employing four stay-at-home moms, and is by far more successful financially -- the goal is seven figures for next year -- than her old job. But even more important, she enjoys it.
"So, thank you, David, for sharing your Foolish wisdom and enhancing the quality of life for so many people. Fool on. And please, keep reminding us how to behave when the bears are roaming the streets. Best, Dr. Yair Levy."
That ends this week's epic mailbag. Next week, it's going to be my holiday games list podcast. That's right, I'm going to recommend some of my favorite games from the last year or two, card games and board games, because A, I love games, and B, once or twice a year, I like to focus a podcast on that. I'm very excited to announce that I have an interviewee with me next week. That's Richard Garfield, the designer, for those who know it, of Magic: The Gathering, the collectible card game. Really somebody who jump started an entire industry of card games. Richard Garfield, certainly one of my heroes as a game designer, one of the best living game designers. He'll be joining with me in a special Rule Breaker Investing podcast next week. It's our holiday games list 2018 podcast.
In the meantime, have a great start to December. Fool on!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Ally Wines owns shares of AMZN and PYPL. Andy Cross has no position in any of the stocks mentioned. David Gardner owns shares of AMZN, BIDU, FDX, ISRG, and DIS. David Kretzmann owns shares of AMZN, BIDU, JD, PYPL, SHOP, and DIS. Denise Coursey has no position in any of the stocks mentioned. Emily Flippen owns shares of BZUN and IQ. The Motley Fool owns shares of and recommends AMZN, BIDU, BZUN, CME, FDX, ISRG, JD, MDB, PYPL, SHOP, and DIS. The Motley Fool has the following options: short January 2019 $82 calls on PYPL. The Motley Fool recommends IQ and NDAQ. The Motley Fool has a disclosure policy.