Benton Moss is an accomplished financial blogger, with Circle Of Competence about to celebrate its one-year anniversary of putting out thoughtful, researched investing write-ups every week. He's also a minor league baseball pitcher for the Tampa Rays.
On this week's episode of Rule Breaker Investing, Motley Fool co-founder David Gardner interviews Benton about his work, his blog, and his life. Benton shares his favorite newsletters and websites for keeping current with the markets; how the baseball world is changing; some painful investing lessons he's learned; how he finds the time and focus to do such different things so well; what got him started investing, and more.
A full transcript follows the video.
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This video was recorded on Feb. 13, 2019.
David Gardner: From time to time, I meet people who remind me of the power of "and." They're really good at this and really good at that. Not just one thing, greatness across multiple fronts. The power of "and." McKenna Haase is an "and" person, a professional racecar driver and head of her college's undergraduate investment club. We featured this fellow Fool on Rule Breaker Investing on July 5, 2017. A delightful new voice. I particularly love these new and people among our youth, as people like McKenna and my guest this week hold such promise, instill such confidence through their achievement and their character. I have another for you this week.
I first met Benton Moss, well, thereby hangs a tale. And indeed, as this week's podcast was recorded in front of a live audience at Fool HQ, I lead off by telling that story. Please enjoy this conversation with another of those great and people, my new friend and yours, Benton Moss.
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Welcome back to Rule Breaker Investing! I want to tell a brief story about my guest this week on Rule Breaker Investing. It's when Benton and I first got to meet each other. I was at the University of North Carolina Chapel Hill speaking at something called the Wilberforce Conference, which is an annual conference in Chapel Hill. I was talking about finance. Benton came up to me afterwards and he said, "Hey, I love finance! I've heard of The Motley Fool. I sometimes access your site. I love this topic! In fact," he went on to say, "I blog every week." Pretty comprehensively, you read what's happening in the world of finance. Then you go on to list your favorites and then provide your viewpoints. You've done that religiously every single week. I went back later and checked your blog, and I was like, what a thoughtful guy, what a smart guy.
I said at the time, "I feel like I recognize you, Benson. I don't know what it is." And you said, "Maybe it's because we're both Morehead-Cain scholars at University of North Carolina Chapel Hill," a scholarship program that we're both in and we might have met at one of those reunions or get-togethers. And I thought, "Oh, maybe that's it." And then I paused a second. Benton, I think you're 25?
Benton Moss: 25.
Gardner: He was there with his lovely wife, Morgan and we were all talking. I just said, "What do you do, though?" And Ben said, "I'm a professional baseball pitcher." I said, "You're what?" Because in my mind, you're a blogger, and an excellent one, blogging finance on the internet. But, yeah, I went back and checked Benton's stats. He said he just finished a successful AA season in American baseball at Montgomery, Alabama. I looked up your ERA, it was 2.75, over 100 innings as a starter.
Moss: Thereabout, yep.
Gardner: That's a pretty great season for a 25-year-old. So, it turns out, this very engaged, accomplished financial blogger is also a pitcher. And I thought, you have to come visit us at Fool HQ. This is a really long wind-up. I want to welcome Benton in in a sec, but I have to mention what just happened at Fool HQ. Not only did Benton raise his hand and say, "Sure! I'll come visit! We'll come visit! Let's do the podcast!" But I said, "Would you come and bring your mitt and a ball? Could we set up something inside our corporate offices here at The Fool? I've always wanted to face a 90-mile-an-hour fastball, would you just throw for us?" And we had about 26 Fools sign up to stand in on Benton's heat.
Now, I would say you're not bringing your full heat.
Moss: Waivers were signed. And, as I stated before we began the podcast, I've never been so nervous to throw a bullpen. I'm glad everyone was able to walk out with all limbs attached and no bumps or bruises. I got some work in today, so thanks for hosting a good bullpen session. [laughs] That was great!
Gardner: You're welcome! That was unique and something that a lot of us will remember for a long time here at The Fool. So thank you, Benton!
I want to talk about baseball. I want to talk about finance and maybe life, the interstitials in-between. But let me start off by asking you a question since I haven't seen you in three months. This is a question that Ralph Waldo Emerson would often ask people he hadn't seen for a few months. It's this simple question, it's a lovely question. What has become clearer to you since last we met?
Moss: That's a great question. I will shoot back to you, based on your talk at the conference when you mentioned Steven Pinker's book, you had an ad about Audible, I ended up downloading the book on Audible. It's a long read, maybe 19 hours, something to that effect. I went through it and thoroughly enjoyed it. I think regardless of your spiritual, your metaphysical beliefs, it's a book that really underscores the positive direction that the world is moving in because of free market capitalism and innovation and where the human trajectory is headed. So, something that's become clearer to me is how excited I am for the future, really. So, thank you for the great book recommendation!
Gardner: You're welcome! We both thank Steven Pinker, who was on this podcast, in this very space about a year ago, right here in Fool HQ. I think what you and I probably both appreciate about that work, Benton, is that Steven said the great antidote against pessimism and a pessimistic worldview is just to count. It's all about the data that he puts out in his book, Enlightenment Now, just page after page looking at Pew Research and this or that tech trend or population trend, just saying, look what's happening. It really is pretty remarkable.
Moss: I should have mentioned Enlightenment Now, that's the book title that you mentioned at the conference. I listened to it and blogged a little bit about it. Great book! That theme is what's become clearer to me since we last saw each other.
Gardner: That's wonderful! Let's start early in your life. You grew up in and around Rocky Mount, North Carolina, am I right about that?
Moss: Correct. About 20 minutes north of Rocky Mount.
Gardner: Tarboro?
Moss: No.
Gardner: That's where you were born.
Moss: That's where I was born. I was raised on a farm, technically Enfield, North Carolina. Little. Enfield with an E-N, no pun intended.
Gardner: E, I got it.
Moss: I went to school and practically had our lives in Rocky Mount.
Gardner: What was life like for you as a kid?
Moss: Very free. I really have to give a lot of credit to my parents for loving me and letting me pursue passions. They really encouraged me a lot. I loved how my parents were able to pick me up. Everybody experiences failure along the way, in athletic career and school and whatever, and they really picked me up and encouraged me through that just to do my best and to keep striving, keep putting one foot in front of the other.
Gardner: And at what age, Benton -- maybe two early moments for you -- can you look back to and say, "That's where my love of baseball started"? And then, a different moment, "That's where my love of finance or business started"?
Moss: Very easy to answer. The first one, for baseball, that was the very first day I had practice. My dad took me out there. It was T-ball practice, I was four or five. And I told my dad, "I want to play pitcher." They pitch. You just stand there.
Gardner: T-ball, right? You stick the ball on top of a --
Moss: Well, no, the coach underhands it, and you stand next to the --
Gardner: Oh, OK. You're not pitching, it's the coach.
Moss: No. But I'm feeling it, I'm the pitcher. First practice, he throws me a towering pop fly with what he thought was just a normal ball. It was a hardball. It was a typical baseball instead of a T-ball, like a softball. Of course, like any five-year-old who has never learned how to catch, I put my hand up like this. I think I'm going to catch it, and it hits me right in the nose. Bloody nose. He thought I broke my nose. I called my mom. He said, "He'll never play again. I've ruined his career in baseball."
Gardner: Oh, my God!
Moss: [laughs] And I looked at him and I said, "That hurt but I still want to play pitcher." And I told my dad when I was really young, "Hey, I want to pitch in the big leagues." I never knew if it would be possible. It still may not be possible. It's hard to get there. But I do love baseball. It's been a fun ride.
Then, for finance, I was lucky -- unlucky, I guess you would say -- to be taking note in 2008 and 2009 as the markets really tanked. My dad had just gotten into, I would say one of those trading programs. We'd gotten interested in it together. I was probably 15, 16 and I started observing what was going, just the prices. And I took a little bit of a different approach. I said, "OK, who are the richest people in the world? Let me see if I can learn a thing or two from them. Have they written anything, are there books about them?"
Gardner: And it's certainly not the guys selling the trading programs, is that a fair generalization?
Moss: Where the customers' yachts, right? As my wife would probably say, and her dad, a minor obsession with Warren Buffett and his writing. That's when I began the long-term value investing education of just going through his letters. I learned about other investors that subscribe to a similar longer-term value investing philosophy. That's how it took off. Even from then, I knew that I wanted to study finance at Carolina. We're surrounded by a bunch of Fools who love finance. We're all family here. I was a finance nerd starting at probably 15 or 16. I really engaged with it. I loved it. I still am. I do that off the field. Some people like to play guitar, whatever. I like to read finance. [laughs]
Gardner: Although, I think you're pretty good with the guitar, too, as I understand it.
Moss: I'm OK.
Gardner: With the acoustic guitar.
Moss: Acoustic, I'm OK.
Gardner: I'm curious what your dad was thinking as he watched you transform into, as you're saying, a value investor. Was he cool with that? Was he proud of that? Was he changed by that? Would he have predicted that that would be true of you?
Moss: We had some good discussions. I would say my dad is most certainly a value investor. Both him and I got into that side of it from the trading side, getting interested in, hey, the markets going hyperbolic up right now. Typically, in the later stages of the markets, you start to see the salesman say, "Hey, look how easy this is. Look how much you can do." You can see this in a real estate cycle as well. The gurus. "Hey, let me sell you this, this program." So, as we saw the market dip and through the cycle, we started understanding, this is how market cycles work. How can we learn from this?
The truth of it is, I don't know if we could have ever seen that. Who saw 2008, 2009 coming? A select few.
Gardner: I sure didn't.
Moss: Yeah, you certainly did.
Gardner: No, I did not. In retrospect, we all do, but very few did at the time, as The Big Short and others have made apparent.
Moss: Everyone loves to claim it, but in reality, investing can be a lot of in hindsight. It's 20/20 through the rearview.
Gardner: Do you feel marked by that? At a formative age, age 15, the Great Recession, 2008, 2009. Are your grandkids, 60 years from now, going to go, "Yeah, he grew up during the Great Recession."
Moss: [laughs] I think, fortunate for me, as we talked a little bit about, Rocky Mount is a very steady-eddy town. We didn't have as much of the boom and bust as some of the bigger cities around the country did. Real estate prices didn't really boom, so they didn't have to bust. Same thing with economic activity.
But as I observed the prices of markets and such and the valuations of the day -- I'm almost 26, and I haven't seen a full cycle. I kind of started at the middle or the top of the cycle. We haven't seen another, and it's been almost 10 years. So I am, I wouldn't say excited, but I'm sort of excited to go through a full cycle and really experience those emotions, if that makes sense.
Gardner: It sure does make sense, it's part of life. If we all lead the good, long lives that we hope to, we're going to have a bunch of those happen. I don't think we should be ever over-marked by any one of them. It is that resilience that I think is a great part of investing and the character building that it does for people like Warren Buffett.
We're going to get to financial blogging in a little while. Let's stick with baseball a little bit more. I'm going to try to embarrass you once or twice with quotes from head coach Mike Fox, who's the estimable longtime championship coach at the University of North Carolina. A couple of things that Mike said about you. He said, "Benton's a relentless worker. He's an unbelievable competitor, which some people might not expect." Now, the reason I want to share that quote is, I'm not clear why they would not expect that. What is Mike Fox looking at you and seeing what he's saying, "You wouldn't actually expect that Benton is an unbelievable competitor."
Moss: I think my competitive side is kind of silent or very quiet. But if you get a ping pong table in here, I saw a chess set upstairs, and I know you're a big board game fan, you'll see what I mean. Morgan, my wife, is laughing at me right now because she knows sometimes, she has to slap me a little bit and say, "Get off chess. Come on!" I become obsessed with chess. It's my way to really flex the competitive muscles. I really do have a deep competitive streak. [laughs] I try and rein it in a little bit. Thankfully, they weren't competitive at bats today from the employees, or else it might have gotten a little nastier.
Gardner: [laughs] Well, it is one of our core values here at The Motley Fool. We celebrate it. Of course, anything can be taken too far or not taken far enough. But it sounds like you're hitting the golden mean of competitive pretty well.
Let me go on with one more quote from Coach Fox. This was when you were, I think, a sophomore at Carolina at this point, so five years ago. He said, "I'm a little bit in awe of the young man. I can't even fathom being his age and doing the things he does with his accomplishments, from community service to Athletes in Action to his grades to his personal life to music. You wonder if he sleeps at all."
Moss: I sleep a little bit more than I did in college, I'll tell you that.
Gardner: Part of how I think about you, Benton, what I appreciate about you, is that you're trying to operate at a top level across multiple different contexts. I'm sure being a top-level family man is one of them, and maybe most important to you. But how about a few tips on personal productivity? How do you manage to blog every single week excellently on the internet about finance and be pitching every four or five days and, and try to be great at both?
Moss: It's a great question! Another thing that I'm learning -- I'm young and dumb in a lot of ways -- one thing that I feel like I'm learning is that focus is very important. It's a great quote, but I'm learning that I need to focus on less and less things to do them at a higher level. You mentioned wanting to be a family man and also having your job and your work and what you're passionate about. We only have 24 hours in a day. So, for me right now, baseball, in terms of career, is what I'm focused on. But you can't train 24 hours a day. I love to read and I love to explore financial topics. So I find the time to fit it around that.
Blogging is a very flexible thing. You probably better than most know that, being at The Motley Fool. It fits very perfectly and easily around the schedule of baseball. My workday doesn't start until about 02:00 PM or 03:00 PM, and I get done, call it 11:00 PM, and I come home and spend some time with Morgan, and then I get up in the morning and we'll have our breakfast and coffee and hang out, spend some quality. Eventually we'll read or relax. You even have a lot of downtime at the field. You could potentially be lifting, or maybe you're taking that day off, but you still have to be at the field. It's not like you can just come in and then leave and come back for the game. Once you're there, you're there. There's a lot of downtime that you can fit in those interests that you have. Reading for me fits in perfectly. It's not I can bring an acoustic guitar to the field. I don't know the manager would appreciate that. It does fit well around baseball.
But I am trying to actively get better at saying no. Warren Buffett keeps an open schedule. I think that's what makes him really great, is that he focuses. I think that that's very important with trying to do even a couple of things really high level, is just focus. Also, focusing on family time, quality time, is very, very important. That's an investment that's so much more important, just relationships, so much more important than any amount of money or job or career that you could ever have, in relationships. Just focusing, I would say, is something that I'm learning to do a lot better.
Gardner: Excellent! I'm sure it's something that each of us can improve at. I know I can. Part of it for you, Benton, is that you are talented, and you can pick up things and be good at them, whether it's chess or a guitar or finance or baseball. Focus becomes even more important when you're multi-talented, a problem that many of us, like me, don't have. [laughs]
Since 2015, you've been a professional pitcher. After three, four years now, what's been your experience of professional sports? The people that you meet? What's the life like? Often, Minor League Baseball is portrayed as somewhere between a dystopia or just a hard dream. What parts of that are true? What's the life?
Moss: It's been an incredible ride. It is a grind. If you want to do it the right way, you definitely have to train all offseason. There are a lot of things that you have to say no to, including maybe a really vibrant social life or what have you. Interacting with a job with the Minor Leagues is probably different than like a normal 09:00 to 05:00 job. My day doesn't start until 03:00 PM.
Gardner: Definitely different from a 09:00 to 05:00.
Moss: And people are wondering why I sleep until you know, 09:30 or 10:00. It's because I had a high-intensity workout last night for two and a half hours where I threw a ball as hard as I could for 110 pitches. Try that on for size and see how many days it takes you to get un-sore. [laughs]
Another thing that I've really enjoyed are the people and places that we've met. I've kept in touch with a lot of the people -- not on my team, I mean off the field. Some host families, people that I've stayed with, people that I've met in the cities that we've been located in and places that we've gone. A lot of places that I may or may not have ever gone to. I've played in literally every state from Vermont all the way down to Florida over to Arizona. I haven't counted, but it's probably a good third of the United States, the eastern side. I've played in California. We're working on going to all 50 states.
Gardner: Wow! I sure hope it happens, because it probably means you're succeeding even more. You're seeing parts of our country many of us don't see. A lot of us grow up in a town and don't get too far out of that town. Or, we like the city and not the country; we like the country, not the city. Have you developed any view of your fellow Americans based on having been to all the different states and talked to all different people at a young age?
Moss: It's been incredible to see the differences in cultures. From the North to the South to the Midwest, out in Arizona, the West Coast. And yet, we've met incredibly nice Americans everywhere we've gone. We have what we call our second family in several of the states that we keep in touch with on a monthly basis. I think the cultures may be different, but they are nice people to be found everywhere.
Gardner: I think that you said earlier that you've been clocked as high as 96 miles an hour. Sounds like it takes a lot of work just to do that. That's not a natural born thing. Am I right about that? If you're having a 2.5-hour workout where you throw the ball as hard as you can?
Moss: No, that's true. You may think that 96 is pretty darn hard, but it's about the average fastball out of the bullpen these days. I'm on the slower end of this, I have to be honest.
Gardner: Unbelievable to think. I can't believe that. I know at least among Fool HQ, I believe you're the fastest arm in Fool HQ today by about 20 miles an hour.
Moss: You should maybe try 96 out on the highway. See if it's fast enough for you.
Gardner: [laughs] I actually have, that's one of my many failings.
Moss: [laughs] Did you get caught?
Gardner: Not that fast, but I have double-digit speeding tickets. That's the only double-digit radar that I hit, speeding tickets.
So, what are your prospects, briefly, playing for the next season? You had a successful season at the Southern League in AA baseball. AAA, I believe it's the Durham Bulls, which is the Tampa Bay Rays organization you're in, is that what you're shooting for here?
Moss: Definitely shooting for that. The Rays are very fortunate to be in a position where they have a lot of starting pitching from AA to the big leagues. Fortunate for them. It's going to be competitive for me. But the Rays are a very, very young, very strong organization. I think they have a very bright future. I hope that I can be a part of it. Definitely shooting for AAA. Obviously, that's the next stop, the ultimate goal being the big leagues.
Gardner: Are you going to make it?
Moss: I think every kid that gets drafted and signs a contract has to say yes. I do believe that I can pitch in the big leagues. I think it has to be the right time, the right place, the right organization.
Gardner: I believe that you will, and I'm looking forward to it.
Moss: Thank you, David!
Gardner: You are obviously a player. I know you spent some time in the administrative offices of at least one major league team. I'm curious, as we start to shift to business and finance, your perspective on baseball as a business.
Moss: I'm hopeful for baseball that it's going to continue to grow. I mean, it's America's pastime. I have read that in-person attendances are moderating, but TV revenues are better than ever. I think there will be some interesting trends with my age, millennials, maybe coming out as more of a social event, but keeping in touch on the TV more regularly. That'll be something interesting that I'll be watching from the business side of it.
I think it's a sport that's really poised for family growth. It's a great family environment. You can take your kids out there for, call it $80, a hot dog and beer and have a great time. Family friendly environment. Hopefully not too many bench-clearing brawl, although, free MMA fighting, that's fine too.
Gardner: As a kid, I definitely always cheered on any bench-clearing brawl that might happen. My brother Tom's in the audience today, he and I know that. That's kind of what you want, turn it into a professional wrestling match.
Moss: It's a great sport, a family sport. I think they're doing a lot of initiatives to try and keep the game rolling, speed the game up a little bit, and keep fans engaged. I'm positive on the overarching macro trends on baseball. I think that it's headed in the right direction.
Gardner: Benton, back to you for a sec. I'm pretty sure you tended to be near the top of your class at each level of schooling. I'm pretty sure within the Minor League Baseball grand contingent of hundreds of players, you're probably among the brightest of the players. You have a great eye for finance and business. What's your view of your peers, your fellow 25-year-olds, in terms of financial literacy, financial understanding? If you could make one wish for your fellow players on your team, if they hear this podcast, what's one thing they should be doing in their financial lives?
Moss: I'll be sure to share this with a lot of them that I have a good relationship with. I like to tell them all the time, hey, in the minor leagues, you've got a lot of things taken care of for you for those five months. Take that signing bonus that you got, invest it, because in the long term, if you can make it through, that will be worth it. Putting it into the stock market for the long term, maybe investing in some real estate, but, as Warren Buffett always likes to say, something that's going to be a productive asset for the long term.
Gardner: A lot of guys get, let's say, a $150,000 signing bonus. Not a bad thing for somebody who had a dream in high school and all of a sudden is getting a six-figure check. But maybe a one-off, a one-shot, a signing bonus. What percentage of your peers, in your estimation, make a good decision with that? What percent buy a car or live on it, which I guess is not necessarily a bad decision if that's what they have to do.
Moss: I think it depends on where they got drafted, how much they signed, for, where they came from, family background. It just depends on a number of factors. But like I said, going back to your earlier question, I always tell guys, if possible --because I don't know their background --
Gardner: Everybody's different.
Moss: I don't know where they're coming from. I don't know their proclivities to risk or the ups and downs in the market. I just tell them, "Hey, if it were me, and you could live off of what you get, take that signing bonus and invest it. You'll be glad you did in 10 to 20 years. There's no doubt about that." But again, I don't know their backstory, where they're coming from.
Gardner: Do you feel like they listen to you?
Moss: I think maybe more and more. They're realizing how much of a Fool and a nerd I am. Maybe a little bit more. When I first started, there were some guys looking at me like I had six eyes. Like, "Man, you're in baseball. What are you talking about? Stocks?"
Gardner: [laughs] I have to imagine, on every team you've been on, you have the reputation as the Buffett guy.
Moss: [laughs] More like the nerd, but I'm working on that.
Gardner: Benton, you're blogging. I think it's blog No. 48. Is that almost a year of weekly blogs?
Moss: Almost a year, yes. I had this idea -- again, this is shamelessly cloned from a Buffet phrase known as the circle of competence. What are you good at? What do you know? What I knew was baseball and not much else. So I decided, well, I like finance a lot, I like to read a lot, why don't I just start sharing some links that I think are interesting. When I feel like maybe I have a good grasp on something, I'll just start writing some thoughts down.
Just in the 48 issues that I've done, you write things down and set a schedule for yourself to express those thoughts how much better and more comfortable you feel doing that and how much quicker you can actually do that. It's been a fun process. I think it helps you sharpen your thinking, sharpen your writing skills, your communication skills. It keeps me accountable to read more. I love it. It's been a lot of fun!
Gardner: We really do write in order to learn. The name of your blog is Circle of Competence, I believe the URL is circleofcompetence.co.
Moss: That's right.
Gardner: Did somebody get circleofcompetence.com?
Moss: Unfortunately. I'm still working on it.
Gardner: [laughs] A really thoughtful look at what's happening in the world of finance. It makes me wonder, Benton, what are you reading? What do you keep up with? How do you find the stories and headlines that you want to comment on each week?
Moss: DealBook, The New York Times, PitchBook. I have a few on Sundays that I really like. The Exponential View is more of a tech-y on, exponentialview.co. So, I said, "Well he's doing .co, so I can do .co."
Gardner: [laughs] All the cool kids.
Moss: He has thousands and thousands of subscribers. And I have maybe 100 and some. Subscribe, please!
Gardner: I hope you get a few more this week.
Moss: Let's see, what else. Benedict Evans is a good tech one. There are a lot of these type newsletters that I scroll through for the headlines. I open a bunch of stuff, probably don't get to all of it. Again, focus, I'm trying to do a better job of, when I find something that I think has a really impactful message or thesis behind it, that I think you can learn a nugget and build off of that, I'll try and share it.
Gardner: Do you write multiple drafts? Do you just throw down stream of consciousness? How do you make that blog happen on a weekly basis? We have a lot of people listening who blog or probably would like to.
Moss: I think a lot of it starts with a seed of an idea that I've either had, and I'll write it down and then I'll come back to it. Then it starts to sprout, stream of consciousness. The one that I just wrote, I wrote a small post on Masayoshi Son and the VisionFund. That's something I've been really interested in. It's incredible how he raised $100 billion to deploy in these venture-backed companies.
Gardner: Changes the whole metrics of the industry and valuations of lots of things around the world.
Moss: Lots of things, yes. There are a lot of knock-on effects from that. To me, it does seem a bit of a sign of the times almost. How could you raise $100 billion in 2009, 2010, 2011, 2012? I don't know that it would have been even possible. You're seeing a lot of these private equity firms that are raising $15-20 billion in dry powder. A lot of money out there seeking deals.
But that just came to me as a trend that I was noticing crop up and up and up and keep coming up. So I really wanted to hone in on that. It's an organic process. When I notice something and I really like a trend, I'm like, "That's interesting, let's explore that." I try and do something a little bit different, a different industry or a different concept or topic each week.
Gardner: I know you're interested in real estate as well, talking about different interests, and you're invested in real estate.
Moss: I am, yes.
Gardner: Since we like to talk more about stocks than anything on Rule Breaker Investing, what are some of the favorite companies or interesting companies that you're looking at right now?
Moss: Just to get back to some of those big asset managers, I own some shares in a company called Brookfield Asset Management. And I really jive with Bruce Flatt, the CEO, his investing philosophy. He gave a great talk -- I have to be honest, I've been studying their company, but then he gave us great talk at Google. Just google it, Bruce Flatt talk at Google. Bruce Flatt, CEO Brookfield Asset Management, on his value investing philosophy and how they're trying to build their business. It's like the greatest primer on their business ever. And I was like, "I'm in!" This is a great business. They just raised a $15 billion fund. They've got a lot of dry powder. They've been in the business of alternative assets of renewables, real estate, infrastructure, those alternative spaces. Now, they're managing funds. They have leverage on leverage. They're growing their assets under management at a really big clip and their fees from assets at a 20% to 30% clip. They're not exactly cheap, but I think they're a solid company. Well positioned.
Gardner: That's a stock you own directly?
Moss: Brookfield Asset Management, yeah.
Gardner: I love hearing that people own stocks directly. Often, it's not cool to do anymore. It seems like the cool kids are all signed in and just indexing. But of course, we think it's cooler to buy great companies directly.
Moss: I agree.
Gardner: Do you remember what the first stock is that you bought?
Moss: I thought you might ask this, so I actually went back and looked at this. The first two stocks that I bought were Apple and Google.
Gardner: Pretty awesome! And you've just held them ever since?
Moss: No! Talk about a first-rate education. I mean, really. I made a quick profit on the Apple, what I would call a trade, not an investment.
Gardner: Do you remember roughly where you bought it and how long you held and when you sold it?
Moss: No. This was probably 10-plus years ago. I mean, at the time, my dad opened it up on my behalf. I was paper trading. Then I said, "Dad, I've been following these two stocks. I want to buy them." And at that time, it was more like, "Dad, can I buy some options on the stocks?" And he was like, "Well, just trade the stocks first, understand them, their business, and then maybe we can go into the options." So I made a little profit on Apple, maybe 25%, 30% whatever, over a six-month, year-long period. Great, fantastic, good!
Gardner: It shows had really good instincts for company selection.
Moss: Man, I wish I would have held on to it. Famous last words.
Gardner: Has that been instructive for you as an investor?
Moss: Very. I was talking to Morgan and my father in law about this, Steve, I love your guys' philosophy on that, of, we're not looking at the next quarter, we're not looking at the next year, we're looking at the big trend and holding this hopefully forever. This is a company that we want to buy in and partner with for the long term. So, when you go and look at your track record, and you look at the Netflixs, the Disneys, made up 200X your money or 180X or whatever it was, that's awesome. That's the kind of investor that I want to be. That was not the kind of investor I was.
When you start out, a lot of people come in through the trading side. "Oh, the money's easy. I can just, bam, bam, I can buy a call option and it'll go up 5% and I make 100% on my money!" Like, yeah, it's really that easy. If it was easy, everyone would be doing it. The education that I got early on was buy and hold good companies.
Gardner: We're going to open it up for questions in just a minute. I know there are going to be a couple out there. Maybe just one more question for you for now, Benton. I know you read widely, you think about the future -- which is, by the way, all that really matters. Every investment record we're talking about is something that's already happened. Any number, any stock move, it's all about what happens next that matters. Looking ahead, what are a couple of trends or focal points for you that excite you and that listeners would do well to pay attention to?
Moss: Automation is one that I've really homed in on. I'm a big fan of technology and automation. I think it improves quality of life. It takes people out of robotic --
Gardner: More menial kinds of stuff.
Moss: Menial type of jobs. I think in the short term, there may be some pain associated with that. There's a great study out from a professor over at Oxford who did some work on this. I think long-term, it'll create more jobs, it'll move us into a technologically faster society. There's going to be some real winners and losers from that, also potentially on the labor side.
Obviously, the elephant in the room is retail, with Amazon. I did read a great article this past week that I'll be sharing about the death of retail not as much an Amazon effect, but maybe a social media effect. People don't really care as much about how they dress but how they look in their social media, which is really interesting. I had never thought about that. You can look good from TJ Maxx for the same price as you can from Saks Fifth Avenue in an Instagram post. Anyways, just a hot take on that.
Gardner: Thank you! Alright, questions.
Man 1: The Motley Fool has been interested in e-sports lately. As a professional athlete in real sports, what's your take on the rise of video games, basically?
Moss: That's fantastic -- actually, that's another trend, I should have. Honestly, I need to go back to my blog to look, I have all these industries that I tag things under. E-sports is a huge opportunity. Huge opportunity! I feel like you're looking at me like you've called some of these big companies.
Gardner: No, I just agree with you. I think a lot of the world still doesn't get it. They're like, "Why would you watch people play video games?"
Moss: I'm not a huge gamer, but when I really started to pick up on it was this past season. I used to ask my friends, "Hey, what are you all doing? You guys want to go grab something to eat?" "No, man, we're getting on Fortnite tonight, sorry." Which, by the way, who makes that? Epic?
Gardner: Yes.
Moss: Another big company, Tencent Holdings. They own a lot of a big chunk of Epic, I believe. I think they're a Chinese company. I own a couple of shares of them. E-sports, I think, is going to be huge. I read an article a few months ago about how the championships of some game I've never heard of nor played -- again, I'm not a big gamer, but I think there's going to be a lot of opportunity there -- drew more viewership than the last two or three Super Bowls combined. It's incredible, the number of eyeballs they have on that. Twitch -- who bought twitch, Google or Amazon?
Gardner: Amazon.
Moss: At the time, they paid an astronomical price.
Gardner: It was like $1 billion.
Moss: That looks like pocket change now. I think they were, obviously, very ahead of the curve there. But at the time, it looked extremely pricey as an acquisition. I think it's going to be a massive opportunity. I have no future in it because I'm terrible at any video game. But when I can find some good companies that I think are really going to outperform, yeah, I want to get my hands on some shares. We should talk after the show.
Woman 1: You talked about being really competitive. Have you ever lost your cool on the field and taken a swing at someone or have someone take a swing at you? I know the pitchers usually are in there, right?
Gardner: Love the cage match question. We have to have one every Rule Breaker Investing week.
Moss: The first part of the question, have you ever lost your cool, if you just stopped there, I could have said yes. But then you said and. Taking a swing, no. Nor have I ever had anyone take a swing at me. I can't say that I'm mad about that. But, yes, if you play a sport long enough, or even e-sports, there will be a time that you get mad and lose your cool. I try not to do it in front of everyone. It has happened.
Man 2: I have seven questions. The first is not a question, it's just to let you know that Apple 10 years ago -- by the way, I did not own the stock either -- when you were trading it, we were reflecting that we didn't know exactly what the return has been since. It's been a 10-bagger. 25% return is great for six months. But it's a great learning lesson. We've all learned it. I learned it with Dell Computer before you were born. What's one thing that you would change about the game of baseball to make it even more enjoyable for the fans?
Moss: Man, we could write an entire book on this! I would say more fan engagement. I think that starts with the players. Look, I'm not going to say that I'm perfect about this. When you've had a long day, and those fans are waiting out there, they want you to sign something or they want you to just take a picture. I would say that, starting with me, we should do a good job of engaging the fans and building relationships and encouraging them to build that personal connection. I think that's very, very important.
And then, they have done some rules starting in the minor leagues to speed the game up. They've actually put a shot clock or a pitch clock up there. I work fast already, but for some guys, that's been good.
Man 2: It's like a 20 seconds, isn't that what it is?
Moss: I think it's 15.
Man 2: 15 seconds in between pitches. Pitch, spend a little time, pitch again.
Moss: Right. If you get the ball back, you get your sign, and if you're not in your wind up or in the set position about to throw as the clock runs out, as a pitcher, you get a ball. If the batter is not in the box with two feet in the box ready to hit, they get a strike. Twice, I've seen batters actually strike out on this. They were not very happy, and that definitely cost us more time than it was worth. I guess it nets out. But the effect of "Hey, I need to get the ball and I need to go."
Man 2: How has Moneyball affected the way you pitch, how you are evaluated as a pitcher? Are there any advanced statistics that you use in evaluating yourself that maybe we haven't heard of yet?
Moss: Not necessarily me evaluating myself. I'd have to defer to the higher ups in the Rays. But I do know they're very, very, very much into these analytics, as we talked about earlier today. They have these advanced statistics like the BABIP, the batting average on bases, batting average of balls in play. They have the second derivative of that. They have so many ways they can slice and dice this data, and now they're starting to get data on the way your ball moves, on hitters the angle of your bat, the approach angle to the ball, the trajectory that is coming off of your bat, the speed at which it's coming off, is it a ground ball, a line drive, a pop fly, what's the percentage. They can slice and dice everything now, down to the Nth degree. There's a big trend not only in baseball, but in a lot of sports, in how can these analytics make us better as a team and in player development.
I'm not on that side. I get that experience and I get the feel that that's what's going on. I understand that's what's going on. They don't, obviously, share a lot of that with me, except for the player development side of, "Hey, we think this can make you better." Again, we could sit and talk a long time about how that's changed the face of baseball and other sports.
Gardner: One more baseball question for you, Benton. I've noticed as a fan over the last few years that pitchers and how they're being used at the major league level anyway seems to be changing. The idea of a starting pitcher, that's blurring, it's disappearing some. Now it's about starting a reliever or every pitcher coming in and throwing a couple of innings every few days. Do you think that trend is going to continue? What is your view as a traditional starting pitcher yourself?
Moss: I believe that trend originated with the Rays.
Gardner: Your organization.
Moss: Exactly. We actually did some of that down in AA. I believe they did it throughout the organization, but more so has moved up the ladder. To the best of my knowledge, the way to explain, the way it was explained to me, the statistics on paper show that it would be better to bring your closer in fresh to face the very top of the lineup --
Gardner: The best hitters.
Moss: The best hitters, right. Your closer with the nastiest stuff to come in, face those guys, sit down the one, two, three, and four batters if one of them gets a hit or walks or whatever. Then, have your starter come in and go five, six, seven, eight, nine, so that when they roll the lineup over for, let's call it the third time, they're facing the top hitters only for the second time. Does that make sense?
Gardner: Yes.
Moss: So they can get deeper into the game without having to face the top of the lineup a third time.
Gardner: Do you think it's going to persist? How psyched are you about that as a pitcher?
Moss: I think there will always be a role for... I don't want to call them starters, but pitchers that'll go longer and pitchers that'll come in and go three innings or less. Whether you call them a starter or longer reliever or second starter, they call the closer and opener this year, when you come in and open the game. Not a starter, but an opener. An opener to the starter.
I think as teams see how the statistics bear out and how that takes place, more and more people either write it off or it will turn into a trend. But I mean one year, I don't think it's enough across-time data.
Gardner: You're not being managed that way at AA or maybe AAA this year.
Moss: No. I came in probably three or four times after an opener. Maybe even more than that in AA.
Gardner: So you did?
Moss: Yeah. I've experienced that. It's a little bit different. Some guys like it, some guys don't. I don't really mind. It's just a different take on trying to maximize your team and what you have based on what the statistics say.
Gardner: Last question for you, Benton: would you like to come work for The Motley Fool when you retire from professional baseball? I guarantee you a job!
Moss: Absolutely!
Gardner: [laughs] So, you've got that in your back pocket, plan B or maybe even Z for you. You've got that plan!
Moss: Absolutely!
Gardner: Thank you so much for joining us this week on Rule Breaker Investing! It's a delight to meet somebody so young, so accomplished, so intellectually curious and concerned for the future of all of us. Thank you, Benton Moss!
Moss: Thank you so much, David! Thanks for having me!
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Gardner: Well, I know who I'm going to be cheering on as a baseball fan this summer. Yes, I have my favorite teams, but now I think we have a favorite player, whether he's playing for the Montgomery Biscuits, the Durham Bulls, or indeed the Tampa Bay Rays, or anywhere else, Benton Moss. Thank you again, Benton, for joining with me. Best wishes to him. Maybe we'll check back in with him sometime down the line.
Well, next week, we're going to continue with the power of and, but this time it's not going to be and people, it's going to be three five-stock sampler reviews. That's right, we're going to review five Supernova stocks I liked in February 2016, and we're going to check in with Five Stocks The World Needs Right Now, which I did in February 2017. Maybe you see where we're going here. In February 2018, I also dropped on you another five-stock sampler. That was The Next Five Stocks To Feed The Bear. All three of those five-stock mini-portfolios I picked, we're going to check and see how they did, see what we can learn from how they've done, and improve our investing going forward. I'm really looking forward to sharing with you three five-stock sampler reviews only on Rule Breaker Investing next week.
In the meantime, with pitchers and catchers starting to report, 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.
