In this episode of Rule Breaker Investing: Mailbag, Motley Fool co-founder David Gardner goes through some comments, poetry, and mailbag items from the Fool community. David gets into the nuance of doubling down versus adding to the winners and how it can be different for different individuals, the power of randomization, a story of courage and conscious leadership, a new Motley Fool podcast, and much more.
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This video was recorded on October 27th, 2020.
David Gardner: "Dear, David, I never get tired of listening to you, in fact, I listen to your podcast while driving to-and-from work regularly. Although I'm in a Tesla, I still try not to type emails while driving. I've been a member since the Duke St. days and want to thank you, and all The Fools, for helping make me smarter, happier, and richer, but poor Rick needs some support. I think 50 minutes is an ideal length for the podcast, so Rick can sleep peacefully away from his office. Fool on! David Callanan."
Well the gauntlet has been tossed this week, can I do it? It's a mailbag episode, traditionally my longest and deepest. Last month's was really too long, my longest ever, 1 hour 27 minutes. Poor Rick, [laughs] I agree, can I do a mailbag in under 50 minutes? Looking backward, you can obviously already see the answer, but living forward, I can only try. [Yoda Voice] Wait! No try not, do or do not, there is no try. [Yoda Voice] Under 50 or bust, only on this week's Rule Breaker Investing.
Welcome back to Rule Breaker Investing, a special episode of our mailbag, because it's designed to be one of the shorter mailbags in memory, and yet, we are still so info rich, so much fun ahead. One thing I will not have fun with is guest stars this particular mailbag, maybe it's because I'm kind of by myself right now at the beach, but I'm just going to, kind of, do it myself. More stream of consciousness than usual, and yet, still hot takes from Twitter, still eight solid Rule Breaker mailbag items, all that packed in, I hope, I've committed to under 50 minutes.
I should mention what we've done in the month that was. By the way, Happy Halloween! A few days early for those who celebrate Halloween, and darn it! I hope you do get outdoors with a mask on, maybe two masks on, and have fun in whatever way you can safely and responsibly do tricks and/or treats.
Well, the month that was October 2020, we led off with Essays from Yesterday, Vol. 2, my delight to share those with you. Second week was Mental Tips, Tricks and Lifehacks, Vol. 5. And then last week, memorably, my interview with Shirzad Chamine, Positive Intelligence.
And I like to lead off with hot takes from Twitter reacting to the month that was, and got some great feedback from last week's podcast. Here are just a few of the items we received, ShipOfFoolsGD @fools_gd. "Wow, is all I can say! This week's podcast with Shirzad Chamine #PQ was possibly the best episode yet. I feel like I could listen every 5-10 days!" ShipOfFoolsGD goes on, "I scored in the high 50s so the future is bright if I keep at it."
Harley Carrol @HarleyMCarroll "57 years of trying to figure myself out and it takes an investing podcast to put me on a new path of discovery! Wow. Thanks @DavidGFool and @RBIPodcast."
Well, really, it's thanks to Shirzad Chamine, but thank you, Harley.
And Arash Radparvar, @DrRadparvar on Twitter. "@DavidGFool absolutely loved today's @RBIPodcast. Thank you @ShirzadPQ for sharing your insights and stories. I've always thought of the @RBIPodcast as timeless lessons, not only in investing but also in life. Always worth relistening for a happier, smarter, and a richer life. Fool on, my friends!" Thank you, Arash.
And finally, stockpanther, rocking the @Hail2stocks screenname on Twitter. "Completed PQ score and Saboteur Assessment. 67 PQ and I am a restless, hyper-rational person. Admittedly too rational sometimes, and working on showing more sympathy and empathy to others. #fool #Positiveintelligence"
Well, a wonderful way to summarize last week. It was a mixture of Foolishness and positive intelligence. It was made possible by a very special person, Shirzad Chamine. And I know you all enjoyed it, and I can see, stockpanther, in your case, you went right on, took the PQ score and the Saboteur Assessment, you didn't just listen, you learned and acted, and I love your resolution to show some more sympathy and empathy to others.
We all can look at our saboteurs, can't we, and think about how we could make them smaller. They'll never go away, as Shirzad said, the voices will always be there, but you can make them smaller. Another theme for Twitter tweets in the month of October were 5-Stock Samplers, we had some amazing moves made by some of our past stocks picked and active 5-Stock Samplers. These are, again, all stocks in the Rule Breakers service in the Stock Advisor service, members know them. These samplers are just a small helping of some of these, enticing you, I hope, to come join us in the wonderful walled gardens of Motley Fool Rule Breakers and Motley Fool Stock Advisor, where we can serve you best. But I love this tweet from one of my fellow Fools, actually, Anand Chokkavelu, Anand who works here at The Motley Fool and spoke on this podcast a few weeks ago. "The percentage of these 5-stock samplers beating the market (not just this year but all-time) is truly amazing. Also, I believe the coronavirus pack convinced me to buy Peloton, so thanks!"
Well, thank you, Anand, thank you for all that you do.
You know I do keep active stats, nobody cares more about my 5-Stock Samplers than me, you're allowed to tie me if you really love them, you can be tied with me, but I track them all. And it is a better version of myself, I can say, each 5-Stock Sampler, we've done 26 of them, and indeed 23 are beating the market, which is a hit rate of 88.5%, which is higher than any hit rate I've ever had in any other context. It's so much fun to pick these stocks for you and to see how they do over time, to track them in the most Foolish manner as we've done for years and years at The Motley Fool, really since we started in 1994, tracking how we're doing.
And you know, with elections on our minds coming in November here in the United States of America, I'm thinking again about America's five core values and those five stocks that I picked representing each of those five core values, that was the June 10 stock sampler from this year, a remarkable group of companies, and outstanding performance. I want to mention one, in particular. Before I do, I'll just point out that the five stocks picked for America, which is about four-and-a-half months ago, stock market is up 6.2%, that's the S&P 500 gain, this group of five stocks is up 40.1%. Not a bad four-and-a-half-month return, but driven most of all by the Boston Beer Company (SAM 0.20%), ticker symbol SAM. When I think of freedom and I think of some of the founding fathers like Samuel Adams, how could I not pick the Boston Beer Company. To think that it has more than doubled is a shocker to me, it was at $523.87 when we picked that 5-Stock Sampler less than six months ago. Today it's gone from $523 to $1,075. I realize people are probably buying more alcohol than usual in the year of 2020. So, it appears that ticker symbol SAM is a beneficiary, but really the reason I wanted to single out SAM is not just for its exceptional performance, Etsy also a wonderful performer for this 5-Stock Sampler, we'll be reviewing it next June, but I wanted to mention that Sam is also distinguished as a company that is memorable for a miss on the Market Cap Gameshow.
You may remember, a couple of shows ago one of our contestants greatly overestimated the market cap of the Boston Beer Company. And I said to that good person at the time, you know, this reminds me of the performance of Etsy from years ago when Matt Argersinger kept guessing Etsy's market cap wrong. Again, guessing Etsy's market cap much higher than it actually was at that point. True here again of Boston Beer Company in 2020. You know, when people think the market cap is much larger than it is, maybe that's a pretty good indicator, we've occasionally wondered aloud on this podcast, maybe that's a pretty good indicator that you should take a hard look at that stock, because in your own mind, if you way over-guessed its market cap, it should be, or maybe you thought was a lot larger than it is today, so maybe you're finding a hidden gem. And certainly, Etsy has proven that over the years for all Rule Breaker fans, and Boston Beer, SAM, the most recent big miss on a market cap game show.
One other tweet relevant to 5-Stock Samplers, @Flosser40000654 at Flosser Invest. "I remember listening to the podcast, ... " this is the 5 Stocks for Coronavirus done earlier this year, which is the greatest performing 5-Stock Sampler yet. Flosser says, "I remember listening to the podcast, out in the rain on a run during the heart of the pandemic as things were getting bad. Gave me some solace. Incredible. I own all five of these and they are worth holding for far longer..."
Well, their 235% return has been well [laughs] in excess of anybody's expectations, mine most of all, but I certainly agree that all five of those companies are companies that I would love to hold from this point over the next 10 years. And given that our 5-Stock Samplers are people with stocks that are active recommendations from our services, and we have those over years, yeah, they are all still actively recommended. And while the market may sell off postelection, 2021, 2022, you tell me when you think the market will sell-off next, it doesn't matter to me too much, it never feels good, but I just keep holding all the way through as we have done for 27 years and counting at Fool.com. So, whether these companies keep rising from here even further or give back gains and come back later, I know one thing, I like all five of those, I like all stocks from all of my samplers, just about, from this point forward.
Two final tweets, one from Eugene Ng. Eugene, I'm not going to call this a haiku, because I don't think you're shooting for that, but it is poetic in its own way. Thank you for this. You said this is inspired by our podcast. You said, "Anticipate, don't expect. Look forward, don't forecast. Strive toward the future, don't dwell on the past. Know you can be right & you can be wrong. Winners will be up more than the losers will be down." Thank you for that.
And the last tweet I'll mention is just a fun one, pure fun from Collin Dando @cadando on Twitter. "@RBIPodcast I'm loving @DavidGFool made my birthday (February 4th) #WinWinWinDay. I'll take it and try and live up to the honor and celebrate with you."
Well, thank you, Collin, you're reacting to our Mental Tips, Tricks, And Lifehacks, and one of mine that I contributed was: Make your own holidays. And I explained in that podcast earlier this month, why February 4th, for me is win-win-win day, why it is and why I think everybody should consider, even if you don't want to celebrate with me and Collin, that we will be celebrating next February 4th, win-win-win day. Celebrating your own holidays, making your own mark on the world, thinking about what really matters to you, naming it, dating it and celebrating it on a recurring basis each year with family and friends. Feel free to take the day off on your own holiday, that's what I say.
All right. Well, let's move from the past reflecting on what we did over the course of October 2020, and now let's start creating the future together with this month's eight Rule Breaker mailbag items. First one up, love this one, thank you John Flood. "Hi, David, although I've had my foolish times ... " that would be the bad kind of foolish times. John goes on, " ... I was rescued by Stock Advisor many years ago, and I'm still a very happy member today. I was also a Global Gains and Hidden Gems subscriber in their day, replacing them with Rule Breakers. Most recently, I've joined the ultimate financial voyage with the Blast Off 2020 crew, steered by those two superb pilots, Emily and Aaron." That would be Emily Flippen and Aaron Bush, analysts whom I greatly enjoyed working with, both on our Rule Breakers team, and now they've gone on to do some of their own greatness together, and occasionally come back to this podcast.
Well, John, you go on, "I had the immense pleasure of visiting Fool HQ back in October 2008, a time of market gloom and opportunity boom if you had the nerve. Thanks to several Foolish conversations on that day, I sold nothing and dipped my toe into four battered but still brilliant businesses. These were some of the best decisions of my financial life. You made me both smarter and richer with a few deft strokes that day."
Well, I don't remember that day, John, but I am so delighted that you were with us. Fool HQ will reopen at some future point, and members are always invited to see if they're coming through town if they'd like to come tour our offices. Well, not in 2020, anyway, because they remain closed for the year, but how about 2021, we'll see.
"I love your podcast for its subject variety, the constant sense of learning, your unflinching enthusiasm, your equally engaging guests. Last week, October 21st, 2020, was a lovely example of the fare on offer. You introduced us to Shirzad Chamine, a courageous man with an amazing story, who overcame childhood adversity, political hardship, and depression, only to start all over again with incredible success in the USA. I had never heard of Shirzad before, but I have now. And I've learned that my three saboteurs ... " John says, " ... are avoider, pleaser and restless. You do educate constantly."
Well, thank you, John. Of course, especially when I have guests to the show, the education is coming from them, their great works, their books. I hope I took pains to mention last week that I haven't actually read Shirzad's book Positive Intelligence. I'm sure it's a great book. I just wanted to share him with you because I had seen the online saboteur quiz, that was my in with Shirzad, so I was discovering a lot more about him along with all of you, I have not read his book, it was more just wanting to share the fun personality test and we all learned a lot more than that.
John moves on, "I really appreciate when you qualify a statement with "here in the United States" as you so often do. You acknowledge that there is a big world out there and many of us are listening. I'm originally from Ireland." Which means, I should've been talking more like [Irish accent] this, John, thank you. [Irish accent] [laughs] But you go on to say you've been living in Switzerland for many years, so who knows what's happened to your accent, " ... a country where the tax rate on share capital gains is a big fat and very lovely ... " Wow, this sounds good, I didn't know this, John, " ... zero. Not a bad advertisement [laughs] for the country of Switzerland. Like your podcasts, I hope to finish this note with a flourish. Below I've described my road to Foolishness and some of the core tenets of The Motley Fool in a short poem. I've taken a slight liberty with your surname, which I hope you'll enjoy, a huge thanks to you, Tom, and the 400-odd fools making The Motley Fool the model company it is today. Fool on! John Flood."
Well, John, I am honored to read your poetry, this is the first poem that you've shared with our podcast, I like it enough that I hope you'll think about more in future. And I do love it when our members and listeners send in poetry. You know, that I've done this over the years, perhaps at some future date we can have a reading of all the poems ever shared through this podcast. And if we do that, we'll certainly reread this one.
Becoming a Fool by John Flood.
"It always begins with an inhibiting doubt, I could never invest with success or with clout.
The market is only for pros, in the know, not for me, a mere ordinary Joe.
Leave it to the experts, hand over your cash, they talk with conviction they cut a fine dash.
At Christmas, they send you a card, a small gift as your investments lag the market in a downward drift.
This cannot go on, this financial scam, it's time to wake up, tell those posers to scream.
But who to turn to, who can I trust, what was presented as gold turned out to be rust?
The solution is to buy individual shares, led by a company who, both, guides and cares. Their three stated aims, to make you smarter, happier and richer, complete their charter.
Take centerstage ... " This is very kind, John.
"Take centerstage, The Motley Fool, two brothers indifferent to the current cool.
In for the long haul, not today or tomorrow, using money you neither need nor borrow.
Gardner by name, and boy! can they sow the seeds to sustainable portfolio wealth,
finding companies disrupting the status quo.
No magic formula, no slithery stealth.
Winners win, seems an obvious fact,
But here's the Rule Breaking contrarian act, you buy, you love the spectacular rise,
Yet in order to win the ultimate prize, you must buy and buy and buy some more, the sell refrain you resolutely ignore.
The market falls fast, makes the legs feel weak, don't sell in a hurry, be steadfast, not meek.
Doing nothing seems reckless while panic holds sway, the market will recover and sellers cry in dismay.
The index curve from left-to-right over a 100 years and upward slope, where are those drops, those times of fright, only visible under a microscope.
If you're still unsure watching from the side, take that first step, you'll soon find your stride at Fool.com.
Help and guidance await, it's time you took control of your financial fate."
That was Becoming a Fool by John Flood. And boy! John, have you. Thank you.
Rule Breaker mailbag item No. 2. This one comes from House Hunter. Now, there's a chance that your last name is Hunter in real life and you might have been named House. I mean, maybe your family thought it would be funny and get you into real estate ahead of time or maybe it's a pun or maybe it's just an anonymous name. But, House Hunter, thank you for this note.
"One of the rules is not to double down, but add up to winners." Now, I should specify what House Hunter means there. House Hunter is referring to trait No. 2 of the Rule Breaker investor. The right tactics to success for Rule Breaker Investing trait No. 2, of course, add up, don't double down. So, from that, House Hunter goes on to say, "Say, a new recommendation comes out and I don't have funds to buy until a later time. In the meantime, say, the stock price goes down significantly, would you recommend initiating a position, which I assume is, yes, because it's an active recommendation." And the answer right now is, yes, yes, I would, assuming it remains an active recommendation, which they usually do on our sites and in Stock Advisor and Rule Breakers. Yes, I would. But I like the subtlety and nuance that you now introduce.
House Hunter says, "I'm a little conflicted because, say, someone else bought when the recommendation was made, and now they are down in the stock, but say, the person wanted to buy more at the lower price, the rule of not doubling down on stocks which have dropped in price is not recommended, but if it's OK to initiate a position at the lower price, kind of, for that person, would it not conflict with the doubling down rule? So, does your advice change or matter whether the stock went down to company-specific reasons versus the entire market dropping and dragging everyone down. Rule Breakers and the entire team is awesome, I listen to all the other podcasts with Industry Focus being timely on a daily basis. Fool on! From House Hunter."
I want to mention, by the way, I just discovered myself, it's been happening for a few weeks, but there's now a sixth Motley Fool podcast, it comes from our Millionacres team: Matt Argersinger, Matt Frankel, and others. And I highly recommend, if you have interest in real estate, if you think you might one day be interested in real estate, I bet you'll enjoy downloading and subscribing to our Millionacres podcast.
Well, House Hunter, I just want to say two brief points. The first one is that it is true that you and that hypothetical person might be acting differently based on the same stock if you follow my advice, because on the one hand you decided not to buy, it went down, it's still an active recommendation for us. And so, I'm saying, yes, I think you could buy some shares there. And yet, there's this other person who did buy when you were hoping to, but couldn't, this person did buy, the stock dropped for them, and my advice to that person is, don't add more to that position, and yet, it's the same stock at the same price for you both.
While that may seem like a contradiction, for me, anyway, it isn't, because the advice is meant to be followed individually. In other words, for you, House Hunter, you haven't bought that stock yet, it sounds like you'd like to buy that stock, and the stock is down. Good news, if you buy, you will be getting a better price than we record on our scorecard and report back through our performance. So, you'll be getting, if the stock ends up a winner, you'll be getting a better outcome than we do on our scorecard or members who are following us earlier than you did. And yet, for the other person who already owns some, I'm saying, with extra money, most of the time tend to add, not to a position down for you, but a position that is up for you. Now, none of these are hard-and-fast rules, they are principles, they are pirates' code, really just guidelines after all. But I think it's helpful for us, as investors, to add to our winners. So, in your case, you hadn't bought it yet, so it's not a winner or a loser for you, you're entering that position. For that other person, they are down.
Now, I won't say I've never added to a stock that's down; occasionally, in our services and on our scorecards, you'll see I did add to Netflix once when it was down, and I did add to Activision Blizzard once when it was down. And the reason I'm thinking of those two, is because they've been spectacular, so it did work for me.
My second, and concluding point is, when do we ever add to our losers? Well, most of the time, you know, I don't. That's just what I do; it's what I recommend. Your mileage may vary. But the times that I have are when I'm looking at the balance sheet of the company, and while the stock might be down, that's why I'm looking at it discussing this right now, I'm looking at a balance sheet with a lot of cash, little to no debt, often management in place and doing something that I think is special in this world, whether it's leading the charge to streaming content on the internet, as Netflix did, or leading the charge, a movement from entertainment away from movies toward video games, which Activision Blizzard has been rocking for +20 years. Yeah, those are leaders that I like, and I have occasionally added to stocks that are down, but it is rare.
So, I hope you hear me speaking out both sides of my mouth in a way that makes sense to you, when somebody else might hear a different thing for them, and yet I hope it works for you both.
All right. Rule Breaker mailbag item No. 3. Now, I'm not going to reflect deeply about these, but there are two notes along the same theme. I think the theme will become clear; I love this theme. I want to say something briefly at the end to make sure no one thinks I'm utterly crazy, but let's go ahead and share.
First, we'll go with Pat Fizzano. So, Pat, thank you for this. "Hey, David, I'm a member of Rule Breakers, I've been listening to the podcast for about a year now. I'm 22. I wanted to get started with investing. However, I've noticed that even after doing my homework and finding great companies to invest in, I didn't have the funds to invest in them all. And so, I struggled with choosing, and then, eventually, I just didn't buy any. And this continued to happen for months until this week. After I listened to your podcast last week where you talked about using dice to make decisions, I decided to give it a try. I'm an avid Dungeons & Dragons player, so the thought of using dice excited me."
"So, I made a list of the companies I did my research on and liked. And then I broke out my favorite D10 ... " that would be a 10-sided polyhedral die; a decahedron, I believe " ... and I rolled it ... " says Pat " ... four times to pick four companies to invest in. And after that I rolled again just to see how many shares to buy, you know, just for fun. I then immediately bought shares in each of the four companies, three of which were Motley Fool suggestions. I just want to thank you for sharing this helpful tip that is making my life happier and richer Fool on! Pat Fi."
And a related note, this one from Reed McCullough. "David, I wanted to comment on your most recent podcast of Rule Breaker Investing. As a teenager, in the '90s, I was introduced to the game HeroQuest, which was a gateway into all sorts of games that use dice in unique ways." And, yes, by the way, Pat and Reed, I both know, and have played, Dungeons & Dragons and HeroQuest; great times. Reed goes on. "Now in my 40s, I'm once again questing for adventures and creating my own games, having rediscovered my love of the D10. Your comments regarding randomization made me smile, as we all hope to crit with the D20, 20-bagger perhaps." We'll just not explain those and some of you will get those references, well played. "But what I appreciate most is your calming, easy listening voice as you cover an assortment of topics that I would not normally consider. And the fact that I no longer look at investing as a random chance, but with a bevy of podcasts made available from The Motley Fool, I'm able to approach the market and life in a more informed manner. So, thank you. PS: There is no app that can replace the feel of rolling dice." End of note.
Well Pat and Reed and all my fellow Fools, a lot of you are gamers, and so, if you're like me, you just love those notes. You want to share those notes on your weekly podcast mailbag. How could you not share the story of the guy who is rolling dice to see which stocks he should buy? Now, I realize, looked at one way, that sounds deeply, crazily irresponsible. And I certainly want everybody to hear 100% from me, I do not think that you should randomly pick stocks and randomly roll numbers of shares to buy, that is not what I do, that is actually not what any of my correspondents do. What Pat, my first correspondent did, is he had his list of his favorite stocks and he could not -- he was paralyzed, he could not buy any of them. And so, he did what I explained in Mental Tips, Tricks, And Lifehacks that I learned to do in college when selecting a restaurant to go out to supper with friends, I would randomize simply to get us off our duffs and get us to take action. And I described in that episode, how that's a tactic I've used ever since. My favorite way to go down my to-do list on a daily basis is not from No. 1 down to No. 27 or whatever it is. It's actually to randomize 27 numbers and see which one I'm going to do next.
And while you might think, well, why don't you prioritize them and do the most important thing first, which I think is a great approach to life. I have a lot more fun not doing that. And on my to-do list of 27 items, there are some horrendous things that I do not want to do and would push them as far down the list as I could normally. But the die, when it comes up with that number forces me, I have the sacred pact, it forces me to do that thing then. So, I've done a lot of things and been more productive as a consequence of randomization than had I not.
I also understand that Tolstoy, yep, Leonid Tolstoy used to dice his life decisions. Well, I think that sounds kind of crazy, portions of my own life have indeed, as I just shared, [laughs] been determined. So, Pat, I know, you know that I don't think anybody should just be dicing what to do in life, including which stocks to buy. But if you have a curated list of goodness and you can't figure out what to do next or what to do first, a D10 isn't a bad idea. And Reed McCullough loved your note as well. Thank you. And you're right, there is no app that can replace the feel of rolling dice.
All right. Rule Breaker mailbag item No. 4. This one is from Ubiratan Sousa, and Ubi, you write, "Hi David, my wife and I are from Latin America. She is from Mexico and I am from Brazil. We've been in the U.S. for 10 years but never lost touch with our family, friends and cultural environment. The motivation to write to you came not from one of your recent podcasts, but from local stories that I wanted to share with the Fool community."
"The first has to do with MercadoLibre (MELI 2.59%), the company's logo is a shake of hands, symbolizing the gesture that follows a transaction or a deal." For those not familiar with it, simply search for "MercadoLibre" at Fool.com and you will see it. And if you go to Mercado Libre's Mexican or Brazilian websites, MercadoLibre.Com.MX or .BR., you will notice that they changed their logo and replaced the handshake with an elbow bump. "In Latin America there is a lot of controversy about how serious COVID-19 is and the measures that should be in place to reduce its spread, the country's government officials feed a great deal of this controversy. And I find it brave that a company like MercadoLibre made this change and brought it to the forefront of their brand. The importance of fighting this virus and of following the recommended health and safety guidelines. Mainly, because in Latin America governments can make life difficult for companies that do not follow the official agenda. You've given many reasons to invest in this company in this podcast, I thought you might like to learn about another great one."
"The second also has something to do with MercadoLibre. It recently surpassed Vale, the Brazilian mining conglomerate, as the largest company in Latin America. Most of the local market pundits have noticed it and were quick to attribute it to a bubble forming again in the U.S. stock market, reminding people of the dot-com debacle of the early '00s and that they should run away from the Nasdaq. Sadly, I couldn't find one single note talking about the merits of MercadoLibre and how important this company is for the region's economy, particularly in these times of COVID-19, treating it like a fad is a disservice to the investor community and the public, in general."
"And that brings me to my request to you, we're living in times of record low interest in Latin America, particularly, in Brazil. When I lived there it was easy to make 10% to 15% a year above inflation by buying government bonds. When I moved to the U.S. I realized that I would have to learn about the stock market to have similar gains. I don't know if The Motley Fool has ever considered having a branch in Latin America, but if you haven't now is the time, Brazilians, Mexicans, Chilean, Argentinians will need to learn how to invest in the stock market to see their wealth grow, and I haven't seen anybody that can provide the kind of quality education and investment recommendations that you do. I hope my family and friends will have the opportunity to become subscribers of the Fool sooner than later. Please come to their rescue. Thanks, gracias, obrigado, and Fool on! Ubi."
Well, of course, I love this note and it was my honor to share it as Rule Breaker mailbag item No. 4. Several things jump out to me. First of all, I didn't know that story about MercadoLibre. I do follow the company, but I didn't know that it had changed its logo. And that it did so, says a lot to me. And as you point out, companies like this that rattle their sabers or make too much noise, sometimes can get the attention of governments that may or may not like their actions. So, it does take a little bit of extra courage, I think, to do what Mercado Libre has done. And at the same time, I'm so confident in its leadership. I can't speak to the leadership of individual countries in Latin America, there's a wide range of different leaders, but I can say one thing, some of my favorite leaders come from business. And part of their leadership is conscious leadership, as we learned from John Mackey in the past month, when we did an extra on his book Conscious Leadership; that was at the end of September.
So, some of the best examples for me, in my lifetime, have come from the leadership of public companies. And often they're the founders, they're the leaders who can take extra risk, and whose personal reputation is tied up in the brands of their companies. So, I see this as another example, MercadoLibre. Thank you for telling that story, Ubi.
And then, certainly, I think that MercadoLibre has earned its market cap, and if I were a betting man, and darn it! I am, I'm an investor, I'm playing the long-game. And thinking about the next 10 years, I would predict that MercadoLibre will have a substantially higher market cap than Vale. Which isn't to say much about Vale, it's just to convey my optimism and belief in MercadoLibre. Now, that optimism and belief isn't pie in the sky or happy go lucky. It's been earned by holding the stock for more than 11 years now. Our cost was $14.13, as we brought it to Rule Breakers in February 2009, just over $14/share, today it's over $1,200/share. We have been wildly right, and indeed this 90-bagger has been the single best performer in Motley Fool Rule Breakers' history. I'm absolutely delighted it came from Latin America. There are great companies around the world, most of the time you're just looking for the businesses that are doing well by doing good. And I think MercadoLibre is a great example.
And as for whether there will be Motley Fool services in Latin America, I can't say what my talented CEO brother, Tom Gardner, will decide next, as Fool international expands, but I'll say this, many of our listeners are members, and many of you, there is an opportunity for anybody anywhere in the world to subscribe to Motley Fool Stock Advisor, Motley Fool Rule Breakers, any of our services. So, I hope that you will not wait for The Motley Fool to show up locally in a country when we're already available with great stocks like MercadoLibre, for those who may still not trust it in Latin America.
Anyway, Ubi, thank you for the note and Fool on!
All right. Rule Breaker mailbag item No. 5. This comes from John Grant. "Hi, David. Longtime listener, first-time writer. I discovered Motley Fool over 20 years ago, when I used to read a newspaper, [laughs] and you wrote a syndicated weekly column. Rich wisdom and great fun over the years. You've helped me make wonderful investments. I enjoyed your bonus interview with John Mackey on Conscious Leadership. I have listened twice and benefited both times." Well, thank you for that, John.
"Two years ago, I walked away from my stable job to work with a nonprofit Homeless Ministry. It has been a delightful adventure. What you said on the podcast is true, there is a stereotype that leaders in the nonprofit world are purpose-driven and lead with love, and that is nothing more than a stereotype. I have been surprised how few nonprofits operate with principles like the ones Mackey and his co-writers encourage. Just like in the business world, nonprofit leaders struggle to focus their energy and work for win-win-win. Most nonprofits stay small and few outlive their founder."
"Jim Collins wrote a bonus edition of his book Good to Great that applies to the social sector. It explains how nonprofits lack a key indicator that businesses enjoy; that would be profits. If a business undertakes a losing initiative, they pull the plug once the losses accumulate. A nonprofit is not trying to generate income, so it can stick with a lousy idea sometimes as long as the donors keep paying. Nonprofits lose the feedback loop provided by the market. All that to say, don't let the stereotypes fool you, nonprofits might have to work harder than businesses to enact principles like the ones Mackey shared. Thanks again, and Fool on!"
Well a provocative thought, John, and in your case, borne by your own personal experience. Congratulations on the Ministry work that you are doing, it sounds like it's succeeding, and I hope it outlives its founder. And you're right, there are lots of stereotypes about for-profit and not-for-profit. Here's another one I heard recently. This was from a dad of a middle school child who was ruing what had happened that week at their middle school. The kids were all invited to come up with an idea for a new enterprise. And let's just put him in about seventh grade. And let's say there were about 14 kids in that class and they all did, they came back with their presentations at the next class. And to a boy and girl, all 14 of them had dreamed up a not-for-profit. Nobody, none of the middle school kids, had a for-profit plan or idea. I'm certainly not sitting here in judgment of that, I think any new enterprise that adds value to the world is a beautiful thing, but for things to be so skewed to where, at least in that one classroom, you tell me fellow Fools whether this is indicative of this younger generation or not, I don't have a developed viewpoint, but in that school, anyway, not a single kid came up with a for-profit business idea.
I think about the power of profits and how they allow us to reinvest and grow our enterprises and how they are, as John mentions, a feedback loop that helps us understand when things aren't working and when we should actually shelve something. It's a very powerful thing. So, I guess, I would say in reflection and conclusion, I wish seven of those kids had come up with a for-profit business idea, and seven had come up with a not-for-profit, but the idea that, I don't know, what was going through the kids' or parents' minds, does a for-profit make you look greedy, I sure hope not.
I am so grateful for the products and services that I buy and use every single day from for-profit enterprises that surround me and greatly enrich my life. And certainly, the one that my brother Tom is a CEO, and we're Co-Chairman of, and have been managing for 27 years. I am so grateful, profoundly so, that we can do it and have done it and are doing it for-profit, in a way that allows us to expand already well past my wildest dreams when I came up with the name The Motley Fool out [laughs] of The Penguin Book of Quotations [The Penguin Dictionary of Quotations] (sic) and said, "Hey, Tom, should we name the newsletter "The Motley Fool?" 27 years ago.
Rule Breaker mailbag item No. 6. "On October 14th, the lifehacks podcast was a terrific listen," says Noel in Edmonton, Alberta, Canada. "Two comments, ... " thank you for these, Noel. "First, Frank's faceoff advice is solid, let me add to it. When you realize you are facing off with a guy you can't beat, be humble enough to recognize it, ignore the puck entirely and just tie up his stick. This gives your team the chance to come in and get the puck. There are tons of life metaphors you could take from this. And No. 2 ... " Noel says, " ... I love words and rarely come across a new one. I'd never heard the word "agglomerated" before [laughs] and had to look it up. Thanks for the teaching. If I ever find a way to work it into a conversation, if anybody notices, I will give you the credit." Signed, again, "Noel in Edmonton, Alberta, Canada." Thank you for the amusement, Noel, one Fool to another.
Rule Breaker mailbag item No. 7. "Hey, David, hope all is well. I have a nomination for your next Great Quotes podcast, it might sound familiar, "Given the proliferation of information and speed of information today, where does our edge as investors come from? Wisdom, perspective, mindset. There are a lot of aspects of human character and human psychology for which we can be examples, where we can exhibit excellence. And separate ourselves from the vast majority of others who are also just trading the market, also the machines that are just trying to read algorithmic numbers." This is one of your quotes, ... " says Erin Barrow, " ... from the Circle of Competence podcast. This statement stood out to me as I listened to you speak with Benton Moss."
He's referring to an appearance I made. My friend Benton Moss, his podcast Circle of Competence. He had me on a couple of months ago, I really enjoyed that conversation, if anybody wants to hear me get interviewed by somebody else, I think you'll really enjoy the time I spent with Benton, clearly you did, Erin, and thank you very much for honoring me with that quote.
I don't think it's a great enough quote to make my great quotes podcast. I really, obviously, am flattered by the inclusion, but I hope that this sentiment does come through. And indeed, it seems like it did to you, Erin. You went on to say, "I've experienced the truth of what you said, I was not an economics finance or business major. Almost all of my investing education has come from The Motley Fool podcasts and website. I will almost certainly never have the same level of knowledge or experience that so-called financial professionals have obtained, and that's OK. I know that I can still succeed as an investor, I can have the wisdom to invest in good companies, not chase the latest fads. I can have the perspective to think long-term, not worry about short-term fluctuations of the market. And I can have the mindset of adding to my winners and watching them grow rather than cashing in after a predetermined game. Thanks for all that you do to be an exemplar and exhibit investing excellence for us. Fool on! Erin." Erin, thank you, Fool on! to you back, Sir.
And I can really relate to that note, because I think, as I've often said in the past, Tom and I were both English majors, yep, we never went on to get graduate degrees, we certainly didn't get MBAs, we didn't get any kind of investment certificate certifying us as investors, we're just fellow travelers along the path of life, sharing it back and trying to grow a company, making you smarter, [laughs] happier, and richer. We have learned so much over the course of time. And a lot of my job, and I do it here every week with you in this podcast, it's just trying to share it back, share it out. I've learned so much from all of you that part of my role is simply to share that back out.
All right. That takes us to the last one. Rule Breaker mailbag item No. 8. Now, there is a letter that accompanies this that I'm not going to read, but it's from Michael. Michael writes from Calgary, Alberta, Canada, another great Canadian Fool. Michael is the one I referenced a few podcasts ago when I mentioned that some things are just too long to read on a Rule Breaker mailbag. After all, when I'm struggling to come in under 50, if you write me a four-page letter, I'm probably not going to be able to share that. Michael heard me that day, he took it to heart and he rewrote it all in a page-and-a-half, actually less than a page-and-a-half. So, Michael, good on you, because I loved your four-page note, I just couldn't share it in the first place.
Then you wrote me an explanatory cover letter about that experience, what you learned, and then you finished it with your actual letter that will close this Rule Breaker Investing mailbag.
"Hello, David. I wanted to quickly share the impact of The Motley Fool on my life, a second time." With a smiley and a wink. "I joined Stock Advisor Canada on August 27th, 2019, followed by Stock Advisor in the U.S. in April of 2020. Since then The Motley Fool has helped me create my own path to financial freedom, but what about prior to The Motley Fool? Well, I was always good at saving money, but I was fearful of the stock market, so I was left to returns that banks offered. I thought there had to be a better way."
"I went to a financial advisor. One of my investments was found to have fraudulent activity, now down about 90%. The funds I invested in are not liquid, and so I'm stuck until maturity with poor performance. I was no longer confident in trusting my money to a financial advisor. I then began buying stocks in the marijuana industry due to what I have now learned is FOMO. [Fear Of Missing Out] I held my stocks, only to watch their value plummet." Yep, there are a lot of bad cannabis companies out there, and we hope a few good ones.
"After joining The Motley Fool and using several of its resources and teachings, I learned I had not invested in good companies. I sold those at a loss, as I learned my thesis was broken, and reinvested into Motley Fool recs right away. My biggest learning, I wasn't diversified enough in any of my original investments, and put too much money into those same investments, I even doubled down in some cases. After all this, one would think I would never invest again, but I would not quit. I was not going to give up, I felt I could figure this out as The Motley Fool continued to inspire me to press on and learn. I now realize managing my own portfolio allows me flexibility, and I get to make the final decision on where I put my money, there is empowerment in that, and The Motley Fool taught me this."
"Well, last August 14th, 2019, I lost my wonderful mother. Neither of my parents were stock investors, but they helped me understand managing personal finances, and they made it clear you had to save for retirement. So many great lessons and guidance from them both. Shortly after losing my mom, I discovered The Motley Fool, and maybe it was a last bit of financial guidance from my parents, one last lesson, if you believe in that sort of thing. Stock Advisor Canada got me on the correct path, thanks to Rob in the membership services."
"Rob told me about the podcasts, and this was the biggest gamechanger for me as an investor. This led me to Stock Advisor USA, to Motley Fool Live TV and so much more knowledge. The lessons around emotions and temperament with investing, while understanding the history of the market and how often big drops occur and to expect them have been priceless. It might be the most important lesson of all. When the market crashed this year, I didn't panic, The Motley Fool taught me not to. Remember the Rule Breaker Investing podcast in early 2020 with the mock market crash?" Well, I sure do, Michael. "What a great lesson for a new investor. I kept investing at regular intervals, and when the crash came, not only did I hold my stocks, I deployed cash above and beyond my regular schedule and bought or added to great companies. I didn't wait on the sidelines for a W recovery to occur, I kept investing."
"The Motley Fool also teaches you must know the score. So, thanks to Brian Withers and his tracking spreadsheet, I can tell you my portfolio was up about 47% since Aug. 27, 2019, beating the S&P by 29 percentage points. As we learn on Rule Breaker Investing, keep adding to your winners. I bought into this early thanks to the podcasts and Fool TV and I just added to my winners. This knowledge has not only changed my financial path, but I love it more than sports. Thank you, David, and thanks to the entire Motley Fool team. Keep up the great work on both sides of the border. You've made me smarter, happier, and richer in so many ways, some of which are not tangible. Fool on!"
Well, Fool on! to you, Michael H. writing in from Calgary, Alberta, Canada; writing in twice.
And thus, ends October for Rule Breaker Investing, I am looking forward to November election and all, I'll be holding on tight to all of these great companies we talk about every week on this podcast. And speaking of great companies we talk about every week, every week of November we'll be reviewing one past 5-Stock Sampler. Yup, that will be a back theme to the primary theme of each of the podcasts, one of which will be a new 5-Stock Sampler. You know, right now I'm thinking of maybe naming at 5 Stocks Should the World End.
We'll see. Have a great week. Happy Halloween! Fool on!