"Rule Breaker Investing" Blast From the Past, Vol. 6

Not everyone has been listening to this podcast from the very beginning. And even if you have, can you possibly remember it all? This week we revisit some of our favorite moments, lessons, and stories from Rule Breaker Investing.

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This video was recorded on June 01, 2022.

David Gardner: I never say never for just about anything, but I'm as close as can be to never on some things. One of them is, that I never think I'm going to enter the government or run for public office. First, I'm not particularly interested in it. Pretty sure my brother, Tom, and I both believe that we can affect far more positive change in this world through the vehicle of our company, The Motley Fool, through the platform of hundreds of Fools every day working inside our building. We're back to work for the first time in Fool HQ this week, and outside our building where many of us continue to work. Then all of us, I mean you too, of course, all of our members, we can make the world together, smarter, happier, and richer. There's no political office needed, there's no campaigning, no special interests, no packs, no negative ads. I got so many negative ads and no sloganeering either.

This is particularly good for me because one of the things I'm the worst at is just saying the same thing, the same soundbite over and over. I just can't do it. I take far more joy in coming up with something new for you right here every week on this podcast than if I were just saying the same thing over and over, but if I were good at that, well, that seems to be what politics are often about. You need to stay on message. You say the same thing over and over, and that gets you the votes. But that's the opposite of my own inclinations and joy.

To a fault, I think I need to keep coming up with new tricks for you every week on this podcast. To a fault, I'd say because if you're always playing a new instrument or a new tune from one week to the next, you might make the mistake of forgetting to repeat some of the important truths, the timeless ones, the essentials. From time to time I like to hail back to the past and remake some cardinal points that I've made before, so they are not lost. Especially for my newer listeners, I would be a fool, small f, if I assumed you knew that critical lesson I taught on this podcast back in 2016, or one of my favourite stories from 2020 even. About once a year, I do this series. It's called Blast From The Past. It features five points that I want to make sure you hear again or hear for the first time. Is it June already? Great. It's time for Blast From The Past Volume 6, only on this week's Rule Breaker Investing.

Welcome back to Rule Breaker Investing. You know, as I did the cold open, as I spoke to you at the top, I was conscious that I actually did something similar to this a few weeks ago because what have you learned from David Gardner Volume 3 is your annual birthday gift to me. Thank you again, I'll stop thanking you for it. It can get annoying to over thank. But I realized that part of what I make of that episode every year is an opportunity to revisit most of the really important stuff that comes out through Rule Breaker Investing. In a way you can think of Blast From The Past as an opportunity to revisit what I think of as meaningful, I hope compelling. I hope rewarding stories, frameworks, and points don't make it into what have you learned for me.

They don't necessarily always make the best hits, greatest of the most important points, but the reason we blast back from the past, and this is the sixth time in the seventh year of this podcast, is because these are important, I hope, compelling points, but maybe in Internet terms, they're below the fold. Maybe you'd have to scroll down to really find these. That really scrolling down is a pretty good analogy for what we're doing with Blast From The Past, Volume 6. I will be presenting this week five bits from the past. In most cases restated, not just giving you what I did before, but specifically calling out those episodes from the past, which I do believe, I hope are worthy of some time and attention.

If you have a little extra beach time this week or later this summer, instead of reading, which is traditionally what people do at the beach, maybe it's time to listen to some extra podcast. If so, I hope all scale up one or two good ideas for you, looking through the past this week on the show. Here's the game we're playing. For each of these, I'm revisiting a point made in the past podcast. Most of these are five, six, and sometimes seven years old. I'm pretty sure you won't remember these unless you're a very long-time, very faithful listener. I know some of you are out there, thank you. But for most of the rest of us, this is all going to be new, but I intended to be helpful and just as relevant I hope here in 2022 as it was back in, here's the first one, July 20th, 2016.

Let's get started. Blast From The Past got five points for the past year comes point number 1. This one goes back to July 20th of 2016. The Rule Breaker Investing podcast that week was entitled Pet Peeves Volume 1. I've been storing up presumably for 50 years since I was born in 1966. It wasn't until the summer of 2016 that I got to air out my pet peeves on this podcast for the first time. You can imagine, I was loading some up and I'm going to share with you one of them now, but in order to entice you, maybe to go back and relisten to Pet Peeves Volume 1, let me mention elsewhere on that podcast, I spoke to state lotteries, which will always be a pet peeve for me.

Another one was that button that you are forced to click that says you've read someone's disclaimer, you know that online button that a lot of us have to click to get past stuff to what we're really trying to do. Yeah, that's a pet peeve, and one other I remember is that ticker symbol that's listed incorrectly more frequently than any other ticker symbol. I hope I'm enticing you to go back and listen to Pet Peeves Volume 1, but there was pet peeve number 2. I hope you share this pet peeve. This is a big one for me. It's littering. How can any person today, whether you're driving down the street or on a truck somewhere, just walking through a parker? Sometimes people presumably do it on their own front lawn. How can you just drop the cup or flip the cigarette away, or toss the straw? We end up driving down that highway and seeing over on the shoulder litter. It doesn't look good there and it looks even worse in green settings and family settings. I hope you feel this too.

I know the Teddy Roosevelt in all of us, the national park-loving people that we are. I know you don't like littering. I really don't like littering. I think that there is no real excuse for it in almost any context that I can think of. I don't actually care what your own personal background is or how easy or tough life has been for you, where you come from, or what your culture is. I don't think there's any excuse for just dropping something and making someone else pick it up. The phrase litterbug. I remember growing up, in the 1970s, my formative years. I don't see that phrase around quite as much anymore, but I do see some powerful statements against littering. In fact, a lot of us who are outside the state of Texas might not know this. But if you've ever seen that bumper sticker, "Don't mess with Texas." Maybe you've seen it on the back of a truck or on someone's T-shirt.

You might have thought that's just some tough guy talk from somebody who is presumably a Texan. But the truth is, that was started by a very talented ad agency run by a fellow Fool named Roy Spence. It was all about encouraging Texans not to litter in their home state. Don't mess with Texas. I love that sentiment and whenever I see that bumper sticker, it makes me smile. By the way, speaking of Blast From The Past, Roy, join me on this podcast on November, 1st of 2017, and I will tell you that is 48 minutes of greatness that you should take the time to listen to if you haven't. Rate is not for me of course, but just because of Roy, who I think is a truly great entrepreneur and human being, one of the best storytellers I know.

Back to littering. One of my proudest but most ridiculous moments was when I was in my car behind another car at a light somewhere in Greater Washington DC, and the person, a young man had lowered his window and just dropped his cigarette right there, while we were waiting at the light. I knew it was a longer light, and I was having a little bit of fun with this, so I literally opened my door from the driver's side, got out, walked up, bend over right next to him at his window, picked up his cigarette, which was still smoking, and without even looking at him, simply walked back to my car with it.

I hope that doesn't sound self-righteous. I'm definitely not suggesting I do that all the time. But the reason I'm telling it as an anecdote is that I did it once just to see what it felt like. But I like to think that, that guy still remembers that moment, and maybe that in a small way that changed the future destiny of our world. Littering, big pet peeve, Blast From The Past number 1. Blast From The Past number 2. This one it's one of my favorite author interviews. Every August for the last several years, we've done authors in August on this podcast and once again, I'm rubbing my hands together getting ready for authors in August 2022 edition. I still need to decide my books and I hope the authors will say yes and join me. But in 2018, it was August 8th, when Priya Parker, the author of The Art of Gathering, said yes to this podcast. I still regularly think back fondly, not just to that book, which I highly recommend to all my fellow humans, The Art of Gathering by Priya Parker but of course, I think back fondly to that podcast and I even did a weekend extra with additional spillover comments from Priya.

That's how passionate I was and M about her work which is focused on gathering. Now I think she defines a gathering as anytime three or more humans are gathered together for a particular purpose that counts as a gathering. That means the wedding that you'll be attending later this summer, the funeral that you may have attended last month, the corporate offsite that, are these happening again, that's going to happen for your company in 2022 or really any dinner party, or picnic. All of these are gatherings and Priya, with passion and intelligence say, we can do these better. Now as fellow human beings, we know that none of us is perfect, but it doesn't mean we can't do it a little bit better each time that we gather. What I think is really delightful about Priya's book is each of the chapters in her book is a sentence or a directive and it gets across to you.

This is probably perfect for being on Oprah. It gets across you just with the chapter title, where she is headed and what she is thinking about. I'm going to share with you the one that I remember best, but before I do it, let me just mention a few others. Chapter 1 of The Art of Gathering is to decide why you're really gathering. I think that's such a great reminder and a wonderful way to start off the book because it's a reminder to really think deeply and carefully about the purpose of why you are having that corporate offsite or why you are having that supper party. Deciding why you're really gathering is the first step to having a better gathering. Another one, Chapter 2 of the book in fact is called closed doors, which sounds a very counter cultural tone. I would say inclusivity is a big trend these days.

Capitalize inclusivity and lots of ways is what the world is about in recognizing the importance of that. But at least in Chapter 2 of her book, she reminds us the power of exclusivity. Closed doors is there to remind you that if you exclude a certain person or type of person, that could be what saves your gathering. A quick example comes to mind for me, one of the better ways to pass down money from one generation to the next is to ensure that the generation that will be receiving the money has been included in the plan. You shouldn't be surprising people when you spring upon them at your own death, whatever you've saved, it would be a much better idea most of the time I think, to have talked it out and everybody has some clarity and understanding.

Now one of the best ways you can get to understanding and get that next-generation bought into your vision is to ensure that they have a chance to weigh in and talk and if you have a wills and estates person or some family office help, to ensure that they have an opportunity without you there to talk with each other or talk with the estate professionals and be able to provide their point of view. I think too often such gatherings can be dominated by the patriarch or matriarch. Their will and their plans end up taking up most of the time but a really effective gathering that will ultimately create a better outcome for all is if, if you're the patriarch, you exclude yourself intentionally from a gathering of your next-generation.

There's one example, maybe not have been the best example I can think of, the importance of closing doors anyway, in that podcast and in her book, you can see other examples of how important it is sometimes to exclude. I think we can all think of somebody who might talk too much or too long at supper parties and how that could really diminish the party if somebody is just dominating the conversation so for that particular part of you might want to exclude that person closed doors. But the Blast From The Past I really wanted to talk a little bit about is her chapter, never start a funeral with logistics. Again, a very evocative chapter title, and it's a reminder of the importance of big moments.

Now I haven't been to too many funerals. I think the first one I ever went to was the suicide of a friend in my teens, I'm sorry to say, but for the most part, at the age of 56, most of the people I know, especially my peers are still alive. I hope yours are too. Most of my loved ones are still alive. We've all been presumably to some funerals if were over the age of 21 but I haven't done it enough to really be experienced at it. Yet Priya's advice to us to never start a funeral with logistics is a reminder of the importance of big moments. In that podcast and in that chapter, she talks about the mistake that many will make. Have you ever been to an important moment, let's say a funeral or a wedding and it starts something like this. Well, thank you all for being here.

ow before we get started, I do want to mention that on the second floor of the parking garage, if you're license plate is DMMS 2147 Indiana plate, your lights are on. While that is important information, maybe the one person in the room, it's really not the way to start something important. Priya points out both at the very start of a gathering and at the very end of a gathering, you have generally rapt attention right at the start. What you say or to what happens right at the start of something, funeral, wedding, birthday party, corporate offsite, supper party what happens right at the start, the first thing you say or do, makes a huge impression on everybody. Never start a funeral with logistics.

Others have spoken to the importance of what do we really remember as humans? We tend to remember the start of things, the end of things, and maybe a peak moment somewhere in between. Well, all of those things are timelessly true to human psychology. Even though the chapter is extensively about funerals, it's about the importance at the start of any gathering of really nailing it. There you go, August 8th, 2018 Priya Parker, The Art of Gathering, I hope maybe we've just helped improve your next gathering. On the Blast From The Past number 3. The podcast was entitled Lessons From A Great Business. It was on August 10th, 2016, that was before we had authors in August, before I dreamed up the idea, so six Augusts ago and the focus of Lessons From A Great Business was specifically, and is specifically on Starbucks. Squarely so a business that I love to talk about because I think so many of us have some association or experience with Starbucks, if not on a daily or weekly basis, at least on a sometimes basis and speaking of gatherings, Starbucks is about the only big coffee brand that I think is as much about gathering as it is about coffee. Within that podcast, well, I got to talk about what are my favourite leaders.

Howard Schultz, the CEO, in a sense the founder, the spiritual founder, anyway, of Starbucks. I think I talked a little bit about how my favourite leaders are not political leaders. They've always been business leaders because I think the business leaders have to create value for all whereas too often, especially these days, I feel as if political leaders are pitting half of us against the other half in a way that at its best is on attractive to me and it is worst can be self-destructive. But business leaders, Howard Schultz being one, will always be a passion of mine. I also on that podcast, Lessons From A Great Business, got to talk about what happened when my brother Tom and I were on ABC TVs, The View, which is probably one of my 10 favorite Motley Fool stories of all time. I'm not going to retell it here, but it is there for you on the podcast if you want to rehear the story of Tom and me on The View. But one of the points that I make in Lessons From A Great Business is about initial public offerings and that's what I'm going to share with you this week.

I call it my great wolf story but before I get there, let me back up a little bit. Initial public offerings, IPOs, are of course when companies go from being private to being public. For those of us who invest in the stock market, it's when new stocks are born. There were sure were a lot of IPOs in the years 2020 and somewhat in 2021, there haven't been as many in the very cold market of 2022 but I generally like initial public offerings because if they don't happen, we don't have stocks to invest in, you and me. I always root eventually for great companies once they've hit scale and I would say a margin of stability, even safety. I like it when great businesses go public. In the early days of the Motley Fool, Howard Schultz, the CEO of Starbucks, through his venture capital arm, Maveron, Howard was invested in the Motley Fool.

Maveron was one of our lead investors and I have very fond thoughts about 25 years later, even though we never went public. I appreciate Maveron and the people of Maveron and Howard Schultz in particular. Howard used to come to Fool HQ from time-to-time and talk some about his views of our company and hope, I think, as our venture capitalist that one day we would go public and I'm sorry Howard, that we never did, but part of what he was doing was coaching us if we did go public based on his own experience of taking Starbucks public. He was coaching us on the proper way and the proper time to take your company public. Obviously, I speak about it at a little bit greater length and detail in that podcast Lessons From A Great Business, August 10th, 2016.

But I think I can remember enough of it just to convey the key point here. The number 1 thing I remember Howard conveying to us is that before you ever go public as a private company, that you do so at a time where you are 100 percent sure of your next couple of quarters of performance that you are going to come out and not just put up good numbers, but 100 percent of the time beat the analyst's numbers. Of course, you're communicating the analysts in the first place and a lot of good businesses consistently under-promise and over-deliver any experienced investors used the company's conservative management's talking down their prospects and analysts respecting that and holding the numbers back a little bit and then the company comes out, beats those numbers and stock market investors like that and usually the stock pops a little bit the next day.

But over the course of time, as a management team, you get used to under-promising and over-delivering. Howard was saying to us, before you ever brought The Motley Fool public, which we may never do, but before you ever do, he was saying back then, make sure that you lock stock and barrel toss away the key, you know that you're going to put up numbers that are good and surprise people positively with the numbers that you report in your first two quarters as a public company. Now, why am I telling you this since you're not about to invest in the Motley Fool, and we're not about to go public? The reason I'm telling you this is because ever since as an investor, I have very carefully scrutinized the first two quarters of any newly public company. In the early days of Motley Fool Rule Breakers, the subscription service, which I hope many present members are hearing me today as I speak in the early days of Rule Breakers, I had recommended a stock, Great Wolf Resorts.

This is a company some of us may know. It's a resort company. It's the water park company. Some people love waterparks. Other people, my wife, for example, don't really like waterparks very much, but Great Wolf Resorts was a pretty successful earlier stage waterparks company and it was coming public with the ticker symbol W-O-L-F and weeks into it being a public company, we decided to recommend it for Motley Fool Rule Breakers. Well, when that company in its very first, I think it was the first but if it wasn't the first it was the second. In its first or second quarter as a public company, they came out with bad numbers that surprised the analysts and the stock market overall and that was one of the few times that I quickly sold a stock out of either Rule Breakers or Stock Advisor, both of which I worked on about 20 years. I didn't do it very often, but I did it with ticker symbol W-O-L-F because I remembered Howard Schultz's coaching saying to us, if you're really ready to go public, you need to prove it by coming out with good numbers at least your first two quarters.

So when NASDAQ ticker symbol W-O-L-F came out and really wolf it's numbers that first or second quarter, it went bye-bye from Rule Breakers. I think I'm happy to say it, I'm sad for them it was not a good company on the public markets, I think it eventually went private, but it was a very poor stock. I think it was a good sell on our part. Ever since, especially with analysts internally, I turned Great Wolf into a verb, a new word, a neologism. I'll say a company waft that quarter, which is my way of saying we probably shouldn't be in that stock because it's a new IPO and they didn't hit their first quarter numbers, were they really ready? Why did they go public in that position? If you like that wisdom and you like that story, you along with me have Howard Schultz to thank.

On the Blast From The Past number 4, this one came from Great Quotes Volume 1, December 16th, 2015. It was our first ever great quotes episode. In that episode, I won't be speaking to these, but just to entice you, I gave my favorite grateful dead quote in that episode. I think it's really my only grateful dead quote. I reached out to a sci-fi author with a great quote about the future and I got to quote the author of the book, The Little Prince with my favourite line from Antoine de Saint-Exupery. But in that episode, I also, one of the five quotes I spoke to was this one and what I love about this quote is, this is not Jerry Garcia, this is not Antoine de Saint-Exupery. This was a Motley Fool member posting on our discussion boards. I remember his screen name was Markoos, M-A-R-K-O-O-S. For the record, this was posted on the Motley Fool discussion boards on December 7th, Pearl Harbor Day of 2002. It was on our economy and markets folder along running discussion board on The Motley Fool and it was post number 5,894. But that's all, just trivia. Here's the quote. I'm just pulling a part of the post and I just love how he expressed this.

So from Markoos here comes a great quote from December 16th, 2015, "The stock is going to trade whether you look at it or not and the Market is a crazy man, If you haven't already noticed, always has been, always will be. Knowing that, why on earth would you listen to a crazy person five days a week? Your mood is going to swing right along with the Market, your stocks are up, you're going to be happy for the rest of the day, your stocks are down. You're going to be in a bad mood the rest of the day and possibly even scared, are worried that something is wrong when there's no reason at all. Honestly, life has enough ups and downs of its own already, you actually want more? Besides, he closed, listening to this crazy person day after day, it's probably going to tempt you to do crazy things." Well, I want to thank Markoos for that great quote. By the way, Markoos, if you're still a member, definitely write in an update your story for May 20 years later, I'll feature it on the June Mailbag later this month. Or if anybody knows Markoos in the Motley Fool community.

Anyway, speaking of the market is a crazy man, haven't we just seen that. Seven weeks in a row, The Dow Jones Industrial Average was down for the longest streak since 1923. That was right up until last week. Last week the markets broke that seven-week losing streak and the S&P 500 saw its highest weekly return in almost two years. Talk about your whipsaw, I admit I personally do follow the Market five days a week. I've often talked about this. I am also a Minnesota Twins baseball fan and I actually watched just about all 162 twins games each year. I love to follow things that I love from one day to the next. But very few people love the stock market as much as I do and many people listening to me right now, probably don't spend five days a week watching the stock market. But if you do, you need to recognize you are watching a crazy person. It's kind of like, I don't know the danger of following in social media somebody who's just constantly raving, there are a fair number of cynical people out there in social media. If you give them your attention from one day to the next, guess who else is becoming a Seneca or maybe even worse, a misanthrope.

At the end of that posting, Markoos talked about how he just checks his stocks once a month. Literally, he says it took discipline but has made a great deal of difference to him. I have to say, I love that. I definitely don't have that discipline or want to show such discipline. But I do think if you find yourself getting preoccupied by the stock market, it's probably because A, the Market is a crazy man, and B, there is a chance you'll go crazy if you pay too much attention to him. I think it was Benjamin Graham who talked about Mr. Market and in a lot of the work of his life. Mr. Market, Buffett has picked up on this as well, Mr. Market is not a very reliable gentleman. Anyway, that was for Great Quotes, Volume one, December 16th, 2015. That takes me to the last one this week Blast From The Past number 5. I opened up with a car story when I got out of my car [laughs] and picked up somebody else's cigarette but next to his car and I often driving my car, I hate to see litter along the highway. It was a car story. Well, this is a car story to close.

In our Omega this week is our Alpha. At the end of what have you learned from David Gardner, my annual birthday podcast from years past, I used to end with this story. This year, well just last month, I forgot it. I didn't make time for it. I think it makes an important point. While I didn't get a chance to end last month's episode with it, I will have a chance. to end this month's episode with it, I've entitled it. It's a short essay for me, Prison of Our Own Creation. I hope it makes a helpful point for you for this Blast From The Past number 5. I wrote this essay just a few years ago, and it starts. Well, I mentioned, I wanted to tell us a short anecdote to close on my birthday last Thursday, I was driving from where I spent my day to supper that night. It was a gorgeous evening here in Washington DC and for those of you who know our climate, there's a little bit of the mid-Atlantic in general, but especially in Washington DC, there's a wonderful three weeks or so each year where spring is sprung, and yet the heat, the humidity, the gnats aren't out yet. Well, the Washington Nationals baseball team might be out, by the way, not a very good team this year.

But I'm talking about the G-N-A-T-S which start to swarm around us like clouds through most of the summer. It was one of those beautiful pre-gnats nights last week on my birthday. So I got in an Uber. My driver had I'm going to say, it was a Russian accent. Quietly on my own I noticed he had the windows up but it was about 5:30 PM and I wanted to drink in the evening air, so I put my window down and we got started on the drive. At about four minutes in, he just reflexively rolled my window up. I'm just sort of sitting there and I'm generally a pretty non-confrontational person. In my mind, the driver wasn't comfortable or maybe he didn't want me to have my window up for whatever reason, he probably had air conditioning on, or maybe he was thinking economically. I'm not really sure what he was thinking other than he wasn't thinking what I was thinking and that made me sad as he put my window back up. I sat there for about five minutes and steward about it a little bit and I noticed that the air in the car was not particularly pleasant, wasn't really air-conditioning.

I think he had the air going but not the AC on and I was just sitting there thinking, it looks so beautiful outside. Should I do it? Well, I decided I'm going to do it. I'm going to ask him if I can roll my window down. Now. I know many of you are like, of course, you can roll your window down, its Uber they are there to serve you. It's your window temporarily while you're in his car and yet, that's just not how I roll. As I said, I'm pretty non-confrontational, but I decided I'm going to ask him directly. Do you mind if I roll my window down? I asked him and he said back to me in so many words, thank you so much for asking me to do that. In fact, I'm getting a little sick right now and the air in the car would not have been good for me. What I realized from that conversation was that we were both creating together a small dystopia.

He misunderstood my intentions, I misunderstood his. We both found out that the wicked witch was dead, All Hail Dorothy. We both wanted the window down and as I told my kids later that night, it's important in life, not only to let others know what you like and not make assumptions about what they are thinking. But sometimes you may be surprised that the other person was thinking exactly the same thing that you were and yet if I had not reached out if I just sat there and stood for another 25 minutes, missing a gorgeous evening in the nation's capital, I would've been living in a dystopia of our own collective creation. Now I'm sure many of my seasoned, wise and knowledgeable listeners already knew that. That's maybe not something that you had to learn from David Gardner, but perhaps for a few of you, I've given you a nudge. Let's not live in prisons of our own creations.