In this mailbag, the Rule Breaker Investing podcast is looking at authors, numbers, percentages, baseball, and so much more! Plus, we review and draw to a close yet another five-stock sampler: Stocks Indistinguishable From Magic.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on Sept. 27, 2023.
David Gardner: A final Wednesday of the month, which means it's your Mailbag. This time I didn't have to write myself a note, though, I had a lot of fun doing that in August. Nope. Some social media hot takes and then seven Mailbag items from baseball to stocks that are indistinguishable from magic, and much Foolishness in between and all the way through. Mailbag only on this week's Rule Breaker Investing.
Welcome back to Rule Breaker Investing. Welcome to the end of September 2023, not a good month for the stock market. Many of my favorite stocks lost something like 20% of their value over the last four weeks or so. I don't know about you. September will not be a memorable market month for market mavens, but I will say it's still been a pretty good year overall, so 2023 brings a smile to my face as an investor but not the start of the autumn. Now of course, some date the start of September meteorologically from September 1, which means we're already well into fall, but others look to the astronomical calendar and say it all starts with the autumnal equinox, which was somewhere around September 22, just days ago. Whether you think fall has been going on in your area, if you're in the northern hemisphere for a long time or a short time, happy start of autumn. Before I get into the Mailbag, I want to mention on next week's show, I'm really delighted to be joined by a new voice in this podcast, although he has a familiar last name. Because Ed Brooks happens to have the surname Brooks.
We already had Arthur Brooks. We'll be reflecting a little bit on Arthur in this Mailbag on this podcast, so please don't get confused. Both of these gentlemen have straight up English-sounding names. One of them is actually English. Yeah, Ed Brooks will be bringing his lovely British accent to this podcast next week as we discuss character. This is something that runs through investing, through business, and through life. Ed Brooks is the head of the Oxford University Character Project. Our topic, does character always win? That's a fun rhetorical question for now. Ed Brooks on next week's Rule Breaker Investing podcast. That will be then. Let's get back to now.
Let's look at September. For this podcast, we had three Rule Breaker Investing podcasts preceding this one this month. The first one on September 6. Stock Stories, Volume 8. Some of my favorite Fools in around the camp fire to tell stories. Stories about, not summer camp, not the one that got away, unless it was a stock, nope, stock stories, that's what we do on this podcast. Lots of lessons implicit in that one. I hope you enjoyed it. A week later, September 13, Arthur Brooks, happier-ness. I'm happy to say that Arthur's book, written together with Oprah, which is part of the magic here, I suspect, debuted as an instant, maybe number one New York Times best seller the day or so after this podcast. This podcast had nothing to do with that other than we're fans, and I hope we got a few clicks for Arthur. He didn't need them but what a wonderful conversation. I've gotten so much good feedback internally and externally about that conversation, about happiness. After all, if the Motley Fool strives to make you and the world smarter, happier, and richer, one of those is happier, and understanding what that means and the difference between happier-ness and happiness is right there in that conversation. Thanks again to Arthur for becoming a new friend of the Fool just a couple of weeks ago. Then last week, talk about friends from the Fool, great to have Emily Flippen and Bill Mann. Back it was the Market Cap Game Show. If you didn't already play, get in the game.
Listen to last week's podcast, get into the game, and score yourself along with us as we talk through 10 stocks and their market caps and a lot of fun beside. That was the month that has been for this podcast. Let's get into it now on what I'll continue to call Twitter and X and not really know which one I want to use but got a couple of good hot takes I want to share with you. The first is from Elliott at Forever Floyd. Elliott, you said, "I really enjoyed this one." He was referring to our Stock Stories, Volume 8. "It was a nice reminder," Elliott writes, "of the power of patience. I'm longer term than most, but I still often get impatient in tough times. I've been investing in individual stocks since 2013, and Apple was my first buy, but I sold when it hit one trillion dollars." With Apple worth about $3 trillion today, I think Elliott is regretting that he sold early. He concludes his tweet, "Shame on me." Elliott, yes, I think we can all shame ourselves for selling too early. I think that's probably the biggest mistake that the majority of investors worldwide make, and it's not just that we make it when we're novices. I think a lot of people continue to do that as experienced investors. The more experience you get, especially if you actually look backwards and check your selves, go back over historically what you sold and when, some of us keep spreadsheets just to track the stocks after we've sold them, to see what we can learn from that. It's a good lesson. We'll discover more often than not that we probably shouldn't have sold. The thing about selling is, if it was a winner, you're already paying capital gains taxes, so you're now reduced somewhat, and then you have to figure out how to reinvest it and where to put that.
Now there are great new companies coming along all the time. There are also bad investments that we do make that are probably worth selling from time to time, but nad-nad, most people make the mistake of selling too soon, too frequently. Elliott says, "Shame on me," humbly, but I say shame on all of us, me included, because I think anybody who's invested for any meaningful period of time can look back and recognize that, but it's all about what comes next, not what happened. We learn these lessons around a campfire a few times a year on this podcast. I was delighted again to feature Stock Stories, Volume 8 at the start of this month. Thank you, Elliott. The second and final tweet I'm going to highlight is from Mike Mcmahon, @ProShopGuyMF1. Thank you Mike. Reflecting on last week's podcast, our Market Cap Game Show. Congrats to @TMFOtter. That is Bill Mann on Twitter, @TMFOtter. After an overtime victory over soon-to-be TV star @Flippen_Emily on the Market Cap Game Show hosted by yours truly on the @RBI podcast, Mike goes on to say, "Emily will be appearing on the reality show, Survivor 45" filmed in Fiji. I'm here simply to remind you, if you're a fan of the show, you should watch it.
This podcast comes out Wednesdays at 4:00 PM Eastern Time in the US, which means if you listen to us right as we come out, you still have a few hours to watch Emily on TV tonight, which should be a lot of fun. We'll see how she does and how long she lasts in Survivor, where they vote you off the island at some point unless you are able to survive all the way through and become, in the parlance of the show, The Survivor. Good luck to Emily, and a lot of fun to have featured her. We discussed her appearance last week in and throughout that Market Cap Game Show. How could I not asked her some of the fun questions about her experiences on that show, most of which she can't share at all because it's all spoiler alert, and you're not allowed to say anything about what happens on the show if you're affiliated with the show, but the truth will start to emerge later this evening.
As I mentioned at the top, we have seven Mailbag items this time around. A lot more fun to do even than the one I did in August, but as I mentioned earlier, that was fun to do too, a unique Mailbag after our authors in August, but as usually happens, a number of your reactions about authors in August and our interviews a few weeks ago didn't make the cutoff for last month's Mailbag. They tend to come in over the course of September and that's what we'll be largely reflecting on this particular Mailbag. Rule Breaker Investing Mailbag Item number 1, this from Vince Granieri, Full-forcey tribe in our Fool community, Vince. It's always good to hear from you. Thank you for this note. "David, I was sorry to hear that your Mailbag was a little light last month. I'm guessing that will be remedied this month. I was a little regretful because I thought to myself a number of times during the month that I needed to put whatever the modern equivalent of pen to paper is. Why? Many reasons." Vince goes on, "First, your interview with mathematics guru Jordan Ellenberg was inspiring, trained as an actuary myself. I have always seen math as necessary," Vince writes, "and not evil, certainly. But Ellenberg opened my eyes to its further potential for me. After listening to your podcast, I had to get that book.
I'm enjoying it thoroughly and even though it's not time for Life Hacks on your podcast, I hope you suffer this Fool gladly and allow my favorite mathematical life hack." Absolutely, I'll allow it. Let's do it here. Thank you for sharing. Mental tips, tricks and life hacks are a recurring theme on Rule Breaker Investing. I'm happy to bring one into this Mailbag. Thanks to you, Vince. I'm looking forward to hearing what this one is. "That being," Vince writes, "when given the numbers, ask for the percentage, and when given the percentage," Vince suggests, "ask for the numbers. This little trick will help cut through the fog if someone is trying to mislead you. For example, you are told that a negative event went up 100% last year. It sounds bad, but what if it doubled from two to four? Maybe not so bad," Vince writes, "Or that company's sales fell by a million dollars. It sounds bad but not if they fell 100 million to 99 million. They were really pretty much level." Again Vince's mathematical life hack here, Fools, when given the numbers, ask for the percentage. When given the percentage, ask for the numbers. Vince closes, "Then came your interview this month with Arthur Brooks. What a fascinating concept: happier-ness. Having attended Harvard Business School myself, I felt kinship with Arthur who teaches there. Two times in less than two months, I could really relate to your guests. Again, I had to get that book. Usually I enjoy your authors in August series, but this year I was inspired as never before. I'm sure I'm not alone. It's fair to say that your listeners are richer, happier, and wiser as a result of these efforts. Keep up the good work, and Fool on. Vince Granieri." Again, Vince, thank you for writing in.
A pleasure to feature your mathematical life hack. I like it, it's very useful, very usable by anybody listening. We have kids who listen to this podcast. Hey kids, and even down there at fifth grade math. My earliest days when math really started to matter to me, it was about the percentages. One of my themes has been percentages not points. I'm always annoyed. I think I've talked about this in the past in this podcast. When we hear that Dow is up 300 points or down 433 points, and it doesn't mean anything to most people. It sounds really big until you realize, well, actually that's not much more than 1% either way. When you have the Dow in or around 30,000, 300 points is 1%. There's really a lack of understanding often in finance, maybe most of all in finance, where it really counts to understand things, the money of our lives. It's very helpful to ask for percentages, just to do simple ratios. Vince, when it got to more serious math like calculating the speed and velocity and ascent of curves and other things that started to scare me in calculus, I started to hop off the math wagon. At different points in Jordan Ellenberg's book, I found myself never skimming. I always read it all the way through, but my mind wandering a little bit. He does go into some higher math at different points. I'd like to stay right in there with my baseball statistics, mind in fifth grade and count percentages. There's nothing better than understanding proportion, very helpful. Thank you, Vince Granieri. Rule Breaker Investing Mailbag Item number 2. This is from Mark. Thank you, Mark. "Hi, David. I'm concerned about the Motley Fool. Some of its best features have been going away.
For example, A, you retiring from Rule Breaker service, B, Chris Hill retiring from Motley Fool Money, C, Matt Argersinger closing down the Mogul service, D, new community discussion boards are clunky, and many complain about them. Is there some malaise behind the scenes that's gutting the fun and focus of the Motley Fool? I love the ethos and mission, but the execution, it seems to me, it's gotten sideways. Your thoughts," signed Mark. Mark, first of all, thank you for your concerns. By sharing them with me, my podcast is listened to by many of my fellow Fools who are going to hear this. I'm sure they all have their many different answers. But since you asked me, I'll give you mine. Before I start, let me just say concerns are a sign of care. Thank you for writing in. Thank you for caring. Second, your pointing to the loss of well-known personalities, Chris Hill, of course, me, and I would even look backward and remember Morgan Housel, or further back, James Surowiecki, etc. We're always disappointed when someone we love and who's been loved and appreciated by many of our fellow Fools chooses to retire or take a new job. What can I say, really, that's life. I think the good news is that, after a great talent like James Surowiecki, the author of the wonderful best selling book, The Wisdom of Crowds, Jim wrote that after leaving The Motley Fool, after a great talent like Jim moved on, we found Morgan. After a great talent like Morgan or like Chris Hill, I just bet we'll have a knack for finding you some new voices that you admire. I'm not going to name names here, but I think we have numerous people who are highly talented at picking stocks, at writing about finance, at bringing you education, amusement and enrichment. I would say listen again to last week's Market Cap Game Show. For one example, we have over 500 employees today at the Motley Fool. Ten years ago it was less than half that, and ten years before that it was half that again.
I've watched us grow and grow sometime in fits and starts, and sometimes we've lost a little here and there, but I believe we grow because of our purpose. We're very purpose-driven. We're here to make the world smarter, happier, and richer. I think I've already said this podcast, and I might say it one more time before we're done this week. But our leadership, starting with my brother Tom, our chief executive officer, that is the focus that we have. I would also say you're pointing to some changes in our service offerings and that's really an ongoing thing. It represents us looking at the world and saying, what does the world want from us? In some way it's that adaptive capacity we have, which has led us to the opening, and sometimes closing, of many different services and features over the years. Remember the Fool-branded credit card back in the day or how about our Motley Fool venture capital funds today? All of these things were things we tried at different points. Some stuck, some didn't. I did stand down from my stock-picking two years ago, which every Fool and any listener of this podcast would know, and I hope remember, but Rule Breaker Investing is alive and well at the Fool. Now Mark, all the stocks went down in 2022, mine along with them, you know I wasn't picking stocks. I was getting cut in half like everybody else.
But 2023 has been a comeback year, and beyond just comebacks, there are some new things that I want to make sure you notice in and around Fooldom as I close my answer to you. In particular, Mark, I think our team has done a fantastic job with the online site this year, particularly the individual stock pages that so many of us use to research the recommended stocks. Those are not just replete with information which by the way, includes every original stock report. You can go right in and see my original Netflix right up back in 2004 or my Nvidia write up 2005, Amazon 2002. Those are all right up there but very findable these days for anyone to read and enjoy. But I would also say the interface has got pretty clean, the number is pleasingly laid out.
I don't think you've ever seen a more handsome set of features making up our advisory services. While we can't put a name on that, like Chris Hill or David Gardner, we can point to some real ongoing improvements I think in member and site experience, maybe not as glamorous here in 2023, but versus the pre-COVID days, I hope anyone who's either a member or considering becoming one, and we'd love to have you, I hope you'll take a look and appreciate the usability standard and the site as it is today. I actually do like our new discussion boards, and I think our marketing keeps improving as well. Anyway, ultimately, dear listener, and Mark included, we're going to sink or swim based on the experience that you have. I hope yours is good enough. I hope despite the loss of our favorite person or favorite feature, that our company, the Motley Fool, will live up to our cradle and make you smarter, happier, and richer. If you don't find that you're doing better with us than without us, I would be the first to say we're not worthy of your precious time on this Earth, but I hope we are. Please know that 500 plus Fools are working everyday from around the world to make your investing life better. We hope we're worthy of your attention. Mark, thank you for writing, and Fool on.
Rule Breaker Investing Mailbag Item number 3. This one from Eric Ryman. Thank you, Eric. "Hey, David. Although I'm young on my investing journey, 22 years old," Good on you Eric. "I've been using the Motley Fool and Rule Breakers for years. I want to thank you for the great work you've been putting together to help young investors like me. I have a question for you. As a Minnesotan and a fellow Twins fan, with the Major League Baseball Playoffs right around the corner, would you buy, sell, or hold on the Twins breaking their 18-game playoff losing streak [LAUGHTER] this year? I have to say," Eric says, "that I would buy due to the strength of their starting rotation. But then again I buy on this idea every year. Fool on. Eric Ryman." Thank you for a moment of baseball and some levity, Eric. I want to say a few things, but only a few things because not a lot of people necessarily listen to this podcast for my baseball thoughts. But you do, so let's do it. The Minnesota Twins baseball team has a record of futility unparalleled in American sports history across the major sports of baseball, football, basketball and hockey, the biggest revenue sports here in the US, at least, traditionally. Minnesota in the postseason, my Twins, Eric, your Twins have lost 18 consecutive playoff games, many of them to the Yankees, who by the way, won't be in the playoffs this year, but not all to the Yankees. This was done since 2004, a 19-year period. Of course, many years the Twins don't make the playoffs at all. But every year that they do, I and perhaps you and some others listening, Eric, watch every postseason game. Which means if you're like me and maybe you are fellow beleaguered Twins fan, you have literally watched 18 games over the last 19 years, about 3 hours a game.
You've put in 54 or so hours watching your team lose every single game. That is truly remarkable, even assuming that the Twins were an underdog in the majority of them. In fact, let's just say they had a 40% chance to win each of those games. Sometimes they were playing the Yankees, maybe it was more like 70/30, but I'm going to go with 40% chance which underrates the Twins because sometimes they were a favorite and still lost. But let's just give them a 40% success rate. What does it take? What are the percentage chances of losing 18 consecutive chances at a 40% success rate? The answer is 0.00387. I won't keep going with the decimals. Basically about 1/3 of 1%. One in 300 times that will happen. The odds of that happening in the one lifetime I'm leading, not the other 299 that maybe I've had or hope to have one day. But the one that we're living in right now, we're experiencing that. This has never been done by any other team in any other major American sport. Your question, Eric, is what are the odds here that the Twins finally win a game when they appear in the playoffs next week? I'm going to say better than average. I do like the starting rotation when you're only playing a three game series. In baseball, that means you have three starting pitchers, maybe only two that you'll be trotting out. The Twins have front loaded with some of the best pitchers in the American League as their starters. That bodes well also, all of these games will be played at home Target Field in the Twin Cities, that bodes well. So I'm going to say the twins have a 55% chance of winning each of these games. Since we're playing the odds this week, the odds of not winning one of the first two games, when you have a 55% chance, is about one in five.
In other words, four times in five. In my mind, straight math here, Eric, four times in five, the Twins win at least one game. I'm going to predict finally, that next week, the greatest postseason futility mark in American sports history ends. I'm glad you asked. Before I move on to Rule Breaker Investing Mailbag Item number 4, I guess I would just want to add that the Twins also have three great rookies that have really carried the team this year. Ironically, because they're paying some other veterans a lot more money then these rookies are making. But the rookies are carrying the team. Royce Lewis, the third baseman who's presently unhealthy but should be back for the playoffs. Royce Lewis has set a remarkable mark. He has four grand slams this season. Just to put that achievement in proper perspective, Lewis has four grand slams this year in only 217 at bats. No one in the history of professional baseball ever that goes back a couple of centuries, no one had ever had that many grand slams in a season in fewer than 450 at bats. He did it in an 18 game stretch. That's pretty magical too. But let's move on. Rule Breaker Mailbag Item number 4. Now this one is from Dave Geck, and long time listeners, and regular listeners of our Mailbags, and we've done dozens and dozens of Mailbags over the years, may recognize the name Dave Geck. Because Dave is one of my favorite storytellers and he writes in occasionally and they're always worth reading. This one is too. They may or may not directly pertain to investing, sometimes they're about business or life. But all three are welcome on this show.
Dave, I really enjoyed this note from you. You dropped it right near the end of August after I've done my August Mailbag. But I saved it because this is the latest Dave Geck gem. I assume others enjoy this as much as I do some, maybe even more so, but I really enjoyed this note and I'm going to share it as number 4. This is probably Dave's fourth or fifth story he's told on this podcast through me over the years, all credit to him, a delight to share this. Let's go Dave. Every year I groan when authors in August rolls around, but then I find the podcast to be entertaining and or educational. I reserve my right to roll my eyes. My fellow Dave says here, and hold my nose, but keep them coming, but don't disappoint. Now Dave wrote me reflecting on the Jordan Ellenberg Math podcast previously, adduced.
Here's Dave's story. This one reminded me of my best friend, eighth grade through junior year of school, inclusive. He was the best in Math that I ever met. I, myself, was no slouch. At the start of our sophomore year for our first geometry test, one of our classmates asked if he could borrow a pencil. The teacher said no, that people need to come prepared to her class. He then asked if he could use a pen, and she said fine. But if this student scratched out anything to there because she would not accept the work. Well, my talented Math friend and I both looked at each other, and at that moment, we put down our pencils and we did that test and all others in class that year in pen. About halfway through the year, I made a mistake. It was my only one, but it was one more than him. I also scored a perfect 36 in Math on the ACT test for college admission, and a perfect 800 on the GRE, the graduate record exam for grad school. It's like the SAT taken by many in high school for college admission. Dave goes on, I also took 22 hours of math my first year at West Point.
Mandated, two years of math compressed into one year, and yet this elementary school friend of mine made me look dumb. He went to summer school after our junior year to take government so he could graduate. My senior year, he was off to college. By the time I graduated from West 0.5 years after my junior year in college, he got his undergraduate degree from our hometown university where he taught all of his math classes. Got his master's degree from Rice University, the best university in Texas, Dave asserts, and also his doctorate degree also from Rice. I saw him once after I graduated. He was working as the stickman on a survey crew. I asked him why, and he said it paid enough to meet his expenses and he did not have to think at all so he could work math issues out in his mind. It wasn't until years later that I admired that at age 21 he was doing what he wanted to do. I need to see if I can find him again. Signed Dave Geck. Well, the first thing I did after reading that story is, I don't exactly know what a stick man on a survey crew is. Now maybe you, dear listener do, but in case you're like me, the stickman on a surveying crew is there holding a rod which is used to measure differences in elevation.
That's one of the things surveying crews do. The stickman is holding the stick, the rod, he holds it vertically so that accurate measurements can be taken. In fact, it's crucial that the rod is held straight and steady for precise readings. He might even read the rod himself in some cases and probably your genius friend did. That's what a stickman on a surveying crew does. Why do I like that story so much? Well, first of all, it's a story about math and it fits so well with how not to be wrong, The power of mathematical thinking, Jordan Ellenberg's book, and the topic of course, of one of our authors in August podcasts. But I love the competition. I love that the teacher wouldn't let you borrow a pencil because you didn't bring one to class and then you have to use a pen and then Dave and his mathematical genius friend who didn't even ask that question, just use pens for the rest of the year. But I think what's most admirable about the story, of course, the hero of the story, the stick man, the guy who at a young age knew what he really loved and it wasn't his job. He took a simple job so that he could do what he really loved, which is math in his head, which he's probably still doing somewhere to this day. Maybe he even appeared somewhere in Jordan Ellenberg's book. Anyway, Dave, a lovely story. Thank you for writing in and Fool on my friend. Onto Mailbag Item number 5. My gosh, this one also written to me, Dave, by another, Dave. In this case, David Ashcraft. Hello, David. I'm a motley Fool client.
I've enjoyed the print and video content over the years. I'm late to the game of podcasting, but due to a recent purchase of earbuds, I now enjoy listening to Morgan Housel and Rule Breaker Investing on my daily walks. I'm a fan of Arthur C. Brooks after reading his book, From Strength To Strength, and I look forward to reading his new book as well. I really enjoyed the podcast with Arthur, but I was surprised that the topic of his free online course from Harvard, entitled Managing Happiness was not mentioned. The course includes both video content as well as readings, and I would highly recommend it to your listeners. Just Google Managing Happiness and Arthur's name and you'll find the course on the Edx platform and I can confirm having play-tested this myself, David Ashcraft. Simply Google managing happiness and right away you'll find what you're referring to. David goes on. Finally, my wife and I just watched the Netflix series on the Blue Zones featuring Dan Buettner. There are quite a few overlaps between Arthur's work on happiness and Dan's work on longevity. Perhaps Dan might be a great guest to have on your podcast. Thanks for making me smarter, happier, and richer. In appreciation, he signs it another David. He did enclose a second email, a quick follow-up note, and I'll just add this. He said he wanted to add a bit to his prior message since he just finished Arthur's wonderful online class himself. He discovered there is a newer version which you can find at scienceofhappier.com. That one is $100 the previous one is free.
But David Ashcraft goes on to say, "That $100 might be the best investment any of your listeners might make other than buying Amazon at $3.21 a share. We have an international flight upcoming," David ends. "I'm saving Arthur's new book for the long plane ride in two weeks. Best wishes," David Ashcraft. Well, any time I have brilliant authors as I featured all throughout August, there's never really enough time to ask or talk about everything, all the things. Some of the podcasts I did run past an hour, which I generally try not to do on this podcast. Although I'm never particularly time sensitive, I don't think I've ever gotten a mail-back item saying this podcast is too long, or sometimes even this podcast is too short. I think you can see the duration and make your decisions from one week to the next, dear listener. Of course, I love the people who subscribe. By the way, you couldn't subscribe to this podcast on Apple podcasts or Spotify, wherever you find your favorite podcast. Subscribe to us too. That'd be great. But, so I didn't get to ask Arthur about his online course, but you did a great job filling it in, which is the purpose of the Mailbag, David. We get to hear back from those listening who share their wisdom and we all get even smarter than I could have made you in a single week with a single author. I'm glad that you pointed that out. I'm sure a lot of fellow Fools will take a look at that and become not just smarter and richer, but in this case, happier as a consequence of experiencing Arthur, teaching happiness.
David, thank you very much for writing in. Since I'm also David and you're David, and our last Mailbag item came from David, and you even signed it, another David, David Ashcraft. It reminds me to do my once every few years, brief reading of Dr. Seuss's poem. Too many Daves. It's that time of the every few years. Again, too many Daves by Theodore Geisel. Did I ever tell you that Mrs. Cave had 23 sons and she named them all, Dave? Well, she did. That wasn't a smart thing to do. You see when she wants one and calls out, "Yoo-Hoo, come into the house, Dave." She doesn't get one. All 23 Daves of hers come on the run. This makes things quite difficult at the McCaves as you can imagine with so many Daves. Often she wishes that when they were born she'd named one of them Bodkin Van Horn and one of them Hoos-Foos, and one of them Snimm and one of them Hot-Shot and one Sunny Jim and one of them Shadrach and one of them Blinkey and one of them Stuffy and one of them Stinkey, another one Putt-Putt, another one Moon Face, another one Marvin O'Gravel Balloon Face and one of them Ziggy and one Soggy Muff, one Buffalo Bill and one Buffalo Buff and one of them Sneepy and one Weep Weed and one Paris Garters and one Harris Tweed and one of them Sir Michael Carmichael Zutt and one of them Oliver Boliver Butt and one of them Zanzibar Buck-Buck McFate.
But she didn't do it and now it's too late. Onto Rule Breaker Mailbag Item number 6. This from Eric Head, writing in from Knoxville, Tennessee. Thank you for this, Eric. David this email will ensure you have at least one outside email that discuss on your next Mailbag episode, he includes a smiley emoji there. Your mention of Jordan Ellenburg and how his talents extend beyond the math field, remind me of another famous individual you're well acquainted with, Mr. Alan Greenspan. We all know him for his time as Fed chair, but few know he is a talented musician, played clarinet and saxophone well enough to study at Julliard, as well as perform with the Henry Jerome Band. Not exactly the image we equate with the man responsible for the phrase irrational exuberance and I'm going to pause it there just to add that Arthur Brooks, our guest earlier this month, also of course, a professional French horns. So yes, there's a lot of multi talent that often runs through some of the greats that we get to know over time and certainly Greenspan is, I think, one of the great and memorable fed chairs, not just of our lifetime, but in American history, and a talented musician, as you're pointing out, Eric. Now, before you leave Eric, you point out one other thing in your note, which I will also share. Also just a note Eric writes to say, you interchanged James Garfield and James Buchanan multiple times in your discussion regarding how people are remembered by history, comparing Buchanan to Thaddeus Stevens.
This was all, of course, in my American Ramble authors in August with Neil King Junior, which was such a delight and we're talking here about American Presidents, both James Garfield and James Buchanan, but unbeknownst to me, and this is why I love having articulate, observant, caring listeners like Eric writing unbeknownst to me, I was interchanging James Garfield and James Buchanan, as Eric says multiple times during that interview, Eric gives me a little bit of head room here, he gives me an excuse. With his final line, he says, I attribute this conflation to your love of another author previously interviewed, Candace Lard and her study of James Garfield in Destiny of the Republic. Enjoy your podcast as usual Eric Head. Well, thank you for that, Eric and what is very clear now is that there aren't just too many Daves in this world for me anyway, apparently there are too many James, because I'm embarrassed to think that I was inter changing Garfield and Buchanan, one of whom is extremely admirable and the other of whom not so much.
Let's talk about him briefly first, James Buchanan was the 15th President of the United States. He served 1857-1861 prior to his presidency, Buchanan held various political roles, including Secretary of State and Ambassador to the United Kingdom. But his tenure as President often criticized for his inability to prevent the nation's slide into the civil war. That is James Buchanan. James A. Garfield was the 20th President of the United States, serving in 1881. Yeah. Just one year, because later that same year, he was assassinated. He was a distinguished civil war general, a long serving member of the US House of Representatives from Great State of Ohio. Garfield's presidency was cut short after just 199 days when he was fatally shot by a disgruntled office seeker and their story is told in Candace Mallard's fantastic book, Destiny of the Republic. I did some further research here, Eric.
How many US presidents had the first name James? Quick quiz. Anyone? Well, the answer is six and if you can rattle all six of them off right now to impress those around you, maybe in the car or jogging past you. If right now you could rattle off all six US Presidents who had the first name James, I'm going to give you six seconds of quiet to do so, and maybe you didn't get all six, but let's go through them quickly in order here. James Madison, the fourth President of the United States, right after him, James Monroe. Does anybody ever confuse those two guys? James K. Polk, the 11th President of the United States, James Buchanan, we just covered him. James Garfield, we just covered him and James, well, he's often called Jimmy, but James Carter, the 39th President of the United States, That by the way, makes James the most common first name for US Presidents, too many James's. But maybe that all just sounds like a really long excuse. Thanks for writing in Eric. Onto our final Mailbag item, Rule Breaker Investing Mailbag Item number 7. This is my review of a five stock sampler picked three years ago this month. I mentioned earlier in this month, I'd be doing this as part of this podcast.
This is not an actual Mailbag item, it's just an excuse for me to tuck in right at the end, a review of five stocks indistinguishable from magic. I first picked these stocks on this podcast on September 2 of 2020, which means when the three years elapsed and that was September 1st, which was a Friday, this year of 2023, the three-year game was over. I took down those numbers. But since I just had one to review, and in years past I've had multiple ones to review, I realized it's not worth a whole podcast just to review those. Let's make it a Mailbag item and that's exactly what I'm doing right now. So the phrase, indistinguishable from magic to some of you, you know it right away, you recognize it's the British science fiction writer, Arthur C. Clarke, the futurist. He actually had three laws, but the most famous of his laws, the best known, most quoted, is this one, "Any sufficiently advanced technology is indistinguishable from magic." That was actually his third law for the fun of it. Before we get to stocks, let's go over his first two. You're probably curious if you didn't know, what were Arthur Clarke's three laws adages of his that he used throughout his career is he thought about the future. Number 1, when a distinguished, but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong. That is Arthur C. Clarke's First law. His second, the only way of discovering the limits of the possible is to venture a little way past them into the impossible.
And of course, Number 3, any sufficiently advanced technology is indistinguishable from magic. Well, as I said on that podcast three years ago, when I thought, what were five stocks in the Motley Fool universe, among my recommendations, what were five stocks I wanted to identify as indistinguishable from magic. Focusing, of course on companies that are so high-tech, so bleeding edge that what they're doing could almost just be magic. I was saying three years ago. Have you ever tried to explain, let's say, the streaming TV show Vikings? Have you ever tried to explain that to an actual Viking of 1,000 years ago? That wouldn't be very easy, how much it's explaining the internet to a Viking? That would be a fascinating conversation, but that's what it's like explaining some of these companies businesses, to you and to me back then in 2020 and I would still say it's true of them today. So five stocks indistinguishable from magic. Now when we do review a pluses of which this is one, we always lead off with, how did the market do in these three years? The stock market as measured by the S&P 500 was up 26% from September 2nd, 2020. Right there first COVID fall right through to the start of the meteorological fall of this year, 9/1/.
2023, the S&P up 26 percent, not bad. That's the bogie that each of these five stocks indistinguishable from magic, is competing against. Let's always, as we do traditionally, let's start with the worst of those performers. I'm very sorry to say that back in early September of 2020, I took a shine to Pegasystems ticker symbol, PEGA. The artificial intelligence company started by a chess master, a genius named Alan Trefler. Now, Pegasystems has been a good performer for the Motley Fool, most of its recommendation in life. I first picked this stock and have held it consistently in Motley Fool Stock Advisor back in October of 2011. In fact, it's October 21st, 2011. I'm looking through our beautiful interface on the Motley Fool premium website to find that data. It's up 120 percent since then, which doesn't sound bad over 12 years. The problem is, it is bad because the S&P 500 over 12 years is actually up 260 percent. It's well down to the market overall. Remarkably, just two years ago, Pegasystems was up 700 percent. It was an eight bagger and a fantastic company, but as it turns out, Pegasystems has had a real problem migrating to the Cloud. It was a software company, a vintage company, that of course started with licenses and sold licenses, and hoped you might renew or buy the new edition from one year to the next, but like a lot of software companies, it made a shift to the Cloud and became a fully subscription, mostly subscription business some years ago. After most of that migration has happened, we're left with a company that is today unprofitable. This is a more mature company, you'd expect it to be profitable. Pegasystems is unprofitable today, and even slightly worse, its sales are declining.
Not a good situation when you're not profitable and your sales are declining. Understandably, the stock has gotten whacked. Its performance for this five stock sampler over the three years, down 62 percent. That's not good at all, but especially when the market's up 26 percent, that puts us 88 points of alpha, negative alpha in this case, in the whole. That is the worst performer of five stocks, indistinguishable from magic. If you want to listen back to me talk more at length about what the magic is of each of these companies, please just listen to that podcast three years ago, you'll hear my base case for each in more detail. Let's move from my worst performer in this five stock sampler to our best. I'm really happy to say that same week I took a shine to Pegasystems, I also took a shine to NVIDIA ticker symbol, NVDA. You know, a lot of people pronounce it NIVIDIA. I hear people casually, even shareholders at a cocktail party, they'll say, "I own NIVIDIA, I got it through you guys, thanks", and I'm too shy to tell them it's not NIVIDIA, it's NVIDIA. But anyway, NVIDIA, ticker symbol NVDA, is up over that three year period, up from $143 a share to 485 as the market closed on September 1st of this year. That is a stock up 238 percentage points, more than a triple, which easily outpaces the market's 26 percent. In fact, give us a plus 212 in the win column. I'm going to say a little bit more about NVIDIA in a minute. But let me just mention the other three companies, all of which are somewhere in between those. Some are down and ones up, and they're all also rans in the context of a plus 212 and a -88, but the other three companies ASML Holding, which is the Dutch semiconductor design firm, a fantastic company, happy to say it's up 66 perecent, so that's a plus 40 over the market. But then I have two losers, Repligen, RGEN. Repligen is actually up 13 percent over the last three years. The problem is the market's up 26, so that's a minus 13, and the last one, a minus 53 in the lost column. I'm sorry to say, that SolarEdge Technologies, maker of solar panel converters, the company's down 26.5 percent since I picked it three years ago against the market's, up 26. Those three give you a plus 40, a minus 13 and a minus 53.
Take it all in all, this five stock sampler graduates and finishes, ascends Rick Engdahl to Fool-halla with the following numbers. The stock market up 26.1 percent. These five stocks all over the map average a gain of 45.7 percent. That's through some very brutal market years. I'm pretty proud that five stocks indistinguishable from magic beats the market by 19.6 percent each, on average and that one closes out a winner. Let me close this Mailbag item and this look at this five stock sampler with two concluding thoughts. The first is about NVIDIA. What a fantastic company and stock this has been. I first picked NVIDIA, check it, April Fool's Day 2005. The stock is up 25,766 percent since, through all kinds of volatility. A 258 bagger, one of three 200 baggers I've delivered at this point in time to Motley Fool members over the course of history. NVIDIA, as part of this sampler, we have a much longer history of course, and a much lower cost basis with it at the Motley Fool and stock advisor, But for this three years of this five stock sampler, what a crazy three years. Of course you had COVID, so starting in September of 2020, the stock would rise 150 percent by the following December, Christmas 2021, a huge win.
Over the course of the year after that, it gave all of those gains back, and actually briefly declined below a zero percent return into the negatives as of December of just last year. But somewhere around the end of last year, ChatGPT, Generative AI began to make a big impression on people and big companies like Microsoft and Amazon and Meta Platforms, and Oracle started putting down big orders for NVIDIA's chips and its ability to increase and accelerate artificial intelligence. NVIDIA just this year, in its first two years, relatively flat for this five stock sampler. Just this year alone, from 150 to where it closed earlier this month at 485. A huge triple plus, which by the way, this sampler needed so thank you very much NVIDIA. Thank you Jensen Huang, one of the truly great, truly underrated, non-household-named CEOs of our time. What a fantastic leader and company doing such important things in this world. NVIDIA as we sit, has a $1 trillion market cap, it's in that club. Of course, when I picked it just three years ago, it was closer to 300 billion, not 1 trillion.
Those are the benefits, dear Fools, of finding stocks indistinguishable from magic. As I said, I had two concluding points. That was the first, a pean, if you will, to NVIDIA. But my final closing point is that when you look for things distinguishable from magic, when you think not just about high tech, but about high high tech, I think it's worth reflecting on this. As I look over these five companies, I notice that their performance from NVIDIA's 238 percent gain to Pegasystems, 62 percent loss, these five companies pretty much line up by market cap as well as performance. In other words, the biggest cap company of all, NVIDIA, started with about a $300 billion market cap, really big, even back then, that one did best of all. The smallest cap company at the time, Pegasystems did the worst of all. The others line up in between in the middle, which means, I think the big cap companies, the big capers, probably have the resources necessary truly to work magic in our society today and in business. I think it's a little bit of a warning the next time a friend of yours tells you they have this amazing stock, it's probably a penny stock, that you should find out about this really cool new technology. One of the first things you should do is find out what the market cap of that company is. If we're really talking about technology indistinguishable from magic, my thought dear Fools is, they better have serious resources to deploy that magic. They're much more likely to succeed if they do. They're much less likely to succeed if they don't. This is a little bit of self learning I'm doing as a consequence of five stocks indistinguishable from magic. There you go. That's a Mailbag. That's a podcast. Looking forward to Ed Brooks joining with us next week. An open ended conversation of relevance to you and me and all human beings, does character always win? Have a great week. Fool on.
