Motley Fool Co-Founder David Gardner Digs Into the "Rule Breakers Investing" Mailbag

Do you own shares of the so-called "Magnificent Seven" stocks? Do you remember FAANG stocks? Do these arbitrary groupings matter? It's time again for the Rule Breakers Investing mailbag.

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This video was recorded on Jan. 31, 2024.

David Gardner: Parkinson's Law, we've talked about this before on Rule Breaker Investing. Do you remember it? Parkinson's Law dictates in so many words that work will expand to fill the space that we give it. One of the stock standard corollaries of Parkinson's Law. One of the secondary effects is, well, let's put it this way, I've always loved this one. If you wait till the last minute to do your work, your work will only take you one minute. I particularly like the stock standard corollary to Parkinson's Law this month, which has been a very busy one. I bet for you to it's the end of January 2024, Happy New Year. May I be the last to say that to you? Let's get started with your January 2024 mailbag only on this week's Rule Breaker Investing.

Well, this podcast will not just take one minute, but I did put off preparation feeling very busy this week, most mail bags, I try to be pretty composed. Often I'll invite on guests to help answer some of your good questions. I don't know how busy my producer, Rick Engdahl, was this past week, but I know I was busy. I bet he was busy too. In fact, if you ask anybody in January if they're busy, nobody's not going to say they're busy. Everyone is busy and so this is going to be a little bit more of a slap dash approach to your mailbag. Not as composed with my answers, not as polished raw. We're going to take it one at a time. I've got seven points in this January. Mailbag, I have one Twitter hot take to lead off with. But just remember, I put off preparation for this podcast to the last minute. It only took me one minute to prepare. Let's get started. One hot take from Twitter. Thank you Mark Ducas at M-D-U-K-A-S on Twitter. Yes, I still call it that. Hi, David. I really loved the Calculating Risk Foolishly Podcast. I wanted to pitch you this question. Better world? Is this company doing something that makes the world better, ie for Mark, he says, Axon. Yes. Monster Energy drinks. No. Writes Mark. Just my opinion. Well, let me say, I love the idea, Mark the 25 point risk scale that we featured last week, where we simply ask with my talented advisors last week, yes or no.

Going through 25 points as we analyze stocks, trying to figure out the risk of holding that stock over a long period of time. Something not many people have tried. I don't think I loved doing that for you and with my team of Andy and Emily, and you can never fit everything into a single framework. We had 25 questions, one of them though was not, is this company doing something that makes the world better? But I love that question. Mark, and I do agree that when you can say yes, it's probably a less risky stock than if you were saying no. I think any framework I ever share with you through this podcast is there for you to pick it up. It's like Legos. You can pick them up on the floor and arrange and build your own thing. It's like a set of tools I'm giving you. You can take whatever you want and use for your own toolbox, you can improve on what I'm doing. I think that's an excellent suggestion Mark, and I like it very much your better world question. Admittedly, I haven't spent a lot of time on Twitter this month, so that's what we saw. Thank you. There were others out there, but let's get to the Rule Breaker Investing mail bag again, seven points this month. Now, before we do get started, I did mention last month that this right now what you're hearing is our 99th consecutive mailbag.

Last month I started to wonder aloud, it's going to be 100 for February, should we do something special. I think in some ways, I got more mail than I was expecting, suggesting how to do that or what we might do. I'll be featuring one or two takes here, but this is my way of saying thank you for thinking I do two, that 100 consecutive monthly mail bags is special, probably deserves something a little bit more special than just a typical mail bag like this one. We're thinking about that and planning for next month. We'll just say this is an ordinary slap dash mailbag. Next month, will be a little bit special. Let's get to now Rule Breaker, mailbag item number 1 for January and this comes from long time correspondent, Dave Gek. Dave dropped me this note. He's reacting to the magnificent seven. Now that's a phrase, died in the wool stock market investors will probably recognize right away. It's not one I use and I'll explain why in a sec, but it's one of those popular catch phrases to quickly capture several winning stocks and say how many of the Magnificent 7 do you own? Well, Dave Gek is thinking about the Magnificent 7 as he drops me this note. Now, an earlier version of the media hype around the so called Magnificent 7. Anybody remember this? The fang stocks, it was like Facebook, Amazon, Apple, maybe Netflix, Google, and popular TV personalities. Other people were picking this up and everybody was talking about fang stocks. This is 5, 6, 7 years ago. At the time of this podcast I was saying this, which I'm about to do from the Magnificent 7 I was saying.

Well, it's all very well to have cute phrasing around a small bundle of stocks, or think about those stocks themselves. But I think the real test of investors is not how many of the stocks you might know or own, although good on you if you have, but rather how long you have held those stocks. For the fang stocks, I started asking a new question. I'm not sure the media ever picked up on this. I think it may just be a thing in this podcast, but my question was, what is your fang score? Your fang score is simply adding up the number of years you've held each of those positions in those particular stocks. Since Dave Gek has a long time corresponded a treasured one here on this podcast. He, obviously, had this on his mind. He wrote me this note looking at the time Dave wrote, I have held these Magnificent 7 stocks. I find it adds up to 77 years. In actuality, I know it's more because for example, Netflix, I know I bought this before my oldest current holding shows, but I sold off my original shares over the years. I've never sold out of Netflix, but have trimmed to buy something else, but still have more shares than my original purchase. We'll just end it right there for Dave's note. Well, thank you for that, Dave, because you've given me a brief platform to talk about the concept, again, of not the Magnificent seven or the fangs stocks, but your Magnificent 7 score add up the number of years you've held the seven stocks. Now, let's be clear on what those stocks are. A lot of people might have heard the phrase, but you might be wondering, well, what is in the so called Magnificent 7? Which I'm not even sure who came up with that.

But it starts getting picked up by the media and everyone starts talking about those seven. The seven, are these alphabetical by company name, alphabet? Google, of course, Amazon.com, Apple, Meta Platforms, the former Facebook, Microsoft, NVIDIA and Tesla, grouped together since I don't know, maybe the stock market started making a comeback around a year ago, this month. These are all companies that I admire. I'm about to give you for the fun of it, my own magnificent seven score. But whether you have an enviable one like Dave Gek's, 77 years of combined ownership of those stocks, or you're just starting out as an investor and you're at zero right now, doesn't matter so much to me because it's all in the past. What really matters is what you do, what you choose, how you invest going forward and while it's fancy to talk about looking backwards, what's really won, and of course, I cared deeply about that because I've been picking stocks all the way through. Let's be clear, it's not about chasing yesterday's returns or trying to hit on the hot group of the latest stocks. People are no longer talking about fang, and in a few years people won't be talking about the Magnificent Seven anymore. But what I want you, dear fool, to talk about is your score. The number of years you've held these stocks and alphabetically here's what I got for you for stock picking that I've done at the Motley Fool since we launched the Motley Fool.

The first one I bought was Alphabet 2008. Amazon, fortunately, I picked that one back in 1997 in the original Fool port, added it to Motley Fool stock advisor, but that's 27 years from 1997. Third, Apple 2008. You know I'm 57 years old. You might be older than I am, in which case you may have owned it much longer. You might be younger than I am and still owned it much longer. I didn't really cotton to Apple until 2008. It was a year after the iPhone had debuted and I'm finally like, I think this is a good company and recommended the stock 2008, so that's 16 years there. Let me see, so far we're up to 59 years. Next one up, Meta platforms, that's Facebook. It came public in 2012. I recommended it for Rule Breakers in 2012, we're still holding, it's changed its names, but that's another 12 years we're up to 71. Microsoft, I've still never recommended it. I love my Xbox. I admire this company and Satya Nadella is one of the great living CEOs, and yet I give myself a zero. There were decades there where I was glad I never did recommend or own Microsoft. It underperformed in the Ballmer era quite dramatically, but I've just never been that interested in the big beast from rent in Washington. But I do admire the company greatly. Give myself a zero.

We're still at 71. As we go to the last two, NVIDIA, which I recommended in stock advisor in 2005, we're still holding. It's been a fantastic 19 years. That takes us to 90 and Tesla. Well, Elon Musk came to full HQ in November, I think it was actually October of 2011 and in November of 2011 I picked it for Rule Breakers. We're still holding there, so tech 13 years on top as well. So my Motley Fool Magnificent Seven score is 103. I'm not trying to compete with Dave Gek or anybody else. I'm very happy to note though that using Rule Breaker principles, I have consistently been able to find these companies. But it's one thing to find them, it's an entirely different thing to actually hold them and so the measure of your Magnificent Seven score is all about your ability to find and hold the great companies of your time, hold them to a great value for you. The next time you hear somebody mention Magnificent Seven, I would encourage you to teach them about the Magnificent Seven score, share yours and ask them theirs, because to me that's the real measure of investing. All right.

On to Rule Breaker, mailbag item Number 2. This one from long time correspondent, Martin Triggs. Thank you Martin, for this. A general statement for January mailbag. He writes the besties of 2023, our Rule Breaker podcast in December was an excellent revisit of the best RBI podcasts of last year. Always good to hear from your very talented and enlightened guests once again, and I agree, Martin, it's such a delight when great authors and thinkers and actors come and join us for our year end extravaganza. The Besties I think I was letting on this direction. You may or may not agree. The Besties is often the best, one of the best podcasts we do every year. Martin goes on instructing the Ignorant, "Is one of the seven spiritual works of mercy. Learning from these top thought leaders fills our minds with spiritual and intellectual truth and wisdom. I do hope Arthur Brooks is right with his prediction that 2024 will be a better year for most Americans and that we've hit peak crazy in politics. Let's hope so." But Martin writes, I don't think we have. But I do hope temperatures will fall among people and that we truly do love our enemies as Arthur Brooks once wrote in a book, thank you for your work. Best wishes to you all Americans and all Rule Breaker, fellow listeners everywhere this important year. That's Martin Triggs. Martin, I believe, writing in from Japan as an ex-patriot. Great to hear from you again, Martin and hope springs eternal.

We're here at the start of a new year. It's been pointed out that there are more important elections. We're not just talking about one country across the world this year than any other in history. On the one hand, that creates a lot of anxiety and angst as we wonder who's going to win all these elections and how will the world change. On the other hand, it's nice to know that there are that many elections that happen in a given year at this stage of human development, so with Arthur, I'm bullish on 2024 and talking about the stock market. Anybody who's listened to this podcast for more than a year or so knows that I think the market's going up this year. Martin Triggs, best wishes to you. Happy New Year. All right. Onto Rule Breaker, mailbag item Number 3. Hi, David, Rick, and everyone at the Fool writes Jom. I hope you've been to the office and received brownies, a treat I sent you all from Greyston Bakery and yes, I did Jom, that was so generous. Jom, one of our long time listeners who's a big Fool Foundation fan and sent from Greyston Bakery. I interviewed the CEO of that wonderful for profit operation some months ago on this podcast, Joe Kenner and obviously you were listening Jom, and you recognized the great work, the remarkable way that they hire at Greyston Bakery and the brownies that result from that and you shared it out, and it was my delight to open that up to Fool HQ recently so anybody could grab a Brownie. Thanks to you. Thank you so much for being a superstar listener and foolish friend. Jom goes on, it's a way for me to say happy holidays and spread joy to everyone at the Fool. This year has been quite a good year. Reflecting back on 2023 for the stock market.

You were right. Jom said you said the market's going up this year. I'm very grateful for being your listener for the past eight years, and being able to stick to the Foolish investing mindset, listening to the Fool throughout the years, this is what I consistently hear and she basically bullets out six points and if you want to stop listening to the podcast this week, after what I'm about to share, you will have gotten a lot of value. Because Jom brilliantly recounts the key framework points for anybody, especially new listeners here in a new year. If you want to understand what Rule Breaker investing and Foolish investing is all about, here we go, she says, and this is what she's learned over the years. One, you can invest in quality individual companies and beat the market. Two, long term mindset. Three, diversify your portfolio even have a portion of it in an index fund. Four, stay invested, don't panic and sell during the market downturn, just keep swimming. Number 5, be a rule breaker. Sometimes going against conventional wisdom isn't a bad thing, and number 6, all of the above is made possible by not investing the money you need in the next 3-5 years in the stock market. Well, that is an excellent praise, a summary of what we stand for at the Motley Fool, and especially me with my rule breaking ways. Jom goes on, my portfolio continues to do very well today. I can't say it felt great when my portfolio, one point, dropped to the tune of the value of a nice house, but with a foolish mindset, I didn't panic and sell any shares. I kept my company's jerseys on and bought more shares of my winners at a lower price. I also didn't sell the losers because I believe that if I held a quality company, there may be a chance for a turnaround or even a buy out. More importantly, my portfolio Jom continues is very diversified, which means I can afford to have losers without hurting the overall portfolio.

I also let my winners run high. Funny story, she closes, my financial advisor told me to sell NVIDIA shares when they'd risen 200%. He said, you already doubled your money, get out, I respectfully told him that of all the companies in my portfolio, NVIDIA has my highest conviction so no thank you. Had I followed his advice, she goes on, I would have missed out on a 1,500% gain. The point is not to brag about how high the stock has risen. It's just a perfect example of how following a foolish mindset has worked for me. I wish you, your family, everybody listening a happy and healthy new year. Thank you for the Besties 2023 podcast. Looking forward to 2024 and more Foolishness. Forever a fool. My biggest fan, she signs always in quotes, Jom, Well I think that one spoke for itself and especially Jom. Thank you for that solid summary of the principles that I hope many people may be hearing for the first time, but increasingly make not just words but actions leading to real action to succeed over the most important term that counts, the only one that matters, that would be the long term. Onto rule breaker, mailbag Item number 4. This one from another long time correspondent, Jason Moore. Hi, David, I just wrapped up the December mailbag. What a phenomenal way to conclude another outstanding year of podcasts. The insight shared by your listeners underscored some pivotal points, offering a fitting wrap up to the year that has been 2023, and before I go on Jason with your note, I just want to pause there and say thank you for recognizing a major reason we do mailbags from one month to the next in a lot of ways what they enable us to do. First of all, I get to hear good points or challenges, or sometimes poems, stories from each of you, and how much has that enriched my life and this podcast lets me share someone's great story out to everybody else. We can all with Jefferson light our tapers, light our candles from one bright candle held by one bright fool. We can all listen and learn together and that is at the heart of the rule breaker investing podcast now in its ninth year. But it is that summarizing often of the pivotal points as you speak to Jason in your note, that's what Jom just did in my previous item. Just resummarizing what we stand for.

That's such a lovely rhythm for our mailbag so you go on. Mike Mcmahon's comments resonated with me. Jason writes, adding an extra layer of depth to the already nuanced topics you explore weekly, the mailbag episodes have consistently been a favorite of mine, providing a platform for interactive discussions with your audience and a chance to dive deeper into each subject. Now I'd like to propose an idea for your upcoming February Centennial spectacular. Having engaged with numerous fools over the past few years, Jason concludes, whether through mailbag submissions or on the ever tumultuous Twitter, which he also still prefers calling it Twitter, Jason says, I've consistently been impressed by the generosity of your listeners, by their wisdom, their humor, their intelligence. So I'd like to hear, hear, H-E-A-R, a conversation between you and a member, exploring a mailbag submission or that member's story. Thank you kindly and Fool on, concludes Jason Moore. Well Jason, thank you for that. Initially I was just whistling Dixie and having fun last month when I said it's going to be number 100 in February, but you have inspired me to think about how to make next month's mailbag different, better, special, and at the heart of what you just suggested, I hear interaction and I think we should do that. So I'm not going to say the exact plan for next month's mailbag, but I am going to hype it up a little bit on this month's mailbag and say it will be something special, I hope, and if it is, that will be because you made a great suggestion.

Jason Moore in rule breaker, mailbag item number 4. Thank you. By the way, talk to you next month. Onto rule breaker, investing mailbag point Number 5. This one from Jeff Brown, writing in from Blue Springs, Missouri. Now I've never been to Blue Springs, Missouri, but any time I hear an evocative town name, it has me scrambling to Wikipedia to understand a little bit about where we're writing in from and as I've talked about it over the years, approximately 1/4-1/5, 20-25 percent of those hearing me right now are outside the United States of America. The majority are US based citizens, but even most of you, I haven't been to your hometowns and I love hearing the stories. Jeff, you just wrote Blue Springs, Missouri at the bottom, but I went on to find out that the city's history is tied to the migration of settlers seeking their fortunes out west during the age of Manifest Destiny. Pioneers found the area to be an ideal stopover. It's in northwestern Missouri, I checked it.

Due to the abundance sure of clean water from the local spring, the presence of water and a need for supplies led to the construction of a grist mill, and a permanent settlement and that's how Blue Springs, Missouri got going. But that's really not germane to your point, you just signed Blue Springs, Missouri at the bottom, I thought it'd be fun to share. Jeff writes hi David. This is in response to the mailbag topic concerning the upcoming last review of Palusa. At first when I heard that I was a bit sad. I always look forward to the updates on the chosen companies, and I'm still in recovery for your decision to stop doing new ones. But then an excitement began building in anticipation of what we'll do to replace those slots. Now at first, I was running through your common topics. I was interested in hearing maybe more episodes of some of my favorites, like more authors, more life hacks, more stories, or highlighting individuals who have done exciting or grand things in their lives. But then the mind shifted to even more exciting new things, such as maybe an anti pet peeve episode highlighting things that you a guest loves about people, life, et cetera. I do enjoy the Pet peeves episodes, Jeff writes, including the humor and insight they can bring, but too many could bring things down a bit much. Maybe an episode highlighting some invention or improvement, or change in the world in the last couple of years that's having a wonderful impact on our lives. The possibilities are limitless. I'm looking forward to the exciting things this year will bring. Thank you for this podcast enriching many people's lives.

Jeff Brown from the afore mentioned Blue Springs, Missouri. Well, that sense of manifest destiny, Jeff, that propelled people through your hometown. I feel the same sense as we think about 2024 and sure, yes, this podcast. I won't say what special stuff we have in store because half of it, I don't know. We build this plane as we fly it. As I've often said about rule breaker investing, and this podcast over the years. But one thing I can share with you is my intent, I hinted at this end of last year to do a little bit more market cap game show. Maybe not too regular, but maybe a little bit more often. Let's hit up against the market cap game show. I started thinking, Jeff and my fools everywhere, I started thinking, March, March is a month of madness for various reasons that some of you will immediately gloak and others will be confused by what I'm saying. But I think it could also be a month of Market Cap Madness. So Jeff, let's see if that scratches an itch for you. It sure will for me as I started thinking. I'm still excited about February, and I'm looking forward to next month's mailbag, but then I'm looking forward to March Market Cap Madness. Onto Rule Breaker mailbag item number 6. This one from Andreas Ham. Thank you Andreas for writing in again. Andreas, definitely a German listener in a fun note about games and game designers, he wrote me this month talking about game designers putting their names on the front covers of their games. That's a topic we took up near the end of last year in the Games, Games, Games episode.

A clear sign of a change in the industry, and I would say the artistry being recognized now of game designers. By the way, like authors, are remarkable artists. But unlike authors, am I back up on my soapbox again? They were not given their names on the front cover of their creations until just very recently, just this last generation. Anyway, Andreas added toward the end of his note while he was bragging about his market cap game show score 8, which by the way, outscored both of my guest stars last month. But Andreas, you're also suggesting for the 100th mailbag. You wrote, why not have besties of Mailbag items scores, or ideas from your mailbag authors still relevant today. People and topics that have caused the most responses among your listeners which are worth sharing. Again, I think I got a lot of suggestions as I mentioned earlier because I actually asked for them, I said, what should we do for February? Well, I will take your ideas Andreas under advisement and mix that into our cauldron as we continue to brew up the February 2024, 100th mailbag. In Rule Breaker Investing history. Enough hype. Let's go to our final mailbag item, this one from Brandon Gerach. Thank you Brandon for taking the time to write and share this story. David, I had a recent experience at work. Brandon writes, that really speaks to the work of the Motley Fool Foundation. After years of being asked.

Brandon writes, the company that I work for is now offering a 401K plan to employees. It sounds like Brandon, that's something new. A lot of us take something like that for granted in our workplaces. Certainly, not everybody has that. But it sounds as if, I think in part, you were able to inspire the leaders of the company you work for to have a 401K plan for employees, which brings a smile to this foolish face. Let me keep going. Brandon, you said the informational meeting, we had led many of my co-workers to start to open up to me about personal finance. Brandon says, my co-workers are aware of my side job teaching personal finance to high school students online. Many therefore view me as a guru of anything investing. Or personal finance. I get multiple questions per week from people and the confusing in, "401K meeting we had really opened the floodgates." In a heartbreaking moment, one co-worker in her early 60s opened up that they don't have anything save for retirement.

They're so scared of retirement, she fears she will likely need to work until the day she dies. By the end of her story, we were both on the verge of tears. She told me that I'm in the wrong career. My career is quality assurance, writes Brandon, and that I need to be helping people with their finances. I'm told that there's a real hunger for financial education classes among my co-workers. I'm highly skeptical about the owners allowing me to offer classes at my company, but I'm willing to make a proposal if I think it has any chance of success. I'm intrigued by the Motley Fool Foundation's thoughts on this situation and I'm looking for some guidance before taking the next step. Foolishly signed Brandon Gerach, and I hope I pronounce your name right. Brandon. Well, I know separately, you reached out to our foundation and our talented executive director, who has been on the podcast many times before and will be in future. Jennifer Janaro Oxley, I think has gotten back in touch with you. Thank you for reaching out. It's a reminder, anybody who wants to reach out to the Motley Fool Foundation with ideas or support. We love that, foolfoundation.org is our email address. But what you did is really remarkable Brandon, you began to socialize the idea of money and investing for lots of adults that you work with in your workplace.

That's not even your job. Your job is Q&A and yet you're there helping educate them, and you're opening up conversations and thoughts that have probably been pent up for years. Probably unanswered questions, maybe in some cases unasked questions that came about because the leadership of your organization decided, yeah, we will offer a 401K plan. I think they deserve some congratulations for making that decision. But if you are skeptical that they would allow you to offer classes at your company, I hope you'll confront that. Feel free to replace some of this mailbag item to your management because we are very supportive of that thing. We don't just do it at our company. We encourage every organization for profit and not-for-profit to offer a good retirement plan for their employees. I think that's almost table stakes for a good workplace these days. But in addition, anytime you can activate and support employees who want to help other employees with these really important questions and decisions we make in life, our financial life specifically, that might happen in workspaces around the water cooler. Anytime you can make that a little bit more formal and spread the knowledge and love, I think that is a better world and a better workplace. I hope you do get your way and I know when the leadership of your company decides to support you, it will become self-evident what a good decision that was.

Thank you, Brandon, and Jom, and Dave, and Jason, and the list goes on. What a delight it was to open up this year's mailbag with your thoughts and your stories. Obviously, I'm looking forward in particular, to next month's mailbag. I would be remiss if I didn't mention what we're doing in this podcast next week. This is going to be fun. I've never once in our 450-Plus weekly episodes ever talked much about art. Like paintings, sculpture, other forms of visual art that traditionally not just adorn homes or museums, but are also in themselves. I have a good friend, in fact, I have two friends, a couple that runs a beautiful gallery in Santa Fe, New Mexico, and regularly they're helping advise and getting people like you and me started on the idea that we actually could make investments successfully in the world of art. I will certainly be a fish out of water there learning right along with you as we engage that topic next week, investing in art, is that a rule-breaker thing to do, investing in art on next week's podcast in the meantime. Sure, I'll do it once again. Happy New Year Fool on.