We celebrate the breaking of rules here on the Rule Breaker Investing podcast, but laws are different. From the silly to the sublime, in this episode, Motley Fool co-founder David Gardner covers six laws that will level up your game and make you smarter, happier, and richer.
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This video was recorded on May 22, 2024.
David Gardner: "I'm breaking rocks in the hot sun. I fought the law and the law won, I fought the law and the law won. I needed money because I had none. I fought the law and the law won", the songwriter was Sonny Curtis. The year was 1958. I wasn't around back then to hear it. But then again, in this century, Rolling Stone put it as number 175 on the 500 Greatest Songs of All Time list. The Crickets recorded it in 1959 as Sonny Curtis took the place of Guitar from Buddy Holly who tragically been lost to a plane crash earlier that same year. Speaking of laws, there are two right there. I just mentioned the law of gravity and the law of mortality. Two laws to me, rules, what we normally talk about on this podcast, rules govern many aspects of our lives, but are often, as is said, made to be broken and breaking rules is what we're all about on this podcast. Breaking rules and investing in business and in life. Rules are just rules. Laws are different. Laws, well at least how I'm framing them, here this week run deep. The consequences of fighting them are not good. Many of them are natural, like the natural law of entropy, that matter overtime gravitates to its lowest most disorganized state. That's the natural law of entropy. Other laws are societal choices. Thou shelf not steal. Well, this week I want to bring you a Foolish set of laws that apply to investing, business and life. Some are sublime, some are silly. Each will be explained and illustrated. The aim, well what The Motley Fool's aim always is, to make you smarter, happier, and richer, one law at a time. Only on this week's Rule Breaker Investing.
Welcome back to Rule Breaker Investing on the face of it, laws and rules may not sound like the way you and I might want to spend our time during a 45-minute jog or cutting a lawn or driving somewhere, whatever you do during this podcast. But just as I did with the first in this episodic series, the first I Fought The Law (And The Law Won) was September 1, 2021. Here we are, number two, three years later, I'm going to try to make it fun. Before we get to laws, let me just say again a few things about rules first. The main difference between rules and laws, as my Googling revealed, is the consequences of breaking them. You fight rules, you break them. You might just have improved the world forever. Maybe you knocked out a Goliath as you broke the rules, as you fought the rules, you replaced him with something better. In the same way that streaming video has ultimately replaced a few generations later VHS tapes. You fight rules, you break them, you can break through and breakthrough's power, much of our culture and our world today, that's fighting rules.
But you fight laws, you break them, the consequences are, well not going to be good. Breaking rocks in the hot sun is a great example of the consequences of fighting the law. What I want to do this week is to introduce you to six compelling insights that we're going to put forward as laws. They're eponymous, that means in each case they're named after the person who came up with it. They've generally established themselves with law, legal status. With the six I'm introducing this week, we're going to go from the sublime to the silly. Perhaps not every one of these laws were covering this week will have such deep consequences should you break it. But for each of the laws we're going to cover this week, I have four quick sections. The first, what's the name of the law? What's the law in a few words? The second, who proposed it? A little bit of history behind that. The third, additional thoughts that we can share together about these laws and the fourth would be my Foolish takeaway. Now I'm conscious, this is all me talking to you.
But of course, at the end of every month in this podcast, you have an opportunity to talk back to me if you can make me smarter, happier, and richer. Any of the material we cover this week, you're going to have that opportunity. [email protected] is our email address. I would love to hear from you. Teach me, give me a new law is something more to think about. Based on this week's podcasts, you can always drop us a note for our mailbag. The mailbag is next week. You can also tweet us at RBI podcast. Six laws, each were going to explain, talk about history for the thinking Foolish takeaway. Let's get started. Let's kick it off with law number one. This one is from Sir Isaac Newton. It's his first law of motion. You probably studied this at some point in school. It's from his 1687 book, Philosophi Naturalis Principia Mathematica translated the Mathematical Principles of Natural Philosophy. But I forgotten this. It does make sense when I think about in retrospect, this was written in Latin, this entire work was written in Latin, so that's our English translation of this English polymath's most famous work. Many people just call it the Principia or Principia, if you want to stick with high Latin. What was his law? A body at rest tends to remain at rest. A body in motion tends to remain in motion. You could add, at a constant speed in a straight line, unless interrupted by an external force, unless acted upon by an external force. Things tend to just stay where they are or keep moving in the same direction at the same speed that they are unless something shows up and changes the situation. Because this is an investing podcast, I want to make it clear. This is for me, one of the formative concepts that has been such a part of my own investing style and my advice to you of Rule Breaker investing. In fact, when you look at the third trait of Rule Breaker stocks, which I'll speak to in a second, or the second habit of Rule Breaker investors, which I'll also mention.
Both of them are rooted in physics, various specifically in Newton's first law of motion. A lot of people think the stock market, they say stuff like, "What goes up, must come down." Or once a stock hits new highs, a lot of people start thinking, "Maybe I should start thinking about selling it" because it's at a new high and people always say buy low, sell high. That's what the rule followers often say and do, you, of course, are hanging out with Rule Breakers, for me, the visual of the stock market, the picture you want to have in your mind is not a parabola. It's not something that starts low, goes up high and then curves downward back to where it came from. That's the way a lot of people think about the stock market. They think it's cyclical. It goes up and goes down. You better time your way in at the right moment. You better time your way out at the right moment. Buying low, selling high. Otherwise, you probably may lose your money. But Isaac Newton reminds us that things that are in motion tend to stay in motion. Let's now go to the third trait of Rule Breaker stocks, which I first wrote about in our book, Rule Breakers Rule Makers back in the late 1990s. The third trait of the Rule Breaker's stock is outstanding past price appreciation. This is one of the most contrary things I've put out there and acted on over a long period of time, most people think it would be crazy to buy a stock that's already up. I have to credit William O'Neil who wrote the book How to Make Money in Stocks, because O'Neil was the first one who really turned me onto this contrarian notion that the best place to look for your next investment is not the list of the stocks hitting a 52-week low. It's the list of the stocks hitting a 52-week high because bodies in motion at a constant speed in a straight line tend to continue in that motion. That's why for years now, we've made outstanding pass price appreciation. One of the things we look for before we buy a Rule Breaker stock, and I think it's self-evident as to why given Newton's first law of motion, I also mentioned just a few minutes ago, the second habit of Rule Breaker investors and other core part of the material I've put out through this podcast to you over the years. The second habit of Rule Breaker investors is to add up, not double down. When you have new money and you're looking at an existing stock, I would suggest you add to the ones that are up that have already done well for you, as opposed to adding that new money to stocks that are down, hoping to get back to even. Again, this runs contrary to most people's instincts and yet it is part of physics.
As I searched for a takeaway here for law number one, it's a phrase I've used many times in the past in this podcast, and I'm sure I'll do so in future. What do winners do? Winners win. Winners in motion tend to maintain their constant speed in that same straight line in motion. Therefore, we look among the winners for our next winning investments. That's why we look for outstanding pass price appreciation. That's why we add to the things going up, not the ones going down. Well, I think a lot of you, my regular listeners and longtime Fools and Rule Breakers already totally get this and I apologize if I'm ranting a little bit over the last couple of minutes because you may have heard it all before. But for most of the world, this is a radical notion. This goes against what most of us have heard in terms of how you should invest or what you should be looking for. Indeed it goes against most of how Wall Street operates and what mutual funds do, which is they constantly rebalance a lot of index funds rebalanced every quarter. They sell the things that are up in order to add money to the things that are down, in order to maintain the parody that they intended with their overall holdings in their index fund portfolio. As we've often said, that means they're cutting the flowers and watering the weeds. Sir, Isaac Newton and I disagree. That's why I wanted to lead off with this first law for this week's podcasts. Let's move on to law number two. I didn't intend this parallelism, but just as law number one was Newton's first law of motion, law number two is actually Arthur C Clarke's second law. Arthur C Clarke, the 20th-century British futurist. I've used his third law as the source of one of my 35 stock samplers. But let's focus here on his second law because that's the law we're looking at this week. Arthur Clarke's second law was this, the only way of discovering the limits of the possible is to venture a little way past them into the impossible.
Clarke's second law basically emphasizes the importance of pushing boundaries to achieve breakthroughs. This principle has inspired countless innovations in science and technology. It suggests that significant advancements often come when we explore uncharted territories and when we take risks. Historically, many technological feats once deemed impossible, like space travel or wireless communication or just Wi-Fi. Sometimes I've made the joke if we could invite of viking from the past, sit him in the room next to us and try to explain Wi-Fi to him. It would be a very amusing conversation, things that seemed completely impossible. In fact, that didn't even seem imaginable. It would be hard to explain the internet to people from 1,000 years ago or more. All of these things became possible through the mindset of Arthur C Clarke's second law. The only way of discovering the limits of the possible is to venture a little way past them into the impossible. I mentioned Clarke's third law earlier, which is, any sufficiently advanced technology is indistinguishable from magic. Indeed, my 26th five-stock sampler, I pick those stocks on September 2 of 2020, four years ago. The 2006 five-stock sampler was called five stocks indistinguishable from magic rocking Clarke's third law, I want to point out those five stocks over the course of their three-year run in the game that we played, the five-stock sampler went up 45.7%. The S&P 500 went up 26.1%. It's always nice to have a winning five-stock sampler proving out, align or in this case, a law. I'm happy to say by the way, those five stocks, if you just kept going past those first three years, we're now into the fourth and fifth year coming. They're doing a lot better than just that. Arthur C Clarke's second law. Ultimately, for me, my takeaway, it's about taking risk.
The very first page we printed when The Motley Fool was just a print newsletter for friends and family, they are the only ones who knew about it. In July of 1993, they were the only ones who would pay us 50 bucks a year for our print newsletter to try to float are early enterprise included this line. The greatest, least mentioned risks of all is not taking enough risk. We've all heard the financial disclaimers. Past performance is no guarantee of future results. While I recognize the necessity of issuing that as a ubiquitous disclaimer everywhere. Indeed, past performance for me anyway, is often the single best indicator of future results. You can think again of Newton's first law of motion, but almost as important for me is this notion of taking risk, which sounds risky, doesn't it? A lot of people resist the word risk altogether and maybe you do too. I do in some contexts, I don't like to try new foods nearly as much as many other people that I admire more than my own tendency not to try new foods very often. We all have different areas of our lives, where we're willing to take more risks. I think it's fair to say your most willing to take risks in the areas of your life that you're the most confident about. But the greatest lease mentioned risks of all, especially with our money is not taking enough risk. A lot of people bury it in the mattress, just keep it in the bank account, maybe earnings some interests when the stock market historically has returned us 10% gains annualized the earlier you and I can get on that train, the better. The only way of discovering the limits of the possible is to venture a little way past them into the impossible, to take a little bit of risk, be willing to lose and learn. Let's move on to law number 3. I had to look this one up. I've definitely heard the phrase before. I bet you have as well, but what I say, Sutton's law, does that mean anything to you? William Francis Sutton junior lived from June 30, 1901 to November 2, 1980. He lived to be 79 years old. He was an American bank robber. During his 40-year robbery career, this is his Wikipedia pages robbery career, he's still an estimated $2 million and he eventually spent more than half of his adult life in prison. By the way, escaped three times.
Here's Willy Sutton's law. By the way is Sutton said he never actually said this, but it's a great line. Go where the money is. These seemingly apocryphal story is that Sutton was asked by a journalist why he robbed banks and his answer was because that's where the money is. Go where the money is. Sutton's law comes to us from a bank robber, which sounds pretty bad and I think is that's breaking the law. But Sutton's law go where the money is teaches us, to prioritize our efforts where they're most likely to yield significant results. Don't over-complicate things. Don't invent crazy strategies, focus just on the most obvious opportunities for success. In fact, you could even reflect back on Rule Breaker Investing when I say outstanding pass price appreciation is something you should be looking for. All I'm really saying is by the stocks that are going up. That's an uncomplicated strategy, focusing on the most obvious thing to notice about investing. Here in Sutton's law, law number 3 in this week's podcasts, we have again and urging toward simplicity. Let's take a look at Sutton's law and apply it to investing and business and life. I think for us as investors, Sutton's law teaches us to go where the action is. Pay attention. The first trade of Rule Breaker stocks is top dog and first-mover in an important emerging industry, I'm not telling you to look under stones on other planets trying to figure out what might be something good to invest. I'm talking about where the action is, what's happening in our society, what are the technologies? Cultural shifts that seemed really important, not just interesting, curious, but actually very impactful, very important. When I think about what you and I do as investors, especially as Rule Breaker investors, we should be focused on the most important things happening in our society because sure enough, the companies that are bringing those things to you that are innovating in their products and their services, the winners will end up being the great stocks of this generation, of the past generation and the next-generation as well. Go where the money is, that includes venture capital money. Where is that? It's a good idea to keep your eye on that. I also just want to mention before moving on to the business implications of Sutton's law, I want to mention that I have a general dissatisfaction with investment books, I haven't actually read a lot of investing books. I certainly read Peter Lynch's One Up on Wall Street back in the day. William O'Neil, I mentioned earlier his book how to make money in stocks. I've described it variously as one of the greatest and worst books ever written on investing. I've explained that elsewhere, but in general, I don't read investment books very often. I tried to put it into a beautiful question for Warren Berger when we had them on Authors in August in 2019. Here's the question. I'm going to restate it right now. Why did the most highly esteemed investment books of yore, that's Y-O-R-E, typically cause their fans to miss the best stocks of our own time?
In a nutshell, that describes my dissatisfaction with some of the investing books, some of the classics. While they sound great and they read well on paper, if you actually follow them, they don't lead you to amazon.com or Netflix or Tesla or the list goes on. So I think in part, it's because they're not telling you to look at where the money is in your generation, in your era. Written in the past, often the long ago passed as they were, they tend to look more at their status quo and the present day. But technology is so important today to drive change and value. If you are always looking in the rearview mirror, it's going to be hard to buy the next great stock. So my general dissatisfaction with investment books, I've tried to correct that with a couple of books that I've written in the past myself. But I think we have to recognize that often they're not telling us to go where the money is or where the action is, they make it sound like that's overhyped and we should be looking at another direction, and I disagree. Well, we're about to move on to law Number 4, but briefly taking Sutton's law and thinking about business and then about life. For business, I want to say that anytime this time of year where people are graduating from school, I just attended a lovely graduation last weekend at Winston Salem, North Carolina, Wake Forest University. Sure many of you are tied to a graduate, if you yourself didn't just graduate in the last month or so. So it's the graduate time of year and whenever I speak to a group of students and we start talking about their first job, my advice is always the same. Do what I did, even though I didn't intend to and got lucky. Try to get lucky in the same way that I did. My first job was basically the Internet. The Internet was being born and The Motley Fool started before people even use the phrase worldwide web. But we're reusing online services and I recognize how interesting and compelling this potentially could be the word Internet, I wasn't using when I took my first job. But I'm so grateful that in effect, I was going where the money was. People said back in that day, I assume the same would be said of artificial intelligence today, that a single year spent at a company working in the internet, or today AI, a single year of employment is worth maybe seven years at another job in a stabler or less interesting industry. You learn so much when you hang around the hot white center of innovation. By the way, I'm not just talking about AI here, there are many different from healthcare to consumer services. There's so many interesting innovative things happening across our world today. So for those of us in business, especially for those early in business, especially for those taking their first job this year, I suggest you find as close as you can to the bleeding edge of whatever is happening in your industry, get on that team, work for that company. Because even if it doesn't work out, even if that's start-up fails and people have to bail, the learnings will be so valuable, they'll stead you well the rest of your life. Go where the money is.
Finally, when we talk about Sutton's law applied to life, where the money is today in our world is actually in cities. I'm thinking of Edward Glazer, the Harvard economist. I had them on this podcasts years ago. He wrote a book called the Triumph of the City, where he pointed out the people in cities just do better than people who are not. They live longer, they come across more interesting ideas; foods, people, challenges. In many ways, it's hard to live in cities and it's expensive to live in cities. But that is where not just the money is, although certainly the money is in cities worldwide today, but it's also where the most opportunity lives. That's why, as Edward Glazer wrote, humanity's greatest invention is the city. I'm a big fan. I'm a city mouse myself. I appreciate my country mouse friends and I like hanging out at the beach, which is not exactly the city either. Some people love the mountains. But I do think if you're going where the money is, you're headed toward cities. Let's move on to law Number 4. Well, I said we go from the sublime to the silly. We're not quite, it's silly yet, but I think it's going to get a little bit quicker because those first three are a little bit deeper and richer than my next three. But I'm including my next three because they're Foolish, capital F, they're fun. I learn a lot from them, I hope you will too. Law Number 4 on this week's podcast is Amara's law. Maybe like Sutton's law, Amara's law will be better known to by the law itself than the person's name. But I do want to say first that Roy Amara was a researcher, a scientist, and futurist. You can see I'm a big fan of futurists. Roy was the president of the Institute for the Future based in Palo Alto, California. Helps organizations plan for the long term future. Roy Amara is no longer living, but while he was living, he said this and I quote, "We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run." He said it and later people started saying, let's call that Amara's law. I bet you've come across this before. In fact, it's not even just confined to technology, the concept of just overestimating anything in the short run and then maybe underestimating it in the long run runs across many human dynamics.
There's a lot of hype built up around lots of different things, not just technology. Along with Gartner and it's hype cycle, which I'll speak to in a sec, usually we tend to get a little bit too hyped up about that thing in the very near-term. But then longer-term, we start realizing maybe we didn't hype it enough because these things, especially technology, is especially important ones often become ubiquitous. So it's a natural human instinct to get excited when we first hear something and then go to a conference and other people are also excited about that thing. We start company together about that or we're part of an industry that's dedicated to that. You can imagine AI would be an example right now. We tend to overestimate the effects in the short run. Gartner and it's hype cycle have been a past topic also. Keep referencing the past a little bit this week, but that's because we've talked about these things before, but I'd like to bring them right back into the present, especially along with these laws were throwing down this week. The Gartner hype cycle takes you through a five-step paradigm, a five-step framework from which we can learn about the perception of new technologies. Let's go through it real quickly. The first stage of the Gartner hype cycle is the innovation trigger. That's when the thing is recognized. It's a thing. Artificial intelligence, cloud computing, Internet streaming, entertainment. When people first start to see that thing, it's usually years before it actually shows up. That's the innovation trigger. If you're chasing a stock graph in your mind, eventually you're going to see that keep going up, up, up, up, and we start to get greater and greater expectations and we hit a peak. That Stage, Number 2 of the hype cycle, these Gartner's words, "Peak of inflated expectations." Things get hot to the point that they get too hot and we have inflated expectations. Then if you're tracing the stock graph of what this looks like, you're headed downhill now. In fact, you go down, down, down, down. I'll always remember Webvan, which was in the early days of the Internet, first round of Internet, excitement and hype. Webvan was a very smart company trying to do something very helpful, deliver groceries. Instead of just driving over from the Giant or the Safeway, a load, a card of groceries and dumping them at your door, Webvan was sourcing directly from the farmers themselves. Webvan built its own distribution centers. It was like a soup to nuts, so-called answer of straight from the farm right to your doorstep. Much more efficient than letting it sit for four or five days at Walmart. Webvan seemed like a brilliant idea, but it was too early on this podcast. I feel like the economics weren't in place and ultimately, Webvan went out of business altogether. It had a fine CEO, lots of backing, and it didn't work. It hit Stage 3 of Gartner's hype cycle, the trough of disillusion.
That's what happened in 2001 for the internet. Everyone decided, you know what? All of this stuff is over-hyped. Amazon.com was overhyped. It dropped from $95 a share to $7 a share in a couple of years at the start of this century. That was the trough of disillusionment. The last two stages of the Gartner hype cycle are the slope of enlightenment. That's as we start to move back up and we start saying, e-commerce is for real, people will use PayPal. Perhaps cash will start to disappear from our society and mobile payments will actually take hold. That's the slope of enlightenment. The final fifth stage, Gartner calls the plateau of productivity. We're no longer going up or down on the stock graph. We're at a plateau and it just goes flat out for a long time until I don't know. The human race disappears or that technology gets disrupted by something else, the plateau of productivity. At that stage it's almost invisible. In fact, I'd say here in 2024 across much of the world, mobile payments no longer seems like this edgy, daring possible thing. It's happening ubiquitously, constantly it's reached the plateau of productivity. Roy Amara years before any of this said, we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. That is Amara's law. My takeaway for you is just to be aware of it. Be aware of that human dynamic. It tends to recur, this is a law, capital L. I think this is going to always be true because of how we behave. But you can be self-aware about it. You can be a little more enlightened than the people around you are, the people who are looking to buy or sell the stock that you're offering. The person on the other side of the table transacting with you, you can be a little bit more enlightened. Then they are, if you're aware of Amara's law, it also gives you the shape of that Gartner hype cycle graph that you can have in your mind as you think about the investments that you make, the way that I've tried to navigate this dynamic as an investor, my whole lifelong is I try to buy as early as I can, somewhere in or around the innovation trigger, maybe on the way up that those inflating expectations.
Then I just keep holding. There's going to be a trough of disillusionment. I'm not going to sell. If we found a key technology, if we found an important change permanent in our culture for good, we're going to be part owners of the enterprise that is unleashing that upon the world. We're going to have our ups and yes, our downs too, but we're going to hit a slug of enlightenment and plateau. Eventually, maybe the company starts to pay dividends as [Meta's]Facebook and Alphabet are now paying dividends at this stage of their corporate lives. But if you're playing the long game with me, then you're trying to get in as early as you can recognize and then just let things play out. We've shown the great benefits of doing that over time. By the way, the less you trade, the less you have to follow the markets as well. We've got two more laws. Law number 5, Cunningham's law says, this is an internet. I'm not even going to say meme, this is an internet law and I really appreciate who this came from. I didn't know who this was, maybe you do. We're going to talk about that in a sec. Cunningham's law is and I quote, "the best way to get the right answer on the internet is not to ask a question, but to post the wrong answer". Now, now on the face of that, i think that's, i think that's hilarious.
On the Motley Fool discussion boards. Over the course of time, many people have posited one reason or another that a stock might do this or that. I think it's generally true that if you go out there with a wrong answer fairly quickly, you're going to get a reply if you go out with a right answer or you go out with your best shot, you might get a response and you might even get a really helpful response. You might have started a great conversation over time, but you're much more likely to get a response if you put something out there that is wrong. I also see this on my second favorite website, BoardGameGeek. As an inveterate tabletop board gamer, I know how many different people, especially casual players, have questions about the rules of the games themselves. One of the things I love about BoardGameGeek is every single game ever created has its own homepage and on that homepage there's a forum where people are asking rules questions and if somebody answers one of those wrong or if somebody just puts out a wrong idea about that game, very quickly, someone else is going to point out that that is not right. On the face of it, this springs smile to my face, I think it's pretty funny perhaps you did to the best way to get the right answer on the internet is not to ask you a question, but to post the wrong answer. But who is Cunningham? Because this is, Cunningham's law. This was a great learning for me this week. Cunningham, first of all, in contrast to some others, is still living. It's Ward Cunningham. Ward Cunningham is a computer program or 74 years old as I speak, known for developing the first Wiki.
Cunningham's law was basically coined as a reflection of his observation. Ward Cunningham is observation that people are more likely to correct misinformation then to answer a question directly. When you really think about Cunningham's law, which originally sounds snarky and brings a smile to my face. What you start to realize is, this is Wikipedia. This is the internet. This is human creation. This is us all working together. It's a lot easier to know what isn't true often than what is. If you actually embrace that, you don't be cynical about that. You recognize that you can quickly point out that certainly know the lights are not on their off. You can quickly point out to somebody, it's not raining. Things that are objectively quickly verifiable can be corrected or fixed very quickly and that is a great strength. I think I've already been mentioning some of my favorite websites this week. Fool.com, BoardGameGeek.com. I've spent as much time probably on a Wikipedia maybe over the last 20 years, is just about any other website. I'm so grateful sometimes I refer to Wikipedia as one of my best friends on this podcasts. It really is true. Wikipedia started as a very dodgy, questionable site. The big joke was, people would say sarcastically check it on Wikipedia. These days, Wikipedia has progressed to a point where it is far more authoritative. It always was really for decades than the encyclopedia Britannica as studies show, because it changes to reflect what's happening. Printed encyclopedias cannot. Wikipedia has become a phenomenon. Kevin Kelly, the founder of wired, also a past guests on this podcast, points out that the collective humans working together, especially when harness by the internet, which never existed before about 30 years ago. This is a very powerful dynamic cooperation.
Even if I'm putting something out there that's wrong, you can help me and help everybody else by simply fixing it gets us closer to the truth. So these days Wikipedia is far closer to the truth than not. But it's worth remembering as a Rule Breaker that, that was not the perception back in the day. You had to go along with Arthur Clarke and his second law. The only way of discovering the limits of the possible was to venture a little way past them and create this crazy online site where people could say anything about anything but then correcting it over the course of time shaped it into a worldwide phenomenon. So there's Cunningham's law, basically tag teaming with Arthur C Clarke's second law. Those are five of our six laws this week. Let's go on to the final one. Now onto law Number 6. I feel bad because I said sublime to the silly, but this last one isn't silly. I think it's that I have come across it in a silly context of my own. But half status law comes from a very accomplished, serious person and it makes a good point, although it's a little bit tongue-in-cheek, I think. But let me get there by way of a quick story. Recently diving back into Evernote where I have parked every note that I've taken since 2008. So on Evernote, my second brain, one of my favorite books in 2022 was Building a Second Brain by Tiago Forte, my second brain largely resides in Evernote. Occasionally I'll search for something and I've got 10,000 plus notes in Evernote, and I'll encounter some note that I wrote years ago that I will have forgotten about. That's exactly what happened earlier this month when I came across a note I'd entitled Happy Me Circa 2017, which I had written in August of 2012. I think I was reading a book at the time, but the book encouraged us, I encourage you to, from the present day, imagine yourself five years forward. What does happiness look like for you? That future you, that person, that you five years from today, what's going on in his or her life? What isn't going on in his or her life? Can you visualize the life you're living in, what you're trying to live toward? We're not saying your whole life, how about just five years? So raising an eyebrow, I went back to that note, Happy Me Circa 2017, which I had written in 2012, and I hadn't been reading this until 2024.
This came from me 12 years ago. It was written to me seven years ago, so I had an opportunity to reflect back. I'm not going to share that note, but this was the Number 1 takeaway I had about that note, wow. I can really say this, I hope this doesn't sound prideful, but I can truly say that as I read it over in 2024, I was able to say that is what happened. That is the life that I'm living. I do think of myself as a very happy person and in part now I can see why, because the things that I hoped for or pictured or imagined, they're pretty much all there in my life here in 2024. That was takeaway Number 1, but here's the important takeaway Number 2, which introduces Hofstadter's law. Takeaway number 2, as I read that short page-and-a-half essay, is I didn't have a lot of those things though in 2017. That thing or that other thing didn't happen until much later or maybe still hasn't really happened, and shortly after that, I came across Hofstadter's law and it all made sense here it is. Law Number 6 this week, Hofstadter's law, and I quote, "It always takes longer than you expect, even when you take into account Hofstadter's law." It makes it self-referential recursive mention of itself in the law itself. I read that one more time. "It always takes longer than you expect, even when you take into account Hofstadter's law". If that didn't strike me as a most used as hashtag truth, here in 2024. Douglas Richard Hofstadter, still alive with us today. Was born in 1945. He wrote a book called Godel, Escher, Bach: an Eternal Golden Braid. Some of you, I know we'll have read it. It's a classic. It was written in 1979, by the way, it won the Pulitzer Prize for general nonfiction. That's the Hofstadter we're talking about.
The American cognitive and computer scientists whose research includes, well lots of concepts relating to sense of south and consciousness, loops, AI, and mathematics and physics. It's a reminder as we near the end of this week's podcast that a lot of these laws are coming to us from people who are in and around math and science. Maybe it's they who tend to make laws or put their names on their own work. But it is a reminder that I really appreciate my math friends. Last year's Authors in August, Jordan Ellenburg, How Not to Be Wrong, is his book, a brilliant book about math? Yes, but also about life. In a lot of ways, each of these laws comes to us, often from math or physics or computers or the internet, but my aim is to share them with you in a context that makes sense to us as investors, or entrepreneurs, or just people going through life. Hofstadter's law reminds us that I hope you do get there, dear listener. I hope that thing that you're hoping for, I hope you do get there and I believe that you will and maybe I can even help you. Maybe we're all in a sense doing it together. But one thing you should be prepared for is it may take longer than you're thinking even when taking into account Hofstadter's law. Well, I think it makes sense to summarize the laws we just heard, but before I do, I want to mention again our mailbag next week, email address [email protected]. I'd love to hear any of your reactions or reflections to this week's podcast. We'll go over those together next week. You can tweet us at rbipodcast, our email, [email protected]. Now our six law summary. Law Number 1, was Newton's first law of motion. A body at rest tends to remain at rest in motion. Number 2, Arthur C. Clarke, second law. The only way of discovering the limits of the possible is to venture a little way past them into the impossible. Number 3, Sutton's Law, go where the money is. Number 4, Amara's law, we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. Number 5, Cunningham's law. The best way to get the right answer on the internet is not to ask a question, but to post the wrong answer. Finally, Number 6, Hofstadter's law, it always takes longer than you expect, even when you take into account Hofstadter's law. There are rules which we looked to break on this podcast, but then there are laws that I would suggest you not fight. It was a delight to share those with you this week. Fool-on.
