I made a mistake. Last year, after I recommended Great Wolf Resorts
I blew it. I knew it.
Now, in the old days, a smacked-down investor would suffer alone. On a larger stage, a talking head on a business show would be able to tout away, unchecked. I didn't want that. I deserved my lumps. So I rushed to the newsletter's lively discussion board and owned up to my shortcomings. Yes, I should have suggested that investors bail when the company watered down its outlook the first time. In retrospect, I was a dummy for dismissing an analyst downgrade by A.G. Edwards just two days before the debacle.
I was wrong. And whether you wanted to commiserate with me or line up for the well-earned flogging, I was there. I showed up. I may have gotten Great Wolf wrong, but I knew I could get the community part right.
The power of the many
Some pretty amazing things can happen when you pool resources. If you send out the right invitations, you'll have a tasty fiscal potluck dinner on your hands.
The Motley Fool has always been a vibrant community. I started writing for the site 11 years ago, after Tom Gardner picked me out of the Rainforest Cafe discussion board. Philip Durell was heading up the analytically provocative Foolish Collective board before being tapped to lead the Inside Value initiative. Behind so many Fool bylines, there was once a chatty individual investor who was simply passionate about stocks.
Earlier this month, I caught up with DatabaseBob. He's one of the more active message board posters on the Rule Breakers discussion board and one of the top players in the new Motley Fool CAPS community-driven stock-rating service.
He has taken advantage of the Fool's message-board platform to make it an even more engaging feature. Along with kbedwards -- another fellow subscriber -- they set up polls to gauge how folks felt about the active newsletter recommendations. Taking it to the next level, DatabaseBob turned it into a poll-driven mock portfolio.
In the spirit of community, I'll just let DB himself explain the evolutionary process:
At one point, there was a "Which RB to Buy Now?" board discussion of how KB's polls might be changed to be more useful to board participants. Some great ideas evolved, including that of building a scorecard or a portfolio based on the poll winners. But all these ideas would have meant a lot of extra work for KB. I volunteered to run a portfolio. In a flash of inspiration (really, the document started writing itself in my head as I was trying to get to sleep, so I got out of bed and put pen to paper), I developed a system for periodic polling and a set of rules for maintaining the portfolio.
We're nearly half a year into it now, and the portfolio is really shaping itself into something interesting. Every four weeks, we debate whether to sell an existing holding and eventually vote on it. If there's cash available (that would be play money -- this is all hypothetical), we decide what would be the best stock to add to the portfolio. We're still refining the rules and trying to figure out how to appropriately compare our portfolio against the Rule Breakers scorecard.
In short, a healthy stock-based message-board community is like a lasagna, with flavorful layer stacked on top of flavorful layer until you create a hearty and enriching meal.
The value of money
As someone who grew up on discussion boards -- I headed up the Investors RoundTable on General Electric's GEnie online service until the Gardners came calling -- I have always had a fond appreciation for the power of like-minded investors pooling their thoughts out in the open.
You see way too many critics arguing that penny-stock hype and equity manipulation take place in cyberspace. Yes, those things do happen, but you will rarely see them around monitored boards, like the ones available at Fool.com.
Some pretty amazing things happen when you open the floor up to personal interaction. Some of the best-performing Rule Breakers, like Intuitive Surgical
"Might be a tad early on this one," freethinkerkeywe posted on the New Stock Ideas board in December of 2004 while discussing Akamai, "but I feel good about it."
That revelation came two weeks after he had discussed the company's role as an Internet enabler and its ability to deliver chunky content more effectively. It became an official pick a few months later and has tripled in value since then.
"One of the doctors who frequents my club told me about this company," he posted a few months later in bringing up Intuitive Surgical. The doctor told him that it was "making robotic surgical equipment, which doctors use to conduct more precise surgeries."
"The best part about this is the machines are like a Gillette razor, in that all the add-ons, such as blades, plastic sleeves, etc., have to be changed and prepped," he continued. "The analogy I am trying to make is that once these machines are bought and placed in hospitals . . . then the revenue spigots are really turned on."
The stock was singled out shortly after that and has gone on to more than double.
Are we lucky to be blessed with such a dynamic community? Yahoo!
So here's a toast to our own community. Cynics who think that a subscription to Rule Breakers is overpriced and see it as just a dozen monthly issues and 24 annual stock recommendations are missing the point. It's an interactive newsletter service that offers so much more than just a new issue that comes out every third Wednesday of the month.
Get the community right, and few things are impossible. As for Great Wolf, I still own a small stake in the company. An executive shuffle and expansion into larger, virgin markets should serve it well.
One way or another, I'll get that one right, too.
Want to learn more about how to spot the next great growth stock picks, like Akamai and Intuitive Surgical? Take the next 30 days on us with a trial subscription to Rule Breakers. When you do, you can take advantage of immediate access to all of our past issues, as well as the 24/7 exchanges of the perpetually provocative subscriber discussion boards.
Longtime Fool contributor Rick Munarriz thinks Dennis Rodman could be a great investor, given the way he always hit the boards. Rick owns shares in Great Wolf. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Time Warner and Yahoo! are Stock Advisor picks. The Fool has adisclosure policy.