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15-05-2025
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Rule Breaker Investing's Gotta Know the Lingo, Vol. 7
Our all-Fool cast is here to help you understand some common and not-so-common investing terms, so that you can leap tall buildings, swing from a web, and more importantly, be better investors! To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $318,970!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,016!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $598,613!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of May 12, 2025 This podcast was recorded on May 07, 2025 David Gardner: Asset location, inventory turnover, customer acquisition cost, spiffy pop. Each of these represents intermediate level terms that most serious investors know, and most people who are not serious investors do not know. Well, I'm inviting on three serious investors. This week, Motley Fool senior analysts in order to help teach the rest of us some new terms. Terms like the one I just let off with, each of which has been covered in the past episodes of this week's recurring simple, some more advanced, all terms, we think you need to know. Drawn from investing in business, understanding these terms and the concepts behind them will enable you to become smarter about the game of investing smarter, which in my experience leads to happier and richer over time. Or maybe you already know these terms. In which case, I have a scoring system and you can score yourself this week. It's Volume 7 of Got Another Lingo welcoming in Nick Sciple, Yasser Al Shimi, and David Meier to teach you and me only on this week's Rule Breaker Investing. Welcome back to Rule Breaker Investing. It's Gotta Know the Lingo. Volume 7. The purpose of this series is to look at some of the terms that you might hear about and not always fully understand from business, accounting, investing, sometimes technology as well. Some new oncoming terms to get you thinking about the language of investing, business, and sometimes life to get you smarter about these concepts, we're about to do Volume 7. I'm going to be welcoming on Nick Sciple, Yasser el-Shimy, and David Meier to share three simple terms and then three advanced terms. I'll talk about the scoring system for that in just a minute. Coming up a bit later this month, I'm excited to welcome back superstar business writer and marketer, Seth Godin, author of iconic books like Purple Cow, who will make his first reappearance on the Rule Breaker Investing Podcast since becoming my first ever author in August. It was August 1st, 2018. Seth Godin back ahead this month. I also want to call out last week's Mailbag for the extra notes coming in via Twitter X. The Mailbag was originally a bit light on the email side until I reached out over on Twitter X, put up the Ask Us Anything flag, so thank you again to those followers and listeners. Just a reminder that our email address is rbi@ to power up your Mailbag every month. You can always tweet us @rbipodcast on there on Twitter X as well at David G. Fool. There since February 2009, actually. I'm not quite OG status for Twitter, but 16 years of interacting with the public at large has certainly strengthened me and helped grow the Fool and this podcast. I mentioned the scoring system for this week. Before I welcome our senior analysts. Let me make it clear how you can score this week's podcast while listening. You're scoring us. We have six terms for you, six that we're going to share this week and illustrate for you at the end. I'm going to ask you, dear listener, quietly to think with each one, did I learn anything from these Fools? If you feel like you didn't learn anything for a given term, your five minutes or so were wasted by that particular term, the score would be zero because you learned zero, and we were zeros. If on the other hand, you thought that was helpful. Maybe you even did know the term, but hey, they made me laugh. Give us a +1. Finally, if, as Nick or Yasser or David present their terms with their illustrations, if you find yourself delighted, not just by the quality of the learning, but maybe you got to smile along with it, if you really enjoyed it, give us a +2. That is the scoring system for Gotta Know the Lingo. Well, as I shared at the start of the year, just before we get started here, let me mention my 2025 book, Rule Breaker Investing is available for pre-order now. After 30 years of stock picking, this is my magnum opus, a lifetime of lessons distilled into one definitive guide, and each week until the book launches on September 16th, I'm sharing a random excerpt. We break open the book to a random page, and I read a few sentences. Let's do it. Here's this week's page breaker preview. Two sentences from near the very end of the book and I quote. "To quote the British historian Thomas Babington McCauley on what principle is it that with nothing but improvement behind us, we are to expect nothing but deterioration before us?" Then I wrote the word Excelsior. That's this week's page breaker preview to pre-order my final word on stock picking shaped by three decades of market crushing success. Just type Rule Breaker Investing into Barnes and or wherever you shop for great books. When you think about it, a great investment book literally pays for itself. To everyone who's already pre-ordered, thanks. That means a lot to us. Before we start, I want to mention what happens next week. It's my birthday next week, and your annual birthday present to me. This has happened most every year, the last several years, is that you let me know what you've learned from me over the last year, or if you're a longer term listener, maybe what you've learned from me over the longer term. What have you learned from David Gardner, 2025 edition, Our email address, rbi@ You can tweet us @rbipodcast on Twitter. Again, if you have a little extra time this week and you want to celebrate my birthday with me drop me a story. Drop me a few lines, a few paragraphs, if you like, rbi@ I will turn it around and share back the ones that feel most apt, the most beautifully written, the most inspiring on next week's show. Thank you in advance. Without further ado, let's get started. Nick Sciple. Welcome to this week's podcast. Nick Sciple: Great to be here with you, David. David Gardner: Nick is a senior analyst on the Motley Fool Canada Investing Team supporting our Canadian services outside of the Fool, most of his time gets taken up by his 2-year-old and his 10 month old, but Nick tries to find time to follow Alabama athletics and get to as many concerts and shows as he can. Nick, my icebreaker question for each of our senior analysts this week is, what is a financial term that you, Nick Sciple wish you'd known prior to adulthood? Nick Sciple: Well, David, I think, for me, compound interest is the one that came to mind, it sounds a little technical and academic. But when I pictured getting wealthy as a kid, I pictured Scrooge McDuck in his bank vault swimming around in big buckets of gold coins. I thought you just saved your money, and you put it in the bank, and then slowly over time, that's all that happened, but I didn't realize that your money is actually out there working for you. It's like when you're a kid playing baseball or kickball, and there's some ghost runners on base, you already got a hit earlier on, and there's a pretend person out there running the bases for you. That's what your portfolio is doing. But as a kid, I really had no understanding of that as I came to grasp that more over time. It'd be crazy not to be participating in the stock market, participating as someone benefiting from compound interest out there in the world. I didn't understand that until later in life. I wish I would have known it earlier. David Gardner: Appreciate that, Nick. you're reminding me one of our fellow fools, Mark Reagan, who was at our company for some years, told a great line when I first met him. He said my mom raised me, and she said to me, Mark, there are three ways to make money in this world. With your mind, with your body, or with your money, which one would you like to do? And he said, Tell me about that third one. How can I make money with my money? Welcome, Nick, Roll Tide. Let's introduce next Yasser Al Shimi, Yasser is a senior analyst at The Motley Fool, where he serves as the acting advisor and investment coordinator for Global Partners, our international markets-focused service. Since having kids, Yasser's free time is a thing of the past, but he still manages to follow Italian soccer every week. Nonetheless, Yasser, welcome. Can you remind me of the team? I know it's like premier league. It's the big time. Yasser El-Shimy: Sure. The league itself is called Serie A. That's a Italian soccer league. My team is AS Roma. That's a team I've followed for over 20 years now, and I think I'm going to stick with it for the next 20, at least. David Gardner: There I am showing my ignorance in a lot of ways of international soccer. I guess I should just ask you this basic question, Yasser, is AS Roma the best team? Yasser El-Shimy: Well, that depends. For me, it is the best team. No questions asked. From a footballing perspective, however, it's not by far the best team in the world. Now, they don't have the resources to compete with the likes of Barcelona, Real Madrid, PSG, or some of the Premier League clubs, but they still nonetheless manage to play for the fans, play for the Jersey, and that's what I love the most about them. David Gardner: Thank you. Yes, so it looks like they're looking for at least one more promotion at some point. Yasser, what is a financial term you wish you'd known prior to adulthood? Yasser El-Shimy: Well, I would have gone with compound interest, thanks a lot, Nick, but minus the mental image of swimming in gold coins. I think, for me, I would have appreciated learning more about diversification. I think that growing up, my parents and a lot of the people I knew, and, of course, I having grown up in Egypt, not in the United States. A lot of the people I know tended to invest almost all of their money in real estate or to a lesser extent in CDs, certificates of deposit in the bank. Unfortunately, not a lot of investments go the way of stocks, bonds, or other alternative investments that might exist. I think that has definitely been a missed opportunity for a lot of people, especially with the depreciation of the local currency over time. David Gardner: Thank you for sharing that, Yasser. Remind me of two quick facts. What was the year you came to the United States from Egypt? What was the year you bought your first stock? At what age? Yasser El-Shimy: I moved to the US in 2007. I think I was around 25 years old at the time, and it took me two years to buy my first stock, and it was a process of, getting to learn what stock investing even is, and thanks a lot to the Motley Fool for helping with that. But ultimately, I decided to go ahead. Even as a graduate student, I set aside the little money that I had and started investing. Thank God I did. David Gardner: Fantastic. 2009, by the way, not a bad year to start investing. Yasser El-Shimy: Exactly. David Gardner: Hey, David Meier. Welcome, David. Great to be with you. David Meier: Great to be with you, too. Thank you very much for having me. David Gardner: David is a senior analyst at The Motley Fool, where he's part of the Trends team, the lead investing liaison as well with our marketing teams. Since his daughter is out of the house married and an oral surgery resident at Case Western. He spends many afternoons on the golf course working to lower his handicap. David, I'm sorry to take you off the golf course this particular afternoon. How's the handicap? David Meier: On the way down, which is good. David Gardner: Do you want to quote publicly for all time through this podcast where you are right now or do you not want to? David Meier: I am a seven index right now and descending. David Gardner: Single ditch. Very impressive. David, what is a financial term you wish you'd known prior to adulthood? David Meier: Obviously cannot disagree with either of those two terms, but I'm going to go in a little bit of a different direction. I'm going to go with the term bond vigilante. First of all, it's just pretty cool. In your mind, pictures these armed men and women who are terrorizing the bond market. But in all seriousness, the reason that I think it's an interesting term is, hopefully, I won't screw up James Carvill's quote too bad, but he said "Some people dream of coming back, being reincarnated as a 400 hitter or a psi Young Award winning pitcher in baseball." I want to come back as the bond market because in the bond market, I can intimidate anyone. What these bond vigilantes are are supposedly these groups of people who conspire and say, we are actually going to be the ones who set rates. The reason that it's interesting, in my opinion, is because over my 20-plus years of investing 20 at The Motley Fool, the bond market actually plays a role, and I think it's good for investors to understand how interest rates moving up or down can impact stocks. It's one of the things that's helped me become a smarter, happier, and richer investor over time. David Gardner: Thank you for that, David Meier. While that is not one of our official terms for Got to Know the Lingo this particular week. I'm going to call that a bonus. I admit I didn't really know the phrase bond vigilante either. There's at least one phrase on this week's roster that I didn't really know much about. I'm learning along with everyone else, and let's get started. Let me turn first to Nick Sciple. Nick, you're queuing up a simpler term in a more advanced term. We're going to rotate through our simpler terms first. What do you got for us? Nick Sciple: David, so for my simple term, I went with proxy statement. Might also find it referred to as SEC Form DEF 14A. The proxy statement is a document that publicly traded companies are required to file with the Securities and Exchange Commission and distribute to their shareholders before any annual or special shareholder meeting. It exists to give shareholders enough information to competently vote on the matters before them at the meeting, whether that's election of electors at regular annual meetings, or if there's a big transaction where there might be a special shareholder meeting, that's to vote on that transaction, other changes in corporate policy. As well, gives you insights on executive compensation and incentives, insider ownership, potential conflicts of interest, and that things. All good. Background information, one of the most important SEC filings to check each year. David Gardner: Well, I would say, Nick, from the earliest days as a little investor raised on my daddy's lap, I think that I remember receiving through the mail proxy statements. then as I came of age, I would get them all myself for stocks in my portfolio. Do you have an opinion on how seriously we should take these, how much time we should spend for somebody who's keeping up with the diversification required by the Gardner Kretzman Continuum, a very difficult term to parse. We'll skip it this week. But for somebody who roughly has as many stocks in their portfolio, as their age, number of years on this earth, and that's me. I'm around 58 years old and I have around 58 stocks. How much time should I devote to proxy statements? Nick Sciple: I think it is important to understand how management is compensated and what their incentives are. Especially when you're looking at a company for the first time and you're unfamiliar with the business. If management is incentivized to increase per share metrics, which I own the shares. I would like to increase earnings per share. That is a lot more aligned with me than, for example, a manager that's incentivized on adjusted EBITDA where, hey, those adjustments are pulling out some real important costs and also incentivize things like acquiring assets to juice those types of metrics. Knowing what the incentives are of the management team that you're following and knowing potential conflicts of interest they have is important. Is it important to spend a lot of time debating whether they should be hiring auditing firm versus another auditing firm? I don't think you should spend any time on that at all, who is running the business and what their incentives are, I think is super important, especially when you're starting a position. David Gardner: Thank you. I might also add that I agree executive comp would jump off the page versus who the auditing firm is. I think maybe in terms of time management, we're all time-starved in this society. We should be. There's so much productivity to our every hour, I hope. But I would say it makes a lot of sense. Do you agree, Nick, to focus on the proxies of your biggest holdings? If I have a small starter position in something that really isn't going to tilt my portfolio too much, maybe I shouldn't spend too much time with that proxy. If I have a 5% or greater position in anything, you guys should probably vote that proxy. Nick Sciple: That's right. I'd say, the bigger the position is, the more important it is. The more influential a particular manager is over the business, the more important that is. You might be curious about what's going to happen next for Berkshire Hathaway. Well, if you read through that proxy statement, you get a pretty clear sign of who the next chairman is going to be. It's going to be somebody with the last name Buffett. But I think for different company, [inaudible]. Yasser El-Shimy: I'm so glad you brought this term to the podcast, Nick because this is actually not from a time management standpoint, but this is the first document that I go to whenever I come across a new company, and it's for the exact reason that you say. I want to know who the management teams are. But more importantly, I really want to know what their incentives are. Charlie Munger famously said, "If you give me the incentives, I'll show you the behavior." We have seen across the years of stock market investing, that is exactly what tends to happen. You can root out what you think is bad behavior right away just by spending a few minutes going over that section. Lastly, I'll say, the other thing that you get to see is, who are you investing alongside. You get to know who owns a big stake. Who's been selling their stake. It's it's a document chock-full of information, and it's nowhere near as famous as a 10K or a 10Q or anything like that. David Gardner: Good points, David Meier. Nick, let me turn back to you to close. I've asked you each to produce an interesting and illustrative sentence to put your term into to close. What do you got? Nick Sciple: My sentence is, if you're worried, your management team is taking advantage of you and other shareholders. Go check the proxy statement, and you'll find out real quick. David Gardner: Very well done. Thank you, Nick, for getting us off to a fine start proxy statement. Term Number 1 this week of the simpler sort. Let me move on to Yasser El-Shimy. Yasser. Term Number 2, what do you have? Yasser El-Shimy: Well, so some of us Rule Breakers are familiar with the first trait of a Rule Breaker that David came up with, and that was top dog and first mover. However, I'm going with a slightly version of that term today, which is something that you'd find in MBA textbooks, basically, the first mover advantage. Now, what we mean by first mover advantage is basically the benefits that a company would gain by being the first to enter a new market or introduce a new product or service that even creates a new market. This strategic position can give a company several advantages, including brand recognition, for example. Being the first allows you to establish a strong brand. Maybe even brand association. If your company's name becomes a verb or the action that's being done, think of Google, for example, for search and Uber for ride-sharing and so on. It can give you other advantages, including having bigger market share in that new market. It can give you resource access. If you can secure critical resources like patents, supplier contracts, or even physical locations, think Prologis for warehousing, for example, that could be an interesting example here. All of that gives you an advantage as a first mover that makes it a little more difficult for your rivals, for your competitors, to try and play catch up with you. The final thing I'm going to conclude here in terms of the advantages is effectively setting the industry standards or the customer or user expectations. First mover can define basically how products work. They can set the expectations for the end users of what they can come to expect from the service or from the product, and therefore forcing anyone who is trying to enter into this sector, a later entrant to adapt to those expectations and those standards that that first mover had in fact set itself. David Gardner: First mover advantage is obviously very important concept, and you're right. It is a little bit the stuff of MBA or grad students in coming from the business world, Yasser El-Shimy. I do think that it's something anybody can understand. It can be taught or explained pretty well to a bright child, and they are real. You're right. You mentioned brand and setting the benefits of brand, and I sometimes just think about the media coverage that goes to somebody like OpenAI, the sheer amount of brand building that the media does for you because you got out first. It's hard to put a number on it. Maybe there's a new term here, Brandwagon. I don't think I'm going to go there, but there's getting on the Brandwagon with the media helping you out is part of that, but I really appreciate your points about consumer expectations, making the rules early, even though you're ironically breaking the rules, but setting the standards of expectation. Nick Sciple: It's really interesting in either technology adoption or in the process of innovation, you're absolutely right. First movers can grab a lot of that advantage for themselves. But there's a paradox in there in that sometimes it's actually the fast follower that reaps all the benefits because either they come up with a better way of doing something or less expensive or something. The first mover did a whole lot of hard work, but it was the company that came in second that reaped all the rewards. Again, it could not agree more that it is a great thing to understand. But just beware, there's somebody out there always trying to get you. Yasser El-Shimy: That's an excellent point. Thank you so much for raising that because I was actually going to talk about some of the risks that come with being a first mover here, including what I might call a first mover disadvantage. There are certain sectors where there are, in fact, lower hurdles for new entrants to come into that sector, especially in technology. Think, for example, coding. That's something that's both quick and easy to do and scale as well. If you're a first mover, good for you, but that may not necessarily give you a clear advantage over late entrance. In fact, we might come from behind, fix your mistakes, out innovate you, and still benefit from the fact that you had made the first move to create the market to begin with. I'm thinking here, for example, Zoom for video conferencing versus Webex by Cisco. Cisco was the first to create this field or industry and Zoom comes in with a better product and basically takes a lot of market share. David Gardner: It's a good example, and obviously we can find good examples on both sides. That's why we're just here to educate and to make sure that you, dear listener, know these terms and have a nuanced appreciation, even of the simpler terms like Yasser's first mover advantage. Thank you for that, Yasser. Do you have an interesting illustrative sentence for us? Yasser El-Shimy: Sure. My sentence is the Patriots first mover advantage makes it impossible for another New England football team to rise and claim to be the team for New England. David Gardner: I don't think even if you don't like the Patriots, and I know some people listening don't. You can't disagree with that. Well, said. Let's move on. You went from football to football. Very nice, Yasser. David Meier, you have our final simple term. This is term Number 3 for Gotta Know The Lingo, Vol. 7. What you got? David Meier: I'm coming with portfolio management. Now, I actually was down in our asset management group for a while, and so I actually got to manage other people's money. I thought about this a lot. But portfolio management, really, when it comes down to it, it's just how are you collecting a group of stocks into a portfolio that is going to try to do what you want it to do? There's no right way to do this. Sometimes it gets much more complicated or it seems much more complicated than it is. For example, like professional investors on Wall Street. They will say, I need a portfolio of stocks that are not correlated with each other. Well, that's great, but that's hard to do. Then I remember something that you said, David, which was, make your portfolio be the future that you want to see. That's a completely different approach to portfolio management. I will say this. The way I try to go about it and the way I still try to do it is I try to create a group of companies in a portfolio that have the highest quality and the most attractive risk and reward. I figure if I can do that, over the long term, I should be able to beat the market a little bit. But put very simply, anybody can do portfolio management, however they want, because it's just a way of putting stocks together. David Gardner: Really appreciate that. Portfolio management, when you rock out that phrase, a lot of people for them, it probably means something formal and something that they need to study. While none of us is going to disagree with that, it is important and it is worthy of study. I don't think, David, as you're saying, that there's any single school of how to do this. In fact, I would say in some ways, it is undertaught. Even just looking at our company, I think the Motley Fool does a great job identifying stocks you might want to add to your portfolio. We've tried to think about people's portfolio dynamics over the years. But the reality is, other than our asset management part of our company, which is regulated, and we don't really talk about that here, everybody is left to their own to figure out how to manage their own portfolios. We can't give specific prescribed advice about what to do in your portfolio, even though that would be so relevant if we could. Anyway, therefore, there's a little bit of choose your own adventure. What color is your parachute? I'm all about that. I really want each of our listeners to be thinking about one or more principles that contain their intentions. Roughly how many stocks do you want to have? What kinds of diversification, etc? Yasser El-Shimy: David, I wanted to ask you, and maybe I'm throwing you a hand grenade here, but the pros and cons of concentration, being concentrated in your portfolio versus being diversified. We always hear arguments on both sides of those coins, and I would love to hear your thoughts on it. David Meier: Oh, it's such a great question and thank you for asking it. Well, there's something to be said for investing heavily in what you know. Because that's the thing you're most comfortable with. That's the thing that you probably pay attention to the most. Also may be the thing that if there are times when the stock is volatile, because you know it well, you may be more patient with it. You may actually think on a longer term time horizon than if I was trying to switch things in and out. But there is actually you don't necessarily just want one stock some people can do it. Not everybody can because that's going to be a very volatile portfolio. But do I need five to create diversification? Do I need 8, 10, 12? Some of it will depend on your own bandwidth, meaning how many of these can I follow? If I'm a normal retail investor who's doing this as part of the families, I'm a breadwinner. Plus, I'm trying to manage the family's finances. Probably not a whole lot of extra time to be going through this. I personally think you can get some decent diversification on about 10-12. If you can follow more, and you know those companies, it certainly will help. David Gardner: Well, well said. Yasser, hand grenades are welcome. I don't really think that qualified as a hand grenade. It was just a very thoughtful and important question to ask. Thank you for sharing that. David, your interesting and illustrative sentence, please, portfolio management. David Meier: I think for everyone, the best portfolio management is the one that enables you to sleep best at night. David Gardner: I do love that, and that is an excellent sentence. Thank you, David Meier. We are at the halfway point of this week's podcast, my dear Fools. We've just gone through three simpler terms, a reminder for each of them now, proxy statement, first mover advantage, portfolio management. Again, if you feel like you already knew any of those and we added no value to your life for that one or even all three. Well, that would be a zero. No, that would be sad. That would be a zero. On the other hand, if for one or more of these terms, you learned something or laughed, give us a plus one. Finally, if you found yourself utterly delighted and you now see the world in a new way that you didn't before this week's podcast, give us a plus two for that one. This is a quality assurance system. Let us know on social media or via our mailbag, how we scored for you this week. Why? Let's now move from our simpler to our more advanced terms, gentlemen. I'm going to turn back to Nick Sciple. Nick, what is your more advanced term for Gotta Know The Lingo, Vol. 7? Nick Sciple: My more advanced term is 10b5-1 trading plan, which if that doesn't sound complicated, it is. Refers to Rule 10b5-1 of the Securities Exchange Act of 1934. A 10b5-1 trading plan is a pre-arranged written plan established by corporate insiders, like officers, directors, or other large shareholders to buy or typically to sell company stock at a future date. They exist to provide an affirmative defense for those insiders against insider trading. To qualify for that, you have to establish the plan at a time when you don't have material non-public information. You have to give your broker specific instructions on how to carry out those trades, whether the date, price or a formula, calculate those and also, you have to exercise no further influence over the plan once you've established it. There's also a minimum cooling off period. It's about 90 days after you put the plan in place. Then since 2023, now every time a company files a quarterly or an annual report, they have to disclose those 10b5-1 plans that their executives have entered into during the quarter. It gives you advanced notice on upcoming buying or selling from insiders of the companies you own. David Gardner: Very well explained again, Nick, for those keeping score at home, and I hope you are, if you're wondering how this is spelled, it's 10b5-1, just to make sure we're parsing the language as perfectly as Nick, who by the way, is a lawyer would do himself. I admit this is the one I need to look up, guys. If you just hit me with 10b5-1 trading plan, I know it in concept, but I didn't actually know it by that highly technical name, but I appreciate that you brought it, Nick. Let me ask you back, what is significant about 10b5-1 trading plans for you as an individual investor? Nick Sciple: If you looked at the headlines last Friday, you may have seen just about anywhere you look on big financial websites, Jeff Bezos has filed to sell up to five million dollars worth of Amazon stock. If you go check Amazon's 10-Q, you will indeed see that on March 4th, 2025, Jeff Bezos, founder and executive chair of Amazon adopted a trading plan to satisfy Rule 10b5-1, where he's going to sell 25 million shares of over a period ending May 29th, 2026. When you see that headline and say, Bezos is selling $5 billion of stock. Maybe I should be concerned about what's going on with Amazon right now. If you actually drill into what's going on here, this is a plan established two months ago that's going to run over the course of a year plus. If you go and cross reference those sale numbers with the proxy statement that we talked about earlier, you see that's less than 3% of Bezos's overall stake in Amazon, something that's very likely just for personal financial planning, funding his other business interests, not something to worry about as an investor. David Meier: I'm glad you brought this one up too because I think it's very important that executives, directors, etc, disclose ahead of time when they're going to be selling. One of the things I can't stop thinking about Peter Lynch and his favorite quotes is that people sell stocks for a variety of reasons, but they only buy for one. Yes, it's great to know this information, and it's also great to know when they've actually purchased shares as well. There might be just a little more information value in the purchase, but it's always good for investors to understand what is happening with the leadership of the company and their stakes in the company. Nick Sciple: I'm glad you mentioned the purchase angle, and I think there's definitely a lot more information available in management purchases than there are in sales. I did mention, you can use a 10b5-1 plan for share purchases, although that's pretty rare to see done, management blind buying into the market, although you do see that, occasionally, one example we saw actually earlier this year, TKO Group, which is the parent company of WWE and UFC, their controlling shareholder endeavor, bought about $300 million in stock over the course of just about a month between January 17th and February 12th at prices up to $177 per share. Know anything about TKO Group? There's some pretty big catalysts coming down the line this year. The UFC's rights agreement with ESPN expires here at the end of 2025. They're going to be launching a new boxing league in collaboration with the Saudi Entertainment Authority this year, and then domestic rights for the WWE's premium live events also expire in March of next year. With management blind buying in January and February, legally compliant, maybe says something about how they expect those negotiations to proceed throughout the year. If you look at the shares here today here in the mid 160s, management was blind buying 10, $15 higher than where we are today. Maybe it's something to have your eye on. David Gardner: There you go, Nick Sciple somehow managing to fit in some references to WWE and/or UFC. I know you're a fan. By the way, Netflix seems to be doing pretty well with its WWE show. Nick Sciple: That I think is going to be a big driver for Netflix's advertising business moving forward. You think about that weekly inventory, getting folks to tune in. They're continuing to put the gas pedal on when it comes to sports content. Going to have another Christmas Day game this year, another boxing event this year. I don't think this is the end of Netflix's forays into live sports. David Gardner: Well, and as I look this up, because I did not immediately recognize the numbers and letters together in the way that they're configured on my friend Wikipedia, one of my best friends in this world, I found out that SEC Rule 10b5-1 was enacted by the SEC in the year 2000. It's been around for 25 years, but then it wasn't around for 100 years. It makes me glad that I think, in general, the world for individual investors, the world of transparency and better information, is so much more present here in 2025, starting really somewhere around 2000. Remember Arthur Levitt, SEC chair. We had something to do with that back in the day, Regulation FD, Fair Disclosure, where companies could no longer give information just to Wall Street. Any material information had to be given to individual investors, and the Motley Fool was a big proponent of that and helped get that passed. Anyway, it makes me happy to see that this has been around for 25 years, but it does make me wonder, Nick, about the century before that. Nick Sciple: That's right. It was the Wild West, I guess, back before we got some of these investor protection laws here in the past 25 years. David Gardner: How about an interesting and illustrative sentence to go? Nick Sciple: If you see insider selling under a 10b51 trading plan, usually, that can be safely ignored. But when you see purchases made under a 10b51 trading plan, you should start paying attention. David Gardner: Very well done. Very well said, thank you, Nick. Let's keep moving on to term Number 5. Yasser earlier you brought us first mover advantage. You could even argue you were taking advantage of a first mover advantage with that introduction of that term. What do you have now for term Number 5? Yasser El-Shimy: For term number five, I'm going with insider ownership. Insider ownership refers to the shares of a company that are owned by executives, directors, and other key insiders. Think, for example, venture capital firms and so on that may have invested early in the business and kept their shares in the business as they IPOed. These individuals often have significant control over the company and they exercise a lot of influence over its decisions and how the company operates. But I think the most important element of insider ownership is the signals that it sends to market. I'm going to just go ahead and say that generally speaking, the higher the insider ownership, the more positive I feel about the stock, and I can go on about why that's the case, if you'd like. David Gardner: Well, do go on a little bit about why that's the case. Yasser El-Shimy: I think there's an important signal in the insider ownership here. The first one is alignment of interests. The higher the insider the ownership, the more certain you are as a retail investor, that the company's management has skin in the game. It's deeply invested in the company and its success, and that the interests of management should align, hopefully with those of other shareholders who have obviously vested interest in the company's success. But it can also be a confidence indicator. It shows you that executives, directors, and so on, feel pretty bullish about where the company is headed and the business they are creating and that's always a good indicator to have. Finally, I think also and that's my favorite one, perhaps, it should signal an inclination on the part of management and the board to be more long-term oriented or have more of a long-term focus. Companies with higher insidership, they often prioritize sustainable long-term growth over just the quarterly earnings and kind of trying to move the company around one way or another in order to make it for just one quarter. David Gardner: Thank you for that, Yasser and Yasser and or other senior analysts, if I'm interested by this, if I'd like to know how to find these numbers, what is a ready source that you could recommend that I as an individual investor tap into? Yasser El-Shimy: Sure. One easy free source to use, although I cannot vouch for the veracity of those statistics would be Yahoo Finance. If you go on Yahoo Finance and you write the stock name, under financials, you'll find a bullet that says, Percentage of shares owned by insiders or something like that along those lines. That's a very easy way for retail investors to access that information. Although, for us, we tend to rely on other more professional behind payroll sources for that data. Nick Sciple: Yeah, I might also just a double underline. You can go to the proxy statement, which we talked about earlier. That won't be updated throughout the year, unless there's additional special meetings at least around May, every year, you'll get the proxy statement filed for the companies that you follow, and they will disclose all shareholders, usually over 5% and then also for any named executive officers, they'll tell you exactly how many shares those individuals hold. The proxy statement at least once a year, will give you some of that information as well. Yasser El-Shimy: I have to give Nick kudos for weaving in his proxy statement again into this term. Bravo Nick David Gardner: Plus one to Nick. [laughs] I do ask you guys just to independently come up with your terms, but it is fun to see the interconnectedness, because in insider ownership, we do see some proxy statement. We also see some 10b51 trading plan. These are one level down in terms of complexity. This is more under the hood relative to many people that we meet in society at the water cooler at work on the bus or in our investment club who don't necessarily know these things or know how to look for these things but they do count. Thank you. Thank you Yasser, thank you Nick, for those comments, Yasser interesting and illustrative sentence, please. Yasser El-Shimy: Let's go with this one. The Gardner Brothers' big insider ownership in the Motley Fool gives us Fools confidence in the business and its future. David Gardner: Well, I really appreciate that. Come on, score one for the home team and without navel-gazing too much, thank you for that. Tom and I are substantial owners of the Motley Fool. All of the other owners are our employees. We really have no outside capital in our company, despite having taken in a lot of venture capital money back in the day. That's a fun story we don't often talk about, but thank you for that, Yasser. Appreciate that. Insider ownership. By the way, we always hope our insiders are friendly, good people. Sometimes they are active private equity types or showing up trying to sway or take over the board. This is also something to be guarding against in some cases. Let's move on to our final term this week. Gotta Know The Lingo, Vol. 7. David Meier, last time you went with portfolio management, is the next one tied in? David Meier: Not really. David Gardner: That's fine. David Meier: Yes, I appreciate that. David Gardner: It's a horse of a different color. David Meier: But it is one that's been popping up in the news lately. From a current event standpoint, the term that I would bring to everybody is stagflation. It's probably a term that we haven't heard here in the United States for going on 40 plus years because I think that was the last time it occurred. What is stagflation? It is the combination of stagnant growth so the growth of our economy is very small to zero at a time when inflation stagflation is rising. This is actually a very bad scenario for our economy. One of the reasons that it's bad is because those two things work against each other. For example, if I wanted to increase the growth of investment in our country, one thing I could do is I could bring down interest rates. But bringing down interest rates actually might make the inflation problem worse. Making the inflation problem worse we would all feel the negative effects of rising prices. But one way that I can make inflation come down is to increase rates. But the unfortunate byproduct of that is if I increase rates to combat inflation, I actually might push the economy into a recession because companies will not be willing to invest in growth in whether it's factories or human capital and things like that. The fact that it's coming up in the news gives me a little bit of pause, and that's why I think it'd be good to bring it to listeners today. David Gardner: I appreciate that, David. The last time I really heard that in a regular way was in my undergraduate economics course at the University of North Carolina Chapel Hill, which, by the way, was the late 1980s, which is the last time reflecting on it at that point that it had happened. I admit I ended up not majoring in Econ. I went the English literature route. I didn't really tie a bone or complete this. But, David, have you looked back at this, can you remind us of how we got out of it the first time through? David Meier: Well, this is part of the problem. It actually takes a long time to get out of it. If I remember my history correctly, there was significant stagflation in the early '70s, but it wasn't until the late '70s and early '80s when interest rates increased, some of it from the Fed actually pushed the economy into a recession. Again, it's a negative outcome that we didn't necessarily want, but that's what resets things, unfortunately. The recession resets the expectations, the aggregate demand comes down, people stop buying things. Therefore, prices moderate. You combat the inflation. Then people say, oh, wait, there's an opportunity. Let me start investing because United States has typically been a great place to always invest. Then the economy then mends itself on the way out. Yasser El-Shimy: Let me throw you a curveball, David.[laughs] David Gardner: Not a hand grenade this time. Yasser El-Shimy: Not a hand grenade this time. David Meier: I expect nothing less from you. Yasser El-Shimy: It's just a curveball. If I were to put you on the spot and ask you to choose either 10 years of stagflation or 10 years of deflation, which would you go for? David Meier: Oh, boy, I would go for 10 years of stagflation. If we had 10 years of deflation, that would be exponentially worse than stagflation, because at least we have a little bit of growth, prices might be moving higher, but we would still be able to consume things. In a deflationary environment, the problem there would be even if prices are coming down, no one would be buying anything because most likely companies would be shedding labor. We'd probably see in a situation like that, unemployment rising rapidly. Again, we're talking deflation across the board, there are certain instances where deflation is a good thing. But if all of our prices are going down, then businesses are probably struggling. If businesses are struggling, employment is struggling, therefore, citizens are struggling. I'd much rather have 10 years of stagflation. David Gardner: Fortunately, we haven't had deflation in any meaningful way in a long time. Although there have been worries over the last 15 years. The markets have reacted, and it's not pretty. Let's actually add some pretty here, David. What is your interesting illustrative sentence to close? David Meier: So Peter Lynch, going back to him again, also said, If you spend 13 minutes a year studying the economy, you've probably wasted 10 minutes. I disagree. Given that stagflation has reared its ugly head again, I suggest spending at least five minutes on it. David Gardner: Are you throwing a hand grenade at Peter Lynch on this podcast? David Meier: No, it's definitely not a hand grenade. [laughs] It is a backhanded compliment.[laughs] David Gardner: Well said. Fellow Fools, there you have it. Gotta Know The Lingo, Vol. 7 We had six terms this week, just to review them in order. Proxy statement. First-mover advantage, portfolio management, 10b51 trading plan, insider ownership and how to find it, and stagflation. I think my talented fellow Fools did indeed bring some simpler and some more advanced, a little bit of header talk here at the end of this week's podcast. How'd you score at home? Remember, 0, 1 or 2 for each of those, feel free to tweet it out if you got a high score or a particularly low score. We hope your results, dear listeners speak for themselves, whether it was a 0, 1, or 2 for each of our terms, we had a lot of fun bringing that to you this week. Thank you again to Nick Sciple, Yasser El-Shimy, and David Meier. In fact, I want to give them each an opportunity for a final line. It's baseball season again and in Major League Baseball, as hitters come up to bat, they get their requested walk-up music played. For my senior analysts this week, I thought, why not give them a walk-off line? Let's do it in order. Nick Sciple, you're up first with your walk-off line. Nick Sciple: I think it's OK to steal lines from other people and bring them together and make them in. David Gardner: Sure. Nick Sciple: Something new so here's what I'll go. On the Canadian Investing give me love to quote Stein's Law, that which cannot go on forever must stop. I think that certainly describes the macroeconomic world that we're in today. Jack Bogle always used to say, You should stay the course. Keep on investing. My favorite head football coach ever. Nick Sciple says, trust the process. Listen, in this world that we're in, that which cannot go forever, must stop. Stay the course, trust the process, and you'll be a successful investor over the long term. David Gardner: Pretty good walk-off line. Thank you, Nick. Yasser, your walk-off line. Yasser El-Shimy: Sure. As a recent steward of our global partners' service, I would like to remind investors that there are other markets beyond the United States, and that is not to say that we should not be investing in the US, absolutely not. But rather, that diversification is not just for sectors or market caps, but it's also for geographic locations, and being overly concentrated in one geography can come with its fair bit of risk. Look at your portfolio, think about how diversified you are from a geographic perspective. David Gardner: Thank you, Yasser. Very well said. Could you put the name again on the service that you help lead? Yasser El-Shimy: Global Partners. David Gardner: Something to consider signing up for, fellow Fools. Let's go to David Meier. David, your walk-off line. David Meier: How do I top those two? I guess maybe I don't need to top it, but how am I even in the same ballpark? David Gardner: Just play music with this. David Meier: I'll give it a try. In periods of short-term volatility, quality companies are always your long-term friends. David Gardner: What a nice close. I was reminded last time on volume six in this series, our fellow Fool Analyst Sanmeet Deo rocked the Dos Eckes man of TV advertising and fame, who says, "As you'll all remember, stay thirsty, my friends." But Sanmeet went with "Stay curious, Fools." That is indeed the spirit of this series. Gotta Know The Lingo, where we're here to educate, especially, of course, always to amuse and rich, as well, but to educate. We're actually building up quite a glossary of terms, A-Z. Once you start multiplying 6*7, we've done 40 plus terms and concepts at this point. If you enjoyed what you heard and want to keep learning with your child in the car or just by yourself on your phone somewhere, Google, Gotta Know The Lingo, Rule Breaker Investing, and you'll see our previous six episodes in this series. A final reminder next week it's my most self-indulgent podcast of each year because it's my birthday week. What have you learned from me? It'll be the latest addition to 2025 of what you've learned from David Gardner. It's always fun to summarize the cardinal points or things that you've heard from me and just share them back. I take your gifts in the form of emails, rbi@ is the address, and then I share them back out as a summary of some of the most important takeaways that I can give you in investing and business and life. Again, rbi@ You can tweet us at @rbipodcast. In the meantime, have a foolish week. Fool-on. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. David Gardner has positions in Alphabet, Amazon, Berkshire Hathaway, and Netflix. David Meier has no position in any of the stocks mentioned. Nicholas Sciple has positions in TKO Group Holdings and has the following options: short January 2027 $150 puts on TKO Group Holdings. Yasser El-Shimy has positions in Amazon and Uber Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, Cisco Systems, Netflix, Prologis, and Uber Technologies. The Motley Fool recommends TKO Group Holdings and recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy. Rule Breaker Investing's Gotta Know the Lingo, Vol. 7 was originally published by The Motley Fool
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10-04-2025
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Rule Breaker Investing: Essays From Yesterday, Vol. 7
It's time once again to dust off Motley Fool co-founder David Gardner's old writings and pull some lessons forward into the light of today. In this podcast we discuss buying stocks that you already own, annual predictions, risk ratings, and keeping a record of your investment decisions. We look back in order to be smarter about looking forward! To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $296,487!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $37,700!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $509,884!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of April 5, 2025 This video was recorded on April 02, 2025 David Gardner: I got a secret for you. Actually, it's a secret weapon for you as an investor today. One word for you and no. It's not plastics. History. History. It's secret because most people don't have much of it. They follow financial media outlets, which through TV and social media display and promote such a short memory, quoting stocks minute to minute, throwing the bells and whistles of our attention at whatever's just happened. Well, as a Fool, I love to look back. The lessons we really learn, learn and earn are a consequence of observing and living through history, measured in years, not hours or days. Well, for years, I wrote short essays to kick off our monthly Motley Fool issues. I'm a quoting, as I say that they used to be snail mail mailed out to members back in the day. Well, today, the Motley Fool is, of course, pretty much fully digital and wedon't do paper copies anymore, and we don't do opening essays. But I put a lot of time into those essays, and they occurred over a long narrative arc of market history 2002-2017, 15 years worth of investing lessons in Motley Fool Stock Advisor and Rule Breakers. In this world of now now now, I say, you and I open up April 2025 by getting smarter, happier, and richer today for the lessons learned from yesterday. Only on this week's Rule Breaker Investing. Mary Long: It's the Rule Breaker Investing podcast with Motley Fool co founder David Gardner. David Gardner: Welcome back to Rule Breaker Investing. March Market Cap Madness. Most of the madness, even the sports madness is just about over. We had a lovely mailbag last week. Really enjoyed that. Thank you all for your wonderful notes. I enjoyed sharing my 20 favorite words, especially. But that was then, this is now, and let's get into it, essays from yesterday. Volume 7. This is the seventh in the series. And we last brought you the previous episode 7 months ago. It was September 4th of last year. So a couple of ground rules about how this series works. First of all, I completely randomize which essays I'll be sharing with you. So I don't know ahead of time until we plan this podcast, what I'll be speaking about, and I randomize it. Now, I wish I could cherry pick my best and favorite essays written over the years. I guess I like all of them. It's just that some of them were more right than others. So you never know how right or wrong I'll be with any of these. It's completely randomized, and often I'll refer to some stocks. So we get to look them up now and see how they've done since and we're always going to have some doozies both ways. That's the first ground rule randomized. The second is they're in chronological order. So we go from earliest to latest. For example, this particular episode, I'll be sharing an essay from May 2003. That was one of our earliest Motley Fool Stock Advisor issues. Then we'll jump forward to 2013, 15 and 16. Now, what matters isn't so much what I was saying back then, though, it's fun. What matters is what we can learn from it now. The purpose of the Motley Fool is, of course, to make you smarter, happier, and richer. I'm looking to do all three every week on this podcast, but especially this week, focusing on that word smarter with this one. Before we get started, as I shared at the start of the year, my 2025 book, Rule Breaker Investing is available for pre order now after 30 years of stock picking. This is my magnum opus, a lifetime of lessons distilled into one definitive guide and each week until the book launches on September 16. I'm sharing a random excerpt. We break open the book to a random page, and I read a few sentences. So let's do it. Here's this week's page Breaker preview. It's one sentence from early on in the book quote by the way, I need to take a deep breath for this quote. Here's my longest sentence of the book. Apologies ahead of time, but it just feels right to deliver this in one mouthful. Even though we disagreed on one key point with Jack Bogle, the founder of both Vanguard and of the Index Fund revolution, that individual investors should not, he said, buy individual stocks, we say you should. We dearly love Jack as a person and what he stood for and did in this world, which was to help wipe it of bad advisors and the compensation systems that drove those people because of overpriced opaque schemes, Ponzi but others, too, that were enabled by a status quo where the average person wasn't educated about money and thus, as an adult, was walking into a red light district of financial choices where even some of the cops couldn't be trusted. That's this week's page Breaker preview to pre order my final word on stock picking shaped by three decades of market crushing success. Just type Rule Breaker investing into barnes and or wherever you shop for fine books. And thank you to everyone is pre ordered. That means a lot to me. All right, essays from yesterday, volume seven. Rick Engdll, if I could get please, a little bit of wayback music. In fact, as we fire up our Wayback music machine, we need to go way way back with this one, Rick. The month was May 2003, and this was the introduction to Motley Fool Stock Advisor. It was entitled Back then we didn't have really titles for these. Later, we eventually dreamed up the idea of titling these essays. So if you go back to it, you'll see the title of this is introduction to May 2003 issue. And here is that essay. Dear reader, if you've been checking our stock scorecard hourly and be honest, who hasn't you may be convinced that investing is a bit of a crapshoot. Certainly, as the war unfolds, emotion and sentiment always at work in our financial markets are working double time. Hence, the wild swings as reflected in our scorecard. But I assure you, there's nothing random or irrational about stock investing. Over the long term, if the US economy grows, so too will the stock market. And in all markets, good and bad, well managed companies, particularly those that consistently surprise investors with their businesses and cash earnings eventually see their stocks head higher. The secret is to find those companies and have the courage to buy them in good times and bad. Sometimes you don't have to look very far. Late last summer, a few months after we launched our Motley Fool Stock Advisor, my brother Tom had a curious thought. Why he proposed? Don't we each take time out in an upcoming issue? To review our past picks. We could assign letter grades to each one for the company's business prospects, another for valuation, and then re select whichever was our favorite at the time. Foremost, Tom thought you'd want our latest thinking on our prior picks, but he was also stressing that we're not too hell bent on finding a new stock each month. After all, if we're to give you our single best idea each month, why would we exclude past picks? Now, initially, I disagreed. He is my brother, after all, insisting, among other things that our readers expect new ideas, new stocks every month. But Tom is right. I agreed to update my pick in a later issue, which turned out to be December. But when the time came to re select, I couldn't settle on just one. So I covered the names with my hand, and I simply scanned the page to see which stock had graded out the best and as I lifted my hand from the page, I saw beneath it the word Marvel. Rest, as they say, is history. The stocks up 64% in the few months since. I'll be the first to point out that Tom's suggestion and methodical approach prompted this great re selection, one that perhaps ironically has outperformed all of his picks so far. I hope you re upped on Marvel, and you can thank Tom if you did. Each month we provide our very best stock ideas right then, right there, looking at our standard investment horizon of at least three years. Often, that means a new idea, but not always. But by all means, recognize that when we re select a stock, we're saying that stock is a best bet right then, right there at that price. If you've already invested some, we're saying up the anni, invest some more. And why not? When we make a boring re selection of a previously written up stock, the returns need not be boring at all. Geez, I only wish all my stocks were up 64% in four months. In fact, take a look at the stocks Tom and I have re selected so far. And there's a short table with returns I won't share right now, but I'll speak to it in a minute. And remember, these returns are since the stocks were re selected. Notice, too, that none of our re selections has lost money, and as a little group, our re selections have heartily outperformed the market. Sample size is a bit limited here. There were only five re selections at that point. So we draw grand conclusions at our own peril. Still, my sense is that we do better with these picks because we know the companies even better the second time round. The moral, a single best idea is a single best idea, regardless of whether you've seen it before. One could even argue that you should be more confident in a re selection than a new stock and thus far, our returns bear that out. Next month, Tom will review his selections to date and re op his favorite, and I'll do the same the following month. But now we have two new selections for you until then, Tom, over to you and that is the end of introduction to May 2003 issue. The first thing I'd like to note about that here in April of 2025 is that essay was published on April Fool's Day. It was the May 2003 issue, but like a lot of magazines and other publications in paper back then, our so called May issue actually got published on the first of the previous month. So here we are recording on Tuesday, April 1, April Fool's Day here in 2025. And this was literally published what I just shared with 22 years ago today. And my next note, it had been a very poor stock market. The dot bomb crash of 2001 was still settling out in early 2003. There was a war breaking out at the time in the Middle East. There was a lot of angst and doubt around stocks. People who held real estate at that time, 2003, looked like the smart ones. In fact, my brother's essay the following month was all about how people think too much of real estate these days and they've written off the stock market. People who owned stocks in May 2003 looked like rubes. Now, it is worth noting 22 years to the day later that the stock market is up 550%, the S&P 500 over these 22 years, and by the way, Motley Fool's Stock Advisor is up way more than that. Two more quick reflections for you. The first is, Tom innovated. It was such a simple innovation, but much credit to him. He said, Let's repick a stock because up until that moment, we've been publishing stock advisor from March of 2002, so it was now more than a year later. And we'd just been picking one stock after another new each time and Tom said it doesn't always have to be new. And the results that came forthwith tell their own great story. I'm not going to read to you the table that was published in that essay. An stock advisor member can go back and read it. But basically, yeah, we had Marvel up 64% with the S&P down 2%. That was from December of 2002 to when I wrote this on, of course, April Fool's Day. So it had only been a few months. We also had Whole Foods up. Amgen was about a market performer, as was Activision Blizzard. The group as a basket. This is almost like its own five stock sampler back the five stocks were up 18.3%. The market was down 0.1% on average. So they were well outperforming the market, making, of course, the key point that Tom was trying to make, which is that sometimes your best idea can be one that you've already had, and just re upping that is a wonderful way to win as an investor. So again, much credit to Tom and from that day forward, I would go on to pick Marvel again and again. And a year later, 2004, I would pick Netflix and then Netflix again, and again, over the years. And one year after that, NVDA. And a few years later, I repicked Nvidia again. And then, of course, again and again. And we eventually turned those sometime rerecs into a new feature. Longtime members will know Best Buys now was eventually born in Rule Breakers and Stock Advisor. And we turned that sense that we should relook at our existing favorite stocks in our portfolio and make that a mainstay of our services. And as the years went by, it became the most clicked feature when we released something for Stock Advisor or Rule Breakers, not our new PI. The most popular feature were the Best Buys Now, the five from past PIs that we would say, With that new issue with that new month, we like them today. Even more or just as much as we did back then. So this all makes a really good point. And the last thing I want to say is performance. I mean, I love that I included that little table in that little essay 22 years ago. I love that it was 22 years ago, that I can tell you today, 22 years later, how the market has done and how we have done since, and I love that our stock advisor site shows you all our good picks. Like Marvel and all our bad picks. We'll be mentioning a few more this, this week over time. I love, of course, that we've crushed the market. The performance of my Best Buys now in particular, tells an eloquent story, supporting Tom's vision in 2003, to start re picking stuff we'd always picked. Many lessons embedded in that essay, but maybe the biggest takeaway for you and me here, not just in 2025, but any year going forward, is when you have new money coming in, take a hard look at stocks you already have in your portfolio. If you're listening to be Rule Breaker Investor habit number two is to add up. Don't double down, tend to add new money. If you're going to add it to existing picks, add it to the ones that are going up to your winners, throw good money after good, as I've often said, is maybe a great takeaway as we close out Essay number one. Let's move on to essay from yesterday, number two, and now we're going forward through time. It's almost ten years after I wrote that first essay that February 2013 was the page we turned on our calendars, and I go to my Rule Breaker's opening essay in that February 2013 issue, which was entitled New Year's Resolution. Here it is. At the start of this new year, it's natural to look ahead and wonder, what kind of year will this be for our breakers? January triggers humanity to look 12 months ahead, and that's much longer term than most people usually think about their money, yet it's still just a fraction of the three to five year increments that have always guided us here at Rule Breakers. Of course, the media outlets want market calls, but I rarely make them. Now, last year, in this intro, I did write January 2012. "I'm not a predicting fool, but I have a pretty bullish feeling about the NASDAQ performance in 2012 based prominently on what's happened since July 2011." We had all watched our returns, and some of our favorite companies temporarily cave in at the end of 2011, so I was going with my gut. It was the right call for 2012, amid all the political grandstanding and "fiscal cliff" and some doomsday economic forecasts, yes, Virginia, the NASDAQ really did rise 14%. Again, I'm not a predicting fool, but I have a pretty bullish feeling about 2013. If I had to make a call, I'd say NASDAQ 2013 up. The percentages are with us. Historically, the market rises two years out of three. You just wouldn't know it based on how the media covers the markets. Also, not helping is the lack of financial education. Worldwide. People tend to fear what they don't know, and I suspect most Americans think the stock market's returns look parabolic, when the truth is they're hyperbolic, but enough hyperbole NASDAQ 2013 up. But I could be wrong, and rule Breaker Investing isn't about one year market calls anyway. Another thought for the year ahead. In 2013, we promised to make extra efforts to make the best use of your time. For instance, on the day that Zipcar got bought out by Ava's Budget, did you get direct to your inbox an email featuring our perspective? You did if you were a Rule Breaker member who'd put Ticker symbol ZIP on his or her my scorecard. Of course, the information could be found on the site as well, but that's one example of us sending relevant info to those most concerned well, spamming rule Breaker members who presumably don't care much. The key is that you help us help you by here using my scorecard. There's one idea we have for improving our service. Your ideas are always welcomed at our RB members suggestions Board for 2013 up or down Fool on. That was the end of New Year's resolution, my Rule Breakers February 2013 essay. My first note, looking back now, and this is true every year. People always want the annual prediction, don't they? It doesn't really matter to Rule Breaker investors, but near the start of every new year, the media can't help itself. I'm sure we do this at these days too. They want to think about the year ahead and have people make calls that, by the way, are usually unaccountable. Because rarely do I ever hear a year later someone go back and say, Here's what you predicted on this podcast or this television show a year ago about this or that market year. In fact, note number two, let's note that the calls never really extend more than a year. At the start of a year, they just want your call for that year. If you try to say, I'd like to make a two year prediction or a five year prediction, nobody's really interested. In fact, after you start that year with your market prediction, the rest of the year, the financial media tends just to settle down into a quarter by quarter mode. It's largely just about this next earnings report, and after this one, well, the one after that. Everyone's attention shrinks further from a year where we started the year looking a year ahead, which was, by the way, always short term anyway. But then we just get down to each quarter. Now, I know any regular listener of this podcast, my fellow Rule Breaker, I know you know this isn't the right way to view the stock market or your portfolio. Two more notes about that SA. The third was, you're probably wondering, how did the market do in 2013, and I'm happy to say, Hey, I was right. The NASDAQ was up 34% that year. It clearly came just maybe a year or two before I settled into what has become my habit on this podcast and when I'm on other people's podcasts, my habit each year to say, I think the stock market's going up this year. That's my single market prediction I make at the beginning of every year. The joke, and it's not really a joke totally, but the joke is the market goes up two years out of three, so I have an incredibly good record as a market timer. Most market timers are flipping coins right about half the time. I'm right two thirds of the time because at the start of each year, I say, I think the market's going up this year. I can see from that 2013 essay I hadn't yet settled into that rhythm. I was still trying to call it one year at a time. Finally, I'd like to note that whether it was 2013 or when we launched the Motley Fool on AOL, August 4th of 1994, or right here today, April Fool's Day, as we record, in 2025, we're always looking to improve our services. That was the final paragraph of that essay, New Year's resolution. I was pointing out that people who were using our My Scorecard tool on the site at the time, if they had Zipcar, ticker symbol ZIP listed there, they got a special email from us with our write up about Zipcar being bought out by Avis Budget, which in fact, it was years ago. People who didn't get that email, that's because they didn't list ZIP as a stock that was of interest to them on their My Scorecard tool. I will just say, I hope we're better today in 2025, it's saving you time and being relevant to you than we were 12 years ago when I wrote that. I'll always say the Motley Fool is at its best when we combine empathy. We're all fellow armchair investors. We combine empathy with you, with intelligence, with our best ideas to serve you up something that's helpful and that respects your time. That's always been the aim. You can see I was speaking to that in February 2013 when, by the way, Zipcar got bought up by Ava's Budget, Zipcar wasn't really much of a winning stock for us at Motley Fool Rule Breakers despite that buyout. Speaking of Molly Full Stock Advisor, if you're enjoying this week's podcast, and you're ready to take your investing chops to the next level. Head over to to join Motley Fool Stock Advisor, our flagship Investing Service. As a Stock Advisor member, you get at least two new stock picks each month. That includes some rerec as well, rankings of a whole scorecard of companies and access to all episodes of our premium podcast, and that's Stock Advisor Round table. That shows only available to premium Motley Fool members. It focuses on Foolish recommendations and takes a deeper dive into the businesses we cover, featuring Fool analysts you already know and love from listening to Motley Fool Money. My brother Tom Gardner appears regularly on bonus episodes of Stock Advisor Round Table to discuss what's new in the Stock Advisor universe and answer questions sent in from Motley Fool members. Again, just show up, point your browser, See you online. On to essay from yesterday. Number three, let's go forward two more years in time. Essay number two is February 2013. This one is February 2015, and it's from Motley Fool Stock Advisor. The title is risk ratings for new members. Now here's that essay. I, David, this month, have never been satisfied by traditional risk measures applied to stocks. Most common is probably the proverbial high, medium low, subjective blase labels that leave me cold. Or typically in academia, risk equates to the Beta of a stock, Beta measures how exaggerated are a stock's moves relative to the averages. While a stock's past volatility may be a risk factor, by no means, is it a real indicator of the true risk of holding a stock for the long term. I think rating a stock's risk should be more forward looking, more fun, more educational, and indeed, more numerical. For true investors, the long term minded, like you and me, we should be more focused on the business than the stock itself. That's why for a few years now, our team has been putting numbers on the riskiness of our stocks. With so many new members of stock advisor joining in the past year, I want to make sure you know of this resource. I define risk as the likelihood of permanently losing a large amount of your investment. Our risk ratings range from zero, no risk at all to 25. Insanely risky. The higher the number, the higher the risk. To obtain our ratings, we ask 25 yes or no questions of a business and its stock, and each no adds plus one to our risk rating. Our set of questions is open to all, meaning that any member can embrace and employ our methodology. How might you use this new tool? Lots of ways. Here are a few. One, look at the risk ratings we published for your stocks in order to gain greater intelligence, assessing how safe or dangerous each is to hold, invest accordingly. For instance, both and Gilead Sciences are worth about $140 billion, but one has a safe risk rating of six, while the other is significantly riskier. Ten. To see which is which, visit our site's recommendations tab, looking at the active stocks in order to see the ratings for every stock we cover. Two, familiarize yourself with the methodology and begin to use it to rate other stocks you're considering or hold outside of stock advisor. Three, come onto our discussion boards and share your findings. Every act of sharing speeds up someone else's investment research and knowledge. You will be helped and can help others with this. It's worth noting that every starter stock on our list has a risk rating of eight or lower. We really believe every new stock advisor member should load up on a dozen or more stocks from our service, starting with the safer ones. Happy Fool year. Well, a few reflections back on risk ratings for new members, again, written ten years ago, February 2015, I continue to believe that risk ratings are a needed and great resource for investors. We still use them in some places on our site, I think, but I've made a real point of using that methodology for a podcast or two over the years, just to refresh it and make sure you, especially if you're a new listener, know of the methodology and the resource. In fact, we last did a calculating risk Foolishly episode. That's the name of the series on January 24th of last year. 1.24.24, check it. In fact, I had two Foolish friends come on, and we ran Chewy Ticker symbol CHWY and Kinsale Capital Group KNSL through those full 25 questions, two completely different companies with different risk ratings, but all united by the same system, which yielded a number for each. It's also a fun note coming out of March Market Cap Matis. It's a fun note to note that you can go back and listen to that podcast January 24, 2024 and learn the whole system Chewy and Kinsale, and you're led through it by the two Fools who joined me that week, Emily Flippen and Andy Cross, the very two who closed out our world championship a couple of weeks ago on the Market Cap Game Show. It was obviously not something I would have expected back in January 2024, that that would be true. But it's really fun to note that Emily and Andy talk you through my risk ratings methodology in that podcast. By the way, I'm reminded we should do another one of those this year. In fact, if anybody would like to write into this month's mailbag, rbi at is our email address. Of course, I love getting your mail about any of our episodes, but reacting to this one, if there's a particular company or request you have about maybe doing our next in the calculating risk Foolishly series, maybe this summer, make me a suggestion. So that's one thought back reading that essay from 10 years ago. Before I go to my second and final reflection on this essay, I do just want to mention I love the risk rating system because the higher the number, the higher the risk. So to me, it's very intuitive. And in fact, we've never given any stock a risk of zero. I've designed the system, so no stock would have a risk of zero because no risk at all will never be true of any equity you're thinking about putting into your portfolio. Anyway, there's a lot more I could say about that, but, A, you could listen to the podcast from last year or B. I'm sure we'll do one this year coming up this summer. My final reflection is just to note since I called it out in that essay, how and Gilead Sciences have done since February of 2015, because, as I mentioned, they had the same market cap. That month, as I wrote that essay, they did have different risk ratings. As you might guess, Amazon had the lower risk rating of six, and Gilead Sciences had a higher risk rating at 10, not a crazy high risk rating, but markedly riskier. Here's how they've done since that month. Since that month, the S&P 500 is up 200%. So over the last 10 years, the stock market has tripled. is up 1,200%. That would be a 13 bagger using Peter Lynch's multibagger parlance that I lean on a lot. So Amazon is a 13 bagger. In the meantime, Gilead Sciences is where its stock was 10 years ago. It's up 0%. Now, I'm not trying to make a point that our risk rating system is predictive and helps you pick out which stocks will beat, which others. I would also like to note, I picked Gilead Sciences along with Amazon. One has way outperformed the other, but those both have been Motley Fool picks, but it's fun to revisit that 10 years later and see how those stocks have done. All right, let's move on to our last one this week. Essay from yesterday number four, we'll jump it for just one more year. The year 2016, the month was June, and the Rule Breakers essay introducing the June 2016 issue was entitled What is infront of One's Nose. And here it is. I did my Rule Breaker investing podcast today, and on this one dated May 25, 2016, you can listen to it via iTunes, Spotify, etc. I pull a quote from an at RBI podcast follower on Twitter named At Wellington Randi. Randy's profile quote comes from George Orwell. To see what is in front of one's nose is a constant struggle. Love it. So true. You can hear more about my reflections on it in the podcast, but I want to add a couple of thoughts here. That line comes from Orwell's essay entitled In Front of Your Nose. As is often the case when you find a great quotation, you're rewarded for going to the source, checking context, reading a bit more. And so I quote a little bit more from that essay. To see what is in front of one's nose needs a constant struggle. One thing that helps toward it is to keep a diary or at any rate, to keep some kind of record of one's opinions about important events. Otherwise, when some particularly absurd belief is exploded by events, one may simply forget that one ever held it. And now continuing with the second half of my Rule Breakers essay, What is in front of one's nose, I wrote two Rule Breaking thoughts for you. One. This is one reason I love Motley Fool CAPS, @ I can put my thumb up or down for any stock, be accountable, and be scored from that date forward for my opinion. Further, I can spend a little time typing in a few sentences as to why I put forth that opinion. I have now done it 392 times since the debut of CAPS in 2006, ten years of learning, ten years of keeping Orwell's words some kind of record of one's opinions about important events, has been an invaluable part of my learning and development as a stock picker and future thinker. Are you serious about learning to pick stocks? If you're not already using CAPS? Take Orwell and me up on our recommendation, keep some kind of record. And two, beyond CAPS, I have the benefit and sometimes detriment of having a live updated scorecard for every stock I've ever picked, here in Rule Breakers, and in Stock Advisor. That includes a full write up for each, elucidating the reasons for my and my team's recommendations. That is also incredibly valuable, not just for me, but for you, you can go back and learn why we recommended Bydu in 2006, up 21 times in value. Or first solar in 2009, it lost 91% and everything in between. To close, what is in front of my nose these days, I think yours, too, is that we are at an unprecedented time of technological innovation. It will yield huge value for all of us, both as consumers and rule Breaker investors get invested with us and Fool on. And that was What is in front of One's nose, the Rule Breakers intro from June 2016. If you're really interested in hearing more thoughts on the Orwell quote, as I started that essay, I did it right here on this podcast, which is a reminder that while I no longer do opening essays for Rule Breakers and stock advisor, those were only ever once a month or so. I'm here with you every week, and when we reach July of this year, it will have ten years of a new fresh podcast every week from Rule Breaker Investing, thanks most of all, to my longtime producer Rick Engdol and, of course, many others. So while essays from yesterday no longer exist, I actually try to give you far more insights and add value to your life, trying to make you smarter, happier, and richer every week. And that has been true for years and years and something that I love doing this podcast. Well, a few more thoughts about what is in front of one's nose. The first is just that mention of Motley Fool CAPS, and I just want to say I'm sad about Motley Fool CAPS. As a resource, it's a pale shadow of what it once was. We really haven't invested that much or kept it up very well on our site. I do think that it is such a valuable resource, and I'm kind of sad about its present state. I do hope the company will make an effort to reinvigorate. I think there is such value to it. You know, I was reading Kevin Kelly's wonderful book, The inevitable, his book about technological predictions. He wrote it back around 2016. Motley Fool CAPS, he highlighted at one point in that book, which I took a lot of pride in 10 years ago or so. But now CAPS is hard to find at all on our site, and I would love to see that change. I can't move on to other reflections without making sure I reflect that. For those of you who've used CAPS and enjoyed it over the years, thank you. It's a way to add value to each other as investors, a community stock picking tool. And then one more thought, this one, much more about the stocks. And in fact, the ones I mentioned in that essay, I mentioned Baidu, which I think at that time, 2016 had been our number one performer in Motley Fool Rule Breakers up 21 times in value. It's actually down 50% since I wrote that essay. The S&P 500 is up 160% since I wrote that essay in June 2016, the S&P 500 up 160%, Baidu, down 50% First Solar. Also mentioned, up 160% right in line with the market. Why am I talking about these? Well, it's interesting just to know what's happened since. The rule Breakers team right near Christmas 2022 decided to jettison Baidu from our service, and they made a good call. The stocks actually down 20% since. The market has done well since. Baidu has really ended up being an underperformer, even though it still has some cobwebs in my own personal portfolio. So congratulations to the rule Breaker team letting go a market underperformer these last several years. I also want to note First Solar and its journey through Motley Fool Rule Breakers. I'm referencing it in that essay as a stock that was down 91% for us, and we had sold it at that point. So that was a permanent record. It was. It was first picked in 2009, not a good stock market environment, and it lost a huge amount of value. 91% over the subsequent three years we sold disconsolately in 2012. And so there I was mentioning it a few years later, and that essay is our worst performer in Rule Breakers at the time. But I want to shout out again the Motley Fool Rule Breakers service because we repicked it First Solar a year after the essay that I just shared with you in July of 2017. It's my colleague Carl Teal, longtime Rule Breakers present day Rule Breakers team member. And as he wrote up, that recommendation of First Solar in July of 2017 he reflected on how we'd already picked it once and lost 91% of its value for our members. And I actually think it takes some gall, maybe even some courage to repick a stock for paying members that had already lost you 90% plus some years before, but Carl wrote and I quote from his By report onFirst Solar, he said, What's changed? Two key weaknesses have turned into strength by focusing on commercial installations rather than residential with those solar panels, of course, which is First Solar's business. And also, he wrote by greatly lessening its reliance on government incentives, First Solar has shown both resilience and adaptability, two traits we prize in this industry, resilience and adaptability. Well, that was from his write up in July of 2017, and I'm really happy to say that now years later, here's we embark upon April 2025 First Solar is up 178% beating the market by 20 percentage points. So my takeaway at the end of this essay and really at the end of this week's podcast is too often we convince ourselves we missed it. We missed a stock. Either we didn't buy a winning stock in the first place or we did poorly with something, and we sold it and we write it off forever. So I want to congratulate the Rule Breakers team for being willing to go back in and re pick a stock that had already been such a loser. It reminds me in some ways of when I first picked Nvidia for Motley Fool Stock Advisor, because I'd been cheering against it. I recommended the rival of Nvidia, three DfX in the early DFX didn't end up panning out well at all. In fact, Nvidia bought The DFX for a song, but I decided with some humility with my tail between my legs to eventually just recommend Nvidia, and I'm darn glad I did in 2005, and the rest is history. So often we convince ourselves that we missed a stock. People could have bought Nvidia or Amazon in 2005, 2010, 2015, 20. Some people still haven't bought them today and should here in 2025, convincing ourselves we missed it. And also sometimes we have a bad experience with the stock, and keeping an open mind, it's worth sometimes revisiting, not always, but reconsidering. And so shout out again to the Rule Breakers team for that. All right. Well, from introduction to May 2003 issue, which led off the podcast to what is in front of One's nose, which closes us out this week. There it was essays from yesterday, volume seven, for essays. As always, we acknowledge some horrendous mistakes, for example,First Solar 2009-12. Ouch but also some heartwarming and inspiring facts because all of these things happened, and I wrote about them at the time, and so by actually using history, as our secret weapon, harnessing the power of our wayback machine, we're having that opportunity together this week to reflect and take away some lessons that we can use this month, this year are investing lives going forward, all powered by essays from yesterday. Fool on. Mary Long: As always, people on this program may have interest in the stocks they talk about, and the Molly Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing @ John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Gardner has positions in Amazon, Baidu, and Netflix. Mary Long has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Amgen, Baidu, Best Buy, Chewy, First Solar, Gilead Sciences, Kinsale Capital Group, Netflix, and Nvidia. The Motley Fool has a disclosure policy. Rule Breaker Investing: Essays From Yesterday, Vol. 7 was originally published by The Motley Fool
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31-03-2025
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"Rule Breaker Investing" Mailbag: Chalkboard Wisdom and Favorite Words
In this podcast, Motley Fool co-founder David Gardner fields listener questions and offers reflections with trademark Foolishness. Topics include: Should you use forced rankings to evaluate your portfolio? Can AI help guide investment decisions? Do Elon Musk and Tesla continue to reflect your best vision of the future? Why does following the simplest of instructions matter so profoundly? To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $284,402!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $41,312!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $503,617!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 24, 2025 This video was recorded on March 20, 2025 David Gardner: It's that time of the month for Rule Breaker Investing. It is your mailbag. The final Wednesday of every month. A delight. Thank you for stuffing the mailbag with fun this particular month. Speaking of fun, that was the theme of March. It is every year for this podcast, at least for the last couple, as we've filled up March with market cap game shows, specifically our world championships. Congratulations to our new world champion Emily Flippen, who acquitted herself well, taking on Andy Cross, our Chief Investment Officer, last week, but even the previous two weeks, so much fun, the final four. I hope you played along with us. I hope you scored some points too. That was the real focus of March. Usually, at the start of Mailbag, I like to review the different episodes we've done. Usually, we have a motley array of them, but this time, it's just pure madness. Let's move on then to some hot takes from Twitter to kickoff this week's podcast Pro Shop Guy MF. That's Mike McMahon at Pro Shop Guy. MF1 on Twitter X. Mike, you wrote a biased poll ran during the Monday Morning Show with The Motley Fool's Morning Show, viewers are rooting for Emily Flippen to dethrone reigning champ Andy Cross in the March Madness Market Cap Game on the Rule Breaker investing podcast. Mike, you showed a poll you said admittedly biased. I wasn't watching the Motley Fool Morning Show at the time, but it sounds as there was a plug for Emily, and most people were cheering her on. I realize we often do cheer on the underdog. She was taking on our present world champions. Thanks for referencing that at Neil and Rockville. I think that would be Rockville, Marilyn Neil. You wrote in, please, only one of these three have actually had to fight her way around a desert island. Obviously, Emily will be the final survivor. Neil, you ended up being right. At Pops Spiffy Love Spiffy Pops. You wrote Looking forward to playing along. This is just my insertion, that is, after all, the whole point of the game show for you to play along with us. Andy rocking those pie socks, but also his on shoes. I know the ticker symbol, ON, ON, is popular among Fool members. Thanks for some fun hot takes mostly centered on the market cap game show, and speaking of which, I was having a conversation with my wife, Margaret, over the course of a long drive in March. She was saying you didn't really go back and redefine market cap at any point. I realized in the early days of the Market Cap Game Show, I made a big point of explaining what market cap is and how it works. Yet, we just went through an entire March. For especially newcomers to the stock market, you would have had to look it up because I never really explained market cap at any point. I thought just a brief rehash of market cap before we get into this month's mailback, the market cap of a company is just simply the number of shares issued, the shares outstanding of that company, multiplied by the share price. When you multiply those things, that gives you a sense of the value of the equity of a company the market capitalization. Now, it is a bit simplified, as I'll explain in a minute. But most people, in my experience, don't know the market caps of companies. If they're looking at stocks, they often only know the share price of a company, so they'll think, that stocks at $3.29. Well, that would be the one I should buy, say a lot of newcomers who often prefer lower-priced stocks, then, let's say, instead of at $3.29, let's say it was at $32.90 or, heaven forbid, at $329 a share. Now, a lot of people assume that, let's just say, they have $329 themselves. They should probably buy the stock at $3.29 because that would get them 100 shares of a stock rather than just say, 10 shares of a stock at 32.90 or just one share of a stock trading at $329 a share. But again, they're only looking at the price per share of the stock. How many shares does the company have outstanding? You're buying a piece of the pie when you buy stock, a slice. How big is the pie that your slice came from? Market Cap multiplies the price per share of a stock times all the shares outstanding to give you that company's overall value. Now, I said it's a little oversimplified, and it is because if a company were to get bought out by another company, let's just pretend it's a $10 billion company, so it's got a $10 billion market cap, but let's also pretend that they have a wonderful balance sheet. They have $3 billion of cash on the balance sheet and no debt. If somebody else is buying them out, technically, the enterprise value, the actual amount being exchanged, is not 10 billion because you're buying a company with three billion just sitting in the bank. The enterprise value, you subtract the cash from the market cap to get the enterprise value, which would be $7 billion. That's actually the value of that company, even though its market cap is 10. Now, let's take the opposite example. Let's pretend the company doesn't really have any cash in the bank. It has a lot of debt. We'll say $3 billion of debt on the balance sheet. If somebody else is buying them, they're actually paying basically $13 billion. The 10 billion for the market cap, and then they're having to assume $3 billion of debt. A quick study there on enterprise value, which is the slightly more intelligent, slightly more complicated view of market cap. But of course, to keep the game easy, lickety split, and for the most part, market caps are good numbers to have in mind. Anyway, we made it the market cap game show, not the enterprise value game show doesn't quite come as trippingly to the tongue. I will say this, though, as we get started now with the mailbag, it's not an easy game. The ending of Game 2, if you remember, between Bill Barker and Emily Flippen, they each made guesses around $60-70 billion. This was the tiebreaker to see who would advance to the finals. Both Bill and Emily, again, guessing around 65 billion the actual market cap of service now is 168 billion. They were both off by about $100 billion, which is a reminder that this game is not easy. It's hard to understand and know so many different companies and what the market caps might be, especially at an inflated value like $168.12 billion. Service now is by now storied market cap. Speaking of Market Cap, let's get to Mailbag item number 1, which is about the Market Cap Game Show. Thank you, Dave Geck. Dave, you wrote Today's Market Cap Game reminded me of two valuable life lessons. Now, I want to hasten to add, Dave, I've abridged your notes somewhat for presentation on the podcast because it was longer at points than I could really share. I tried to tighten this up. It's just so much fun to share, though. Thank you for writing in. Dave, you wrote, again, today's Market Cap game reminded me of two valuable life lessons. First, when Bill and Emily both gave their final guesses on the tiebreaker. I realized I wasn't entirely clear on the rules. That recalled my father's wise advice, Dave writes. Don't play any game where you don't know the rules. Dave said I had misunderstood the parameter. I failed to consider that you were an English major, David, and would come up with rules that required less math. I blame you. However, in hindsight, if you'd intended the parameter to be an average, you probably would have explicitly stated that. Let me pause there for a quick sec, just to remind that in that final tiebreaker with service now, both Bill and Emily had very similar overlapping guesses. As I already mentioned, I'll just say Bill said 60-69 billion. Emily said 55-73 billion. They were both off by about 100 billion, but since Emily said 73, her top-end parameter. That was closer than Bill's 69 billion, his high-end parameter, and therefore, she won the tiebreaker in advance. But there was debate raised by Bill, and here by Dave, who knows a lot more about math than I do, saying, why don't you take the average and look for the midpoint of each of their guesses? Had I done so, Bill at 64.5 billion would have edged out Emily at 64 billion and won the tiebreaker. But again, as you wrote, Dave, that is not actually the rule. If it was an average, I would have explicitly stated that we've always gone with the closer parameter to the actual market cap. Anyway, let me more importantly get to your great coming story here, Dave, but you did say, like Bill, I take 100% responsibility for my loss. It's a reminder that details matter, even or especially in games. Now, speaking of details mattering, Dave writes the second lesson came from a math instructor at West Point in 1971. A fellow cadet who was first in our math class got called up to the chalkboard. Yep, real chalkback then to do a proof. In front of the class. Upon completing the proof, you were supposed to write QED and underline it twice with the green piece of chalk. He went through the proof, and it looked good, and it was well explained, and the instructor asked the class what was wrong. At first, no one said anything. Then I piped in Dave writes. He only has one green line under QED when there should be two. The instructor said yes and informed the cadet that he would get a zero for his board work for the day. This was crushing. The probability of him making up the ground to get back to the top of the class that semester was now practically nil. He looked a little stunned, and the instructor asked him if he thought that was too harsh. He admitted that he thought it was in that he solved the hard part of the proof that most people in the basic course could not, but that they could all double underline. He would think he should receive only one or two-tenths off, not a zero. The instructor got in front of him and said, we are in agreement that underlining twice is simple. However, your demonstrated ability to follow the simplest of instructions may someday get yourself and your people killed. ''Dave closes this stuck with me deeply during my time in military leadership, reinforcing the importance of precision and attention to detail, even in the smallest tasks. Details matter. Thanks again for the Market Cap game and the memories it triggered, Fool on David Geck.'' Well, Dave, that is quite a story. I think it speaks for itself. I'm sure we can all see both sides of that one, how heartbreaking it was that the guy who is top in the class in math and did everything right except that second double underline with the green chalk would get a zero. We see how seemingly unfair that is, and yet we can also see the instructor making a point that you still remember 50-plus years later, I bet that cadet does, and many others in the class, and it made an important point that might be more important than math. Let's move on to mailbag item number 2. One's from Rod Reid. Thanks for writing in, Dear David, I've been following the Motley Fool since the days of Rule Breakers and Rulemakers and have subscribed to various services over the last 25-plus years. I was listening to last month's mailbag episode where a couple of the contributors asked questions about when and why to sell stocks. Now, as one who almost never sells stocks, it caused me to think about my own practices and wonder if I should approach my portfolio differently and consider the opportunity costs of holding on to some stocks instead of selling and investing in something different. As I did so, I thought back Rod writes to the way Jack Welch, former CEO of GE, reputedly required his leaders to rank their employees and fire the bottom 10% each year. Now, while I think this is a terrible way to run a company, it made me wonder if it might be a good way to at least evaluate my portfolio. I know you love keeping score and have a scorecard for your own stocks. Have you ever practiced any ranking system on your scorecard? If so, what factors drive your rankings, and does that system generate any selling considerations when you evaluate your portfolio? Incidentally, Rod concludes I decided to see if ChatGPT could help me out with this process. I entered all the ticker symbols and then asked it to rank my portfolio by predicted return over the next five years. Then I compared the list to the Stock Advisor rankings. I didn't make any immediate sell decisions, but it gave me a different way to think about if and when and why. I should sell. Thank you in advance for considering my question. Fool on, Rod, Reed. Well, Rod, I really appreciate this note, and from many different angles, we don't have time to cover all of them, but I want to start first and foremost by saying, I think it's great what you did. I think it's great to consult ChatGPT. I'm glad you checked our Motley Fool Stock Advisor rankings, which are available to members of Stock Advisor when they want to see our stocks ranked. I think that thinking through which stocks make the most sense is always a good thing to do. That goes for not every single day, but I would say quarterly. On a quarterly basis, that's a good check in time for a lot of us as investors to just reassess how our portfolio is doing and what we think of our stocks. Again, I realize some people may want to do that more frequently, and some others might just want to do it once a year, or so. But I think doing that work of assessment and reconsideration always makes a lot of sense. I don't like the Jack Welch approach to business. I've also heard it said of Microsoft at different points. It might be one of those old saws that goes around and people mention it for big companies, really big companies. Usually, when companies get as big as GE did once or Microsoft, some people start rooting against them just because they're so big. They start developing stories or perspectives about those companies that may or may not be reflective of what actually happened in the culture, but just simply taking you at your word, this was what Jack Welch did. I was not a big Jack Welch fan, so I didn't keep up. But I don't think firing the bottom 10% of your employees annually is a great way to create a culture that people want to be part of. But your question cleverly reframes this. You're basically saying, well, what about forced rankings as a good discipline for evaluating our portfolios? Again, I think that can be helpful. But I would also say, make sure you're not oversimplifying what sometimes can be a nuanced picture because it's not just how you might rank stocks, but it's also the allocations that you presently have in those stocks. For example, if you had one of your very favorite stocks and you were over allocated to that stock. It was outside of your sleep number, you were like, I may own too much of this at this point. That actually might be a better stock to consider selling than one that you don't like anymore, and that is lower ranked. I think a key factor is, of course, what are your actual allocations? I also appreciate you calling out the importance of scoring, and I would say that if you do intend to sell with more frequency than you did in the past, make sure you're scoring what you're doing so that you can see after three or five years of evaluation whether that's working out for you or not. I do favor holding on to stocks for long periods of time, allowing those shares to compound for you. I know you've been around the Motley Fool for 25 plus years so presumably, you've had that happen in your own portfolio. I think that's really a great state to get any portfolio in. I try not to mess too much with the compounding clock that operates underneath all of our portfolios, the stock market rising 10% or so every seven years. If we're outperforming it with rule-breaker stocks, we're doing better than that and you can start seeing the value of holding on and letting a company like NVIDIA or Amazon keep compounding instead of selling against it and trying to figure out where else to allocate that money. I also think that sometimes, it is a good reason to sell if you've got a better place to put the money. If you're fully invested and a new company comes along that you really like. Of course, I think it's a good idea to consider selling something of what you have in order to put it in that new stock. I just want to make sure, Rod and everybody else listening that you're keeping score. If you're going to start a new approach, one that you're not quite sure about, make sure you're keeping score and learning because that creates a learning system. If you're not keeping score, it's hard to know how you're doing or what you should do going forward. Anyway, a great note, I would never want to let go the bottom 10% of my employees but I would consider letting go the bottom 10% of stocks that I didn't like. The little selling I do usually are stocks that just haven't worked out for me, and I'm reducing my capital gains by getting rid of losers from my portfolio. I've always had some losers, and we as rule-breaker investors always will have some losers, so it's something that comes rather naturally to me. On to Mailbag item Number 3. Hi, David. Long story very short. I'm a long time Berkshire shareholder and one of the stories of the recent decade. Frank writes is how much GEICO has lost ground to Progressive? The biggest reason, Frank writes, Progressive embrace technology by trying to use telematics to underwrite smarter. Now, this is David now speaking not Frank, our correspondent. I'm not a big insurance industry follower, so I want to make sure I define telematics for all of us if you too are not somebody who follows this very carefully. Telematics is the use of telecommunications and informatics. If you put those two things together, data transmission and data processing, you can get real time information about vehicles or machinery, or equipment. Think about using something like GPS technology. Then you've got the on-board diagnostics in cars. You have sensor, wireless communication, the vehicle location, its speed, its fuel usage. Its maintenance status can all be monitored and analyzed remotely. You can see how auto insurers can monitor driving patterns like your speed, your braking, your mileage to offer personalized premiums to their customers. That's what's going on here with the backstory of telematics and Progressive. Picking it up there from Frank's note, Frank writes, progressive was behind GEICO in 2011 in market share, and now they are firmly ahead with 50 more business than GEICO. In the mindset, the Rule Breaker mindset of winners win, look for the top dogs, smart backing matters, etc. Berkshire is now trying to catch up firmly playing Pepsi to progressive Coca Cola. Frank continues, I decided to buy some progressive stock ticker symbol PGR today. When it comes to telematics and data usage, PGR is the top dog and first mover. The CEO, I believe, is an example of smart backing. There's strong recent price performance, a lot of the traits we look for in Rule Breaker stocks. In some of my very brief homework, David Rubenstein, who has an interview show on Bloomberg is also today the principal owner of the Baltimore Orioles an incredibly generous benefactor in the greater DC Baltimore area. David Rubenstein interviewed Progressive CEO back in late 2020. The stock back then was around $85 a share. Now, Frank goes, I have a very small snippet of how he opened the show. He said he thought he missed it by saying the next company she goes to, I will buy the stock. Frank says, this is classic, and he sent us the audio from the opening of Rubenstein's show, which we will now for 33 seconds, share right here. In United States today, there are only 38 women who are serving as CEOs of Fortune 500 companies. One of those with the best track record is Tricia Griffith. She is the CEO of Progressive Insurance, one of the largest automobile insurance companies in the United States. She started out as a claim adjuster and worked her way up over many years to become in 2016 the CEO. Since that time, the stock is up more than 175%. My big mistake was I didn't know her then and I didn't buy the stock in the company. If she ever leaves that company and goes anywhere else, I'm going to buy that stock right away. Picking it back up with Frank's commentary, you see he said his big mistake was not buying the stock when she took over. I think the bigger mistake, Frank writes, was not buying the stock after the interview. Now, it happens to be a rec on Stock Advisor on your brother Tom's side. Anyway, I just wanted to share this with you because in the years gone by, I would also have said, I missed it. But now, I'm learning and taking a position. Fool on Frank I. Well, Frank I, thank you very much for going above and beyond sharing the audio clip from five years ago. But of course, I esteem your viewpoint and I love the lesson that you've learned. In fact, Frank went on to include the data of how progressive stock is done against the S&P 500 from the day that interview aired, which was October 7th of 2020. The stock from that day has gone from 96-281 or so, and that means the stock is up 220%. The S&P 500 just up 79%. We can both smile askance a little bit at each other Frank, to think that a billionaire investor as successful as Rubenstein has been thinks that he missed a great company because he wasn't there early days when she signed on as CEO. Yet, the stock has more than tripled from the day of that interview five years ago. I did tweet out on Twitter X where I'm at David G Fool, if anybody wants to follow me. I did tweet out last July the following. I said five of the most harmful words for a potential Rule Breaker investor looking at Rule Breaker stocks. Here they are. I guess, I missed it. So much money left on the table, such an opportunity cost around that mentality. Most great Rule Breakers and you've made a good case, Frank, for Progressive being one of it's funny because I don't follow the insurance industry. I just see all the funny ads from Progressive and GEICO, and all of their competitors. They're trying to out funny each other, especially on sports broadcast, especially throughout this March. I've seen so many television ads. State Farm is going really big in March madness this year. They're all quite funny, but they all blend in together. I myself didn't realize how Progressive has started to dominate GEICO based on a fantastic CEO and a real commitment to technology. Thanks for helping us realize not just the state of the insurance industry today Frank, but also I missed it being one of the most harmful mentalities we can have as investors. Usually, as Frank understands, the winners keep on winning. Well, I've done this all month long on this podcast. It's half time, and I'll do it one more time. This is the last halftime we'll have. I don't think we'll do this anymore in April, but I've been doing my page breaker previews as halftime entertainment throughout this month. As I shared at the start of the year, my 2025 book Rule Breaker Investing is available for pre-order now. After 30 years of stock picking, this is my magnum opus, a lifetime of lessons distilled into one definitive guide each week, until the book launches on September 16th of this year. I'm sharing a random excerpt. We just break open the book to a random page, and I read a few sentences. Let's do it here. This week's page breaker preview for your March 2025 Mailbag. Three sentences from early on in the book, and I quote, "For me, I like to think forward 42 years which allows that seven year double to happen six times. What does that mean? It means every dollar bill you're holding or spending at Starbucks, or investing today is actually worth $64 to your future self." That's this week's page breaker preview, every dollar is actually $64. To pre-order my final word on stock picking shaped by three decades of success, just type Rule Breaker Investing into Barnes and or wherever you shop for fine books. I want to thank everyone who's already pre-ordered. That means a lot to me. Onto Rule Breaker Mailbag item Number 4, really appreciate the whimsy here. Thank you, Chris Abels. You write, Dear David, I'm curious. Do you ever collect words that you find particularly interesting or meaningful? Here are a few I've come across. Chris writes, that I quite like. I'm going to note before I share these that each of these is of foreign derivation. None of these is English. I appreciate your global view, your global sharing here, Chris. Here's the first one. Number 1, Sisu, S-I-S-U. Chris writes this finish word embodies the concepts of determination, perseverance, and resilience in the face of adversity. It's a fundamental aspect of finish, culture, and identity Sisu. The second one of Chris's 3 is Wabi Sabi. Chris writes, this Japanese aesthetic appreciates the beauty found in imperfection, impermanence, and incompleteness. Finally, Number 3, JUGAAD, which is spelled J-U-G-A-A-D. I might be butchering the pronunciation, I'm doing my best. Chris writes this Hindi word describes a flexible approach to problem solving that utilizes limited resources in innovative ways. Chris signs his note. Meaningfully to me, KaluKale Crisabelas When I think of KaluKale, I think of the poem Jabberwock. Where the Jabberwock, my son, the teeth that bite, the claws that snatch, beware the Jubjub bird and Shun the Frumious Bandersnatch. KaluKale to you as well Chris, a fellow lover of language and of poetry. No doubt, as well. Well, I'm so glad that you wrote it. First of all, I love each of your three words Sisu, Wabi Sabi, and JUGAAD. I think what's special about them is each of them comes from outside the English language, and yet that attempt to convey the meaning of a word in another culture, a concept that we don't necessarily have in our culture, but when you share it, it makes a lot of sense. It sounds really good. Wabi Sabi, that Japanese aesthetic appreciating the beauty found in imperfection and impermanence. I love it. But since you open this can of worms, I do keep a list of my favorite words, and I have 20 of them. I'm not going to explain each one. They're all English, so you're going to know most of them. Maybe there are one or two stories here, but thank you for giving me a platform. About 10 years since I started this podcast to share my 20 favorite words, these didn't come to me all at once. It's just when I heard one, let's say seven years ago or three years ago, I had to add it to my list. Here, they are alphabetically. The first one is balmy. I love the feeling of balmy. I love the word balmy. The second is camel case. That's describing not upper case letters or lower case letters. But if you think about something like iPad, where that P is capitalized right in the middle of a word like a camel's hump, that is truly camel case. I just love that there's a word for that in the English language. Number 3 is crackerjack as something excellent. I was looking up the etymology of this one. The year was 1893, it became a US colloquialism. Fanciful construction that caramel coated popcorn and peanuts confection was said to have been introduced at the world's Colombian exposition the World's Fair in the year 1893. Supposedly, a salesman gave it a name when he tasted some and said, that's a crackerjack because at the time, the phrase crackerjack meant something. That's something excellent. The name was trademarked in 1896. The prize in every box by the way, introduced in 1912. I just like Crackerjack as an adjective. That is a crackerjack stock pick. The fourth and fifth on my list of 20 favorite words are dreams because it's such a beautiful word, and it means so much to so many of us. Number 5 is Excelsior, which means ever higher in Latin. It is my Motley value here at The Motley Fool. In Rule Breaker Investing when it comes out on September 16th, the final chapter is entitled Excelsior. My next five freedom global. These are just words that I think are important, and I think that's in part why I love them. Joy. Number 9 is Lucubration. That one needs brief explanation. If you've ever pulled an all night or if you've ever worked by lamplight, if you're a regular candlelight person, that's what you're doing. You're Lucubrative. You're working by lamplight, Lucu speaking to the Latin for light, that first half of the word, abrasion, about work, so work by lamplight, I love because I've done it throughout my life. I am a Lucubrator, and perhaps you are, as well. Number 10 is meliorism. Now, of all of mine, this is the one you have to look up in a dictionary to understand what's happening, M-E-L-I-O-R-I-S-M. Of course, once I tell you the concept, you'll see why I love it so much. It's a metaphysical concept, but it's the belief that the world tends to become better or is capable of improvement. I think that explains as much as anything why the stock market goes up decade after decade and century after century over long periods of time, from lower left to upper right, despite people thinking, My gosh, it's different this time. It's all going to end badly. It hasn't ever. I do believe things will continue to become better, not every day, and not in every way. But if you take the long view, as an investor, your whole life long, meliorism is a huge reason you're going to profit. Well, those are words 1-10. I feel like if I go on too long and I'm being too self-indulgent, I'll keep moving here. Number 11 is mystery. Just love the word. Love the concept. Number 12 is nocturne. That does, of course, come from, I think it's the French, so it's not exactly an English word, but the musical composition of a dreamy character, a composition appropriate to the night, nocturne's a beautiful word. Number 13 is a little bit of a 10-cent word. It's nugatory. Look it up, N-U-G-A-T-O-R-Y, basically means something that's useless, trifling of no value. Nugatory. But if you look at the etymology, you'll see why I love this word. The Latin nugatorius did indeed mean worthless, trifling, futile, but it came from nugator, which was a jester, or a trifler or a braggart, but nugatus passed participle of nugari to trifle, jest. Play the fool. So you can see why I love the word nugatory number 13th on my alphabetical list, because first of all, it's such a dramatically overstated and complicated word for just the meaning of useless. Nugatory itself feels futile and invalid as a word, but that it all derives from the court jester, from playing the fool, has special meaning to me, and I suppose many of us as well. Word number 14, Oligophagous, another 10-cent word, comes from, if you know what oligopolies are, oligarchies, rule of a few, economic domination by a few. That's the oligo part, and phage means to eat. When I came across this word in my reading 20 or 30 years ago, I was like, My gosh, there's a word for that. That's me. People who eat a few things. I am not somebody who's particularly daring when it comes to going out to restaurants, or my palate is quite limited. I tend to eat the same things over and over again. And the word Olegopagus O-L-I-G-O-P-H-A-G-O-S is, of course, for me, maybe for you, too, if I've just described is on my list of my 20 favorite words. I'll just run through my last six quickly. Again, each of these words I love, but most of us understand what these are plucky is number 15. Number 16 is racy. Number 17 is rapt as in R-A-P-T. Number 18, sang foie. Of course, this from the French, as well. Just means coolness, mental composure, sang foie, cold bloodedness from the French, and my last two are treasure, and then whimsy. I always think of Dorothy Sayers, the novelist, and her character, Lord Peter Whimsy, and his coat of arms, his family motto, where my whimsy takes me. I think for a lot of us, that's true of life. Often, if we let our whimsy take us places, we find treasure. So those last two words connect for me. Anyway, thank you, Chris Abels, for giving me an opportunity to share my 20 favorite words, which I've never gotten to do before in this podcast. I'll probably never do it again, but I hope there are a few there that popped out for some of you and might enter your own favorite words list. On to Rule Breaker mailbag item number 5. This one from Bruce. Bailey, thanks for writing in. Bruce is a longtime Motley Fool subscriber and listener to the Rule Breaker Investing podcast. I appreciate your stance that, generally speaking, you avoid any involvement in political statements or analysis. On the other hand, Bruce writes, I have heard you say many times that, "Your portfolio should reflect your best vision for our future." Words to that effect. With that in mind, Bruce asks, I'm wondering if Elon Musk and Tesla continue to reflect your best vision of the future signed Bruce Bailey. Well, Bruce, thank you, first of all, for understanding and knowing how I think about these things. You're right. Even though I grew up in Washington, DC. I don't spend a lot of time thinking about the political world. I've benefited Net N, I think not being part of the news grind, it's exhausting these days to follow the news, and yet, I never really have followed the news very much. I do follow news of my companies. I tend to follow the private sector much more carefully than the public sector, and I think I've been well rewarded for doing so. There are a lot of reasons why I think the private sector is actually what runs our country far more than the public sector, which is often how newspapers or academia tends to talk about our country. Of course, understandably, if you're president or in Congress or you're a Supreme Court justice, you have real responsibility felt by so many Americans, but at the same time, if you are every day delivering packages to my doorstep, if you're serving me my morning coffee, if you're making sure I have insurance, if you are filling my refrigerator or my wardrobe with the things that make my life good every day, you have a much more intimate and important role in my life, typically, than Congress. I've said that from time to time on this podcast in the past. Now, you specifically, Bruce, are asking about Elon Musk, and I understand why and Tesla by extension. And I realize for a lot of Americans, they're very, very divided on Elon Musk and his role, both in the private sector and now the public sector, as well. I am generally pretty neutral here. I'm pretty arm's length. I want to say, most Americans, I think it's true of a majority of Americans, we do believe the federal government should be smaller. It has grown over large. It's maybe doing a lot more than we needed to in some ways. And so I think there's something about courage and vision, even though I'm not always a big fan of how it's been done or what's being done. Nevertheless, I think, looking back, history may see that some of these decisions were good but hard decisions, even if again, they weren't done very well. So I think a lot of people hearing me, especially in the US, recognize that that can be a good thing. On the other hand, Elon's direct alignment with one of the parties, not the other, I don't think leads to my favorite view of America. I prefer a United America where we all realize we share a lot more in common than what drives us apart. I do feel as if the present political milia often tries to do the opposite, and Elon has certainly bought his way into that. But apart from just reading political tea leaves, I want to say, as far as Tesla and what Tesla has done in this world, I think what Tesla has done is wonderful. For the most part has spurred a revolution, obviously, starting with vehicles to get us to more sustainable uses of energy. By the way, electric cars have a lot of superior benefits above the traditional gas engine cars that we all grew up with, the lack of maintenance and a lot of the other expenses that are necessary for vehicles that I grew up with are now gone from the electric vehicle life that I've been leading personally for the last 15 years or so. So I think what Tesla does is really quite wonderful in the world. I realize some people are now equating Elon with Tesla. I would say, If you know anybody who works at Tesla, you're going to have a lot of different types of people who work at Tesla. I'm sure some of the people working at Tesla don't like how Elon has been behaving himself. Others may be solidly behind him. From my standpoint, I'm looking at the company and its effects on the world. For me, I would say, Bruce, in conclusion, Yeah, my portfolio, which owns Tesla, does reflect my best vision of the future. And I would be the first to say, I have many friends who do not like Tesla now or Elon at all. Maybe they never did. I would be the first to say, Don't own that stock. Because you're right, Bruce, I think your portfolio should reflect your best vision for our future. Each of us sees different things. I think our money should be where our mouths are at all times. I think your portfolio should express yourself. For my own part, I'm not a huge Elon fan boy, but I am grateful that Elon was on this earth when I was the value that he's added, whether we're looking at outer space, or we're looking at new areas like robots, there's Neuralink. Of course, PayPal in his past, there are all kinds of innovation and value that Elon Musk has brought. And I would say I'm grateful that he's here in the United States of America. I'm sure glad that he's one of ours as opposed to in another country, maybe a country hostile to the United States of America. I think he is an incredible asset. If you disagree, I'd be the first to say, please don't buy the stock. There are many other stocks you could have in your portfolio. I'm not even asking people to mirror what I'm doing. I'm here saying, make your portfolio reflect your best vision for our future before we go to our final mailbag, just want to briefly look at Tesla's stock. On November 1st, just days before the US election months ago, it was at $250 a share. On December 17, it hit a high of $475. It nearly doubled over the course of a month and a half. And by March 10, it was back where it started on November 1 at $250 a share. As I'm recording this podcast Tuesday afternoon, it's back up over $280 a share. This has been a phenomenal stock, no matter how you look at even the prices where it is now having come down well down from its pricing in December is still well ahead of where it was a year ago, especially five or 10 years ago. And I think Tesla is going to continue innovating in ways that benefit the world. Yeah, I'm going to personally remain invested in a stock that has added a lot of value to my portfolio, but I think a company that's added a lot of value to the world. If your mileage differs, I'm good with that. Just make sure you're invested in a way that's true for you. Before our final mailbag item, let me just mention the Motley Fool's Breakfast News. You can start your day with our free daily market email newsletter. That's Breakfast News from The Motley Fool, daily expert market analysis, company updates sent straight to your Inbox. Every weekday, 07:00 or 07:30 A.M. I'll be there. Without fail. You can sign up for the Motley Fool's Breakfast News at It's part of my every morning. I hope you're enjoying it as well. Our final mailbag item, this one, probably the shortest of the week, a throwaway, but I wanted to honor a tweet dropped to me by Daniel Trindade Daniels at Daniel T-R-I-N-D-A-D-E seven at Daniel Trindade 7, who wrote, Hey, David, I'm listening to your recently released mailbag episode. That would be February last month. Daniel said, There's a small pet peeve that I'd like to bring up. You've been calling Axon Enterprise, Axon Energy. Multiple times. Happens to all of us. Daniel kindly writes, cheers, and speak soon. That was the tweet. I said, First of all, I love it when people correct me because I don't want to walk around saying the wrong thing. I want to say the right things. I've always known it was Axon Enterprise. I've recommended the stock multiple times. It's in lots of Fool's portfolios, our family portfolio, as well. And I can't believe for one mailbag I was saying Axon Energy. It doesn't really make any sense. Axon has nothing to do with energy. But I also wish it wasn't Axon Enterprise. Daniel and others, every business is an enterprise. I'm not sure or clear why Axon needs to have enterprise on the back end of its corporate name. So here's a quick question for the Smith family founders of Axon. Do we need the enterprise? Can we just shorten at some point to Axon? I actually think that would be stronger from a branding standpoint. And it would cause me not to make silly mistakes like the one I made apparently all last month's mailbag long. I want to thank Daniel Trindade for correcting this Fool. Even as I try to end this week's podcast, in my ear, my producer Heather Horton lets me know, David, there actually is an Axon Energy. It's out there. Look it up. Indeed, I'm looking I'm on the web right now, just google Axon Energy Services, and you're going to see this is its own company, but it's not ticker symbol A-X-O-N. It's not Axon Enterprise. It looks like it's based in Houston, Texas. Anyway, I sit I'm going to say doubly corrected. I blew Axon Enterprise last month, and I wouldn't want anyone to think Axon Energy isn't a thing because it is. Well, from military mathematicians who score zero, they didn't double underline to how Progressive became a Rule Breaker in the otherwise staid world of insurance, to some of our favorite words, to making sure your portfolio reflects your best vision for our future. Thanks for joining me this week and really all march long on this mad, fun month. It was where our Whimsy took us. Fool on. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Gardner has positions in Amazon, Berkshire Hathaway, PayPal, Starbucks, and Tesla. The Motley Fool has positions in and recommends Amazon, Axon Enterprise, Berkshire Hathaway, Microsoft, Nvidia, PayPal, Progressive, Starbucks, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, long January 2027 $42.50 calls on PayPal, short January 2026 $405 calls on Microsoft, and short March 2025 $85 calls on PayPal. The Motley Fool has a disclosure policy. "Rule Breaker Investing" Mailbag: Chalkboard Wisdom and Favorite Words was originally published by The Motley Fool
