Things That Matter: Staying Foolish

Cover Story, by Mark Robertson, Managing Partner April 1st, 2015

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It’s been ten years since we featured David Gardner’s speech on “Once Upon A Time in the Land of Investing” on these pages. April is their turf and the month should be a celebration of thoughtful investing.

Once upon a time, David (and Tom) imagined “a financial media that eschewed its fascination with forecasting the market and instead sought to educate.” Learning by doing … learning by demonstration … it’s a way of life at Manifest Investing and the Motley Fool and you’re invited to come along. We’ll show you how.

“Stay hungry. Stay Foolish.” — Steven Spielberg

Imagine if the collective understanding of investing was dramatically improved, resulting in better investing, better business and enlightenment with respect to the challenges of investing. (A Tribute to Foolish Investing, April 2005)

I still consider their original book, The Motley Fool Investment Guide: How The FOOL beats Wall Street’s wise men and HOW YOU CAN TOO, as recommended reading for investors of all experience levels. If you or someone close to you is relatively new to investing, the Rules of Engagement apply here, too:

Be a sponge.

That’s right. Read this — or any other tome on investing — armed with a highlighter, note cards and a willingness to bend page corners where needed. Buy your own copy so you can write in it. Sister Rita Claire taught me that it is acceptable to write in my books as long as they’re not stamped with “Property of the St. John’s Library” on the inside front cover. Go ahead. Wreck them. Be a sponge.

Be a sponge. When you encounter a new term or concept, highlight it or make a note on an index card and then hunt down the answers. Hunt until you understand. If you’re fortunate enough to be in an investment club, canvas or poll them from your deck of cards. Take notes and check their work. It’s not disrespectful to verify. It’s called diligence.

The Power of Demonstration

One of the most powerful things that we have in common with Fool Nation is the number of ongoing demonstrations. Learn by doing. There are few better methods of learning. It’s one of the charming attributes of our Beardstown Ladies investment club. “You can do this. We’ll show you how.”

Successful long term investing changes lives and enables better futures. Our community seeks to dramatically simplify the world of investing and to transform the experience into something less mysterious, less stressful and more successful.

We point to the Tin Cup demonstration portfolio (where every “mechanical” decision is detailed) to Solomon Select features and fun with things like the relatively passive Bare Naked Million portfolio. Investing can be foreboding. But it doesn’t have to be. Discover how Foolish you can be. We’ll show you how.

Dashing Performance

In the early days of the Motley Fool (back when men were men and we did that thing with dial up and the fax sound) they would often chime during America OnLine discussions about how nobody in the media kept track of talking head performance, let alone hold them accountable. Yes, I said AOL. It’s part of Foolish heritage. And some of us can already talk about that fax wailing thing with our grandchildren. “Tell me again, Grandma … or is it too horrible?”

Bottom line? They keep score. We keep score. It’s still true that not very many do.

As cited by Mark Hulbert, namesake of the Hulbert Financial Digest, who has carved a niche by keeping score — the Fool newsletters (portfolios) rank among the top positions among the hundreds tracked by the service.

Learning by demonstration is a powerful thing, particularly when you keep the report card away from the shredder.

We featured the Stock Advisor newsletter during a Dashboard Diagnostics webcast back in July 2012. This was a very popular session as we spent time on overall performance with an emphasis on lessons learned — good and bad.

We keep score. We build tracking dashboards to display our results. We learn. David Gardner shares an interesting statistic in the latest monthly newsletter where he dwells on the “18 Losers” that have lost more than 50-94% of their original value over the last decade or so. And then he observes that the performance of the 18th best performer — all by itself — equates to “wiping out almost half of all of those 50%-plus losses.”

The Rest of The Story …

As a community of investors, you’re even better. Take a look at the current holdings of the MANIFEST 40. First, you’ll see nothing resembling a 50% loser … or a 94% loser. In fact, the (unrealized) “loss” from the $200 invested in Schlumberger (SLB) and AT&T (T) is a mere $21.86. So the stock where $100 is now greater than $121.86 completely offsets the loss. In our case, it’s the performance of Home Depot (HD) at $125.07 — our 31st best performer among the active holdings.

Dwell on that dashboard for a bit. The holdings don’t change very often. Results like Cognizant Technology (618%) and Apple (402.3%) carry a lot of deadwood when needed. “The math is Foolish, powerful and strong.” Patiently let it work for you. Fool on!