We answer your questions.
In this podcast, Motley Fool co-founder David Gardner welcomes back an expert as we start by talking about risk. Then, a nonpartisan look at the upcoming election: What truly drives America forward — regardless of political tides?
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our beginner’s guide to investing in stocks. A full transcript follows the video.
This video was recorded on Oct. 30, 2024.
David Gardner: Risk. We talked about it this month. Risk tolerance, risk capacity. I received a wonderful note this past week with more good thoughts for you from a fellow Fool about these things, risk. If I’m talking about receiving wonderful notes, then this must be the last Wednesday of the month. It’s that time your Rule Breaker Investing mailbag. There’s an election next week. Let’s talk about it. Only on this week’s Rule Breaker Investing.
Welcome back to Rule Breaker Investing again. The sound of rules being broken. That is the sound effect that we’ve been rocking for almost 10 years now, Rule Breaker Investing launching in July of 2015. Same sound. Welcome back. It is the October 2024 mailbag. I have three items this month. We’ll get to those shortly, but first, let’s just review where we have been in the month that was for Rule Breaker Investing. This is the fifth Wednesday of this month. Many months just have four Wednesdays, but sometimes five, therefore, we’ve had four shows that preceded this mailbag to review. We kicked off October 2nd, with stock stories, Volume 9, you have more than you think. Spent time around the campfire. With some of my favorite Fools, I hope you enjoyed. If you didn’t get a chance, join us at the Rule Breaker Investing Campfire as we share one after another. It’s generally five, didactic. Helpful investing stories, usually focused on a stock. Any one of them, I hope, would be enough to raise a smile or maybe an eyebrow, but you get five October 2nd. Hope you’ll enjoy that podcast if you didn’t get a chance to listen a week later. It was innovating the future with XPRIZEs, Elaine Hungenberg, a delightful opportunity to spend time with the Senior Vice President of Partnerships and impact at one of the more interesting organizations on Planet Earth today, XPRIZE. Their unique competitions, sparking world-changing innovations.
A lot of fun, catching up with Elaine. Introducing a friend of mine, which is often how I think about this podcast. If it’s not just me blathering at the microphone one week after another, if I’ve got friends, it’s usually cause I think they’re really interesting, and I want to share them with you. For the third Wednesday of this month, got to know the Lingo, Volume 6, again, an all fool cast here to help you understand some common and not so common investing terms. Thereby, we’ll hang a tail or two for this week’s podcast reacting to got to know the Lingo Volume 6. Then last week, yeah, we do this every year as things get increasingly scary. Over the course of October in the United States of America, we have Robert Brokamp on to tell us horror stories. But in our case, of course, financial horror stories, Volume 3, entitled Ruin Your Retirement. Unfortunately, that can happen if we’re not careful. Robert Brokamp, with just some phenomenal examples of things we want to avoid. True stories, financial horror stories, and it was a treat to have Bro on once again last week.
Onto Rule Breaker Mailbag item number 1. This one from longtime Fellow Fool and a friend of mine, Eric Easton. Eric, thank you for writing in. Eric writes, “Hi, David. I gave Amanda Kish two points for her got to know the Lingo contribution of risk capacity, which she effectively contrasted with risk tolerance. While I was very familiar with the latter and knew from experience that my own risk tolerance is quite high. Her metric of risk capacity was a brand new concept to me, which hit a bull’s eye.” So Amanda Kish, first of all, welcome back to Rule Breaker Investing, Amanda, you hit a bull’s eye.
Amanda Kish: Fantastic. I’m so glad to hear that.
David Gardner: Two points for those who know our scoring system, we won’t go back over that. You’ll have to re listen to it, dear listener. If you don’t know our Got to know the Lingo scoring system, but two points is the best score. So Amanda, you scored with Eric and I bet a bunch of other fellow Fools and listeners. Maybe before we continue, Amanda, let me just, first of all, welcome you back, great to have you. I think I said when I had you on a few weeks ago, we need to have you on soon again. Indeed, here you are in the mailbag.
Amanda Kish: Glad to be back.
David Gardner: I think it’d be great if you just restate for anybody who didn’t get to hear it, just a quick definition again of what risk capacity is and drawing a contrast with risk tolerance.
Amanda Kish: Sure. So risk capacity looks at an investor’s ability to take on risk, and it’s a little bit more objective measure than something like risk tolerance. So risk capacity looks at if there is a worst case scenario, if the market fell, something happened, what capacity do you have in your portfolio and in your financial position to absorb that risk. So it’s more about more of a quantitative objective measure versus risk tolerance looks more at the emotional aspect. Is how do you feel when the market declines? What’s your sleep number? So it’s a little bit more of the hard and fast facts versus how you feel about potential risk and losses.
David Gardner: A really great re explanation. Thank you for that, Amanda. I think a lot of us, I included, have a general sense of risk tolerance. It’s a lot of choose your own adventure and sometimes you need to have something bad happen to really understand, were you that tolerant of risk, but something that is more subjective, as you point out, risk capacity can be much more numerical. I think we’ll get into that a little bit later. Let me keep going on Eric’s note. Like you, David, I’ve always been nearly full invested in the stock market, leaving only a modest amount of ready cash at hand. This, despite encouragements from the likes of Morgan Housel and Robert Brokamp, and Amanda, among others, to keep 2-3 years worth of future financial needs in cash. So Eric going a little off the reservation there. Although we do encourage Rule Breakers to sometimes break the rules when it makes sense to them. Let me keep going. Eric goes on, “Keeping fully invested with limited cash is all well and good while you have a paying job. But it quickly becomes unraveled when you lose your job or you retire for that’s when your risk, capacity suddenly plummets.” Let me pause right there. Amanda, first of all, do you agree with what Eric saying? Second, do you have any additional color or thought around that?
Amanda Kish: I think he hits the nail right on the head. Many folks tend to think that they have a higher risk tolerance, not realizing that potentially their risk capacity is below that. It’s really when those events, we tend to think of them for ourselves as Black Swan events, not very likely, but when we look at the general population. They are things that are likely to happen. That’s really why the concept of risk capacity and knowing your tolerance as well really comes into play.
David Gardner: Thank you for that. I certainly would say now in our 10th year of this podcast, I certainly have generally encouraged people to remain fully invested through all markets. I continue to assert that and believe that while still recognizing that that advice is not appropriate for everyone. That’s part of the reason I’m really grateful we have people like Amanda Kish on our team here at the Fool, because we’re all in different situations. While I can be, I think, prescriptive around some things, the habits that I think you should form as an investor or maybe the traits I look for in Rule Breaker stocks, I actually never want to be more than suggestive when we get to things like portfolio construction or retirement investing versus early stage investing, etc. So I think it’s very important. That’s why I so appreciate Eric’s note here, because as we go on, we’re going to find out there is an event that triggers this for him. I’m not sure you or I, Amanda would call this a Black Swan event. It is unfortunate, but it’s the thing that probably something like this is going to happen at some point. So I don’t think it qualifies for Black Swan. Let me keep going. Eric writes and by this, he means his risk capacity suddenly plummeting. “This became abundantly clear to me when my dad fell and broke his leg at 99 years of age and required 24/7 caregivers, afterwards, which is very expensive.
Fortunately, his portfolio was entirely steady dividend paying companies with calmer stock prices, so we were readily able to raise the money to pay for the caregivers. That’s when I reconsidered my own strategy of all in with limited cash.” Eric goes on, “I retired early nearly a decade ago and benefited from the lucky side of sequence of returns risk.” Another point to Amanda for that one. We’ll talk about that point in a second, Amanda, but you’re scoring with Eric big with your appearance a couple of weeks ago. Sequence of returns risk as the stock market rose for the next seven years before the pandemic changed the world. So again, to review Eric’s very elderly father, boy, I hope we all make at least 99 fell and broke his leg at that point. That changed not just the financial situation for Eric and his family. Fortunately, having invested Foolishly, they were able to absorb that Amanda, but it really changed his perspective. So let me go back to you because you introduced another term and got into the Lingo and he just rocked it and gave you a plus one sequence of returns risk. Could you restate that?
Amanda Kish: Sure. So sequence of returns risk refers to the risk that the market will encounter perhaps significant decline early on, where it makes more of a difference to an investor. Typically, that happens at retirement. So the danger here is that an investor experiences a decline right before or right after they retire, thus leading the portfolio to decline and have less chance to recover versus having some good years. So that’s really a significant risk of something that we can’t control of what the market does on a year to year basis, but what the market does in those years and when you retire does have an effect on the longevity of the portfolio.
David Gardner: That is a risk, Amanda, you were very eloquent on that point and we’re underlining that here, I expect the market to go up next year personally, but whether it goes up or down, we know for sure, one year in three, historically, the market drops. As you’re pointing out, that really matters depending on when somebody is at an inflection point like, I’m no longer going to have a salary. I choose early retirement. So Eric expressing gratitude because he’d retired 10 years ago about, and that allowed him to roll up some good returns. Whereas, to continue his note, had I retired seven years later to just before the pandemic, I would have been on the unlucky side of that particular risk and my finances would not be looking nearly as well. Eric goes on after finally acknowledging the significant change in my circumstances upon retiring, I’ve made two substantial changes to my portfolio.
First, I sold 10% of my taxable portfolio and put the cash into a 5% interest bearing money market where I can quickly and reliably gain access to it. Now, of course, I’m going to be asking you about these decisions in just a second, Amanda. But that’s the first one. Let me share Eric’s second substantial change to his portfolio. He writes, “Next, within my Roth IRA, I began investing the slowly accruing dividends into dividend yielding REITs, that would be real estate investment trusts. Dividend yielding REITs, for which I wish to thank Matt Argersinger and company for their persistent encouragement to invest in this sector. I’ve been listening attentively all these years and I finally taken their advice on the matter.” I’m going to pause it there. We’re near the end of Eric’s note, but, Amanda, let me first check in with somebody who is a professional and looks over portfolios and answers these questions on a regular basis. Do you generally agree or disagree with what Eric’s done, any pointers?
Amanda Kish: Yes, I generally agree and I’m very gratified to hear that those changes were made in his portfolio. I think one of the most important things that we as investors can get right is really that mix between risky and non risky assets, stocks, and cash and bonds. He mentioned they’re selling 10% of his taxable portfolio, putting that into cash. We have always recommended, especially for folks who are tired having those couple of years of living expenses in cash. That’s so important as Eric learned with his father and suddenly needing that cash, getting that balance right, having that liquidity. It’s not exciting for investors who are used to being all in. But when you’re managing against the risk of something happening, it really is important to have that safety and that liquidity.
David Gardner: Amanda, you look at situations like this around these decisions, new commitments, sometimes new financial structures. How common would you say Eric’s case is among the calls that you take and Foolish clients that you’ve seen?
Amanda Kish: I think what Eric mentioned is actually fairly common is that as individuals, we tend to not fully embrace all the risks out there and it really takes something happening to ourselves or a family member for us to really appreciate those risks out there and what it means to have a portfolio that’s truly aligned with our risk capacity. So it’s definitely a case where we see folks with risk capacity and risk tolerance that may not be aligned on different levels. So it’s very much the case and we certainly can’t plan for every risk in life. There are things that we go crazy trying to prepare for everything. But I think everyone we tend not to want to think of bad things happening to us or to family members and to appropriately plan and prepare our portfolio and position it. We have to think about those things and that’s not easy to do, but it is important.
David Gardner: Well, thank you. Amanda, I’m going to read the end of Eric’s notes in a second, but you brought this language to the podcast a couple of weeks ago. With new language comes new thoughts and new awareness. Eric is a very intellectually curious bright guy, as I’ve got to know him, somebody who knows a lot about astronomy over the years. So I’ve always appreciated that intellectual curiosity that he exhibits. When we translate curiosity into action, that’s really what often changes the world. We hope for the good. Sometimes it could be the opposite, but for the good for most of us. In a lot of ways, this podcast, and I would say Motley Fool Money, which as of this week, won awards as the best money podcast in America. With these podcasts, a simple way of thinking about it is that we’re trying to help you, dear listener to become a better version of your financial self. Maybe the best version of your financial self and Amanda, that’s exactly what you’ve helped with this month. So thank you. Let’s close out Eric’s note and then final thoughts. He writes, “So back now to Amanda’s risk capacity. Before I retired, my risk capacity was quite high and well matched my risk tolerance.”
After I retired, that immediately changed as my risk capacity fell well below my risk tolerance. Yet it was a decade before I responded to the disparity. I have to ask, however, after my dad’s circumstances radically changed in the blink of an eye when he broke his leg, is our risk capacity ever truly as high as we believe it is? My dad, bless his soul, he made it to 100-years-old, and nearly to 101. During that time, his leg healed, and with amazing determination, he relearned to walk. I admire him, and miss him, and my mom too, your friend, Eric Eason. Well, Eric, thank you again for such a beautiful and illustrative note, and any final thoughts, Amanda.
Amanda Kish: Eric, thank you so much for your very kind and thoughtful note. As a parting note, I would just say, thank you so much for bringing some humanity to this discussion. I think in the game of investing, we can get so focused on the ups and downs of the markets and on individual companies. It’s not just about amassing money, what it’s about is having enough so we can meet our financial goals and the goals of our loved ones. Having enough where you can have a good retirement, where your spouse can have a good retirement, and will be OK even if you’re not around. So you can afford for your parents to have good care later in life. Those are really the things that we’re investing for. Again, thank you for providing that human face to why it is that we invest.
David Gardner: Well said, Amanda. I’ll just add a couple of things as well, Eric. Our risk tolerance is all over the map. Amanda spoke to that earlier. It has to be learned sometimes. By learned experience, our risk capacity is more impersonal and more data-driven. I want to turn quickly back to you, Amanda. Is there a free tool on the Internet? Is there something I can use as a Motley Fool free visitor or premium member? Since risk capacity is more objective and measurable?
Amanda Kish: Certainly. In that case, there are any number of financial calculators. That’s where you can really get at risk capacity is by running the numbers. There are definitely on Fool.com free premium financial retirement calculators. There’s certainly any number of them available out on the web. I would definitely encourage members to run some numbers, some what if scenarios. That really is where that data driven process is, is running those financial calculators.
David Gardner: Thank you. Let it be said, Rule Breaker Investing is especially focused on the long arc of, I would say, your growth years. I have less to say about your preservation years, and that’s why I’m delighted to show off the quality of people and advice that we have at the Fool. Our month end mail bag, happening more than 100 months in a row now can, in some ways, just be viewed as an exercise in me showing off, not myself, I do that in some other episodes here, but our team. Amanda Kish, thank you so much for joining us again on Rule Breaker Investing. Fool on, my friend.
Amanda Kish: Thank you so much for having me on.
David Gardner: On to Rule Breaker Mailbag Item Number 2. A post on Twitter X came in on Tuesday. We were always recording generally Tuesday afternoons for this podcast. My crack producer, in this case, Des Jones, sometimes, Rick Engdahl, both over the years, always turns it around in 24 hours or so. I’ve been on some other podcasts. I always love being on People’s Podcast. That’s fun for me. But sometimes we’ll be like, that was really fun. Thanks. When is it on? Then my host will say, oh, yeah, it’s six or seven weeks. That’s always a little sad for me because you never know how the world of the market will have changed over six or seven weeks. I’m happy to say this talented team at the Fool brings it in 24 hours every time. Thank you, ahead of time, Des, I got a post on Twitter X today from @leepace tweet. Lee is a friend, I’ll explain a little bit about him in a sec, but I wanted to underline what he says, and then just think with you, especially if you’re a fellow US American about the next week or so, and a perspective that I hope will be helpful. Lee wrote this. He said, “I have voted. I will turn cart wheels when this is over, and I will hearken back to a post from @davidgfool and Fellow Tar Heel from 2016. This is truth.” Lee goes on to quote something, I’ll quote a little bit later. But first of all, let me thank Lee for remembering something that I had posted eight years ago on Twitter and coming back and sharing that this week, a week where many of us are thinking, listening, sometimes feeling like it’s 24/7 about the election. Got a vote, get out there, battleground states, red and blue, and all of the luster and sometimes bluster that goes around an election in the United States. Typically the one that most people care about, the presidential one every four years.
About every four years, I offer a few minutes of thoughts, and that’s what I’m about to do this podcast. Because my next week’s podcast we’ll be recording on election day, and we won’t know what happened, but it’ll come out next Wednesday. Let me just start by saying that Lee, thank you for the note. Lee is a long time Fellow University of North Carolina Tar Hill. Lee’s case, a very talented writer, journalist, follower of UNC sports. Lot of you know how good we are at basketball. We’re also sometimes good at football, and Lee has added a lot of value to those who love and care about the University of North Carolina Chapel Hill over the years. This is not at all a UNC Chapel Hill thought, but I wanted to acknowledge that since he called me out as a Fellow Tar Heel, which I’m happy to be called out as. But that tweet opened up an opportunity for me to share a few thoughts. Let me share with you thought Number 1. Thought Number 1 refers back to 2016. It was in the second year of this podcast. I thought, it’s mid-October 2016, I should say something about the election, I shouldn’t have my head buried in the sand. What I found myself saying in what I called the non-political pre-election special.
What I found myself sharing was Chapter 13 of Charles Dickens’ first novel, the Pickwick papers. If you want to hear me render a dramatic reading of that, you can search back through Rule Breaker Investing Annals and Lore and hear me read out that chapter. But what you should basically know about it is that Dickens, at the age of 24, had already seen some humor in the way that politics divides us. He writes about the Town of Eatanswill, and about as a visitor, his protagonist of the Pickwick papers, Samuel Pickwick goes and visits Eatanswill. As it turns out, the town is completely divided. Everybody has either lined up in one political faction or the other. The colors in his novel happen to be blues or buffs, buff, of course, a beige color. Dickens very humorously sums up how anything the blues assert all of the buffs instantly disagree with. Nobody can jump across blue or buff party lines, everything in that fictional town. Sometimes it doesn’t seem so fictional, has been politicized, and Dickens at an early age, sends it up with a satirical chapter in a very funny book, his first book, his humorous novel, the Pickwick papers.
During a time in which it would seem to be all about the blues and the buffs, and here there are two different colors we rock popularly in conversation in this country, who’s going to win, it’s all about who’s going to win. I’ve said sometimes in the past, and I think Dickens saw it as well, politics can make us worse, because sometimes some of us end up pitting our countrymen against another countryman. When I think we actually all share so much more in common, than really we feel apart. I think we need to hear that and be reminded of that. I said that in 2016. If you want to go back and hear my non-political pre-election special, although I guess, to some, maybe everything’s political. What I may be meant to say was non-partisan pre-election special. That was true in 2016, 2020, and it’s true in 2024.
If I have a few thoughts to share, that was the first one. The second one is, are you a little tired of this as I am? Maybe you are too. Left and right. I’ve talked about this a little bit on the podcast in the past. But it seems as if everything is either ascribed to the left or to the right, two very over simple terms that make it sound like there are only two positions you could take, the left or the right. Not only does that cartoonishly oversimplify and lack all nuance to how most of us actually think, but a very important side is being missed when you hear political discussions or political reporting about the so called left and the so called right. That is the center. What I might call, some people use this word, moderates. There’s rarely, if ever, any media acknowledgment of this fact that more of us are actually moderate than our left or right. People are brought on TV from the left or the right, they’re interviewed, in the newspaper as a blue or a buff, yet the largest group of Americans, the center, the moderates, have no real platform. We’re told what the so called left and right think, we’re not told what the center thinks.
In April 2024 Pew Research Center survey, check it, 32% of Americans identify with one party, I won’t say which, 33% identify with the other party, I won’t say which. Very close, 32 and 33. Thirty five percent of us are independent. Now, some independents may be out on the so called lunatic fringe, but most are in the center. They are not blue or red, they are not left or right, they are in the center. I would say we are in the center because I affiliate this way, and more of you hearing me today also self identify this way than are in either party. How ironic is that 35% of us, the largest block of Americans, essentially have no voice typically recognized or covered in the media? I just want to point that out, and I hope you appreciate that because the center is what binds the left and the right and the center, I think, is at the heart of our country, and why I feel very optimistic and confident in the future regardless of which way the election goes. If I had a few thoughts to share, that’s Number 2. Thought Number 3. I just want to articulate something that we’ve said and established on this podcast before.
This is my opinion, but you’re listening to me this week, so I hope you at least would value my opinion. You definitely don’t need to agree with it as a Fool. I’m the first to say, please disagree. It takes often a thesis and then antithesis to get us to a synthesis, a better thought. But I think just as we in our organization, we’ve done this as the Motley Fool. I bet you, dear listener, have done this professionally or personally. You established the core values of your organization, your church, some people do it for their families. At offsite strategic planning, what are our core values? I’ve often asked in the past, our friends, and sometimes in this podcast, what do you think America’s core values are? Because that’s the real exercise that I think would help so many. If we just had a conversation about what our core values are and aligned around those, that would be such a strong step forward. Two to go. That would be such a strong step forward.
In fact, if I were antagonistic to America, if I were competing in a negative way with America, I would hope we would never do this, because then we would be fragmented and wouldn’t have a clear sense of centrality or alignment. But I will just put out here with Thought Number 3, what I think this is my personal list of America’s core values are. There five, for me, in no particular order. I would say, Number 1, liberty and freedom. Always been so important to this country. Number 2, justice, whether we’re talking about legal justice or social justice. We haven’t always given it, but we recognize its importance, and we’re trying to do better with that. There’s so much corruption in the world in so many different governments. I know there’s some in ours too, but there’s far less culturally in the United States of America than most other countries in the world. That’s because we love justice. Number 3, how could I mention enterprise business? I think that’s the true story of America. I’ll say more about that in a second. But we are such an enterprising nation, always trying to invent new solutions to old problems, introduce new possibilities, and generally for profit. Most of the great Americans I admire most are people who added huge value to all of us through the businesses they created the entrepreneurs.
The last two of our core values are maybe a little surprising, and I’m glad to end with them, because I hope they’ll stick with you. I personally believe that Value Number 4 for Americans is resilience. I think you and I need to show that through good markets and bad, especially bad markets. I think we need to show in good times and in bad, as indeed, our ancestors have demonstrated not just for decades, but for centuries. I think resilience is so much a part of the American Spirit. Number 5, and the last one is kindness.
The most un-American things that I see are the most unkind things that I hear said and done. I truly believe if you are unkind, if that’s the card you lead with, if that’s how you’re showing out to the world, I unapologetically say, I think you’re un-American. Kindness, we are indeed the most generous nation per capita on Earth. There are so many beautiful acts of kindness that, of course, don’t get reported, if it bleeds, it leads an environment, which is true of how unfortunately, for profit news tends to work in our society today. There you have it, liberty, justice, enterprise, resilience, and kindness. I showed you mine, you can show me yours. In fact, if you’d like to share on next month’s Mailbag, what you think the core values of our nation are, I’d love to feature that, because that’s the conversation, I think, especially those of us in the center need to help others with, and help ourselves in so doing. A couple closing thoughts before Mailbag Item Number 3, business, I love so much because it’s a win-win.
When in contrast to a political system, and we’re seeing this very much in 2024 that seems aimed to pit people against each other, fellow countrymen against each other. Business only works. When an entrepreneur starts something, the business ends up selling something, a product or a service, and at a price that people are voluntarily willing to pay for as customers. Those customers end up providing prosperity back to the best businesses, because, of course, they buy from them repeatedly, they pay. Here’s a key. They pay above the costs of the business. They allow the business to earn a profit. Businesses themselves then use those profits in part to have successful stocks that you and I as a Rule Breaker, investors can buy and hold. We have an opportunity pinch yourself to get a free ride if we’re just the investor part of this.
But let’s go back and look through that again. We’ve got an entrepreneur and employees working hard to please people. They’re competing against others, trying to outdo their fellow businesses at pleasing you and me, at prices we’re willing to pay. We have you and me, the customers, we’re buying from this business, not that one, we’re choosing this product, not that one because we value it. No one’s forcing our hand to buy anything in most cases in the United States of America today. When we do, when we’re paying above the costs, those businesses earn profits, which they can use to reinvest in themselves, pay dividends back to shareholders, as mentioned earlier with Amanda. Ultimately, the value of their stock, which we hope will rise over time is driven by their ability to earn and grow profit and it’s a beautiful system. As is often said, it’s not a perfect system, but it just so happens to be better than any of the often much worse systems that have yet been invented by humanity in terms of the best way to govern ourselves. I would assert capitalism done well. I call that conscious capitalism. It’s done so well so often by these kinds of companies. We should remind ourselves of that, all of the companies that I talk about each week on this podcast are exemplars generally of doing business well and right. This is an important point this month. They really are, in my opinion, the underpinnings of our society. The day after the election next week, whoever wins, Starbucks will be serving coffee to all Americans.
Amazon will deliver all Americans your packages. Patagonia will continue to model and embody sustainability and respect for the environment. Intuitive Surgical will help thousands of people walk away from minimally invasive surgeries that once took expensive days of hospital recovery. Apple will be helping people who are less tech-savvy be part of the Tech Revolution, and Mercado Libre will continue to provide a free and accessible marketplace for a portion of our world that would otherwise be even more deeply sunk in authoritarian-driven poverty. These businesses and really hundreds of thousands of others, I think, are the true story of America, where the private sector, by the way, dwarfs the public sector and always has, where our stock market, which looks ahead is at all-time highs and where moderates like me, maybe you too. I’m not prescribing. I’m just describing where moderates need to begin coming into our voice to help a political system that is premised on dividing countrymen. With Congress, by the way, is at an all-time low approval rate, which sounds bad and it is. But that’s not the note to conclude on. The note to conclude on is that it’s small business and medium-sized business and big business that gets stuff done every day for all Americans, not half or a third that’s trying to create win, win, win because that is what wins for our culture. That is a bedrock core value. It’s much stronger, in my opinion than the ballot box.
Sometimes I wonder, are we being gas-lit into thinking this election is too critical? I’m not trying to minimize its importance. I think it is. But as I mentioned earlier, for-profit news gets so many clicks for making us feel urgency. I would just say, don’t be gas-lit too much into thinking in that direction. I started off this mailbag item number 2 mentioning Lee Pace’s tweet. He was quoting me from eight years ago. Let me provide you the actual quote that Lee Pace was rocking this week and it wasn’t for me. I was quoting one of my favorite people that I’ve met through the Motley Fool over the last couple of decades, Tom Engle. Tom Engle, the longtime contributor on our Motley Fool Forums. He went by the screen name TMF 1,000, and Tom Engle, who I’ve quoted a number of times on this podcast in past Motley Fool Books, one of my very favorite people. What I’m about to share is Tom’s line. He wasn’t ever expecting that this would be read aloud by me on a podcast or shared over Twitter. But it’s a line I really admire. I also realize it won’t speak for everybody. But I’m trying to give voice for some of us who don’t often get an opportunity to share these kinds of sentiments. This really speaks to me. I hope it helps you. If it doesn’t connect with you, well, there are a lot of other things to connect with. But here’s what Tom said that Lee remembered eight years later. He wrote, I have one big rule. I never worry about anything. There’s no point to it. Some things are just not in our control. I always felt it is within all of us to win regardless of the circumstances.
A man can win even with terminal cancer if he doesn’t succumb to fear and pain and dies with dignity, not always easy. But for those not facing death to worry is just energy wasting. I have lived through many different presidents, none of them changed my life for the better or worse. I just stepped outside, admiring the fall colors, fresh air, cool temperatures neither candidate could ever change this day for me for either the better or the worse, it’s not in their power. If a change in presidents saps my strength, well, the weakness is mine. So far, no president has had that type of power over me, and I hope they never will. But if they ever do, it is my weakness. I strive to make the world a better place every day of my life and that is all any of us can do. Well, thank you again to Tom Engle for sharing that sentiment.
I hope that opens an eye or two, especially for those of us who might have our heads buried in the sand, or as Lee said in his tweet, I have voted. I will turn cartwheels when this is over. Election thoughts. I don’t do it too often. Maybe once every four years or so, I hope that helped. Onto Rule Breaker Mailbag item number 3, thank you again, John Flood, for reporting in. Always a delight, and I love this note to close. John Flood writes. Hi, David. If I tell you that my magnificent seven score is 74, then I think you’ll know immediately that I did not become a Motley Fool member yesterday or even last week, and I need to pause for a sec. Some of you will remember what your magnificent seven score is. I talked about this. In fact, on Last month.
Mailbag, that’s what John is reacting to. But in brief, your magnificent seven score is, if you take the so-called Mag seven or magnificent seven stocks, Apple, Amazon, etc, Google it, if you don’t know what they are. What I’ve often said is. Other than have an alluring label for a random basket of stocks that all have done very well, which is what I think of that phrase. Rather than just talk about those stocks, let’s talk about if we’re going to go there, how many years you, dear listener, I, or anybody else has owned those stocks. If you took those seven stocks, and you said. Well, I’ve held this one for three years, and this one for 12 years, and that one not at all. Your magnificent seven score is simply totaling up the number of years you’ve owned those companies. If you want to hear my number, well, it’s the same number it was a month ago, so you can listen to that podcast, and it’ll be plus six in another two months or so, but enough about me, this is about John Flood, John, your Mag seven score 74. John goes on. I’ve been with you and your team since around 2000. I’m delighted to be able to present a few eye-popping statistics which might make you almost as happy as they make me. Before diving in, I should add that I’ve written to you before. You even read a poem of mine out not once but on two different podcasts. Most recently, I was surprised and chuffed to be part of the poetry reprise on August 7th of 2024 this year. Yes, I do remember the poetry of Rule Breaker Investing Podcast, John, and thank you.
Let’s move on. Your magnificent seven episode last month was very timely in the very same week. This is maybe my favorite line of John’s note. In the very same week, the institution where I do my investing actually wrote me a letter asking how I had accumulated so much wealth. They wanted to be sure that it wasn’t a front for a money laundering scheme. John goes on. It was very easily explained, and the guilty party was “The Motley Fool.” Let me explain. My magnificent seven score is 74. In particular, thanks to the Motley Fool in 2005 and 2006, I bought Amazon and Nvidia and the magnificent Sevens honorary eighth member Netflix. John writes, I also bought Apple. I held on to all four of them, and I’m still holding, though I have shaved a little off the top to buy other stocks once or twice.The magnificent seven vital statistics. I invested approximately $25,000. That’s valued today just over $500,000 or a 20-bagger. If I add Netflix, that I’m looking at a 22-bagger, it’s only fair to balance those wild numbers by pointing out that there have been losses. Learned from you, John writes and probably generated by me, too, if I may add, John. Thankfully, the ratio of my losses to gains is low, a very happy ratio. Overall, my portfolio is about a 10-bagger. I have a Gardner Kretzmann score of 2.5, thanks to having 161 stocks. That’s far too many stocks, but incredibly, 46 of those stocks have at least doubled. All of those Motley Fool big hitters are in there, Chipotle, Intuitive Surgical, MercadoLibre, Arista, Shopify, and The Trade Desk. The list goes on. I have held onto them all through the stormiest of seas, everything securely tied down. John writes, nothing flying overboard when I came out on the other side in 2010.
Again, in 2019 and most recently, in 2023, I found myself in the calm sunny waters of undreamt of wealth. I retired at the end of January 2024 and find myself in the amazingly privileged position of not only having a very good pension but of having a Motley Fool-generated 60% bonus to go with it. In a sentence, I and my wife are secure to the end of our lives. We will have no financial worries it’s all thanks to you and your incredible team. Retirement has not been a trigger to exit the market for me. The Motley Fool proven strategy will continue, obviously with no salary coming in, trimming my portfolio positions will probably become more necessary. But there’s no question of me going in John’s words completely bald. Thank you so much for the incredible advice over the years, advice given with honesty, humility, and enthusiasm, coupled with invaluable education, clear feedback, and transparent performance tracking. It has been an amazing investment adventure with the Motley Fool so far, and long may it continue Fool on. John Flood. Well, John, it’s my pleasure and delight to read such a note. I realize it can sound self-aggrandizing. That is not at all my intention. Sometimes sharing a story like John’s, especially one for somebody who’s stayed invested, stayed in the sailboat for 24,20 plus years, and being reminded that letting stocks win and lose at different points, but great Rule Breaker companies win for you, racking up a magnificent seven score of 74. I honestly can’t think of a better way to invest, which is why I follow this approach to investing, John, I’m so glad you do, too, and you are such an exemplar for a lot of people listening today. Not all of us have been invested for 20-plus years.
Many are just getting started, and wondering with an election coming, should they buy or not. If they’re listening to this podcast, you’re buying every two weeks dollar-cost averaging into the best things that you know, whether it’s an index fund or a great company like Intuitive Surgical choose your own adventure, but what a delight it is to see what it looks like on the other side of things, John, as you wrote, from the calm sunny waters of undreamt of wealth. John, you may have enjoyed the first mailbag item earlier because there might be something to look at in terms of risk capacity.
Sometimes our great mailbag notes speak to each other. You might have heard something in Eric’s words or Amanda’s advice that may help you where you are now. But from the calm sunny waters of undreamt of Well, if that’s something that I hope for you, dear listener, something I hope for me and for all of us, that’s really, in a lot of ways why this podcast and why the Motley Fool exists. To close the week, which for many feels anything but calm and sunny, I hope I and my mailbag talents and Amanda have given you, dear listener a little bit of sunshine. A little bit of calm, waters, by the way, are blue places. If you look into this, if you don’t know the phrase blue places, check it, we are healthier. We’re less stressed, we’re calmer when we are around water or other blue places. In a lot of ways, I hope that’s what this week’s podcast represents for those who come across it. If you have an opportunity to share any of these points or stories, I bet, dear listener, there’s somebody that you know that might benefit from mailbag items number one or two, or three this week. To John Flood, most especially for his note, I say, but also to you and yours, dear listener, Fool on.
