I Fought The Law (And The Law Won), Vol. 2

I'm breaking rocks in the hot sun. I fought the law, and the law won. I fought the law, and the law won. I needed money because I had none. I fought the law, and the law won. The songwriter was Sonny Curtis. The year was nineteen fifty eight. I wasn't around back then to hear it, but then again, in this century, Rolling Stone put it as number one hundred seventy five on the five hundred greatest songs of all time list.

The Crickets recorded it in nineteen fifty nine as Sonny Curtis took the place of guitar from Buddy Holly, who tragically been lost to a plane crash earlier that same year. Speaking of laws, yeah, there are two right there. I just mentioned the law of gravity and the law of mortality. Two laws to me rules what we normally talk about on this podcast. Rules govern many aspects of our lives, but are often as is said, made to be broken.

And breaking rules is what we're all about on this podcast, Breaking rules and investing in business and in life. Rules are just rules. Laws? Laws are different. Laws, well, at least how I'm framing them here this week run deep. The consequences of fighting them are not good. Many of them are natural like the natural law of entropy that matter over time gravitates to its lowest most disorganized state. That's the natural law of entropy. Other laws are societal choices. Thou shall not steal.

Well, this week, I wanna bring you a foolish set of laws that apply to investing business and life. Some are sublime, some are silly. Each will be explained and illustrated. The aim well, what The Motley Fool's aim always is to make you smarter, happier, and richer one law at a time, only on this week's Rule Breaker Investing.

It's the Rule Breaker Investing and rules may not sound like the way you and I might wanna spend our time during a forty five minute jog or cutting the lawn or driving somewhere, whatever you do during this podcast. But just as I did with the first in this episodic series, the first I fought the law and the law one was September one twenty twenty one. Here we are at number two three years later. I'm gonna try to make it fun.

Before we get to laws, let me just say again a few things about rules first. The main difference between rules and laws as my googling revealed is the consequences of breaking them. You fight rules, you break them, you might just have improved the world forever. Maybe you knocked out a Goliath as you broke the rules. As you fought the rules, you replaced him with something better. In the same way that streaming video has ultimately replaced a few generations later VHS tapes.

You fight rules, you break them, you can break through. And breakthroughs power so much of our culture and our world today, that's fighting rules. But you fight laws. You break them. The consequences are, well, not gonna be good. Breaking rocks in the hot sun is a great example of the consequence of fighting the law. What I wanna do this week is to introduce you to six compelling insights that we're gonna put forward as laws. They're eponymous.

That means in each case, they're named after the person who came up with it, and they've generally established themselves with law, legal status. And with the six I'm introducing this week, we're gonna go from the sublime to the silly. So perhaps not every one of these laws we're covering this week will have such deep consequences should you break it. But for each of the laws we're gonna cover this week, I have four quick sections. The first, what's the name of the law?

What's the law in a few words? The second, who proposed it? Little bit of history behind that. The third, additional thoughts that we can share together about these laws. And the fourth would be my foolish takeaway. Now I'm conscious this is all me talking to you. But, of course, at the end of every month in this podcast, you have an opportunity to talk back to me. If you can make me smarter, happier, and richer, any of the material we cover this week, you're gonna have that opportunity.

R b I at fool dot com is our email address. I would love to hear from you. Teach me. Give me a new law, something more to think about based on this week's podcast. You can always drop us a note for our mailbag. The mailbag is next week. You can also tweet us at r b I podcast. Okay. Six laws. Each we're gonna explain, talk about history, further thinking, foolish takeaway. Let's get started. Let's kick it off with law number one.

This one is from sir Isaac Newton. It's his first law of motion. You probably studied this at some point in school. It's from his sixteen eighty seven book, philosophiae naturalis principia mathematica translated the Mathematical Principles of Natural Philosophy, but I'd forgotten this. It does make sense when I think about it in retrospect. This was written in Latin. This entire work was written in Latin. So that's our English translation of this English polymath's most famous work.

Many people just call it the Principia or Principia if you wanna stick with high Latin. What was his law? A body at rest tends to remain at rest. A body in motion tends to remain in motion. You could add at a constant speed in a straight line unless interrupted by an external force, unless acted upon by an external force. Things tend to just stay where they are or keep moving in the same direction at the same speed that they are unless something shows up and changes the situation.

And because this is an investing podcast, I wanna make it clear. And this is for me one of the formative concepts that has been such a part of my own investing style and my advice to you of rule breaker investing. In fact, when you look at the third trait of rule breaker stocks, which I'll speak to in a second, or the second habit of rule breaker investors, which I'll also mention. Both of them are rooted in physics very specifically in Newton's First Law of Motion.

You know, a lot of people think the stock market, they say stuff like, what goes up must come down. Or once a stock hits new highs, a lot of people start thinking, I guess I should start maybe I should start thinking about selling it because it's at a new high. And people always say buy low, sell high. Right? That's what the rule followers often say and do. You, of course, are hanging out with rule breakers.

For me, the visual of the stock market, the picture you wanna have in your mind is not a parabola. It's not something that starts low, goes up high, and then curves downward back to where it came from. That's the way a lot of people think about the stock market. They think it's cyclical. It goes up and goes down. You better time your way in at the right moment. You better time your way out at the right moment, buying low, selling high. Otherwise, you probably may lose your money.

But Isaac Newton reminds us that things that are in motion tend to stay in motion. So let's now go to the third trait of rule breaker stocks, which I first wrote about in our book, Rule Breakers, Rule Makers back in the late nineteen nineties. The third trait of the rule breaker stock is outstanding past price appreciation. This is one of the most contrary things I put out there and acted on over a long period of time. Most people think it would be crazy to buy a stock that's already up.

I have to credit William O'Neil who wrote the book How to Make Money in Stocks because O'Neil was the first one who really turned me on to this contrarian notion that the best place to look for your next investment is not the list of the stocks hitting a fifty two week low. It's the list of the stocks hitting a fifty two week high because bodies in motion at a constant speed in a straight line tend to continue in that motion.

And that's why for years now, we've made outstanding past price appreciation, one of the things we look for before we buy a rule breaker stock. And I think it's self evident as to why given Newton's first law of motion. I also mentioned just a few minutes ago the second habit of rule breaker investors, another core part of the material I've put out through this podcast to you over the years. The second habit of rule breaker investors is to add up, not double down.

When you have new money and you're looking at an existing stock, I would suggest you add to the ones that are up that have already done well for you as opposed to adding that new money to stocks that are down hoping to get back to even. Again, this runs contrary to most people's instincts, and yet it is part of physics. So as I search for a takeaway here for law number one, it's a phrase I've used many times in the past in this podcast, and I'm sure I'll do so in future. What do winners do?

Winners win. Winners in motion tend to maintain their constant speed in that same straight line in motion. Therefore, we look among the winners for our next winning investments. So that's why we look for outstanding past price appreciation. That's why we add to the things going up, not the ones going down.

While I think a lot of you, my regular listeners and long time fools and rule breakers already totally get this, and I apologize if I'm ranting a little bit over the last couple minutes because you may have heard it all before. But for most of the world, this is a radical notion. This goes against what most of us have heard in terms of how you should invest or what you should be looking for.

And indeed, it goes against most of how Wall Street operates and what mutual funds do, which is they constantly rebalance. A lot of index funds rebalance every quarter. They sell the things that are up in order to add money to the things that are down in order to maintain the parity that they intended with their overall holdings in their index fund portfolio. As we've often said, that means they're cutting the flowers and watering the weeds.

Sir Isaac Newton and I disagree, and that's why I wanted to lead off with this first law for this week's podcast. Let's move on to law number two.

I didn't intend this parallelism, but just as law number one was Newton's first law of motion, law number two is actually Arthur c Clark's second law. Arthur c Clark, the twentieth century British futurist. I've used his third law as the source of one of my thirty five stock samplers, but let's focus here on his second law because that's the law we're looking at this week.

Arthur Clark's second law was this, the only way of discovering the limits of the possible is to venture a little way past them into the impossible. Clark's second law basically emphasizes the importance of pushing boundaries to achieve breakthroughs. This principle has inspired countless innovations in science and technology. It suggests that significant advancements often come when we explore uncharted territories and when we take risks.

Historically, many technological feats once deemed impossible like space travel or wireless communication or just WiFi. Sometimes I've made the joke if we could invite a Viking from the past, sit him in the room next to us and try to explain Wi Fi to him, it would be a very amusing conversation. Things that seemed completely impossible. In fact, that didn't even seem imaginable. It would be hard to explain the Internet to people from a thousand years ago or more.

All of these things became possible through the mindset of Arthur c Clark's second law. The only way of discovering the limits of the possible is to venture a little way past them into the impossible. I mentioned Clark's third law earlier, which is any sufficiently advanced technology is indistinguishable from magic. And indeed, my twenty sixth five stocks sampler, I picked those stocks on September second of twenty twenty.

Four years ago, the twenty six five stocks sampler was called five stocks indistinguishable from magic rocking Clark's third law. I wanna point out those five stocks over the course of their three year run in the game that we played. The five stock sampler went up forty five point seven percent. The S and P five hundred went up twenty six point one percent. So it's always nice to have a winning five stock sampler proving out a line or, in this case, a law.

I'm happy to say, by the way, those five stocks, if you just kept going past those first three years, we're now into the fourth and fifth year coming. They're doing a lot better than just that. Arthur c Clark's second law ultimately for me, my takeaway, it's about taking risk. The very first page we printed when The Motley Fool was just a print newsletter for friends and family, they were the only ones who knew about it in July of nineteen ninety three.

They were the only ones who would pay us fifty bucks a year for our print newsletter to try to float our early enterprise included this line. The greatest least mentioned risk of all is not taking enough risk. We've all heard the financial disclaimers. Past performance is no guarantee of future results. And while I recognize, I guess, the necessity of issuing that as a ubiquitous disclaimer everywhere, indeed, past performance for me anyway is often the single best indicator of future results.

You can think again of Newton's first law of motion. But almost as important for me is this notion of taking risk, which sounds risky, doesn't it? And a lot of people resist the word risk altogether. And maybe you do too. I do in some context. I don't like to try new foods nearly as much as many other people that I admire more than my own tendency not to try new foods very often. So we all have different areas of our lives where we're willing to take more risk.

I think it's fair to say you're most willing to take risk in the areas of your life that you're the most confident about. But the greatest, least mentioned risk of all, especially with our money, is not taking enough risk. A lot of people bury it in the mattress. Just keep it in the bank account, maybe earning some interest when the stock market historically has returned us ten percent gains annualized. The earlier you and I can get on that train, the better.

The only way of discovering the limits of the possible is to venture a little way past them into the impossible to take a little bit of risk, be willing to lose and learn. Alright. Let's move on to law number three.

I had to look this one up. I've definitely heard the phrase before. I bet you have as well. But when I say Sutton's law, does that does that mean anything to you? William Francis Sutton Junior lived from June thirtieth nineteen o one to November second nineteen eighty. So he lived to be seventy nine years old. He was an American bank robber.

During his forty year robbery career, this is his Wikipedia page, his robbery career, he stole an estimated two million dollars, and he eventually spent more than half of his adult life in prison and, by the way, escaped three times. Here's Willie Sutton's law, and by the way, Sutton said he never actually said this, but it's a great line. Go where the money is.

The seemingly apocryphal story is that Sutton was asked by a journalist why he robbed banks, and his answer was because that's where the money is. So go where the money is. Sutton's law comes to us from a bank robber, which sounds pretty bad and I think is. That's breaking the law, but Sutton's law, go where the money is, teaches us, I think, to prioritize our efforts where they're most likely to yield significant results. Don't over complicate things. Don't invent crazy strategies.

Focus just on the most obvious opportunities for success. In fact, you could even reflect back on rule breaker investing. When I say outstanding past price appreciation is something you should be looking for, all I'm really saying is buy the stocks that are going up. That's an uncomplicated strategy focusing on the most obvious thing to notice about investing. So I guess here in Sutton's Law, law number three in this week's podcast, we have again an urging towards simplicity.

Let's take a look at Sutton's Law and apply it to investing and business and life. I think for us as investors, Sutton's Law teaches us to go where the action is. Pay attention. The first trade of rule breaker stocks is top dog and first mover in an important emerging industry. I'm not telling you to look under stones on other planets trying to figure out what might be something good to invest in. I'm talking about where the action is. What's happening in our society?

What are the technologies, cultural shifts that seem really important? Not just interesting, curious, but actually very impactful, very important.

And so when I think about what you and I do as investors, especially as rule breaker investors, we should be focused on the most important things happening in our society because sure enough, the companies that are bringing those things to you that are innovating in their products and their services, those the winners will end up being the great stocks of this generation, of the past generation, and the next generation as well. Go where the money is. That includes venture capital money.

Where is that? It's a good idea to keep your eye on that. I also just wanna mention before moving on to the business implications of Sutton's Law. I wanna mention that I have a general dissatisfaction with investment books. I haven't actually read a lot of investing books. I certainly enjoyed Peter Lynch's one up on Wall Street back in the day. William O'Neil, I mentioned earlier his book, How to Make Money in Stocks.

I've described it variously as one of the greatest and worst books ever written on investing. I've explained that elsewhere. But in general, I don't read investment books very often, and I tried to put it into a beautiful question for Warren Burger when we had him on authors in August in two thousand nineteen. And here was the question. I'm gonna restate it right now.

Why do the most highly esteemed investment books of your, that's y o r e, typically cause their fans to miss the best stocks of our own time. In a nutshell, that describes my dissatisfaction with some of the investing books, some of the classics. While they sound great and they read well on paper, if you actually follow them, they don't lead you to amazon dot com or Netflix or Tesla or the list goes on.

So I think in part, it's because they're not telling you to look at where the money is in your generation, in your era. Written in the past often, the long ago past as they were, they tend to look more at their status quo in the present day. But technology is so important today to drive change and value. If you are always looking in the rear view mirror, it's gonna be hard to buy the next great stocks.

So my general dissatisfaction with investment books, I've tried to correct that with a couple of books that I've written in the past myself. But I think we have to recognize that often they're not telling us to go where the money is or where the action is. They make it sound like that's overhyped, and we should be looking in another direction, and I disagree. Well, we're about to move on to law number four, but briefly, taking Sutton's law and thinking about business and then about life.

For business, I wanna say that anytime this time of year where people are graduating from school I just attended a lovely graduation last weekend in Winston Salem, North Carolina, Wake Forest University. Sure many of you are tied to a graduate if you yourself didn't just graduate in the last month or so. So it's the graduate time of year. And whenever I speak to a group of students and we start talking about their first job, my advice is always the same.

Do what I did even though I didn't intend to and got lucky. Try to get lucky in the same way that I did. My first job was basically the Internet, and the Internet was being born and The Motley Fool started before people even use the phrase worldwide web, but we were using online services and I recognized how interesting and compelling this potentially could be. The word Internet, I wasn't using when I took my first job, but I'm so grateful that in effect, I was going where the money was.

People said back in that day, I assume the same would be said of artificial intelligence today, that a single year spent at a company working Internet or today AI, a single year of employment is worth maybe seven years at another job in a stabler or less interesting industry. You learn so much when you hang around the hot white center of innovation. And by the way, I'm not just talking about AI here. There are many different from health care to consumer services.

There are so many interesting innovative things happening across our world today. And so for those of us in business, especially for those early in business, especially for those taking their first job this year, I suggest you find as close as you can to the bleeding edge of whatever is happening in your industry. Get on that teamwork for that company. Because even if it doesn't work out, even if that startup fails and people have to bail, the learnings will be so valuable.

They'll stead you well the rest of your life. Go where the money is. And finally, when we talk about Sutton's Law applied to life, you know, where the money is today in our world is actually in cities. I'm thinking of Edward Glaser, the Harvard economist. I had him on his podcast years ago. He wrote a book called the triumph of the city where he pointed out the people in cities just do better than people who are not. They live longer.

They come across more interesting ideas, foods, people, challenges. In many ways, it's hard to live in cities and it's expensive to live in cities. But that is where not just the money is, although certainly the money is in cities worldwide today, but it's also where the most opportunity lives. And that's why, as Edward Glaser wrote, humanity's greatest invention is the city. And I'm a big fan. I'm a city mouse myself.

I appreciate my country mouse friends and I like hanging out at the beach, which is not exactly the city either. Some people love the mountains, But I do think if you're going where the money is, you're headed toward cities. Alright. Let's move on to law number four. Well, I said we go from the sublime to the silly. We're not quite at silly yet, but I think it's gonna get a little bit quicker because those first three are a little bit deeper and richer than my next three.

But I'm including my next three because they're foolish. Capital f. They're fun. I learn a lot from them. I hope you will too.

Law number four on this week's podcast is Amara's Law. And maybe like Sutton's Law, Amara's Law will be better known to you by the law itself than the person's name. But I do wanna say first that Roy Amara was a researcher scientist and futurist. You can see I'm a big fan of futurist. Roy was the president of the Institute for the Future based in Palo Alto, California. It helps organizations plan for the long term future.

Roy Amara is no longer living, but while he was living, he said he said this, and I quote, we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. He said it and later people started saying, you know, let's call that Amara's Law. And I bet you've come across this before. In fact, it's not even just confined to technology.

The concept of just overestimating anything in the short run and then maybe underestimating it in the long run runs across many human dynamics. There's a lot of hype built up around lots of different things, not just technology.

And usually, along with Gartner and its hype cycle, which I'll speak to in a sec, Usually, we tend to get a little bit too hepped up about that thing in the very near term, but then longer term, we start realizing maybe we didn't hype it enough because these things, especially technologies, especially important ones, often become ubiquitous. So it's a natural human instinct to get excited when we first hear something and then go to a conference and other people are also excited about that thing.

We start a company together about that or we're part of an industry that's dedicated to that. You can imagine AI would be an example right now. We tend to overestimate the effects in the short run. You know, Gartner and its hype cycle have been a past topic also. Can I keep referencing the past a little bit this week, but that's because we've talked about these things before, but I'd like to bring them right back into the present, especially along with these laws we're throwing down this week?

The Gartner Hype Cycle takes you through a five step paradigm, a five step framework from which we can learn about the perception of new technologies. Let's go through it real quickly. The first stage of the Gartner hype cycle is the innovation trigger. That's when the thing is recognized. It's a thing, artificial intelligence, cloud computing, Internet streaming entertainment. When people first start to see that thing, it's usually years before it actually shows up.

That's the innovation trigger. And eventually, if you're tracing a stock graph in your mind, eventually, you're gonna see that keep going up, up, up, up. And we start to get greater and greater expectations, and we hit a peak. And that's stage number two of the hype cycle. The, these are Gartner's words, peak of inflated expectations. So things get hot to the point that they get too hot, and we have inflated expectations.

And then if you're tracing the stock graph of what this looks like, you're you're headed downhill now. In fact, you go down, down, down, down. I'll I'll always remember Webvan, which was in the early days of the Internet first round of Internet excitement and hype. Webvan was a very smart company trying to do something very helpful, deliver groceries.

And instead of just driving over from the giant or the Safeway, a load, a cart of groceries and dumping them at your door, Webvan was sourcing directly from the farmers themselves. Webvan build its own distribution centers. It was like a soup to nuts so called answer straight from the farm right to your doorstep much more efficient than letting it sit for four or five days at Walmart. Webvan seemed like a brilliant idea, but it was too early on this podcast.

I feel like the economics weren't in place, and ultimately, Webvan went out of business altogether. It had a fine CEO, lots of backing, and it didn't work. It hit stage three of Gartner's hype cycle, the trough of disillusionment. That's what happened in two thousand one for the Internet. Everyone decided, you know what? All of this stuff was overhyped. Amazon dot com was overhyped.

It dropped from ninety five dollars a share to seven dollars a share in a couple of years at the start of this century. That was the trough of disillusionment. The last two stages of the Gartner hype cycle are the slope of enlightenment. That's as we start to move back up and we start saying, you know, ecommerce is for real. People will use PayPal. Perhaps cash will start to disappear from our society and mobile payments will actually take hold.

And that's the slope of enlightenment in the final fifth stage. Gartner calls the plateau of productivity. And we're no longer going up or down on the stock graph. We're at a plateau, and it just goes flat out for a long time until, I don't know, the human race disappears or that technology gets disrupted by something else. The plateau of productivity and at that stage, it's almost invisible.

In fact, I'd say here in twenty twenty four across much of the world, mobile payments no longer seems like this edgy, daring possible thing. It's happening ubiquitously, constantly. It's reached the plateau of productivity. Roy Amara, years before any of this, said we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. That is Amara's law. And my takeaway for you is just to be aware of it. Be aware of that human dynamic.

It tends to recur. This is a law, capital l. I think this is gonna always be true because of how we behave, but you can be self aware about it. You could be a little bit more enlightened than the people around you or the people who are looking to buy or sell the stock that you're offering, the person on the other side of the table transacting with you, you can be a little bit more enlightened than they are if you're aware of Amara's Law.

It also gives you the shape of that Gartner hype cycle graph that you can have in your mind as you think about the investments that you make. The way that I've tried to navigate this dynamic as an investor my whole life long is I try to buy as early as I can somewhere in or around the innovation trigger, maybe on the way up that those inflating expectations, and then I just keep holding. There's gonna be a trough of disillusionment. I'm not gonna sell.

If we found a key technology, if we found an important change permanent in our culture for good, we're gonna be part owners of the enterprise that is unleashing that upon the world. We're gonna have our ups and, yes, our downs too, but we're gonna hit a slope of enlightenment and plateau eventually. Maybe the company starts to pay dividends as Facebook and Alphabet are now paying dividends at this stage of their corporate lives.

But if you're playing the long game with me, then you're trying to get in as early as you can recognize and then just let things play out. We've shown the great benefits of doing that over time. By the way, the less you trade, the less you have to follow the markets as well. Okay. We've got two more laws. Law number five.

Cunningham's law says, this is an Internet I'm not even gonna say meme. This is an Internet law, and I really appreciate who this came from. I didn't know who this was. Maybe you do. We're gonna talk about that in a sec. Cunningham's law is, and I quote, the best way to get the right answer on the Internet is not to ask a question, but to post the wrong answer. Now now on the face of that, I think that's I think that's hilarious.

On the Motley Fool discussion boards over the course of time, many people have posited one reason or another that a stock might do this or that. And I think it's generally true that if you go out there with a wrong answer fairly quickly, you're gonna get a reply. If you go out with a right answer or you go out with your best shot, you might get a response, and you might even get a really helpful response.

You might have started a great conversation over time, but you're much more likely to get a response if you put something out there that is wrong. I also see this on my second favorite website, BoardGameGeek, as an inveterate tabletop board gamer. I know how many different people, especially casual players have questions about the rules of the games themselves. And one of the things I love about BoardGameGeek is every single game ever created has its own home page.

And on that home page, there's a forum where people are asking rules questions. And if somebody answers one of those wrong or if somebody just puts out a wrong idea about that game very quickly, someone else is gonna point out that that is not right. So on the face of it, this this brings a smile to my face. I think it's pretty funny. Perhaps you do too. The best way to get the right answer on the Internet is not to ask a question, but to post the wrong answer.

But who is Cunningham? Because this is Cunningham's law. And this was a great learning for me this week. Cunningham, first of all, in contrast to some others is still living, it's Ward Cunningham. And Ward Cunningham is a computer programmer, seventy four years old as I speak, known for developing the first wiki. Cunningham's law was basically coined as a reflection of his observation.

Ward Cunningham's observation that people are more likely to correct misinformation than to answer a question directly. And so when you really think about Cunningham's law, which originally sounds snarky and brings a smile to my face, what you start to realize is, this is Wikipedia. This is this is the Internet. This is human creation. This is us all working together and it's a lot easier to know what isn't true often than what is.

And if you actually embrace that, you don't you don't be cynical about that. You you recognize that. You can quickly point out to somebody, no, the lights are not on, they're off. You can quickly point out to somebody, it's not raining. Things that are objectively quickly verifiable can be corrected or fixed very quickly, and that is a great strength. I think I've already been mentioning some of my favorite websites this week, fool dot com, board game geek dot com.

I've spent as much time probably on Wikipedia, maybe over the last twenty years as just about any other website. I'm so grateful. Sometimes I refer to Wikipedia as one of my best friends on this podcast, and it really is true. Wikipedia started as a very dodgy questionable site, and the big joke was, yeah. People would say sarcastically check it on Wikipedia. These days, Wikipedia has progressed to a point where it is far more authoritative.

It always was really for decades than the Encyclopedia Britannica as studies show because it changes to reflect what's happening. Printed encyclopedias cannot. And so Wikipedia has become a phenomenon. Kevin Kelly, the founder of Wired, also a past guest in this podcast, points out that the collective, humans working together, especially when harness by the Internet, which never existed before about thirty years ago, this is a very powerful dynamic cooperation.

Even if I'm putting something out there that's wrong, you can help me and help everybody else by simply fixing it gets us closer to the truth. So these days, Wikipedia is far closer to the truth than not, but it's worth remembering as a rule breaker that that was not the perception back in the day. You had to kinda go along with Arthur Clark and his second law.

The only way of discovering the limits of the possible was to venture a little way past them and create this crazy online site where people could say anything about anything, but then correcting it over the course of time shaped it into a worldwide phenomenon. So there's Cunningham's Law basically tag teaming with Arthur c Clark's second law, and those are five of our six laws this week. Let's go on to the final one. Alright. And now on to law number six.

And, you know, I feel bad because I said sublime to the silly, but this last one isn't silly. I think it's that I have come across it in a silly context of my own. But Hofstadter's law comes from a very accomplished serious person, and it makes a good point. Although, it's a little bit tongue in cheek, I think, but let me get there by way of a quick story. Recently diving back into Evernote where I have parked every kind of note that I've taken since two thousand eight.

So on Evernote, my second brain, one of my favorite books in twenty twenty two was building a second brain by Tiago Forte. My second brain largely resides in Evernote. And so so, occasionally, I'll search for something, and I've got ten thousand plus notes in Evernote, and I'll encounter some note that I wrote years ago that I will have forgotten about. And that's exactly what happened earlier this month when I came across a note I'd entitled Happy Me Circa two thousand seventeen.

Happy Me circa two thousand seventeen, which I had written in August of two thousand twelve. And I think I was reading a book at the time, but the book encouraged us I encourage you to from the present day, imagine yourself five years forward, what does happiness look like for you? That future you, that person, that you five years from today. What's going on in his or her life? What isn't going on in his or her life? Can you visualize the life you're living and what you're trying to live toward?

We're not saying your whole life. How about just five years? So raising an eyebrow, I went back to that note, happy me circa two thousand seventeen, which I'd written in two thousand twelve, and I hadn't been reading this until two thousand twenty four. So this came from me twelve years ago. It was written to me seven years ago, so I had an opportunity to reflect back. I'm not gonna share that note, but this was the number one takeaway I had about that note. Wow. And I can really say this.

I hope this doesn't sound prideful, but I can truly say that as I read it over in twenty twenty four, I was able to say, that is what happened. That is the life that I'm leading. I'm a I I do think of myself as a very happy person, and and in part now, I can see why. Because the things that I hoped for or pictured or imagined, they're pretty much all there in my life here in twenty twenty four.

So that was takeaway number one, but here's the important takeaway number two, which introduces Hofstadter's law. Takeaway number two, as I read that short page and a half essay, is, you know, I didn't have a lot of those things, though, in two thousand seventeen. That thing or that other thing didn't happen till much later or maybe still hasn't really happened. And shortly after that, I came across Hofstadter's law, and it all made sense. Here it is.

Law number six this week, Hofstadter's law, and I quote, it always takes longer than you expect even when you take into account Hofstadter's law, end quote. It makes a self referential recursive mention of itself in the law itself. I'll read that one more time. It always takes longer than you expect even when you take into account Hofstadter's law. And if that didn't strike me as a mode used as hashtag truth here in twenty twenty four.

Douglas Richard Hofstadter, still alive with us today, was born in nineteen forty five. He wrote a book called Godel, Escher, Bach, and Eternal Golden Braids. Some of you, I know, will have read it. It's kind of a classic. It was written in nineteen seventy nine, by the way. It won the Pulitzer prize for general nonfiction.

So that's the Hofstadter we're talking about, the American cognitive and computer scientist whose research includes, well, lots of concepts relating to sense of self and consciousness, loops, AI and mathematics and physics. And it's a reminder as we near the end of this week's podcast that a lot of these laws are coming to us from people who are in and around math and science.

Maybe it's they who tend to make laws or put their names on their own work, but it is a reminder that I really appreciate my math friends. Last year's authors in August, Jordan Ellenberg, How Not to be Wrong is his book, a brilliant book about math, yes, but also about life.

And in a lot of ways, each of these laws comes to us often from math or physics or computers or the Internet, but my aim is to share them with you in a context that makes sense to us as investors or entrepreneurs or just people going through life. And Hofstadter's law reminds us that I hope you do get there, dear listener. I hope that thing that you're hoping for. I hope you do get there, and I believe that you will. And maybe I can even help you.

Maybe we're all kind of in a sense doing it together. But one thing you should be prepared for is it may take longer than you're thinking even when taking into account Hofstadter's law. Alright. Well, I think it makes sense to summarize the laws we just heard, but before I do, I wanna mention again our mailbag next week. Email address r b I at fool dot com. I'd love to hear any of your reactions or reflections to this week's podcast. We'll go over those together next week.

You can tweet us at r b I podcast or email r b I at fool dot com. And now our sixth law summary. Law number one was Newton's first law of motion, a body at rest tends to remain at rest in motion. Number two, Arthur c Clark's second law, the only way of discovering the limits of the possible is to venture a little way past them into the impossible. Number three, Sutton's law, go where the money is. Number four, Amara's law.

We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. Number five, Cunningham's law. The best way to get the right answer on the Internet is not to ask a question, but to post the wrong answer. And finally, number six, Hofstadter's law. It always takes longer than you expect even when you take into account Hofstadter's law.

So, yeah, there are rules which we look to break on this podcast, but then there are laws that I would suggest you not fight. And it was a delight to share those with you this week. Full on. As always, people on this program may have interest in the stocks they talk about, and The Motley 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 at r b I dot fool dot com.