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. And 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 oh, and there's an election next week. Let's talk about it. Only on this week's Rule Breaker Investing.
It's the Rule Breaker Investing podcast with Motley Fool cofounder David Gardner. Welcome back to Rule Breaker Investing. Again, the sound of rules being broken. Yep. That is the sound effect that we've been rocking for almost ten years now. Rule Breaker Investing launching in July of two thousand fifteen, and, yeah, same sound. Alright. Welcome back. It is the October twenty twenty four 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's. 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 second with stock stories volume nine, 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. I think it was five. Yeah. 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 second. 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 you to 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 because I think they're really interesting, and I wanna share them with you. For the third Wednesday of this month, gotta know the lingo, volume six. Again, an all full cast here to help you understand some common and not so common investing terms, and thereby we'll hang a tail or two for this week's podcast reacting to Gotta Know the Lingo volume six.
And then last week, yep, 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 three entitled Ruin Your Retirement, not rule, ruin your retirement. Unfortunately, that can happen if we're not careful.
So 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. Alright. On to rule breaker, mailbag item number one. This one from longtime fellow fool and a friend of mine, Eric Eason. Eric, thank you for writing in. Eric writes, hi, David. I gave Amanda Kish two points for her gotta 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. Fantastic. I'm so glad to hear that. Two points for those who know our scoring system. We won't go back over that. You'll have to relisten to it, dear listener.
If you don't know, our gotta 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. And indeed, here you are in the mailbag. Glad to be back.
And 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. 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. It's how do you feel when the market declines? What's your sleep number? So it's a little bit more of the the hard and fast facts versus how you feel about potential risk and losses.
And a really great re explanation. Thank you for that, Amanda. Yeah. 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 fully invested in the stock market, leaving only a modest amount of ready cash at hand. And this despite encouragements from the likes of Morgan Housel and Robert Brokamp and Amanda, amongst others, to keep two to three 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 make 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's saying? And second, do you have any additional color or thought around that?
I think he he hits it right on the nail, right on the head, is everyone tends or or many folks tend to think that they have a higher risk tolerance, not realizing that potentially their risk capacity is below that. And it's really when those, events we tend to think of them for ourselves as as black swan events, not very likely, but we look at the general population.
There are things that are likely to happen, and that's really why this the concept of risk capacity and, you know, knowing your tolerance as well, really comes into comes into play. Thank you for that. And, you know, I certainly would say now in our tenth year of this podcast, I certainly have generally encouraged people to remain fully invested through all markets. And 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 and while I can be, I think, prescriptive around some things, like, 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 wanna be more than suggestive when we get to things like portfolio construction or retirement investing versus early stage investing, etcetera.
And so and so I think it's very important. That's what that's why I so appreciate Eric's note here because as we go on, we're gonna find out there is an event that triggers this for him. And I I'm not sure you or I, Amanda, would call this a black swan event. It is unfortunate, but it's the sort of thing that probably something like this is gonna happen at some point. So I don't think it qualifies for black swan. Let me keep going.
Eric writes, this became 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 ninety nine years of age and required twenty four seven 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 sec, Amanda. But, yeah, you're you're scoring with Eric big with your appearance a couple 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 ninety nine, fell and broke his leg at that point. And that changed not that just the financial situation for Eric and his family. Unfortunately, having invested foolishly, they were able to absorb that, Amanda, but it really changed his perspective. And so let me go back to you because, you introduced another term and got to know the lingo, and he just rocked it and gave you a plus one.
Sequence of returns risk. Could you restate that? Sure. So sequence of returns risk refers to the risk that the market will encounter a decline, 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 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 when what the market does in those years and when you retire does have an effect on the longevity of the portfolio. And that is a risk, Amanda. And 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 and three, historically, the market drops. And as you're pointing out, that really matters depending on when somebody is at an inflection point, like I'm no longer gonna have a salary. I choose early retirement. So Eric expressing gratitude because he'd retired ten 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 ten percent of my taxable portfolio and put the cash into a five percent interest bearing money market where I can quickly and reliably gain access to it. Now, of course, I'm gonna 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 these slowly accruing dividends into dividend yielding REITs.
That would be real estate investment trusts. Dividend yielding REITs for which I wish to thank Matt Argessinger 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. Alright. I'm gonna 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 kinds of questions on a regular basis. Do you generally agree or disagree with what Eric's done? Any pointers? Yes. I generally agree, and I am very gratified to hear that that those changes were made, in, 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.
And he mentioned they're selling ten percent of his, taxable portfolio, putting that into cash. We have always recommended, especially for folks who are tired having those couple 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. Amanda, you look at situations like this around these kinds of decisions, new commitments, sometimes new financial structures. How common would you say Eric's case is among the kinds of calls that you take and foolish clients that you've seen?
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 those risks out there and what it means to have a portfolio that's truly aligned with our risk capacity. So it's 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 it's very much the case. And we certainly can't plan for every risk in life. There are things that it's we go crazy trying to to prepare for everything, but I think everyone we tend not to want to think of 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. Well, thank you.
Amanda, I'm gonna read the end of Eric's known as sec, but you brought this language to the podcast a couple of weeks ago. With new language comes new thoughts and new awarenesses. Eric is a very intellectually curious bright guy as I've gotten to know him, somebody who knows a lot about astronomy over the years. So I've always appreciated that kind of intellectual curiosity that he exhibits. And 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? And my dad, bless his soul, he made it to one hundred years old and nearly to one hundred one. 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? Yeah. Eric, thank you so much for your very kind and thoughtful note. And as a a parting note, I would just say thank you so much for, bringing some humanity to this discussion. I think in the the game of investing, we get can get so focused on, the ups and downs of the markets and on individual companies. And 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. So having enough where, you can have a good retirement, where your spouse can have a good retirement, and we'll be okay even if you're not around. So you can afford for your parents to have good care later in life. Those are really the the the things that we're investing for. So, again, thank you for providing that that human face to why it is that we invest.
Well said, Amanda. And 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 kind of learned sometimes by learned experience. Our risk capacity is more impersonal and more data driven. And I'm I I wanna turn quickly back to you, Amanda. Are there tools 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?
Certainly. So in that case, there are any number of financial calculators. That's what you that's where you can really get at risk capacity is by running the numbers. So there are definitely on fool dot com, free premium financial calculators, retirement calculators. Certainly any number of them available out, on the web. So I would definitely encourage members to run some numbers, some what if scenarios.
And that's that really is where that that data driven process is is running those financial calculators. Thank you. And, 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 full Our month end mailbag happening more than a hundred 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 but our team. So, Amanda Kish, thank you so much for joining us again on Rule Breaker Investing. Fool on, my friend. Thank you so much for having me on.
Alright. On to Rule Breaker mailbag item number two. A post on Twitter x came in on Tuesday. We are 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 twenty four hours or so. You know, 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? And then my host will say, oh, yeah. It's, six or seven weeks. And 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 twenty four hours every time. So thank you ahead of time, Dez. And, yeah, I got a a post on Twitter x today from at Lee Pace 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 cartwheels when this is over, and I will hearken back to a post from at david g fool and fellow Tar Heel from two thousand sixteen. This is truth. And 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 twenty four seven about the election, gotta 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. And about every four years, I offer a few minutes of thoughts, and that's what I'm about to do this podcast. Because by next week's podcast, we'll be recording on election day, and it'll come out. We won't know what happened, but it'll come out next Wednesday. So let me just start by saying that, Lee, thank you for the note. Lee is a long time fellow University of North Carolina Tar Heel.
In Lee's case, a very talented writer, journalist, follower of UNC sports. A 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, and let me share with you thought number one. And thought number one refers back to two thousand sixteen. It was in the second year of this podcast. I thought, you know, it's October mid October two thousand sixteen. I should say something about the election. I shouldn't have my head buried in the sand.
And what I found myself saying in what I call the nonpolitical pre election special, what I found myself sharing was chapter thirteen of Charles Dickens' first novel, The Pickwick Papers. And if you wanna 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 twenty four, 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, sort of a beige color. And 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.
So 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 gonna win? It's all about who's gonna 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 countrymen. When I think we actually all share so much more in common, then really we feel apart.
And I think we need to hear that and be reminded of that. I said that in two thousand sixteen. If you wanna go back and hear my non political pre election special, although I guess to some, maybe everything's political. So what I maybe meant to say was nonpartisan pre election special. That was true in two thousand sixteen, two thousand twenty, and it's true in two thousand twenty four. So 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 oversimplified 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, and that is the center. What I might call, some people use this word, moderates. You know, 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. And in April twenty twenty four Pew Research Center survey, check it, thirty two percent of Americans identify with one party, I won't say which.
Thirty three percent identify with the other party, I won't say which, very close, thirty two and thirty three. 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 thirty five percent of us, the largest block of Americans, essentially have no voice typically recognized or covered in the media. And I just wanna 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 two.
Thought number three, I just wanna 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 as a fool, I'm the first to say, please disagree. It takes often a thesis and then an antithesis to get us to a synthesis, a better thought. But I think just as we in our organization, we've done this at 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 off sites, strategic planning, What are our core values? And I've often asked in the past of 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. Three 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 three what I think, this is my personal list, of America's core values are. There are five for me in no particular order. Liberty, I would say number one, Liberty and Freedom always been so important this country. Number two, 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 three, how could I not mention enterprise business? I think that's this 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. And most of the great Americas 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 I hope they'll stick with you.
I personally believe that value number four for Americans is resilience. And I think you and I need to show that through good markets and bad, especially bad markets. And I think we need to show it 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. And number five and the last one is kindness.
And the most un American things that I see are the most unkind things that I hear said and done. And 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, you are, I unapologetically say, I think you're un American. And kindness, we are indeed the most generous nation per capita on Earth. And there are so many beautiful acts of kindness that, of course, don't get reported.
If it bleeds, it leads kind of an environment, which is true of how, unfortunately, for profit news tends to work in our society today. So 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 three, business, I love so much because it's a win win win.
In contrast to a political system, and we're seeing this very much in twenty twenty four, 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, and those customers end up providing prosperity back to the best businesses because, of course, they buy from them repeatedly. They pay. And here's the key. They pay above the costs of the business.
They allow the business to earn a profit, and businesses themselves then use those profits in part to have successful stocks that you and I as rule breaker investors can buy and hold. So 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.
And 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 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 thus yet been invented by humanity in terms of the best way to govern ourselves. So 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, and they this is an important point this month. They really are, in my opinion, the underpinnings of our society. So 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 MercadoLibre 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 to help a political system that is premised on dividing countrymen and 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 through to him go. 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, and that is a bedrock core value. It's much stronger, in my opinion, than the ballot box. Sometimes I wonder, are we being gaslit 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 gaslit too much into thinking in that direction. I started off this mailbag item number two 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 t m f one thousand, 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. And 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. And 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. So 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 Angle 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. Alright. Alright. Election thoughts. I don't do it too often. Maybe once every four years or so. I hope that helped. Alright. And on to rule breaker mailbag item number three. 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 seventy four, 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's 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, etcetera, Google it if you don't know what they are, what I've often said is rather than have an alluring label for a random basket of stocks that all have done very well, which is kind of what I think of that phrase, rather than just talk about those stocks, let's talk about if we're gonna 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 twelve 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 wanna 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, seventy four. John goes on, I've been with you and your team since around two thousand, and 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 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 seventh of twenty twenty four this year.
And, 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 was very timely in that in the very same week, and 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 in quotes was The Motley Fool. Let me explain. My magnificent seven score is seventy four. In particular, thanks to The Motley Fool in two thousand five and two thousand six, I bought Amazon, Nvidia, and the magnificent sevens honorary eighth member, Netflix. John writes, I also bought Apple. I held on to all four of them and am 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 twenty five thousand dollars, so that's valued today just over five hundred thousand dollars or a twenty bagger. If I add Netflix, then I'm looking at a twenty two 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 ten bagger. I have a Gardner Kretzmann score of two point five. Thanks to having one hundred sixty one stocks. That's far too many stocks, but incredibly, forty six of those stocks have at least doubled. All of those Motley Fool big hitters are in there, Chipotle, Intuitive Surgical, Mercado Libre, Arista, Shopify, The Trade Desk. The list goes on. I have held on to 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 two thousand ten. Again, in two thousand nineteen and most recently in twenty twenty three, I found myself in the calm, sunny waters of undreamt of wealth. I retired at the end of January twenty twenty four and find myself in the amazingly privileged position of not only having a very good pension, but of having a Motley Fool generated sixty percent 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, and 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 full 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 stayed invested, stayed in the sailboat for twenty four, twenty 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 seventy four. I I honestly can't think of a better way to invest, which is why I follow this approach to investing, John, and 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 twenty 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. I love 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 wealth. 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. So 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.
And 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. And in a lot of ways, I hope that's what this week's podcast represents for those who come across it. And 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.
So to John Flood, most especially for his note, I say, but also to you and yours, dear listener, fool 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.