Stock Stories, Vol. 9: You Have More Than You Think

Some people like superhero stories. And these days, back in theaters after the pandemic, we'll spend, I don't know, about a billion dollars at a box office to see a movie over a single weekend. Others like sad stories. We can all think of a favorite bedtime story. It's often said of us human beings that we are a storytelling race. The call of the story, the prehistoric campfire where stories were acted out. Huge industries today have been built up just around celebrity stories.

Or how about sports? The news, scores, results, the stories we remember from our own athletic exploits, however scanty they may be, in my case. Stories, stories, stories. Stock stories. Yep. Every stock tells a story. As investors, we get to know our company's mission, maybe know their marketing tagline. That's a story. We followed the share price. We experienced highs and lows, sometimes dizzying highs or cavernous lows, sometimes both.

Our experience as investors gives us the long view, the capital f foolish view, acquaints us with great prosperity creating stories, especially look across a portfolio. Look up and down your brokerage statement, and I bet you see some stories. For the ninth time in this podcast's history, this week we focus on telling stories. We're a stock market podcast, so these are stock stories.

Visiting me around the campfire this week are several talented Motley Fool contributors, each of whom has a story to tell. Five stock stories to make you smarter, happier, and richer only on this week's Rule Breaker Investing. It's the Rule Breaker Investing podcast with Motley Fool cofounder David Gardner. Okay. This week, we're headed back to the campfire, back to the campfire around which we talk about the stock market.

This week, I've asked my friends and fellow analysts here at The Fool to tell the story of some stocks. Not story stocks necessarily, but the linguistic reverse, stock stories. It's something we've done on this podcast. This is volume nine. In fact, all previous volumes in the series, a worthy listen anytime you're on a, I don't know, a hike or maybe camping. Just Google rule breaker investing stock stories.

You should find our previous eight volumes, including the most recent from September sixth of last year. Anyway, this week's podcast stands shoulder to shoulder with all the past ones because every story is new. As I mentioned earlier, I've got those four fellow fools queued up, looking forward to sharing their stories for some education, amusement, and enrichment. I'll tell a fifth at the end. Now as we get prepared here, I do have an exciting announcement.

Due to the growth of this podcast over the years, we can now afford some new and different sound effects than we could in past years. My talented producer, Des Jones, will be bringing some sound to the stories that you hear. We'll start simple and augment as we go. Des, I'm gonna ask you to queue up our single sound effect to set the mood for story number one.

Alright. That helps me start setting the right tone here as we welcome my friend Dave Meyer. Dave, welcome to Rule Breaker Investing. Oh, thank you so much David. I'm so excited to be here. Under a full moon. I I I wasn't even planning for this. Dave, do you have a favorite campfire snack? Oh, it's gotta be the s'mores. Gotta be the s'mores. You're a classicist. Extra marshmallows. Excellent. Dave, what are you doing around the pool these days?

So I am working on the trends team trying to uncover the, the next generation of great growth stocks. And, you know, I appreciate that about you, and, it's a delight to have you as our lead off hitter for stock stories volume nine. But we throw away the baseball analogies because we're back under a full moon. Listen. And, Dave, what stock are we gonna be talking about? So we are gonna be talking about meta platforms, which were formerly known as Facebook.

Ticker symbol, META. Dave Meyer, take it away. So once upon a time, back in two thousand twelve, a company now known as Meta Platforms came to the public markets in the form of an IPO as Facebook. And that's when I was first introduced to the company. Lots of fanfare, and I was like, hey. There's gotta be something interesting here. But Facebook moved in. Absolutely.

This is one of the this this could be, you know, a very important year in investing given what this tech company has gone on to do. So fast forward to twenty thirteen, the stock is around twenty five dollars. Some of the hype maybe has gone away a little bit. So I'm in the meeting with Tom Gardner, and he asked me, are you bullish? And I say, yes. Look. Digital advertising is just getting started. The entire market is going to be moving in that direction over time.

Facebook has the most users on its social platform. It's growing quickly. It has the best analytics. It has the best distribution model. You know, what could go wrong? Right? This is this is a great company in the making. So, of course, Tom asks me, what's your five year price target? I'm a little taken aback by the question. I wasn't expecting it, but I thought for a moment, and I said, two hundred dollars. If if Tom had had a a mouthful of milk, he would have spit it out on me.

I I definitely caught him a little off guard with two hundred dollars given the price was around twenty five at the time, but he replied with something, if I remember correctly, like, look. I like the company, and I'm not even that bullish. So we moved to twenty fourteen, and I've moved down from the, you know, the unregulated side, the publishing side of our business, and I've moved down to Motley Fool asset management.

And, you know, Facebook is still one of the most important companies in the universe. So we made it the largest position in the growth portfolios that are serving our Motley Fool wealth management clients. And the funny thing is every year through twenty twenty, so six years, clients and advisers, my foolish colleagues, They're constantly asking me, does does Facebook still deserve the highest allocation? My answer is always yes. Look. More ad dollars are moving digital. That's not stopping.

And over time, a greater portion of of them are moving to Facebook because, again, they have the best platform. But and then I get, you know, skeptic. Well, is isn't Facebook expensive at ten times sales, twelve times, fifteen times sales? And I would retort, look. When sales are growing north of forty percent annually, cash flow margins are fifty to sixty percent, and there's still a seven to ten year tailwind behind this company. It's probably undervalued.

And, you know, it's I would get some interesting looks from everybody, but that's the way it is. So let's throw some numbers out here. From twenty thirteen to twenty twenty, sales increased from about eight billion dollars to eighty six billion dollars. And during that time, the cash flow the company generated increased from about four billion dollars to about thirty nine billion dollars. So how did my prediction with Tom fare?

Well, in mid twenty eighteen, the stock rose to just over two hundred dollars. And for our Motley Fool wealth management clients, in mid twenty twenty, it was over three hundred dollars. So it looks like, you know, looks like I was able to make a pretty decent prediction. That's fantastic, Dave. And I certainly remember the coming I mean, I remember the the IPO early days. It was considered a failed IPO as you may remember.

Absolutely. You You did mention you kinda came online with the story twenty five in two thousand thirteen, but that was downside. I'm gonna make it up. It was around forty down to twenty five or something like that. It almost got cut in half. That's exactly right. So that's always worth remembering is that there was so much skepticism already there, but the growth rates that you've described and the just the breathtaking numbers and growth, some people love Facebook, truly.

Some people really don't like Facebook. And these days, we don't even call it Facebook anymore. Facebook still exists, but Mark Zuckerberg has renamed his company as we all know. And I realized you dropped the story sort of somewhere around twenty twenty, and I know that you've since transitioned back to our publishing side from The Motley Fool Asset Management side. But Dave Meyer, what is what is your didactic lesson? We always want a good solid morally instructive takeaway for our listeners.

So what do you got? So I think it's important to go back to the title of the story, which is the long arc. And look. We're all foolish investors. Right? We can all analyze companies in different ways. Your your six signs of a rule breaker have served you and so many investors so well. But if you really wanna find if you really find a great company in a long story arc, the best thing to do is to tune out all that noise, tune out the skepticism.

Just look and see what it's doing, and stick with it the best you can based on the analysis you're doing. Dave Meyer, what year did you first come to The Motley Fool as a fellow fool? So I've been here since two thousand five. Phenomenal. And so just as you have been with us for nineteen years, almost twenty now, it's that same approach that we take in to investing.

That loyalty both to an employee or to a company, as well as to the company that we buy, the companies that we proliferate in our portfolios. And it is so rewarding, both the human relationships over now, nearly twenty years Dave Mayer, one Dave to another, but the relationships that we build with our stocks. And, truly, for listeners, if you haven't got there yet, if you've not held a stock for five years at least or ten years at least, please know the great pleasures of doing so.

And, Dave, in conclusion, I think it's fair to say, you can sometimes allow a great company to be overvalued, to look and and, in fact, sometimes be overvalued. In fact, if you hold a stock for ten years, it's probably gonna get cut in half a couple of times, especially if it's more of a rule breaker style company. And yet that's not the reason to sell just like that's not the reason to end relationships after one hard year most of the time. Absolutely. Business is a long arc process. Right?

Just because a stock price can change day to day does not mean that a business's fortunes are changing day to day. You have to expand your time horizon and look at it differently. What a great story to start with, Dave Maher. The long arc. And you've applied it here to Facebook now, Meta Platforms. We can think of many other stocks in Motley Fool portfolios, yours and mine and our members, where there is a long arc operating. There's really no substitute for playing the long game.

Dave Meyer, keep up the great work around Fulldum. Thanks for joining. Thank you for having me. Alright. And on to stock story number two.

And, oh my gosh, Mary Long, I wasn't expecting is this your first appearance on Rule Breaker Investing? It is, in fact, my first appearance on Rule Breaker Investing, and I am honored to be joining you around the campfire. And I'm delighted under that full moon to have you here with with us, Mary, as you prepare to introduce stock story number two. Mary, the wilderness is quiet. I would say maybe too quiet. What's the creepiest sound that you've you've ever heard out in nature?

I don't know that I've heard this one yet, but the creepiest that I can think of considering that there's a full moon out tonight is the cry of a werewolf. Mary, what are you doing around fulldom these days? I am a producer and one of the cohosts of Motley Fool Money. That keeps me pretty busy.

And while you told me you're relatively new to the stock market game, to the investing game, you've been at the full two and a half years, And you may not have a ton of your own stories to tell, although I know you have some. You've helped many others tell stories through our podcasts, and stories are so important, not just to human beings, but especially to fools.

So, Mary, thank you for setting the stage in the platform so that so many people could tell stock stories in just your first few years of The Fool. Thanks so much. Yeah. The stories are as you will hear in the story that I'm about to share, the stories behind companies are what I find to be incredibly compelling.

And so, even if the story itself is not enough to convince me to buy a certain stock, I still I get so much joy and fascination from following companies and and and following their stories. So well said. What is the company you'll be introducing? The company that I'll be introducing is Bumble. Ticker symbol, b m b l. Bingo. Alright, Mary Long. Take it away. What is your title? My title is Catching Flies with Honey.

Once upon a time, I was new to the world of investing, so new that I wasn't even investing yet. I was information gathering. The year was twenty twenty one, early twenty twenty one. I was a measly few months into my first ever big girl job, and I had a small surplus from a small paycheck. I didn't know what to do with that leftover money, but I did know that investing was one thing I might do with it. Trouble was I really had no idea where to even begin.

I asked my dad at one point how to get started investing, and he told me to open a brokerage account. Nice. But I looked back at him. Yeah. But important detail, David. I looked back at him with wide eyes because I didn't even know what a brokerage account was. What is that? That was how little I knew about this world. Hence, my serious, serious need for information gathering.

So I ultimately I eventually did figure out what a brokerage account was, how to get one set up, move forward with that, and I kind of haphazardly picked some index funds and let things lie. But I had this underlying fascination with and curiosity about individual stocks. I wanted to kind of be able to graduate to the point where I might be picking those stocks for myself. But again, no idea where to begin.

So I started talking to some friends, just kinda like initiating conversations, asking questions about whether they invested, if they did, what strategies they used, how they evaluated, and ultimately chose stocks. So one friend, we'll call him Nick, he directed me to a Reddit thread called WallStreetBets. That's where he got all of his stock ideas. And keep in mind the timeline here. This is early twenty twenty one.

He told me to buy GameStop about a week before it blew up and was all over the news. I did not. That's a different story, but it is one that we'll come back to in a few moments. A few weeks later, it's it's mid February twenty twenty one at this point. Yep. February twelfth to be exact. I'm out to dinner with another friend. We'll call her Chloe. And we're having this conversation that at this point, I've I've become pretty keen to have about investing strategies, how friends pick stocks.

And Chloe told me that she had just bought Bumble stock. She'd bought the day before just as it IPO'd, got in at about seventy dollars. She was absolutely thrilled. She'd used Bumble herself, found it way preferable to other dating apps, was the big fan of the founder CEO Whitney Wolfe Hurd. She loved the idea of putting a little bit of her own money behind the company and its vision.

She was so and even better if doing that, if putting your money behind this company would grow that money in the meantime. I instantly found this so compelling, not necessarily the thesis, but the excitement that Chloe had when talking about it. Whereas Nick, a few months earlier, had directed me to look at GameStop. When he did that, he hadn't really had a reason to do so. Chloe's pitch was totally different.

It was fun for me to see how excited she was about the company, fun to see how invested, not just financially, but emotionally and intellectually she was in Bumble's business, its leaders, its contributions to society and to, like, the future. So it seemed in that moment, it seemed like, okay, I had two very different paths, very different investing strategies before me. One is kind of random and without reason, just because everyone's doing it.

And another was like passion backed and intellectually curious and optimistic. And I thought to myself, okay, if these are the two types of investors, I wanna be the second type. I wanna be the Bumble type. That said, I did not go home and buy Bumble stock at seventy dollars a share. And I wish I could tell you, David, that it's because I went home, I did some homework, and came to a conclusion that was smart and sharp and numbers backed.

But the truth was I was just still in this information gathering phase. The action part of my investing journey wouldn't come for a few more months. But even today, I think of Bumble stock all the time. That investment has not grown any of Chloe's money. It trades at less than seven dollars today. And remember, she bought in at closer to seventy dollars a share.

I reached out to her yesterday actually, and I asked her if she'd sold her Bumble stock, and the answer was no. She says she's grown a lot in her investing journey, kinda feels like stock picking isn't her jam. She's pretty risk averse and, and so it's not as interesting to her. But she also told me that she has no plans to sell her Bumble stock. She'd only put in about a hundred fifty dollars to start and figured, okay, I might as well stick along for the ride.

So I don't know that anymore she's she's, like, so committed to the long term vision of the company, but she's she's a lot she's ready to just kind of see what happens. I also have grown in my investing journey, and I still try to be that Chloe investor, that Bumble investor rather than the Nick and GameStop investor. But I've also learned that while your life your life itself can be great ground for stock ideas, not all stock ideas are great investments.

So, like, the fact that I or my friends use a product or a service is not in its own a reason to invest in that product or service. It might be a reason to pay attention to it, but there's gotta be another layer to filter your ideas through something more fundamental and quantitative. So Chloe's optimism around Bumble has shaped, honestly, like, my entire investing ethos, even though I've never bought the stock and I likely never will.

Her perspective on that company made me start to see business and business news as genuinely exciting, which is something that had never occurred to me before because I thought it was a bunch of numbers moving up and down. And I came to see through that excitement that she had about this company that business is about a lot more than just numbers. It's about people and products and emotion and strategy and psychology.

It's about the future and, like, taking care to think long and hard about what you want that future to look like. I am a proud Chloe investor because optimism has kind of become the first filter for me when I look at a stock. First and foremost, I wanna know, will I be proud to invest in this company? But what I've learned since February twenty twenty one is that one filter is not enough.

I've got a second filter now too, which is simple but mightily important, and that is, do I think the company will make me money? And so everyone's gonna have different filters and different orders for different reasons. Anyone's filters are theirs to choose. But if looking you're looking for a place to start, after about three years of not being invested in the stock, Bumble has taught me that looking for honey, a sweet and sticky hook, a reason for excitement, a tasty promise.

Honey is helpful when you're window shopping, when you're in that information gathering phase and you're looking for something that catches your eye, that piques your interest, but you've gotta be careful not to get caught in the honey alone, that it pays to take a little look at the hive behind that seemingly sweet stuff before you load up on it for yourself. That was so articulate, Mary. I I I, you know, I sometimes I wanna jump in and interrupt because I have something funny to say.

But first of all, I didn't wanna interrupt you. I was spellbound by your, I mean, that was, again, so articulate. I know that you're a professional, and I I see how well you speak off the cuff. And so for good reasons, we're happy to have you. I also wanna say that I'm gonna ask you to underline your top lesson. You might be underlining it here, but I at least wanna add a supplementary one right now, which is that it's also okay to lose.

I mean, it's very painful, for Khloe to be in near seventy and watch it lose nine tenths of its value. And I've done that before, and it's worth pointing out that The Motley Fool Rule Breaker service, which I helped start twenty years ago, had a recommendation from twenty twenty one on Bumble, and it was a loser. And let me make it very clear.

We have picked many losers in Rule Breaker Investing history, but I love how you start with interest and passion and what you think actually leads to a better world. Because while we're gonna lose some of the time and sometimes dramatically, when we win and we get it right, we really, really win. And that's always been true of Rule Breaker Investing. So, Mary, thank you. And, also, you know this, index funds are okay.

I mean, that's number one advice for most Motley Fool investors is start with index funds if you don't already have them. I personally love investing directly in stocks. I think we can do better by not having to buy all the stocks, Mary, which is what index funds do. They buy all the the good ones and the bad ones. I like being selective. But would you underline for me what is your top takeaway from the Bumble story? My top takeaway is, yeah, look to your life for stock ideas.

But just because you find a good idea in your life doesn't mean that you have to move towards the next step and invest. You can love what a company is doing and love the product, but that doesn't always make it a good investment.

Alright. And on to stock story number three. And, oh, it it's my friend Nathan Alderman walking up to the campfire. Nathan, great to have you for stock story number three. Hi David. I'm not really a camping guy, but when you invited me and I heard that there would be hot dogs, I was confused. Excellent. Now you say you're not really a camping guy. What do you really mean? But let's get underneath that line. What are you saying? This story is not gonna make me look great.

Every fall, my wife's brother has a charity music festival down in her hometown. And, every fall, my wife and my kids love to camp out. I tried camping with them last year. I spent an a night in a tent on an air mattress and then decided that I'm I'm not a camping person. So this year, most recently, when we went back, I set up the tent. I've inflated the air mattresses. I made sure everything was all arranged and perfect.

And then my wife and my kids slept in the tent, and I went and slept in a hotel, and it was great. I had no complaints. Now was this all above board, or did you sneak out once the kids were asleep? No. This had been previously established, you know, setting up the tent and inflating the air mattresses and everything. That was my penance for not actually sleeping in the tent. I made sure everyone was cool and safe and and kosher before

I left. And, yeah. And, I I got to enjoy a a very cheap but clean and and safe, hotel while they they got to enjoy air mattresses and bugs. It sounds like it sounds like a win for everyone. There are some bugs around this campfire tonight. Well, Nathan, welcome. And just share with our Rule Breaker Investing listeners a line or two about what you do around the Fool these days.

I am the compliance lead for the Ascent, which is our personal finance arm, which basically means that I make sure we, tow the line with all of the various regulations that our credit card partners and and other financial institution partners have. Thank you, Nathan. How long have you been at The Fool? I've been at The Fool, oh my gosh, since, May two thousand and five. Alright. It's been a while. So nineteen plus years. You've had many roles over time.

I know, for example, you've instructed many A Motley Fool writer, contract writers perhaps, especially in how to write better stories, better leads, etcetera for our site. I'm not gonna say you also direct, but you might even also direct in addition to being a writing coach and these days compliance lead for the ascent. And I did make a few videos back during the pandemic. That too. And a lot of other things besides and teller of stock story number three.

Nathan Alderman, what stock are we gonna be talking about? So, David, I regret to inform you that this story is about one of your picks, a rule breaker's recommendation. A bad one, it sounds like. Yeah. I'm sorry. That hang on. There are mitigating circumstances for you. It's down roughly fourteen percent and fifty one percent from where you picked it two different times in twenty ten.

But in your defense, you picked this stock, before it hit its peak and long before its downfall became apparent. And what is that company, Nathan? That company is Warner Brothers Discovery. Ticker symbol, WBD. That is correct. So we're heading into election season, and a lot of us are probably thinking about the importance of leadership and what good leadership looks like. Today, I'd like to tell a story about a leader who went very wrong and the lessons we can learn from their mistakes.

It's a story about a David and a Goliath, but it goes a little differently than you'd expect. And, Nathan, the title of your story? David and Goliath, but not the way you think. So once upon a time, as time goes by, there was a movie studio called Warner Brothers. Founded by Harry, Albert, Sam, and Jack Warner in nineteen o five as a single movie theater in New Castle, Pennsylvania, It's now one of the world's most famous producers of movies, television, and music.

As befits a movie studio, Warner's is no stranger to drama and disaster. Jack Warner notoriously swindled the company out from under his brothers, a betrayal so dire that it gave Harry a heart attack and then a stroke. Oh my. And at the time our story begins, the company has been bruised by a series of ill fated mergers, first with AOL and then with AT and T. And that is when David Zaslav shows up. Zaslav joined the TV network NBC in nineteen eighty nine, four years out of law school.

As he rose through the ranks there, he helped to launch cable channels like CNBC and MSNBC. In two thousand six, he jumped to Discovery Communications, where he loved the TV conglomerates transformation, a very successful transformation from science and nature documentaries to reality TV shows like ninety day fiance and doctor pimple popper. Haven't seen it. Not sure I want to, but good for doctor pimple popper.

Discovery shares rose from around eight dollars a share when Zaslav took over to seventy eight dollars and fourteen cents on March fifteenth twenty twenty one in the month months after Discovery launched its first streaming service. But those good times wouldn't last.

On April eighth twenty twenty two, Discovery closed a forty three billion dollar deal to merge with Warner Brothers, buying the company from its former parent, AT and T. Shares traded around twenty four dollars, down nearly seventy percent from their peak. Sorry, David. But, the bad times for Warner Brothers' discovery were only beginning. So let's talk about the four big warning signs that started flashing as Zaslav took the helm.

First, Zaslav was a lawyer and then an executive in charge of TV networks. He knew how to launch a new channel, but he was never involved in telling stories or working with creative people, arguably the most crucial aspect of Warner Brothers business. Gave the impression at least that to him, one half hour of things you watch was no different than any other.

Mistakes like an early investor presentation where when discussing the new company stable of programming, he had these epic popular stories like Harry Potter or Game of Thrones or Lord of the Rings displayed alongside the ninety day fiance universe. Now good leaders don't just parachute in from an entirely different line of work and assume that their skills in one kind of business will translate to success across the board.

Either they work their way up within the business or, like Warren Buffett, they take the time to study up and really understand how it works and why it matters. Second, Zaslav had Discovery take on massive debt to purchase Warner Brothers. Its first annual report after the merger in February twenty twenty three showed more than forty eight billion dollars in total debt.

Trailing twelve month revenues reached thirty three point eight billion dollars, but costs of forty one point one billion, including one point seven billion dollars just in interest expense, led to a net loss of seven point three billion dollars. Ouch. Yeah. Debt can make sense if you're using it to build or create something. But if you're just piling it on without a long term strategy, it can make you lose focus on what your business actually does well.

Instead, you start focusing only on that huge burden hanging over your head. And to make up for it, you end up pillaging the very assets that made your business valuable in the the first place. So third, to cut debt, Zaslav started slashing, burning, and angering everyone he needed to please. One of Warner's assets was the news network, CNN.

His handpicked new boss for CNN tanked the network's ratings, reputation, and internal morale by attempting to make its news coverage less accurate and more biased. He ditched the valuable HBO branding from the company's streaming service, calling it just Max instead of yeah. It it was like he didn't recognize that that HBO was this valuable important brand that was synonymous with great TV. It was like, well, TV is just TV. The Sopranos, Naked and Afraid, same thing. So yeah.

And then he started yanking series for Max's catalog when one of its selling points was we've got all of this stuff just to save on royalty payments. He angered fans and creators alike by refusing to release three essentially completed movies, several of which had earned raves in test screenings featuring beloved characters like Wile E. Coyote, Scooby Doo, and Michael Keaton's Batman.

These films went down the memory hole, never to be seen by the public in exchange for a one time tax break that didn't even equal what they cost to make. I mean, David, think about it if you are a creator who's worked on one of these films for months of your life, and then you're told not only is no one ever gonna see what you made, even though people really liked it, but it's being done for, like, a one time tax break that you're not even gonna get any benefit from.

Yeah. That wouldn't feel great. No. No. It wouldn't. And this one is is personal for me because I'm a movie nerd, but he butchered the budget at small, profitable, beloved network Turner classic movies, which is where I found a lot of my very favorite movies of all time. He his his decision drew public alarm and condemnation from a few people you may have heard of, Steven Spielberg, Martin Scorsese, and Paul Thomas Anderson.

You know, the kind of award winning, highly lucrative people Warner Brothers might wanna make movies with in the future. Not a great way to build trust with the people you depend on to make your money. And then Zaslav joined other CEOs in fighting tooth and nail against writers and actors unions, drawing out a painful May to November strike in twenty twenty three. Now to be fair, this wasn't all Zaslav.

During the strike, he made a lot of public conciliatory comments about the unions, but he still towed the line with his fellow studios. One union estimated that Zaslav would have spent about forty seven million dollars over the next few years agreeing to what they asked for. Instead, Warner Brothers Discovery said it lost between three hundred million dollars and five hundred million dollars on the strikes.

And Zaslav later, to his credit, publicly admitted that the strikers were right, and he was wrong. Good leaders view their assets as more than line items on a budget. They take the time to appreciate what their predecessors have built, and they treat those accomplishments as more than just an opportunity to raise some quick cash.

They don't focus on short term gains over long term success, and they respect their roles as custodians of something that likely started before them and will hopefully continue after them. Fourth and finally, through all these stumbles, Zaslav got paid.

Warner Brothers Discovery's twenty twenty three proxy statement shows Zaslav pulling down three million dollars a year in salary, another twenty two million dollars a year in bonuses, and twenty three million dollars in stock awards for total compensation of forty nine point seven million dollars, up from thirty nine point two million the previous year. This is the same year they had a massive strike that devastated their business, but his pay went up.

In fiscal twenty twenty three, his company reported a nearly ten billion dollar net loss on just nine point seven billion dollars in revenue. Remember, that's compared to, like, thirty three billion dollars just a few years prior when he'd taken over. There are so many things to react to that we won't even have time around this campfire, Nathan. But I thank you very much, especially for underlining the importance of leadership or sometimes poor leadership.

It's funny because Zaslav, at least from the days I first recommended it as Discovery Communications back in two thousand ten was a winner for a while. And as you mentioned, stock did do well for a while, and I obviously should have sold. But these days, it is a pale shadow of what it once was. The market cap down to twenty billion dollars. Stock having lost a lot of value over the last ten years, just the last two years, two thirds of its value.

It's a sadly ironic note that I have it on my Stock Advisor scorecard. I tend to buy to hold. It doesn't always work. My brother Tom also has it on his side of Stock Advisor because Scripps Networks was one of the companies he once picked, and it got merged into Discovery, which then became Warner Brothers Discovery. WBD, as I mentioned earlier, one of our really not great picks of the last ten years. Nathan, I know that you're emphasizing leadership.

I don't wanna name your own didactic lesson for you. I'm guessing it's in this area. What's the takeaway? Well, there are two takeaways. First of all, like you said, on September thirtieth twenty twenty four, Warner Brothers Discovery shares traded just above eight dollars. That's essentially the same as when Zaslav joined Discovery in two thousand six. Ouch. Adjusted for inflation, that is a thirty six percent loss.

Now, David, you did something wonderful that leaders should do right now just now. You took accountability. Executives whose pay doesn't align with their performance, who don't face meaningful accountability when they make dire decisions are bad news for employees, customers, and shareholders alike. So if I have a big didactic lesson here, it's this. Fools, when you're sizing up an investment, remember that leadership always matters.

Creating something good and lasting requires a lot of talent, cooperation, and decades of hard work. But the wrong boss and the wrong decisions can wreck those efforts in a surprisingly short time. And it's true.

And, indeed, I think it's worth pointing out, and it probably isn't pointed out enough, that beyond the products, beyond the services, beyond the film library, in this case, beyond the profit and loss statement or the increasingly debt ridden balance sheet, beyond all of those things, what I think matters most for our investments over time are the people that we're investing in. It's truly always gonna be the case, I think, unless AI takes over all of our companies.

And if so, I guess that's because it makes better decisions. But up until then, we are heavily reliant on the so called human capital, the visionaries, the dreamers, and doers that actually drive from one day to the next the businesses that we're invested in. That works out great when it's Jeff Bezos who creates untold value over his lifetime.

That works out very poorly when almost twenty years later, we're where we were with the stock price, and the market meantime has gone up four times in value. So, Nathan Alderman, a dark story, story number three. But, you know, it is dark out here tonight. I'm just glad we have a full moon. Yeah. Those those ominous wolf howls in the distance are probably pretty in keeping with, with this story.

But speaking of ominous distant rumblings, I'd like to make sure that our listeners have all visited the nonpartisan site vote dot org to check their voter registration because, like I said, leadership matters. Alright. Well, thank you, Nathan. And, yeah, it is that coming up to be that time of year here in the United States of America. Nathan Alderman, thank you for joining us with stock story number three, David and Goliath, but not the way you think. Nathan, full on. My pleasure, David.

Now if someone could just point me to the hot dogs, I'd be very happy.

Alright. Oh my gosh. It's my longtime friend, Tracy Dahl. Tracy, welcome to the campfire. Thank you, David. It smells great. It does. And, I mean, who doesn't like a good hot dog under a full moon with arguably a werewolf nearby howling? I actually don't like hot dogs, David. We've got other options. You can go dessert first with s'mores. Sign me up. Tracy, what are you doing around fool them these days? I am currently the managing editor for our website in

Canada. We do have a website in the great white north. You betcha. And there's a lot of camping that goes on in the Great White North, maybe during more of the greener months than the the white ones. Do you enjoy camping? I do as long as my son is not with me. Okay. Your son roughly Six. Six. Okay. So maybe a higher maintenance camping trip than you're looking for right now? Yeah. When you get dirty, it's really hard to get clean when you're camping, especially if you have a little one with you.

Alright. Well, let's move on to stock number four. Tracy, what stock are you gonna underline here with story number four? Motley Fool classic stock, Berkshire Hathaway. Excellent. Ticker symbol b r k. There's, like, b r k dot a dot b. There There are different ways of expressing these dots or dashes. Berkshire Hathaway. And, Tracy, what is the title of stock story number four?

David, it's called You Have More Than You Think, which you may recognize as a title from a book I believe you coauthored with your brother. You know I appreciate that title. I didn't know you're gonna do that. Thanks. Once upon a time, there was a fool who invited herself on vacation with Bill Mann. That fool is me. And if you don't know Bill Mann, he's one of our globe trotting analysts here at The Motley Fool. I think a lot of listeners will know Bill by now.

He's made some great appearances on market cap game shows at least. So. Big fool, big personality. So if Bill invites you on vacation, you say yes. So I was in the office about a year and a half ago, and I'd overheard that Bill was going to be attending the Berkshire Hathaway shareholders meeting just for fun. And I said, that sounds great. When you see Jim Gillies there, be sure to razz him for me. And he said, well, I have extra credentials. You wanna come?

And I surprised myself by saying, yes. Wow. Had you been to Omaha, Nebraska before for a Berkshire conference? I had not. In fact, at the time, I did not even own any Berkshire stock. And don't you need to own some to get in? So you can be a guest of a shareholder, which is how Bill was planning to spring me into the convention center. However, I decided that if I were going to this conference, I needed to make it official, and I did buy some shares before attending.

And at the time, the stock price was about three hundred and nine dollars, and I'm a happy shareholder. It's up to four hundred fifty eight today. Wow. That is a big time winner. Now we're talking about is it the Berkshire Bees? We're talking because there are various versions of stock, and there's a very, very expensive share you you could have bought. Yeah. You don't pay me enough to own the a shares. But what a fantastic investment in just the year and a half or so that you've held it?

That's right. Yes. I was pleasantly surprised when I was looking at the the numbers today to see how well it had been performing. So I was at this conference in Omaha. There's about forty thousand people. They're all investors in Berkshire Hathaway or friends of or related to. It's pretty mind boggling to sit in that stadium arena and see all these people who are excited about investing. And I was also aware at the time that it was very self selecting and a selective group.

It was on my mind that everyone there was wealthy in one way or another. We were all there. We all had tickets to be there because we had excess cash that we were able to invest, and we chose to invest it in this wonderful company. So my stock story takes place a bit after the conference that day. Some fools had gathered for an impromptu happy hour. No host. We were not expecting the turnout that we got.

All I had done was make the reservation at the restaurant, but several dozen people ended up showing up. As fools are want to do, capital f. They we love to party. So there was quite a big crowd, and we needed to clear out of the restaurant space at a certain time because somebody else was responsible and actually had sit down dining reservations. The waitress had been so kind to all of us. I know that we were more than she had bargained for.

And when everyone left, I decided to give her a really sizable tip. Love it. It was not as much as the sheriff of Berkshire at the time, but it was not an insignificant amount for the for the few drinks that were left on the tab. And I told her that I was leaving this tip, and she started crying. She gave me a huge hug, and she said, I am a student. I'm really struggling. This has been such a hard month for me, and I I really needed this. Thank you so much.

And in that moment, I realized that I have wealth. And I think so much of investing you can get caught up in. Did I beat the market? What was my cost basis? Am I beating the other guy, you know, at the bridge table? But sometimes, it's enough to just know that you have money to invest. And in that moment, I realized, I'm an investor, and I have wealth, and I can share it. And that was very powerful for me to think about investing in a human and not socking some more away in my savings account.

So appreciate that. And it's a reminder that invest itself is a beautiful word. You're right. It can be it can be thought of as synonymous with trading, which is really I think it's the opposite of trading, but it can be all about the numbers. I certainly spend a lot of time trying to beat the market, and I don't I do so without any reservation. I think I think that's a major goal or the fun of the game of investing. And yet, why do we invest?

And even the etymology of the word invest is a reminder that it's about more than money because it goes right back to the Latin investire, which means to put on the clothes of, to wear the clothes. And I think about those forty thousand fans in the stadium. And in a way, I mean, maybe some of them actually had, like, a football jersey that people go on Sundays or Saturdays to the park. They're wearing the home team jersey.

Maybe it said Berkshire, or there were probably some Berkshire T shirts in the stadium, but in a lot of ways, part of the Berkshire lesson is that it's about putting on the jersey and keeping the jersey on. So much of the world, Tracy, jumping in, jumping out of the market, chasing quick dollars. But people who, a, understand it's about the long game, and then, b, understand that the whole purpose of investing is to do something good with the money that we have.

Some of us hope one day to retire, whatever that means in different context. Others hope to put a child through school or especially college, which is quite expensive. There's probably no substitute for the good feeling that's generated by being generous, especially when you do so spontaneously for another human being.

And I know that's not the only time you've experienced that in your life, but that's a beautiful stock story, especially to tell this time of year because it's a reminder of why we invest in the first place. And human flourishing is one of my favorite phrases, and that's kind of how I heard your story. Tracy, did you take us to the end of the story, or or was there anything more there? Postscript? Only that I think that brings us beautifully full circle to to Warren Buffett himself.

You know, he has a giving pledge where he has promised to give away ninety nine percent of his personal fortune during his lifetime or after he passes, and what a force of philanthropy he is. It is true. And and by extension, so many people who are Berkshire Hathaway shareholders, so much good is being done. And not not just obviously by Berkshire people, although, yes, and at quite a scale.

But through so many others, private philanthropy is, maybe especially in the United States of America, is something that is a beautiful and very recognizable thing. And as the stock market continues to go higher some years down, but I'm talking about that long game, You can see how things should get better and better, especially if it's in our hearts to do so. So, Tracy well, I mean, I'm asking each of my guests around the campfire to underline their didactic lesson.

I think you may have already kind of done so, but would you give us a final double underline? I would say double underline. You have more than you think, and please share. Well, Tracy, it's starting to get a little colder here as the Camp Fire tamps down. We're still in the green months mostly, but I wish you the best as we hit the whiter months in the great white north, and thanks for what you're doing for Fool Canada. You're welcome, David. Fool on. Alright. And on to stock story number five.

As I wave goodbye to Tracy and, oh my gosh, all my other fellow fools have either taken off or fallen asleep themselves. So I'm by myself here under the full moon for stock story number five. I don't think I need to intro myself or give a line of what I do around the fool these days, but I do need to give the title of the story. And I'm gonna go with, for stock number five, I'm gonna go with, that's the last time I'm ever going to do that.

The stock I'm gonna be talking about is no longer publicly traded on the markets. Many longtime hands, longtime listeners will know the ticker symbol y h o o stands for Yahoo, which was once a public company back in the nineteen nineties, and going forward isn't today anymore. The title of the story again, that's the last time I'm ever going to do that. Once upon a time, I invested a lot more on paper than I do today. It was more of a math problem.

As an older investor, as a long time picker for Motley Fool rule breakers and stock advisor, in time, I I learned to unlearn this reliance on math, on taking your price target out to the second decimal. But in the early days of The Fool, back when we first launched, August fourth of nineteen ninety four was when we launched on AOL. We launched one year before that as a paper newsletter.

But back in those days, as a young investor in my twenties, I was much more mathy than I am today, and I got looking at this exciting new company. It looked like it might be a rule breaker. In fact, this is early enough, nineteen ninety five, that I hadn't actually come up with the phrase rule breaker yet. We were already picking stocks in front of people clicking into our website or back then, especially our AOL site keyword fool.

We were picking stocks publicly from the first day in nineteen ninety four, but I hadn't yet thought of what are the six traits I'm looking for in rule breaker stocks. I hadn't come up with the phrase rule breakers or that you wanna find companies that break the rules, and then you wanna keep holding those stocks until they become companies that make the rules. And as rule breakers become rule makers, a book we wrote after you have more than you think. Thank you again, Tracy Dolla.

I think it was nineteen ninety eight when rule breakers rule makers came out. So somewhere, there was a transition from the pre rule breaker me to the rule breaker me, and I think it might be this stock story. That's the last time I'm ever going to do that. Because as I started thinking forward, Google wasn't gonna be showing up for some years. Yahoo was the big game in town if you were trying to search for things online. Even the phrase the world wide web was relatively new.

People weren't necessarily talking about the Internet. We were talking about online services. We were using our computers to dial up other computers. There was that scratchy sound as your computer used the phone to dial another computer. Remember? And then some, like, and that was the sound as you connected your computer to another online. And back in those days, Yahoo was the dominant search leader. And I thought, you know, that's a stock I might wanna recommend.

And I went through my math exercise, and I ended up concluding that the stock was worth roughly twenty six and a half dollars a share, which became the price at which I would recommend. I would buy Yahoo for our Motley Fool members at the time. Twenty six and a half. There was a little problem. Yahoo was trading at twenty nine, which means I sat there going, well, it's overvalued right now, younger me said.

If it drops to twenty six and a half maybe if it drops below twenty seven, I would recommend it. Because at that time, it would be undervalued or properly valued, and I would feel more comfortable recommending Yahoo if it gets down below twenty seven. It was at twenty nine. When I'm asked a rather typical question, I'm sure, dear listener, you've been asked this question before, people will say, like, what's a mistake that you made and what you learned from it?

Or what's what's one of your worst stock picks or stock stories, and what did you learn from it? This is my case study number one stock to answer that question. Because, unfortunately, for me and for Rule Breaker fans who never bought Yahoo, it never did drop from twenty nine down below twenty seven to make me feel comfortable recommending it. It went from twenty nine to the equivalent split adjusted of a thousand dollars per share.

It went up more than thirty times in value over the succeeding years, and I never bought it. I always thought I had it. I missed it. Within months from that point, I would start to realize, you know, actually, stocks that look overvalued are often great buys. Stocks that are doing really well. Some people are waiting for the dip, but I decided dips wait for dips. And so somewhere post my Yahoo mistake, a mistake of opportunity cost, I simply never bought a great stock.

Post that, I started to realize there are some rule breaker traits I'm gonna start laying down from this experience because that's the last time I'm ever going to do that. That's the last time I'm ever gonna find a potential world beater, a potential rule breaker, and decide I'm not gonna buy it today. I need it to go down below a certain number for me to buy it.

And that lesson is maybe the most valuable that I've learned in my fifty eight years on this earth as an investor and a stock picker For many of you, perhaps, over the years, as a fellow rule breaker, I decided I would never again allow a stock that I really believed in, a company that I thought could break the rules and add huge value to the world, which Yahoo did, not permanently, by the way. Google showed up and disrupted it later on.

But for a good five year run, Yahoo ruled the roost, and we passed up a thirty plus bagger because I decided it was a dollar or two too expensive relative to the price I was willing to pay. Since then, most of my great stocks and Intuitive Surgical from our Rule Breaker service is the reason to become a one hundred bagger for me. It just crossed into a hundred bag territory in the past couple of weeks.

I think I've had seven now for Motley Fool members and services like Stock Advisor and Rule Breakers over the year. I would have been happy with any one of them, but each of those seven has looked overvalued. When I first recommended it, most of the way up, people always felt Amazon people still feel this way today is too expensive, and they don't buy it. But that's what I first saw in Yahoo at an impressionable early age in my late twenties, and that's the last time I'm ever going to do that.

So the didactic lesson is learn from your mistakes, or as Nelson Mandela once put it in a oft quoted line, I never lose. I either win or learn. Alright. Well, next week, ever heard of the X Prize? It's the global competition that's pushing the boundaries of human achievement. So don't miss my deep dive with my foolish friend, Elaine, who helps lead the organization that's changing the future aiming to solve the world's biggest challenges one million or one hundred million dollar prize at a time.

Thank you again to Dave Meyer and his story about meta platforms, the Facebook, the long arc. Thanks to Mary Long for sharing a Bumble story, a stock we at Rule Breakers, by the way, bumbled, but she did not, but learned a lesson, one might say a Chloe lesson for life. To Nathan Alderman breaking down in a painful and painstaking way, the pain that has been visited on Discovery, Scripps, now Warner Brothers Discovery. Oh my. Oh, so much debt.

And to Tracy Doll for reminding us why we invest in the first place, you have more than you think. Well, as the fire dies down and the night deepens, I'm left here under the glow of the full moon, reflecting on the tales we've shared. Until we meet again, may your own stories light the path ahead. Good night, fools. 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.