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Author: TMFGuardian Three stars, 500 posts Supernova Odyssey 1
Mission Team Member CAPS All Star SC1 Red Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74  
Subject: Re: Sell Amazon? Date: 9/4/2012 5:24 PM
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Hi Tony,

P.S. What do you get if you win this thing? I mean, there has to be something a little more than a hand shake or a pat on the back. No?

The Motley Fool just initiated a small quarterly incentive program for Real-Money Portfolio managers that are beating the market and are in the top 3 in our rankings. But honestly, Tony, that's not why we do this (and the financial incentives weren't even around when I signed up for the program one year ago).

Many of us are here at the Fool because we believe in our mission: To help the world invest. Better. We want to help people achieve financial security and independence. And personally speaking, Tony, it's been really cool having Fools like you take an interest in my portfolio. Tier 1 just completed its first year, and we earned a time-weighted rate of return of 35%. Anyone who invested along with us earned real money that can help them achieve their financial goals. And they substantially beat the market (+17%), so Tier 1 added value as compared to an S&P 500 index fund or ETF. And we did it for a pretty sweet price!

(It's free)

:)

From a professional standpoint, our real-money portfolios give Fool analysts the opportunity to build our track records. In our premium services, analysts make recommendations to our Lead Advisors. Some of our ideas make it into the services' portfolios. Some do not. In our real-money portfolios, each analyst is the portfolio manager and lead advisor. We are responsible for every investment recommendation – a responsibility I do not take lightly. It's exciting and scary at the same time. It's exciting, because if I find an excellent investment opportunity, I can get it in front of members quickly. It's scary, however, because if I'm wrong, I can cost members money – something I try extremely hard to avoid. But overall, it's been an awesome experience, and I've learned a lot by taking part in this initiative.

And to answer the first part of your question, we can't really win this thing because it never ends. I just had a similar conversation with my father, and he said to me, "You had a great year. So what happens now?" I laughed and said that I keep doing what I've been doing, only better. I told him that I was proud of the returns we earned last year, but they were now in the past. If I focused on the past instead of the future, the market would pass me by, and I wouldn't be doing my job. It's funny, by while other investors might look at Tier 1 and see our 35% return, I see what it could have been. I didn't buy UA when it was trading at $65 (pre-split) because I was hoping it would hit my $50 buy price. That would have been nearly a double for Tier 1 investors based on today's prices. I didn't buy SAM when it was trading in the low $70s and DIS in the low $30s because I knew investors I respected thought they were overvalued. Both stocks are up over 40% since then. And recently, I passed up the opportunity to buy UA at about $45 (post-split) because an investor I respect had a short position in the name. That stock is up about 30% since then.

I mention these mistakes to show that I have much to learn, and there is great room for improvement. But are those are some of the reasons why Fool Chief Investment Officer Andy Cross and Buck Hartzell, Director of Analyst Learning, wanted me to take part in the Real-Money Stock Picks program. They knew that one of the best ways to improve as an investor is to manage real money in front of members. And they were right.

So one thing that our successful first year has done is give me the confidence to trust my research and intuition. Not overconfidence, by any means. I still always look for disconfirming evidence as I form and reevaluate an investment thesis. But I've come to understand that it would be pointless to spend countless hours researching businesses, studying economics, accounting, behavioral finance, etc., and learning as much as I can from the investment masters if I'm not going to use the insights I derive from those efforts.

Of course, I will still mistakes; no investor is perfect. But the performance of the Tier 1 portfolio, the performance of my stock picks within Fool premium services, and my CAPS track record have given the confidence to believe that the winners will more than make up for the losers.

Although I still absolutely hate the losers :)

So Tony, those are some of the things I have gained from the time I've spent managing Tier 1. And I really appreciate Fools like you who have taken part in the journey.


Joe T
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