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No. of Recommendations: 23
The RM port has been bashed quite a bit of late. I'd like to stick my neck out here and say that everything I know about investing can be traced to TMF. Every good investing book I've read I've heard about here first. Every stupid question I had when I was starting out was answered on these boards. I've used the RM philosophy in my own port and have done reasonably well, better in fact than the on line portfolio. My three best performing positions AAPL up 18%, BRK.B up 28% and AMGN up 130% were picked using RM ideas but don't apear in the online real money port. My point is that the method is validated only if it can be applied by individual investors to select stocks. Furthermore I've learned as much from the RM ports mistakes as from its sucesses. I'm educated and amused.

Mark
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No. of Recommendations: 1
So, in other words, you were educated and amused by NOT buying the stocks the Fools in-depth analysis decreed to be Rule Makers, but buying their competitors?
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No. of Recommendations: 3
gdholm wrote:

So, in other words, you were educated and amused by NOT buying the stocks the Fools in-depth analysis decreed to be Rule Makers, but buying their competitors?

If that is your conclusion of markandsusanv's post, then you must not really be reading - which is probably the root of your frustration in investing in general.

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No. of Recommendations: 5
So, in other words, you were educated and amused by NOT buying the stocks the Fools in-depth analysis decreed to be Rule Makers, but buying their
competitors?

<><><><>

Not at all. What I did was learned about investing from TMF and resources I found out about at TMF. Using the RM concepts as well as ideas from Philip Fisher, Warren Buffet I ventured into the world of purchasing individual stocks. I also sold ALL of my actively managed mutual funds. My IRA, wifes IRA, 401K's and my children's college funds are all in index funds currently. This BTW is very Foolish. My own "retire early" portfolio is in a brokerage account that I personally manage in my free time. I care very little how the on-line RM port does. I care much more about what I learn and how successful my own investments are. BTW I've lost money on Yahoo and JDSU so I'm no genius here. My strategy is has been to search for companies that I think are rulemakers whether or not they are included in the online portfolio. This mental framework has been sucessful so far. I have to admit it was very successful prior to March 2000 and currently is just keeping pace with putting all the $$ in index funds and forgetting about it. However three years is a short time and I'm still learning.

Mark
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No. of Recommendations: 0
I'm not frustrated with investing, and you seem to have missed my point completely so I will just drop it.
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Mark wrote,

I've learned as much from the RM ports mistakes as from its sucesses

Good post, Mark, I enjoyed it and your point is well taken. This is really your own personal business, but I am wondering if "learning from the RM port's mistakes" cost you any money.

It's tough for folks to be objective and realize just what they've learned here when their ports are swimming in red as a result of taking the general advice of this heretofore adored web site. Lots of people (and I suppose myself on some level) are disappointed that the RM port could actually perform this poorly. I've got a Fool t-shirt that I used to wear with unabashed pride. Not so after the last year. Now I keep a lower profile.

I can understand why all this "bashing" is taking place. It's disconcerting to see, but I don't necessarily disagree with it. As long as the conversation conforms to some basic standards of civility, I think the criticism is healthy. The end result will be upgrading and improvement to some methods that I actually think are pretty sound.

best,

hogan
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No. of Recommendations: 0
BTW I've lost money on Yahoo and JDSU so I'm no genius here.

I guess I answered my own question. Probably should read a little more closely.

hogan
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No. of Recommendations: 2
So, in other words, you were educated and amused by NOT buying the stocks the Fools in-depth analysis decreed to be Rule Makers, but buying their competitors?
<><><><>

IMO, the point of Mark's post is this:
Not at all. What I did was learned about investing from TMF and resources I found out about at TMF.

My own "retire early" portfolio is in a brokerage account that I personally manage in my free time. I care very little how the on-line RM port does.


In other words, he learned about investing from TMF and related resources, then he used the techniques learned to research and pick his own stocks, without mimicking the online port.
Just my .02
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No. of Recommendations: 2
I am wondering if "learning from the RM port's
mistakes" cost you any money.

<><><><

A little. I took a bath on Yahoo. I would have lost much more had I just tried to mimic the TMF port and not learn to do it on my own. This was the main point of my post. I'm glad to have seen them make mistakes that I don't have to make.

Mark
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No. of Recommendations: 2
My three best performing positions AAPL up 18%, BRK.B up 28% and AMGN up 130% were picked using RM ideas but don't apear in the online real money port.

The rule maker portfolio's three best performing positions were also picked using RM ideas, but so were the three worst performing positions. There's really nothing to be learned from your three best performing positions. Having said that I think people familiar with the rule-maker strategy would disagree that AAPL is a rulemaker http://www.fool.com/portfolios/rulemaker/1999/RuleMaker990722.htm or BRK http://www.fool.com/portfolios/rulemaker/2000/rulemaker000623.htm. I can vaguely see AMGN as a rule maker merely because I have difficulties seeing it as a breaker.

My point is that the method is validated only if it can be applied by individual investors to select stocks.

I agree! But notice that the requirement is investors, not a single investor like you. We need to see an average outperformance for many investors using Rule-Maker ideas.

Datasnooper.
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No. of Recommendations: 3
The rule maker portfolio's three best performing positions were also picked using RM ideas, but so were the three worst performing positions. There's really
nothing to be learned from your three best performing positions.

<><><>

Point well taken. The fact that I read the RM portfolio reports and a lot of the posts on these boards and then randomly pick three examples from my own port and offer them as evidence of proof of a strategy is a pretty shaky argument. I probably should have just merely said that for all its flaws as a strategy I have learned a great deal watching the ups and downs of the real money online RM port.

<><><><><><><>

Having said that I think people familiar with the rule-maker strategy would disagree that AAPL
is a rulemaker http://www.fool.com/portfolios/rulemaker/1999/RuleMaker990722.htm or BRK
http://www.fool.com/portfolios/rulemaker/2000/rulemaker000623.htm. I can vaguely see AMGN as a rule maker merely because I have difficulties seeing it as a
breaker.

<><><><><>

The mere fact no two people who frequent these boards will ever agree on a list of companies that are and aren't rulemakers makes it extremely difficult to perform an analysis that would rigorously prove the method. Since its not a mechanical strategy it can't be backtested. Since the managers keep changing the criteria it can't even be prospectively validated. OTOH it still has been a valuable learning tool, which is my main point. BTW both AAPL and AMGN consistently score in the mid 40's on the ranker which at least makes them candidates for rulemakerdom. Note that I'm not claiming that the score on the ranker is the most important thing in making an investment decision. I bought AAPL because it was way way way undervalued in the mid-teens. I bought AMGN realizing that its "swing for the fences" approach to drug development increases its risk.

If I hadn't been reading TMF I wouldn't have any idea how to evaluate these companies and would be stuck with wild guesses and gambling hunches so yes I'm educated and amused.

Mark
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No. of Recommendations: 4
A little off topic for this thread but...

1. Education costs money, if your going to manage your own investments your going to lose some money. Frankly if you have someone else do it your just as likely to lose some money. This is an education about money, I can see one getting a good education without losing some money. I'm sure Buffett must have lost money in his early year, doesn't seem like he would have got such a good education otherwise.

2. I was lucky I had already lost lots of money in the markets befor I found the fool, I was not going to be taking their picks, I was looking for ideas, concepts... i.e. more education.

3. I personally new some successful investors, and even they would lose on some investments, but they gained a lot more than they lost. Most of the time they new which ones were the risks and which ones were not.

4. I was well aware, than many investors make a killing on the same stock I lose money on.

5. My initial investments around 1990 in 10%+ (calculated compounding rate) in AAA rated strips tought me the power of compounding over the long term 10 and 20 year terms I signed up for. This gave me a comfort level that allowed me to take on more risk with my other investments as I learned about individual stocks and determined my own tolerance for risk.

6. I agree that one must be prepared to take control of one's finacial situation. Even if just to learn enough so they can hand it over to someone else, and have the knowledge to properly measure the performance of the manager compared to the market and their requirements.

7. With all its faults the Fool is one heck of a good place to start one's education on investing, seeing as how it does not seem to be part of the regular education curriculum. I vote for more finacial and investing education in the schools for the future... and the internet for all those past that stage.

8. A lot of people should be happy about the recent market pullbacks... a lot of people got off lucky... they had paper loses. A lot of others got a quick education (some paid more than others), had the bull lasted another couple of years the results could have been much worse. If you are thinking why could it not have continued up forever... well then your still learning.

One real tradgety was some really good folks at FoolHQ got laid off, hopefully most of them were quite young and have learned a a lot about business and will be able to really contribute to some great future businesses.

A bonus is alot of people are eating Humble Pie... but hey if I had a Fool T-Shirt I would certainly wear it with pride... The Fool does not stand for Get-Rich-Quick, it stands for Investing-Education-for-Ordinary-and-Extrodinary-People!

BitFoolish-BitStupid-BitConservative-BitTwiddler


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No. of Recommendations: 6
Hi Mark,
I totally agree!

We hit a bear market and like all bear markets it will end eventually. I have learned more from The Motley Fool website than anywhere else. Interest rates are coming down and in six months everything will change. I hear the term "a work in progress" being spoken of as being a bad thing. But as investors, we need to be "a work in progress" and learn to adapt constantly to changing market conditions.

Like you, I have learned from the Motley Fools successes as well as their failures. When they sold they gave their reasons. I learned from those reasons. No investor is right all the time -- there is no such animal -- but we can learn from our mistakes if we do not let pride blind us to our own fallibility. I have never seen the Fool do this; they have always owned up to incorrect decisions and have tried to learn from those errors. That does not mean they surrender at the first sign of problems -- they stick to their guns until they are convinced they are incorrect -- as I do. But once they are convinced that their road is faulty they take steps to correct it as all good investors should. The Motley Fool will prosper because they constantly learn from their successes as well as their mistakes. We will benefit by heeding their example.
tom
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That does not mean they surrender at the first sign of problems -- they stick to their guns until they are convinced they are incorrect -- as I do. But once they are convinced that their road is faulty they take steps to correct it as all good investors should. The Motley Fool will prosper because they constantly learn from their successes as well as their mistakes. We will benefit by heeding their example.

While I would hope you would be right, I find your conclusion far from assured. From what I've seen they've made very few true modifications to their investment philosophy and - more importantly - they've never carefully looked at their past decisions in any gory detail from what I've seen (I could be wrong!). Most professional money managers are supposed to well-trained in their craft and yet a vast number of them have been miserable failures. What many of you don't appreciate is that Motley Fool has a large number of inherent advantages vs their competition, including not having to worry about withdrawals, having a limited amount of capital to invest, and having a steady income stream to invest in their ideas. Of course, every individual has these advantages too. The Fool might very well outperform – nobody knows the future, but supposedly trying to beat the market isn't their primary mission anyway – this is supposed to be an education site only. As educators, they are quite good, if you have a balanced framework to evaluate what they are trying to teach. But let's not let sentimentality enter into our evaluation of their abilities. As investors, we should always keep eyes wide open.


Just an opinion.


<----@@------>
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No. of Recommendations: 1
Hi Tislynch,

They have made modifications, the 2x in 5 year portion of the rule maker strategy for instance. Of course, this is not an exact valuation metric, but it does provide a guideline and a step away from buying great businesses at any price. The rest of the Rule Maker criteria has advantages and I think those who look at the Rule Maker criteria will do better than most. The Rule Maker seminar has just listed 25 new candidates that meet the Rule Maker criteria. From the time they were downloaded to us, they have moved up 18% -- less than a month. Of course, this should be no surprise, the market is up considerably in that time. Same as it should be no surprise that the Rule Makers bought at the peak of an amazing bull market is down now.


All systems have inherent weaknesses and their is always risks. And I agree with you that The Motley Fool is an educational site above all else. And you are right also when you say, "know one knows the future".

Most professional money managers are supposed to well-trained in their craft and yet a vast number of them have been miserable failures <------ a very true statement!


From what I've seen they've made very few true modifications to their investment philosophy and - more importantly - they've never carefully looked at their past decisions in any gory detail from what I've seen (I could be wrong!).

I disagree with the above statement. I do see them correcting past mistakes in their many articles. There have been articles written against buying companies at any price recently. I do not feel its a necessary warning since I like momentum buying in a bull market. It is the combination of buying in a bull market and holding during interest rates rises that can be dangerous especially in the technology sectors.
I do not like holding an entire portfolio of highly valued stocks at anytime in any market. A diversified portfolio of companies meeting different sets of criteria in my opinion is the best.
They offer different methodologies which I like and they teach financial fundamentals so one can plan his own investment style.

"The Dueling Fools" series of articles show they support opposing viewpoints. Many of the companies in the different ports have been placed through the Dueling Fool series. This in my opinion encourages thinking and not blind buying. The ports are an excellent educational tool whether they do well against the S&P 500 or not. I would hate to see the portfolios not be included at the Fool site for fear of people copying them blindly. My opinion most people do not do that.

What many of you don't appreciate is that Motley Fool has a large number of inherent advantages vs their competition, including not having to worry about withdrawals, having a limited amount of capital to invest, and having a steady income stream to invest in their ideas

I do not agree with that statement. The Motley Fool has a great amount of competition in The.Street.com, Yahoo finance, morningstar, ragingbull, silicon investor and I could name many others. NO withdraws? I disagree, look how many posters have left since the big bear market. They cannot afford to have a losing portfolio, they can lose people which could jeopardize their website independence. Since the Gardners are using their own money it is possible they have a limited amount of income for investment in the portfolio -- I don't know for sure.

They too have disadvantages. I think this site is next to none when its comes to learning. As they have always warned not to copy them and they encourage independent thinking, I cannot think of a better place to go for investment education.

tom
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The Motley Fool has a great amount of competition in The.Street.com, Yahoo finance, morningstar, ragingbull, silicon investor and I could name many others.

I was talking about their portfolio results.

I do see them correcting past mistakes in their many articles. There have been articles written against buying companies at any price recently.

Agree, they've made some commentary in that direction, but it hasn't been specific enough to the portfolio (in my opinion only!). I've yet to see them take an original buy report for one of their stocks and strip it down to see precisely why it worked or didn't work. They've done short evauations, but nothing detailed.

Again, I don't read everything on the Fool so might very well be wrong...
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You know, I probably shouldn't have posted these notes...my dificulties with Fool have more to do with my perception that they created - from scratch - an investment philosophy when plenty already existed. But that's an esoteric concern, and I promised myself I wouldn't get involved in the fracus anymore.

I do find it ironic that I am in the position of defending them (or some of them; they are split with HQs, which is great!) at this latest turn...
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Hi Tislynch,

I know you were talking about competition concerning their portfolio results. However, I feel there are similarities. If their portfolio underperforms in the short term they do suffer similar pressure to portfolio managers. They do not lose a stream of investment money, but they certainly lose people reading their website. I think the situations are very similar.

And I am not arguing and I do not hold you in disregard because your viewpoint is different -- that would be very unFoolish. I just am offering my viewpoint.

I do not have time to read this board often but have read it enough to see you are a value orientated investor. I am not totally a value investor, but do place some of my investment dollars in stocks I feel offer value opposed to other strategies. I am interested in value investing along with other methodologies. I believe a well diversified portfolio should have companies representing different strategies. But that is my opinion only.

tom
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No. of Recommendations: 1
Dear tislynch,

I've yet to see them take an original buy report for one of their stocks and strip it down to see precisely why it worked or didn't work. They've done short evauations, but nothing detailed.

Well, this author (who was probably my fave FWIW) hasn't really re-evaluated why the purchased worked or not, but he gives a fairly detailed rundown on what makes American Express tick IMHO:

http://www.fool.com/portfolios/RuleMaker/Trades/RuleMakerTrade_axp980521.htm

Perhaps too long for some people, I don't know... I personally would like the Fool to go back to writing stuff like this.

Best,

Lleweilun Smith
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