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No. of Recommendations: 3

Hello, David and Tom, and other participants in this discussion board:

Well, I've finally gotten around to reading RB/RM. I read your first book a few years ago, and RB/RM is as entertaining and educational as anything I expect from the Motley Fool.

That being said, I don't agree with everything you say. I thought it would be worthwhile to solicit discussion on some things in the book that I do question. I'll start with this:

David's treatise on the "art" of finding a true Rule Breaker and riding that stock to outstanding returns is quite cogent. However, I detect a fundamental inconsistency that sheds light on just how much risk there is in investing in, et al.

David's final criteria for identifying a Rule Breaker is that it will be prominently featured in the mainstream investment literature as "grossly overvalued". At another point, he mentions how "momentum traders" drive stocks like to unprecedented heights - the implication being that the price does not reflect fair valuation. I understand many Internet stocks are held for an average of only about 7 days - consistent with this observation.

Well, what's it going to be? Over the last few years, has been typically undervalued or overvalued? I find these statements from the book contradictory.

My concern is that the risks in investing in Rule Breaker stocks are understated in the book. The investment race is a marathon, not a sprint, and even a *long* early lead does not necessarily mean one will win the race. In ten or twenty years, will Amazon or AOL more resemble king-of-the-mountain Microsoft, or now-defunct Visicorp, one of the many casualties to Bill Gates?

RB/RM goes a long way toward giving an investor the tools to find tomorrow's Rule Maker in its infancy. It's the best road map I've seen yet to try some bold investments in today's stock market, and I'm looking forward to promoting and discussing many of your ideas in my (otherwise stodgy, NAIC-based) investment club. But I think it will be a long time before we know if you're right.

Tim Klepaczyk

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