What That Famous Investing Quote About Bulls, Bears, and Pigs Gets Wrong
The podcast’s final mailbag of 2023.
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This video was recorded on Dec. 27 2023.
David Gardner: Here we are, at the end of it all 2023. All of it, you and me here together at the end of it all. What did you make of it? How did you do? How would you score yourself? What’s your single favorite memory or moment? Did you have your heart broken? I bet you did at least once. Never forget that, but do get past it. What three lessons will you take away? And with whom will you share those three lessons? Ringing in the New Year English speakers worldwide each year sing, should old acquaintance be forgot. Remember that lyric is actually just the start of a rhetorical question. I don’t think 18th-century Scottish poet Robert Burns was suggesting that you forget old acquaintances. But some non trivial amount of this year, 2023. We do want to forget war in particular. I know we wish we could forget that, all of it, but we can’t and most of all we wish it would end just maybe in 2024, some of these wars will end.
Maybe in 2024, the stock market will do as well as it did this year. Nice year of bounce back the S&P 500 up 20% plus the Nasdaq better. I’ll take that every year. We wish but hey, I think the market’s going up next year. Here at the end of it all, we will close things out, as we always do every month. This week is your mail bag and so let’s do it for the 98th time in rule breaker investing podcast history, the 98th The Mail bag now at the end of it all, only on this week’s rule breaker investing.
Welcome back to Rule Breaker Investing. Thanks for making some time for me this week, probably one of your busiest of the year, although maybe it’s time to relax. Maybe last week was the real challenge and this week you’re able to, maybe not even where you live, maybe you’re able to just relax, listen, have a jog. I don’t know, down the beach. Wait, do people go to the beach in winter? Well, depending on what hemisphere. Yes, I’m at the beach. We recorded this podcast just days ago, last week. Let’s review the podcasts that were for the month of December, 2023. We led it off with games, games, games, volume 5. For gamers anyway, I hope you enjoyed that week and for those who don’t enjoy games, you probably skipped it. But I had a lot of fun bringing you my fifth consecutive annual edition of my favorite new games and old for you to enjoy with family and friends. Give away as a gift this year. Games, games, games, volume 5 and then our annual Besties on December 13th, bringing back a cast of thousands and yeah, it’s the longest podcast I think we do each year, we make it a Fool stravaganza, so 90 minutes long or so. I so appreciated the efforts that Rick put in to produce that show and that my talented guest stars, all of whom came back to wish us well for 2024 and reflect a little bit on 2023, your Besties, December 13th, last week, the Market Cap Game Show, Bill Barker, Yasser El Shimy, the 26th edition. I love doing the Market Cap Game Show at some point last week. I think I said something like, maybe we’ll do it a little bit more frequently next year. We do it quarterly, it’s always special cause it comes back once a quarter. But I start and I’m just thinking aloud right now, I start thinking it would it be fun every two months, like six times a year, not four? Well, you can always let us know your feelings. [email protected] is, of course, our email address. That’s what powers this mail bag every month. Fools who write into [email protected] or tweet us at RBI podcast on, I’ll still say on Twitter. Speak of which, let’s go with some hot takes from Twitter. Harley Carroll, write a in at Harley M. Carroll writing of the besties Harley, you said, it’s always a great recurring episode. One of the absolute favorites that I wish was presented two times per year. Well, you and I had an exchange. Harley and I said, I don’t think it’d be a special.
What if the Oscars occurred twice a year, or I don’t know, the Grammys, I think it’s more special once a year also. It is a lot of work. It is a long podcast. I hope people really enjoy hearing from people like Arthur Brooks who comes back on the show, Warren Berger, sharing some more beautiful questions. Mahan A.I, Elizabeth Hargrave, Wingspan. There were so many great voices on that Besties podcast. I enjoyed doing it, but it is a lot of work for Rick and for me, and many of us so I think we’ll keep the Besties once a year. But thank you for that nice note and speaking of Mahan Tavacoli, our AI expert at Mahan Y on Twitter David, your genuine curiosity and passion bring actionable insights with joy to your guests and your audience. What an honor to join you in this conversation. An incredible blessing for all of us to be in each other’s lives and in our ears through podcasts. Well, thank you, Mahan and I really enjoyed having you with us again and I look forward to discussing more about artificial intelligence as it’s still in such early days. As it continues to make inroads into our society, our culture and I think net, net improve it. I realize there are always going to be people who fear it and those same people probably feared the Internet when it started showing up and changing our society 30 years ago.
These days, we all generally, I think, appreciate the Internet. We recognize it’s a powerful tool for good and for ill, but net.net. It’s been of huge benefit to us. I feel we’re going to say the same thing 30 years from now about artificial intelligence and Mahan, you are a wonderful light lighting our path to understanding how to do it better and I’d be remiss if I didn’t plug Mahan’s podcast. I’ve been on it and I really enjoyed. He does a great weekly podcast. It’s called Partnering Leadership. If you enjoyed his voice once again on our Besties this month, then you can hear it a lot more frequently than that, Partnering Leadership. Garovkumar at Garov Investor, Garov, you wrote in your previous mail bag, that would be our November mail bag. You mentioned that you’re planning to do a review of all the five stock samplers. I’m going to pause it right there and say that is correct. We will do our final review of Paluza for a five stock sampler sometime in the spring or early summer of 2024 and after closing that one out, I will definitely do, I hope, a signature podcast reflecting on the lessons learned from all 30 taken together and it will be backward looking, but also forward looking in its own way too so I do look forward to doing that and Garov closes his tweet by saying, I have a hunch that if you formed a portfolio of the best performer out of those five stocks from each sampler, that portfolio Garov asserts will beat the market in future and that is a fun thought that will capture and hold onto.
Thank you Garov and finally, Vikas Patel at VDP 09 on Twitter, one of our family’s favorite episodes. Vikas writes, speaking of games, games, games, volume 5. Thanks for the past recommendations. I look forward to adding some new ones to our collection and Vikas, you even included a picture of your gaming shelves and I recognized a few of your family games there. Some of my favorites too. Thank you very much for listening one game or to another Fool on my friend. Well, we have six mailbag items for this final mail bag of 2023. Let’s get started.
First up, Morris and Chelsea writing in together love this one. Thank you, both. David and Company thanks for the 2023 Games, Games Games podcast. It reminded us, wrote Morris and Chelsea of last year’s episode. A most notable part of which was when you said the Guild of Merchant Explorers in a fun voice Fool on Morris and Chelsea I assume is Morris. It could be Morris, but thank you both and yeah, reflecting back that was of course Games Games Games, Volume 4 one of the games that I took a fancy to last year and mentioned in last year’s show was the Guild of Merchant Explorers and the reason that we refer to it in a special voice is because, as I was saying at the time, and I still feel the same a year later, that is one of the hardest to recall. Most generic seeming names for a board game that I can think of. The Guild of Merchant Explorers. Each of those words appears in other game titles and strung together in a way that we don’t necessarily expect. It’s just very hard to remember and that’s why I don’t, when we bring it out on our family game table, I don’t say, hey kids, hey family. Let’s play the Guild of Merchant Explorers. I say let’s play the Guild of Merchant Explorers or something like that.
Rule breaker, investing mailbag item number 2. Dan, right again from Nashville. Good day, sir. I am Dan from Nashville, Tennessee. I’m writing to disagree by agreeing with you. In one of your recent podcasts, you mentioned the quote bulls make money. Bears make money, but pigs get slaughtered pause it there that is true, Dan. In fact, I spoke against it first, and most specifically actually in March of 2021. It was my Pet Peeves volume 6 episode, where I spoke at a little bit more length about it then. But you’re right, I referenced it again in my Pet Peeves episode last month. Dan goes on, I listened to several different podcasts about investing. The thing I appreciate about the Motley Fool shows is that even more than teaching what to invest in, you teach a process. I use the processes that the Fool recommends Dan writes, as my yardstick for measuring other podcasts. If they disagree with a Foolish principle, I delete that podcast. Wow, OK Dan. Let’s keep going. I believe that the bulls, bears and pigs quote matches the foolish principles. When I listen to another show that frequently features that quote. The presenter starts by explaining that the best way to make money is to buy and hold good companies. There are many people who make a lot of money by betting against the market in the short term. But people or pigs if you will, who buy stocks because they’re flashy and popular without understanding what they’re getting into, can get slaughtered. The other version of a pig that he mentions is people that hold onto a stock that no longer meets the needs of why they bought that stock. We’ll pause it there again. Dan, I’m going to finish your note and I have more to say in his sec. But I just want to interject here that people who buy flashy stocks, they don’t understand. All in my mind, not greedy or piggish, I would say they’re just merely uninformed. I mean, maybe they’re getting greedy. Sure, I can see that in a gambling way. They’re gambling, but as you said, they’re not understanding what they are getting into and that doesn’t sound to be like greed, so much as ignorance so I don’t think that’s piggish, but I don’t know if we’re going to go with animals, turkeys.
Is that fair or coming after Thanksgiving too soon? Anyway, Dan goes on. I don’t think that either of you is more correct on this. I think in this case it is a yes and I want to say, I don’t listen to that other show I’m referencing anymore. Not because I think it was wrong, but because I feel that I graduated from it. It was a fast paced, fun show with bells and buzzers that got me interested in the possibilities of investing in individual stocks. Then I found the Motley Fool and found a process whereby I hopefully, Dan writes, will not be a pig. Thank you for all you do at the Motley Fool, especially at Rule Breakers where even though you don’t pick individual stocks anymore in this podcast, you still give us a process that makes me smarter, happier, and richer. Fool on Dan. Well, that’s a really nice note, Dan. Let me say that first off and thank you. I don’t really watch financial shows. I don’t really listen to non Motley Fool podcasts, at least on the topic of business. But I may know what show you’re talking about, but let me just speak to this famous line. Bulls make money, bears make money, and pigs get slaughtered.
Now I think we can all appreciate that the main point of that line is that if you’re really greedy, you will lose. But I want to challenge two things about that over used tired line. That’s why I featured it on my Pet Peeves podcast a couple of years ago. It’s a line often used by traders in my experience, T-R-A-D-E-R not T-R-A-I-T-O-R, by traders. In my experience, the first thing I want to challenge is, in my world anyway, bears don’t actually make much money. If you look at the history of the stock market, it starts in the lower left expressed graphically and it goes to the upper right over time. It’s very hard to make real money or meaningful money as a bear over any meaningful period of time. Now maybe obviously if you’re a specialist at short selling or if you’re good at identifying truly troubled companies, you can make some money from time to time, and hedge funds certainly benefit from some of that mentality. But I would say, first of all, there’s no equating bulls and bears making money. I reject the notion that you could say bulls make money without saying bears make a lot less money than that. Which would be, I think, a smarter maxim to start with. But the other and second part of the maxim I don’t like is the notion that if you hang around and try to make a lot, you’re going to get slaughtered.
In fact, my experience is that the longer you hold great companies, the more money you are going to make. It definitely doesn’t look piggish or feel piggish, and I don’t think it should be expressed in negative terms the act of buying to hold great companies. For Stock Advisor, my cost basis for Nvidia going back to April 2005, is $1.63. The stock is $500 today for full members going back to our AOL days, my cost basis for Amazon is $0.16. When we started Stock Advisor in 2002, I right away made Amazon a recommendation, so for Stock Advisor members, their cost is $0.77 The stock is over $150 today. With whom are we sitting on these cost basis for Nvidia, for Amazon, for Netflix, for Tesla, for Intuitive Surgical, for Booking. I look around and first off, it’s lonely here. There are few people who’ve been taught Foolish investing in the world at large. Few people understand to hold great companies through thick and thin. It feels great to have pennies for a cost basis in some of the great stocks of our time, but you had to also sit through declines of more than 50% in those same stocks numerous times to get here. Most people, when I look around and see who else is sitting out here in the pasture with low cost basis and great stocks, it’s a beautiful farm. Don’t mistake me, I’m very happy to have found these Elysian fields. But the few others, some of whom are listening to me today say this, long time Fools and God bless you. The few others would presumably be called pigs and hogs along with me too. What’s more greedy, piggish and hoggish than greedily running up 100 baggers? In my experience, people who say bulls make money, bears make money, and pigs get slaughtered, have very likely never held the stocks I’m talking about in the way that we have. They counsel others not to be greedy to trade, avoid those downsides, get out before those 50% drops, don’t be a pig and in so doing their influence causes people to sell out Apple before allowing Apple to do in your portfolio what it would have, what it should have, if you understand investing, investing Foolishly.
Dan, I do basically agree with you that there is some bad behavior out there, especially if people don’t know the stocks they’re buying or are chasing yesterday’s hot stock. I think we can all recognize that. But I will continue to inveigh against the line, bulls make money, bears make money, and pigs get slaughtered, because bears don’t make nearly as much money as bulls and if you’re a pig sitting on low-cost basis for the great stocks of our time, well, oink, oink, join the party.
Onto Rule Breaker mailbag item number 3. I did get some mail as a result of my express viewpoint on the Israeli-Hamas war. Of course, I did. Let me be the first to say that this is not a focus of Rule Breaker Investing in this podcast and the few words that I want to share now are not intended to take a stance or shift anyone’s viewpoint. My own is ambivalent, as I conveyed. Even though this likely will be the last mailbag for the foreseeable future that I talk about this, still in all it is real. It is happening in the world, and billions of humans around the globe are in ways big and small affected by it, so I was happy to receive the mails. As one might expect, there were viewpoints on both sides.
The viewpoints heavily contrasting were reasonably made coming from fellow Fools and for me, at least connected with my own ambivalent and conflicted feelings and perhaps yours too, dear listener for the Palestinian viewpoint. Stephen wrote in making points about settler colonialism, occupation, etc, I understand these viewpoints, this is a part of history, it is unfortunate, and it is real so are the huge number of Palestinian deaths in Gaza. Stephen added, and I quote, “As a fool like you, I also feel curious and supportive of the other, the weaker side. This led me to explore further about this conflict from the other side and in the process I realized I’d been misinformed much of my life on this conflict. There is not enough space here, Stephen wrote, to write further what I learned, but I will mention a few excellent resources that I found online or met in person, most of them are Jewish that all listeners should explore for better understanding, Norman Finkelstein, Gabor Mate, Noam Chomsky, Stephen Sizer, Peter Slezak, Dan Cohen, Jeff Halper, and Robert Fisk. Miko Peled has an amazing story and book titled The General’s Son Journey of an Israeli in Palestine. Miko’s grandfather, Stephen concluded, signed Israel’s declaration of independence and his father was a general in the 1967 war.”
For the Israeli viewpoint, there was reiteration of the atrocities suffered and understandably so, as well, stories of many Israelis themselves, who have been displaced from homes and businesses. I understand war, war hurts everyone. I was happy that Debbie Goodman concluded her own response by pointing out that she and I share the same initials, DG, which she tells me in Hebrew didn’t know this forms the word fish, which I certainly didn’t know. Debbie as another long time Fool and listener of this podcast immediately referenced in her postscript, our mutual friend Dori from finding Nemo. Knowing that my ongoing theme throughout 2022 here on this podcast was just keep swimming. Thank you to those who wrote in to Stephen and to DG. I wish peace on earth and goodwill to all. I try to feel that and in my own small foolish way, I try to help with that too.
Onto rule breaker. Mailbag item Number 4 this one from Rich Smith. Thanks for writing in Rich. David, I just finished listening to the besties of 2023. Really appreciated the Warren Berger segment. Of course, Warren Berger, the author of books about Beautiful questions. Warren sharing some of his own beautiful questions for 2024 with us on that podcast. Rich, you obviously enjoyed that. You go on in the part where he encourages us to be more curious. I was reminded of the scene from Ted Lasso, season 1, episode 8, where Ted attributes the “be curious, not judgmental,” be curious, not judgmental to Walt Whitman. However, upon further review, and possibly an idea for one of your quotes, episodes, Rich writes, “That’s actually a misattributed quote, at least according to snopes.com. The author from the Snopes article attributed that quote, Be curious, not judgmental to an advice column which ran in the 1986 Charlotte observer regarding a question from a concerned parent who found oral contraceptives in their 17 year olds bedroom. Be curious, not judgmental.” Rich closes. I hope you enjoy the Christmas season. Thanks again for keeping all of us smarter, happier, and Foolishly Rich. Well Rick. Thank you. I am a Ted Lasso fan. I will admit I haven’t actually finished season 3 yet. I have enough people around me. Rick Engdahl is not one of them.
Producer Rick Engdahl said he’s watched it twice. He told me that before I sat down at the microphone. I know a lot of people are still Ted Lasso fans. I am too. But enough people dissuaded me saying, yeah, they lost it there in season 3 that I admittedly haven’t gone back through it but I did see season 1, episode 8. I’d forgotten the misattribution to Walt Whitman. I probably would have believed it at the time. You know Rich that I like it when people source where stuff actually comes from. I’m a huge fan of “investigator.com” one of my top 20 favorite websites and Snopes has done good work over the years, Rich, thank you and I’m glad you enjoyed Warren Berger. I have too. In fact, history will show that Warren has twice appeared on full podcast in rule breaker investing and his appearance earlier this month for the besties was just the third time now that he’s been on the podcast, and I’m glad you enjoyed it. Thanks for writing in Rich Smith. Be curious, not judgmental. Rule breaker, mailbag item number 5. This from Mike Mcmahon. David, while there were 50 podcasts to highlight for your 2023 besties, I would point out Mike writes 11 of them the monthly mailbag issues. While those episodes do not always rise to the level of a bestie, I would posit regular listeners of the RBI podcast appreciate the interactivity between you and the listeners. To all of us who contributed a mailbag submission in 2023, Mike writes to all of you, my mailbag correspondence. He says, “Yo are the best kind of listener who enriches the Motley Fool rule breaker investing community spirit of smarter, happier, and richer Fool on Mike Mcmahon. Well, I so agree with that Mike. As I’ve said, one in four of these podcasts is powered not by me, not by Rick, or any of my external guests. My guest stars who come on having written books or been CEOs of companies. Nope, they’re powered by, well, you, Mike.
You wrote in a few times this year including this one right here. I really appreciate the point made and yes, I join with you and thanking gratitude to all of the mailbag correspondents this year and every other past year. As I mentioned, this is the 98th mailbag. In rule breaker investing history, we have an unbroken string of 98 months in a row. I guess that means February, which also includes Valentine’s Day, Somewhere a couple months from now. That would be the 100th mailbag. I hadn’t really thought about that, not even sure we’ll celebrate it. Someone could write in next month’s mailbag and suggest what we should do to celebrate the 100th mailbag, which will appear at the end of February 2024. In fact, let me ask back out to you, Mike, and to all my dear listeners, if you have a thought about how appropriately to celebrate 100 mailbags, let me know in the January mailbag. That way I’ll be ready for the February 1. Thanks for the note, Mike. Finally, rule breaker mailbag item number 6. The last Rule Breaker Mailbag item of the year is a poem coming in from Lisa. Lisa, thank you for taking the time to write it. It’s a joy to share it. Here we go. Dear Motley Fool, Lisa writes, Gratitude fills me a gainful year in review emotionally and financially. Blessings a new books. The architects of my growing smarts, games, weaving, joy, crafting, happy hearts, 90% richer, my portfolio. Wow, you outperformed me, Lisa, 90% richer, my portfolio sings market gains dance on wealths wings. Eight countries explored a global feat. Conferences embraced where knowledge and ideas meet. Penned another chapter. A book brought to birth. Living a life envisioned a testament to my worth. Motley Fool a guiding star, so reliable in crafting dreams. You’ve made it all possible.
Thanks. Lisa concludes, and let’s have another great year. Well, Lisa Wharton, you have once again graced the show with a lovely reflection in rhyme and meter. I particularly love to hear of your travel, your writing, including what you just shared with us, your reading, and your investing. Wow. What a year. Congratulations. But I think the best phrase of all was living a life envisioned. As we get older, we have more and more control over our circumstances. Far more at 50 or 60 than at 15 or 16. It’s inspiring to be part of a community of people living a life envisioned. As James Clear points out in his book, Atomic Habits, the best way to get in shape is to hang out with other people getting in shape, and the best way to invest foolishly is very likely to hang out with other foolish investors online and, or in person. The best way to live our best life is to find and spend time with others who are managing to do that with theirs. Lisa, I joined with you and I can hear our 500 plus Motley Fool employees surrounding me and feeling the same as Lisa said, let’s have another great year. Yeah, here we are at the end of it all and I want to wish you dear listener, yes, you a very happy new year. Have you made a resolution yet? What if you phrased it as Warren Berger advised two weeks ago as a question. Maybe a beautiful question or it may just be a phrase, an intention. I think I know mine. In 2024 David is a writer. In 2024 what are you? Fool on?