Investing Insights from Motley Fool Analysts
In this podcast, host Mary Long engages with several Motley Fool investors covering:
- How they began their investing journeys.
- Resources for a self-guided investing education.
- Tips for those starting out.
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A full transcript follows this video.
Current Highlights for New Investors
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This video was recorded on Jan. 07, 2025.
David Meier: My approach leans toward making significant investments in fewer opportunities based on thorough research. While this has generally served me well, it does come with volatility. There were times when I hesitated, thinking I had no capital or didn’t want to divest. My advice? If something piques your interest, make a small investment.
Mary Long: I’m Mary Long, and that was David Meier, a senior analyst at Motley Fool. As the year begins, we often reflect on the future. Where might you find yourself a year from now or even a decade later? Actions taken today can shape new paths in life. Whether your goal is to hit the gym more often or dive into investing, now is the ideal time to take that leap. To commemorate the New Year, I gathered insights from some of our Foolish analysts to explore their investing beginnings, lessons learned, and advice for newcomers. First, I asked senior analyst Alicia Alfiere about her first experience as an investor.
Alicia Alfiere: That’s an interesting question that ties into personal confidence in investing. My initial investment occurred in high school. I convinced my dad to buy a mutual fund together, which was a valuable experience. However, after college life started, I paused on investing until my 30s when I became more engaged.
Mary Long: Let’s delve into your high school experience. What convinced you to advocate for a mutual fund over other options?
Alicia Alfiere: It’s amusing you mention alternative choices like a puppy. My family wasn’t invested in the idea of investing, viewing it as akin to gambling. However, I had a great teacher in high school who inspired me. Captain Jim, my AP statistics and calculus instructor, walked into class one day asserting that while money doesn’t grow on trees, it can indeed grow through investing. This piqued my interest, leading me to research stocks at a pivotal time before Pepsi launched Pepsi 1.
I distinctly remember examining stock prices in newspapers. After tracking Pepsi’s growth, I felt certain it could enhance its business prospects. Even as a Coca-Cola drinker, I recognized that Pepsi’s product range was broader. I urged my dad to invest, but he resisted. So, using persistence, I monitored the stock and noted movements daily, eventually discovering mutual funds—an option that suited my dad better. He finally agreed, and we still hold that mutual fund together.
Mary Long: For senior analyst Bill Barker, his investing journey ignited with his first paycheck and a passion for reading.
Bill Barker: After graduating from law school and beginning my first job, I found myself wanting to save and learn about the stock market, even though I was starting from scratch. I dove into various books and began to explore online resources—a novel pursuit at that time—but those readings formed the backbone of my education.
Mary Long: Essentially, you’re saying you taught yourself about investing. What sources did you turn to for that self-education?
Bill Barker: Initially, I gravitated towards well-crafted books about business rather than solely about investing. Classics like Michael Lewis’ Liars Poker and Barbarians at the Gate captivated me with their compelling tales from the market. These books laid the groundwork for my desire to actively manage my investments instead of relying on brokers, subsequently leading me to Motley Fool’s resources in the mid to late 1990s.
Mary Long: Considering the future helped David Meier embark on his investing adventure. Early successes rapidly deepened his affinity for stocks.
David Meier: My journey traces back to 1995, shortly after I married my wife. Starting my first job in Indianapolis marked a significant life change. Excitement filled the air as we embarked on this new chapter, eager to embrace opportunities ahead.
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Investing Journeys: From Novice to Knowledgeable with the Motley Fool
The road to becoming an investor can take many paths. In a recent discussion, Mary Long and her Motley Fool Money colleagues shared their personal experiences that guided them toward investment savvy.
Early Inspirations of Financial Literacy
Mary Long: For me, it began with understanding our future financial needs—buying a house, starting a family, paying for college, and planning for retirement. I discovered the Motley Fool during this time and became a reader. My perspective shifted as I learned not only about money management but also about the stock market. Initially, I planned to invest in mutual funds since ETFs weren’t available yet. However, I found my passion in stocks.
Mary Long: For my co-host, Ricky Mulvey, an important career shift was his turning point toward investing.
Ricky Mulvey: I truly thought of myself as an investor when I rolled over my 401(k) from a previous job into an IRA. Suddenly, I had to decide how to manage my money for the future. My father had shown interest in stocks, which exposed me to investing. However, taking personal responsibility for my financial future made a significant difference—this was the moment I crossed into being an investor.
From Novice to Professional Investor
Mary Long: So, when did your passion for investing take off? You went from managing your retirement funds to discussing stocks professionally.
Ricky Mulvey: I began my journey with The Motley Fool. Working here naturally sparked my daily engagement with stocks, and my role deepened my understanding of long-term investing—holding onto promising companies for years, if not decades.
Mary Long: Let’s place this on a timeline. You joined The Motley Fool around when?
Ricky Mulvey: I started in late November of 2021. At that time, the market was buoyed by the tail end of the pandemic, with many eager to dive into stock trading.
Mary Long: David’s investment story began post-tech bubble, where he found success by investing in lesser-known companies.
David Meier: My pivotal lesson came from investing in late 2021. As a new investor, the advice often is to hold for 3-5 years. However, it’s not easy when your stock drops 20% or more after you buy it. The experience can be painful, yet learning to think long-term is what sets individual investors apart. These challenges have equipped me to better handle future market fluctuations.
DIY Investment Education
Mary Long: You don’t need formal finance training to invest successfully; even those with degrees may find it challenging. For those curious about investing, what resources would you suggest for beginners?
Alicia Alfiere: Read extensively and listen to diverse sources to grasp various investment styles. Engagement across different perspectives enriches your understanding; conversing with both growth and value investors enhances your knowledge.
Mary Long: Bill offered a notable piece of advice regarding established investors.
Bill Barker: I recommend studying Warren Buffett. His writings, especially the letters to shareholders, offer invaluable insights. His 1999 Fortune article remains essential reading for investors. Beginners have much to gain by exploring the Berkshire Hathaway website and his archived letters.
Mary Long: Ricky presented a book suggestion that includes practical investment strategies.
Ricky Mulvey: I recommend “One Up On Wall Street.” For newcomers, index funds serve as a great starting point—they provide exposure to leading companies. Consider the S&P 500, a consistent wealth generator. Starting small and diversifying with 25-30 stocks is essential, and don’t underestimate the value of index funds.
The Importance of Action and Mindset
Mary Long: With many Fools embracing reading, taking action is equally crucial for aspiring investors.
Bill Barker: New investors should focus on dollar-cost averaging. It’s vital to acknowledge that investing is a long-term endeavor. Rather than investing all at once, contribute consistently over time. This approach can build a more resilient mindset while navigating market fluctuations.
Mary Long: Many believe a business degree guarantees investment success, but for David, his experience as an engineer taught him a different lesson about understanding companies beyond mere numbers.
David Meier: My MBA from 2000-2002 instilled in me that comprehending a company’s narrative is crucial—not just its financials. Over time, I shifted from purely quantitative assessments to recognizing the story behind the numbers.
Ricky Mulvey: It’s those qualitative aspects that guide you more than just the figures. Understanding a company’s dynamics, market position, and competitive landscape enriches your investing strategy.
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Investment Insights: Learning from Past Mistakes and Strategies for Success
Numbers Alone Don’t Tell the Whole Story
In investing, numbers can either support or counter the narrative of a company’s potential. Computers handle the numerical data efficiently, so the focus shifts to quality metrics: Is the management team capable? Do they have any competitive advantages? If the figures align with a positive narrative, it may signal a worthwhile investment. Conversely, if they do not corroborate the story, it’s prudent to proceed with caution.
Learning from Investing Mistakes
Mary Long: What errors have investors made that others could learn from?
David Meier: I sold Meta prematurely back in 2022 when many were pessimistic about tech stocks. At that time, some investors lost sight of Meta’s significant user base and online presence, focusing instead on the Metaverse hype. While I initially recognized Meta’s potential, I made a hasty decision to sell when the stock rebounded to break even, ultimately missing out on substantial gains. This experience taught me that impatience often leads to losses, while a patient approach fosters financial independence and the chance for generational wealth.
Distinguishing Hype from Reality
Mary Long: Sometimes, excitement for a company is justified, but other times, as David illustrates, it is not.
Ricky Mulvey: My interest in tech, particularly companies like InvenSense, reminded me of the importance of competition. InvenSense produced motion-detecting chips, earning a contract with Apple for their Apple Watch. Despite its initial success, competition from ST Microelectronics and other entrants eroded its market edge. I underestimated the threat and learned that competition is relentless. A lasting advantage can be fleeting if you’re not careful to recognize it.
Understanding the Unknowns of Investing
Mary Long: In investing and life, uncertainty is a constant. However, clarity in your motivations can help navigate through the unknown.
Alicia Alfiere: The most significant step I took was seeking mentorship within an investment community. This guidance taught me about the importance of reflection, such as journaling to process my feelings. For instance, I once sold Netflix shares to pay off a student loan. Although I had a goal, I found it emotionally challenging to let go. Journaling helped me appreciate the reasons behind my actions and to accept my decisions gracefully.
Advice for New Investors
Mary Long: I sought additional wisdom from my Motley Gang of Fools. What guidance can they offer to newcomers?
Bill Barker: For young investors, embrace the opportunity of lower stock prices. Think long-term; plan to retire in 40 years, and welcome market dips as chances to buy shares at bargain prices. This strategy is better than hoping for steady price increases. If you’re in your twenties, get started with a Roth IRA—it’s an excellent way to save for the long haul.
Advice for Older New Investors
Mary Long: What if someone feels it’s too late to invest?
Bill Barker: Focus on diversification. Just because certain stocks have surged recently doesn’t mean they will continue to perform well. The current market resembles conditions seen in 1999 when many investors faced disappointing returns for years afterwards. If you invested at that peak, being overly concentrated in one area could have disastrous effects.
Finding Ways to Diversify
Mary Long: How can one diversify when recent winners seem appealing? David offers valuable insight.
Ricky Mulvey: Always keep investing. My tendency to make large bets has been successful but can lead to missed opportunities when cash is low, or I don’t want to sell holdings. Regular investment and diversification can shield against market volatility and foster steady growth over time.
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A Missed Opportunity: The Lululemon Investing Regret
Ricky Mulvey: When it comes to investing, one of my biggest regrets is not putting money into Lululemon. I live with my wife and daughter, who love their Lululemon gear. I see new products coming in daily, and I’ve come to realize that even small investments can lead to great rewards over time. Taking a bit of risk doesn’t endanger your entire financial situation. It’s about smart risk-taking. If you’re enthusiastic about investing, don’t hesitate to allocate some funds when an idea strikes you. I certainly wish I had invested in Lululemon sooner.
Mary Long: Investment ideas often arise from our everyday experiences. They don’t need to be obscure topics.
Ricky Mulvey: Absolutely right! Ideas can emerge from anywhere, including your daily life.
Mary Long: At The Motley Fool, we advocate for long-term investing. Typically, we recommend holding onto stocks for five to ten years. This approach can be challenging, both during market drops and when stocks surge.
David Meier: For those of you listening, especially new investors, I suggest documenting your reason for purchasing a stock. When I invested in Rocket Lab earlier in 2024, I did so knowing I wanted to hold it for a long time. My optimism stems from potential advancements in space exploration that could benefit life on Earth. Keeping a written record helps me focus on long-term gains, reducing the temptation to cash out prematurely. Selling requires being right twice, which is much harder than being right just once.
Mary Long: It’s easy to feel pressured by others who criticize your pace or strategies. Ignore that noise. Everyone’s journey is unique. The most important step is simply to start and keep progressing.
Alicia Alfiere: You can take small steps at first. Build your community, read, and focus on areas where you have expertise. This concept of a “circle of competence” is an idea from Warren Buffett. Knowing what you’re familiar with can guide you in finding companies that interest you. I also believe in the power of community—connecting with seasoned investors can help you learn and grow over time.
Mary Long: If you’re new to investing, we welcome you! We hope you will continue listening to Motley Fool Money as part of your investing journey. Check out our flagship service, Stock Advisor, which offers two new stock picks each month, a ranking system, and access to our complete podcast catalog, including Stock Advisor Roundtable. To join or to learn more, visit www.fool.com/signup. You can find a link in the show notes. Also, for the remainder of January, we will only be posting one weekend show to allow for deeper discussions on important topics and enhance our content offerings.
As always, those featured on the program may have interests in the stocks discussed, and The Motley Fool may have formal recommendations for or against, so don’t make investment decisions based solely on this discussion. All personal finance content adheres to The Motley Fool’s editorial standards and is not influenced by advertisers. We only recommend products we would suggest to friends. I’m Mary Long, thanks for tuning in. Happy New Year, Fools. See you on Monday.
Randi Zuckerberg, former Facebook market development director and sister to Meta Platforms CEO Mark Zuckerberg, is on The Motley Fool’s board. Alicia Alfiere holds positions in Apple, Berkshire Hathaway, and Lululemon Athletica. Bill Barker has stakes in Apple, Berkshire Hathaway, and PepsiCo. David Meier does not hold any mentioned stocks. Mary Long has no positions in any discussed stocks. Ricky Mulvey has stock interests in Lululemon Athletica, Meta Platforms, Netflix, and Rocket Lab USA. The Motley Fool endorses and has positions in Apple, Berkshire Hathaway, Lululemon Athletica, Meta Platforms, and Netflix and recommends Rocket Lab USA. The Motley Fool has a policy regarding disclosures.
The views and opinions expressed herein are those of the author and do not necessarily represent those of Nasdaq, Inc.
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