BiggerPockets Money Podcast
Episode: Motley Fool’s Ricky Mulvey: Why I’m Buying MORE Stocks Despite Growing Recession Risk
Release Date: March 25, 2025
Introduction
In this engaging episode of the BiggerPockets Money Podcast, hosts Mindy Jensen and Scott Trench welcome Ricky Mulvey, the host of the Motley Fool Money podcast. The conversation centers around navigating the current volatile stock market, characterized by a recent pullback of approximately 10%, and explores strategies for identifying valuable investments amid growing recession concerns.
Market Pullback and Recession Risks
Scott Trench initiates the discussion by addressing the recent market downturn:
“The stock market is down. And this is either bad news because maybe there's a recession coming, or it's good news because stocks are on sale. It's time to stock up.”
[00:00]
Ricky Mulvey responds optimistically, viewing the correction as a healthy market adjustment:
“Stock market corrections are a good and healthy thing... I’m in this game for decades... As a younger investor, this is something I become increasingly excited for.”
[01:47]
Mindy Jensen echoes Ricky’s long-term perspective, emphasizing the importance of enduring market fluctuations for sustained growth:
“If you are investing for decades long returns, this is going to be a drop in the bucket... I have faith that it will [go up again].”
[02:22]
Analyzing Market Declines: Beyond Price-to-Earnings Ratios
Mindy probes whether the recent market drops are primarily due to Price-to-Earnings (PE) ratios:
“Would you categorize these recent market drops as PE related?”
[02:55]
Ricky Mulvey explains that while PE ratios play a role, other factors like the brewing tariff war and investor sentiment also contribute:
“It's a combination of things... Tariff wars impeding global commerce... Investors look for reasons to sell when the market is priced up.”
[03:47]
Political Influences on Market Sentiment
Scott introduces the political dimension affecting investor confidence:
“Hundreds of millions of Americans are asking themselves, am I comfortable leaving the majority of my financial portfolio in US Stocks given the activity side of the Trump administration...”
[04:25]
Ricky Mulvey acknowledges the growing difficulty in separating politics from market performance:
“There used to be this notion that stock market returns have no correlation to who's in office... But I think it's increasingly difficult to make that case.”
[05:08]
Investment Strategies Amid Uncertainty
Scott Trench shares his cautious approach, shifting capital from equities to real estate to mitigate risks:
“I permanently reallocated to real estate... I’m putting it into real estate which I’m more comfortable with...”
[06:59]
Ricky Mulvey commends Scott’s strategy but warns about the challenges of timing the market:
“Whenever you're getting in and out of the market, you have to be right twice. It's incredibly difficult to be right twice.”
[07:54]
Insider Buying as an Investment Indicator
A significant portion of the discussion revolves around insider buying as a signal of confidence within a company. Ricky emphasizes the importance of monitoring insider transactions:
“I'm looking more than I think I have before at insider buying activity... Insiders buying gobs of stock with their own money is an indication that they believe their company is undervalued.”
[09:06]
Scott seeks practical advice on utilizing this strategy:
“How do I even begin to do research to see who insiders are buying stock?”
[09:28]
Ricky Mulvey recommends tools like Insider Radar and highlights the importance of analyzing insider stakes:
“Check what insiders have been doing with their personal stakes... It’s a form you can find on the NASDAQ website.”
[09:43]
Case Study: TKO Holdings (TKO)
Ricky discusses a specific investment in TKO Holdings, the parent company of UFC, WWE, and other combat sports entities:
“One stock I’ve been buying lately is TKO Holdings... The CEO Ari Emanuel has set up an automatic buying program for his company stock.”
[13:19]
He outlines the value drivers for TKO, including major media rights deals, partnerships with Netflix, and financial backing from Saudi Arabia:
“They are the only company with a major media rights deal... WWE premiered on Netflix... Money from Saudi Arabia for a new boxing league.”
[14:37]
Scott Trench appreciates the strategic growth behind TKO’s expansion:
“There’s a very rational argument for why this company could really dramatically expand and has really huge tailwinds behind it.”
[17:07]
Personal Investment Holdings and Strategy
Ricky Mulvey shares his investment portfolio distribution, favoring individual stocks over index funds:
“I’m probably 60% index funds to 40% individual stocks... I hold a bond fund with a 7% yield as a cushion.”
[21:39]
He reflects on his best and worst investment decisions, citing successes with Meta Platforms and Spotify, and a misstep with Kodak’s cryptocurrency experiment:
“My best ideas have been Meta Platforms and Spotify... My worst was Kodak Coin, which crashed shortly after its introduction.”
[22:42]
Holding Periods and Tax Considerations
The conversation shifts to the optimal holding period for investments. Ricky advocates for a three to five-year horizon to validate investment theses:
“I think three to five years is a proper one... The average holding period has decreased to five and a half months.”
[31:06]
Scott Trench raises concerns about tax implications from selling stocks:
“Realizing gains subject to capital gains tax can result in materially less after-tax wealth over time.”
[34:55]
Ricky addresses this by highlighting his use of Roth accounts to mitigate tax drag:
“I do a lot of my investing within Roth accounts... No gains on sales.”
[36:04]
Evaluating Specific Companies: Costco as an Example
Scott Trench and Ricky Mulvey discuss evaluating stocks with strong fundamentals versus growth expectations. They use Costco as an example, analyzing its high PE ratio and comparing it to potential growth opportunities:
“Costco is trading at 54 times price to earnings... A lot has to go right to meet those expectations.”
[37:50]
Ricky reframes Costco as a “real estate company with a subscription component” to highlight its revenue model:
“Subscription revenue... as long as they keep people happy, that’s what makes them safe.”
[38:38]
Conclusion and Key Takeaways
The episode concludes with Ricky summarizing his investment approach:
- Market Pullback as Opportunity: Viewing downturns as buying opportunities.
- Insider Buying: Using insider transactions as a confidence indicator.
- Spending and Attention Trends: Investing in companies aligned with personal and observed trends.
- Due Diligence: Analyzing fundamentals, profitability pathways, and market expectations.
- Holding Periods and Tax Strategies: Adopting a multi-year investment horizon and utilizing tax-advantaged accounts.
Ricky Mulvey encourages investors to engage deeply with their investment choices, leveraging personal insights and thorough research to make informed decisions.
Final Thoughts
Hosts Mindy Jensen and Scott Trench reflect on the valuable insights shared by Ricky Mulvey, emphasizing a balanced approach to investing that combines both index funds for stability and selective individual stocks for growth potential. They advocate for personalized investment strategies tailored to individual knowledge bases and comfort levels.
“If you have a reason, dabble. If you want to do the research, you have an unfair advantage. But don’t put all your money into unvetted stocks.”
[49:21]
The episode serves as a comprehensive guide for investors navigating uncertain markets, offering practical strategies and expert perspectives to build and grow wealth effectively.
Notable Quotes:
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“Stock market corrections are a good and healthy thing... I’m in this game for decades...” — Ricky Mulvey (01:47)
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“Insiders buying gobs of stock with their own money is an indication that they believe their company is undervalued.” — Ricky Mulvey (09:06)
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“Warren Buffett says that [holding period]... But anytime you look at Berkshire's 13F, you see some buys and sells in there.” — Ricky Mulvey (31:06)
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