B (2:55)

Yeah. The famed investor Michael Tyson is famous for saying, everybody has a plan until the market punches them in the face.

C (3:04)

Yeah. And the market punched me in the face and I said, yes, please, can I have another? So I put more money into a losing idea. Now, it did work out in one case. So with Lemonade, I was waiting to see improvements in the loss ratio before I invested more money. I didn't actually do that. I invested more money before I saw that. Now, that has worked out okay here recently. But some of the companies that I doubled down on in that 2022, 2023 timeframe, some of them are actually zeros. I do this for a living and I invested in a company that went to zero.

B (3:39)

So this is a perfect opportunity to roast you. But I've got a couple of those zeros to match here. So I don't know how much I can really.

C (3:48)

Yeah. But how many of those that I recommend to you?

B (3:50)

Well, now you're giving me ammunition to work with here, but I'm not going to. I think the point is, and the big thing that takeaway for me is, you know, you have to adapt. And when you fail to adapt, that's when you struggle. So, Dan, talk a little bit about that. What it's so important in light of when people decide to get better about something, like investing a big stumbling block they run into that John managed to avoid.

A (4:13)

You know, Jason, you might notice when John was talking about those zeros, I was being very quiet because I have plenty of those zeros of my own. And it's embarrassing, but it's just something that you have to get past. And, you know, I think that John's got a great philosophy when it comes to the lack of New Year's resolution. Just constantly being in a state of trying to self improve. Because with resolutions, too many people are focused on the time element. With New Year's, you know, it's coming and so like the end of December is Like this great time to sort of, like, slack off and do, like, exactly the opposite of whatever it is you're going to resolve. And it's like you're waiting for the apple to drop, and then suddenly everything's going to be easier and you're going to stick to the plan and everything is going to be perfect. Well, it rarely works out that way. Sure, you start out strong, you've got some discipline, you've had plenty of fun beforehand, but now, once it gets difficult, inevitably something's going to go wrong. And at that point, if you tied so much to this idea of, I'm going to start on January 1st and it's going to last throughout the year, something went wrong. It's so easy just to say, okay, well, that failed. I quit. I'm going back to my old behavior. There's no point in even trying to stick to this plan. I think the real thing that you have to learn is you're just not going to get to perfection. But the good news with investing is you don't have to. Just being right more often than not is such a huge driver for investing success. But the one thing you do have to do, you have to be resilient. You have to accept you're not going to bat a thousand. You have to accept that you're going to make mistakes, you're going to have embarrassing losses. Don't let that make you give up entirely. Just start over, put it behind you, move on to the next investment idea and just keep going. Don't wait until 2027, don't wait until the next New Year's resolution phase. Just get up off the mat and move forward. That's the best thing you can do.

B (6:24)

Dan, one of the things that, that I've struggled with in the past and the. The gym example is a good one, is we don't say, I'm going to go to the gym three times a week. We say, I'm going to get in shape, I'm going to lose 30 pounds, I'm going to make some money, right? I'm going to invest, I'm going to do well. And we focus on the goal. And then we stumble and we see the goal get farther away and we give up, versus focusing on the process and the habits that we need to build. And I think, to me, that's really the common theme of all of this. I won't tell you guys how much money I gave to a gym that I went to five times. That's another show. We'll talk about that one I think.

A (7:03)

It'S smart to have measurable goals, but at the same time, I also think that it's important to accept that you're learning something from the process that you're going through. Even if it doesn't yield immediate success, it's going to be valuable experience somewhere down the road.

C (7:20)

You quoted the investor Mike Tyson, but let me quote the investor Rocky Balboa. It's not about how hard you hit, it's about how hard you get hit and keep moving forward.

B (7:30)

Fantastic. Up next, we're going to move beyond those mistakes. We're going to talk about the lessons that we've learned that have made us better and more consistent investors. Unlike some of those resolutions, we hope you stay with us.

D (7:43)

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B (8:20)

Welcome back to Motley Fool Money. Dan. We had a little fun there at each other's expense, but let's talk about more of those lessons that we've learned and how we can apply them to investing in a way that it's something we can stick to.

A (8:32)

I think one lesson I've learned is that one of the hardest things for me to do with investing is buying a stock. When I feel like I'm a little late, I'm too late. I've missed kind of the trend on something and that it doesn't make sense for me to try to get on board too often. I just say to heck with it, I missed it. And then the stock keeps going up. And then I'm just sort of like, well, why did you give up on that? But I find myself, you just have to work on it. Recently, I took a step in the right direction. I bought shares of Dollar General, which ticker dg. I found myself inside their stores more often than I ever expected to because it's proving to be a good go to for discounts on some items like soft drinks that grocery stores, they're just really using pricing pressure they're maintaining ridiculous margins on them. Dollar General, much more attractive there. You know, Dollar General stock has not done well until recently. Did well during the 2022 bear market, but then it tanked 2023, 2024 wasn't able to sustain the growth targets that it had set. But since late 2024, it's doubled off of its lows. And I'm ticked that I didn't hone in on the turnaround more quickly. In the past, that would have totally dissuaded me from buying, but I'm going in the other direction. I'm giving it a shot this time. Recently bought some shares.

B (9:53)

So this is almost like a couple of weeks ago. The three of us were on together and we talked about Alphabet. And this is one that you saw the opportunity to buy in the past at a time that it was down. And this is a lesson that I've learned, too. And the thing is, with Dollar General, you know, that's a real turnaround. The business was really, really struggling. And what I've learned is sometimes it's better being late to the turnaround than rushing too quickly when the business is still struggling. John, what's. What's a trick that you figured out that's helped you keep at it?

C (10:25)

Yeah, I started to prioritize investing in companies that I really love. The brand or the business. I really just love the company. I'm not exactly sure when it was. It was a couple of years ago. I just looked at my portfolio, and all of the companies, of course, that I'm invested in, I believe can go up. But it wasn't necessarily a group of companies that I was in love with, not a group of companies that I was excited about. And look, it's not a mathematical thing, but it is a psychological thing because. Let me frame this for a second. So of companies that are worth more than 10 billion, four of the top five over the past 10 years are Nvidia, AMD, Celsius, and Shopify. Each one has been down 30% or more multiple times. Three of them have been down 70% during their time of being. Four of the top five best performing stocks. Here's the thing. If you don't love that company, if you don't love that business, when it drops that much, you start saying, do I really want to own this? Is this something I really want to hold? And then you sell at precisely the worst time. And so I've been prioritizing investing in companies that I do believe have good upside, but that I also love, and building My portfolio around brands that I really want to hang on to through, through thick and thin. So it's not mathematical, it's psychological. But there is a huge psychological component to investing.

A (11:53)

It's such a great point John, because when you believe in the business, there are all these naysayers are pushing the share price down. You just tell those naysayers they're wrong no matter how far the downturn goes. Now obviously doesn't mean that you're going to be right every time. But in the times when it doesn't work out, at least you don't have the double hit of saying well, well gee, I always hated that company. Why did I ever buy shares in the first place? And when it does rebound like those stocks that you mentioned, it just feels so much better. Even better to get those big gains after having endured such a long period of hardship.

B (12:29)

Yeah. One of the interesting things about this to me is that it it if you're starting with a business first, it certainly helps especially with something like regret minimization, which is really hard because if you start with I really like the business, like you said, it certainly helps holding through the downturn. But my one caution is there's a thin line between really being compelled and attracted to a business and then letting that become biased. That makes it harder for you to be objective when there are real struggles with the business.

C (13:01)

Yeah, that's certainly, it's certainly a double edged sword. We do need to maintain a sober assessment of the company and its outlook. It's it's ability to create value over the long term. If you are in love with the company, it may be a little bit harder but it does carry the benefit that we are talking about. You're going to hold it and holding onto potential winners is so crucial for a long term success in a portfolio.

B (13:26)

Okay, so we've talked about a few things that we've done. But up next, I want each of us to share a habit that we formed that's made a big difference in our own investing and personal financial success. So stick with us for that.

E (13:37)

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B (14:07)

Welcome back to Motley Fool Money. To wrap up today's show, let's each share something that we have figured out that really helps us stick to it over the long term. I'll go. I'll go first, guys. The one thing that's made a big difference for me is delaying my earnings reviews for my core holdings. I have a lot of professional obligations to the fool and its members for a number of companies that I follow. But in general, I don't really dive deep into earnings for most of my personal holdings until we're weeks on the other side of earnings season. Now, the reason that I do this is I want to be completely on the other side of how the market reacts and also what the talking heads are shouting so I can be a little bit more objective. It also, here's a funny little part of it that is a big part of it psychologically for me. It also helps me reduce how much importance I put on a single 90 day, ish period of results for companies that I intend to hopefully own for multiple decades in many cases.

A (15:12)

Jason, I just can't tell you how many times I've seen a stock, it makes a big move after hours after it releases its earnings. Everybody talks about the reason why it's making the big move. Then overnight happens and regular trading starts. Suddenly a stock moves in completely the other direction, it's zagged back and everybody who was talking the previous night is scurrying to try to figure out, okay, do I just change the headline from down to up, or do I, what explanation am I going to find for why it's up when I gave such a great explanation for why it was down last night? And it's just one of those things that your approach, it helps to avoid that whipsaw, all that short term madness plays out and then you have the actual story in a longer term context, which is exactly what you want in the first place.

C (16:08)

So, Jason, I'm curious. For me, time just rushes by and I think there's such value in your strategy of waiting to review the report. But I saw a company report this morning. I could have sworn they just reported last week. It turns out it's already been three months. How do you remember, what's your prompt to go back and how often do you do it?

B (16:28)

Okay, I'm probably not supposed to admit this, but I don't. And What I've learned, 15 years of actively researching and buying stocks. If I miss a quarter, there's probably nothing that I missed, is the hard, cold reality Part of my check for that, though, is I always read the 10Ks. I read the annual report every year. If you know what to look for, you don't have to read off two or 300 pages. There's maybe 25 pages that are important to read in a company's annual report. And if you're doing that, you're probably not going to miss anything important more than if you see the stock is up or down a lot since the last time you really checked in. And then that's the signal to go pop the hood on the business, do some research and find out what's going on.

C (17:18)

Wow. I love that. There's probably a lot more value in what you just said than what I'm about to say. But a little habit that I've developed is just being willing to dollar cost average. And so this means buying very small stakes over a period of time rather than buying it all at once. Now, there are studies out there. Mathematically it makes sense. If you're going to invest in a company, just invest. Just invest what you're going to invest. Dollar cost averaging doesn't necessarily make the most mathematical sense, but sometimes I have a huge psychological hurdle, kind of going back to what Dan was saying with Dollar General. Sometimes I have a hard time just moving from the side into buying a stock. And I found that being willing to dollar cost average, that first purchase just gets me in the game. And now I've overcome that psychological hurdle and now I'm ready to invest maybe that fuller stake much sooner than I would have if I didn't have that first small little buy.

A (18:16)

Yeah.

B (18:16)

Ansel Adams is famous for having said, the best camera to use is the one that you have with you. And when it comes to investing strategies, it doesn't matter what the perfect strategy is if it doesn't fit. And this is a perfect example of that. The research says one thing, but then there's what works in the real world and being willing to, for me, both average up and buy the dip. You know, it works because if your focus is on the business first and last, then you're going to have a better outcome most of the time. Dan.

A (18:45)

So my turn to share. I am married, and my wife and I, we largely keep our finances separate, especially with our investments. But we do have one significant joint stock account that I mostly manage. One interesting thing I have found is I do a much better job of leaving that account alone than I do my own individual accounts. And that joint account has performed better as well. It's good. I have Found to have kind of my own separate avenues for taking flyers on some interesting trends on some more speculative stocks. But that joint account has been really the core portfolio. And I found that having that portfolio be more balanced, be less sensitive to short term moves, it's been a godsend. Not just because it's done really well, but because it has also been sort of that core that gives me the freedom to take a little bit more risk elsewhere in the portfolio.

B (19:41)

As a married man, I can say that the judgment of my spouse is a wonderful incentive to behave more appropriately as an investor. So it's funny that you mentioned that. And in my personal experience, we have a taxable brokerage that I certainly meddle in less and that's carried over to the education investments for our son. So kind of the same thing has applied. And it's funny how those accounts have. Have done quite well just because of the incentives to maybe behave a little.

C (20:13)

Bit more in the same way. I'm really grateful for the Motley Fool's disclosure policy. All three of us have to disclose our positions and so everything we do is happening somewhat publicly. And so that has been a huge booster for my own investment returns is knowing that if I do something that's not capital foolish, it's going to show. And if so, if I make a trade or move or a boneheaded mistake, yeah, it's going to be out there publicly. And so it does just keep you a little bit more on focus, hanging on to the good investment principles. And so I like what you're saying. Dan.

B (20:49)

Dan, John. I really appreciate you guys coming on, being willing to share your mistakes and how they've led to successes. This has been a great show.

A (20:56)

Thank you, Jason. Have a great new Year.

B (20:59)

Happy New Year to both of you and all of our listeners. Hopefully you have a very successful 2026 and well, well beyond. Just remember as all people on the program may have interest in the stocks they talk about and the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisers are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes for John Quost, Dan Caplinger, the entire Motley fool money team. I'm Jason Hall. We'll see you tomorrow.