"Rule Breaker Investing" Mailbag: Sports Bettor Turned Investor

In this podcast, Motley Fool co-founder David Gardner brings back Motley Fool Chief Investment Officer Andy Cross to discuss tools for tracking your portfolio against the S&P 500, talk briefly about dividend allocation, and answer the question "If you were investing your first $1,000 today, what would your approach be?"

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

A full transcript is below.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,042%* — a market-crushing outperformance compared to 183% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of August 25, 2025

This podcast was recorded on August 27, 2025.

David Gardner: Well, here we are at the end of August and at the end of our eighth year of Authors in August. What a delight it was to spend time with authors like Arthur Brooks and Sam Horn and friends like Chris Hill. Thank you for your notes, which I'll share back about our Authors in August this month. A listener recently dropped sports betting and picked up investing. Same competitive fire, totally different game. If you were starting fresh with your first $1,000 today, would you go Rule Breaker like ETFs or take your first swing at individual stocks? We'll also pop the hood on how to actually track a portfolio against the S&P 500 dividends allocations, and also how do you allocate portfolios for a Rule Breaker? Only on this week's Rule Breaker Investing.

Welcome back to Rule Breaker Investing. Happy end of August, happy near end of summer. We're about to get started with our monthly mailbag. At the end of every month, the final Wednesday of every month for dozens of months in a row now, we have done a mailbag. You get to write in rbi@fool.com is our email address. You can also tweet us at RBI Podcast on Twitter X. We read every piece of mail that comes in, we filter in the best and craft a mailbag for you. It's maybe my favorite episode to do every month because we get to talk together, we get to share. Sure enough, that's exactly what's happening once again this week. Before we get started, a few bookkeeping notes. First, I'd like to point out that with my own book Rule Breaker Investing coming out in a few weeks, I find myself doing a fair number of external interviews these days, weeks, and in the months to come. I'll occasionally call them out here because if you're not sick after hearing me speak for I don't know, about 40 minutes at one point during a week and you'd like even more, well, you can hear me on other people's podcasts and it's fun to be interviewed by others. I want to call out in particular this past week the BiggerPockets Money Podcast where I gave that talented team my case for picking stocks, for buying stocks directly as an individual, something that is a minority approach to investing today. Anyway, it was really fun with Scott and Mindy to discuss Rule Breaker Investing. If you'd like to hear that conversation, I totally recommend it to you. They have a wonderful podcast. Came out on August 22nd for the BiggerPockets Money Podcast. I also want to mention that next week we have our first mega review of Palooza. By that, I simply mean that for the 35 stock samplers that I picked on this podcast from 2015 to 2021, as I mentioned a bit earlier this summer, we're going to look back at each one,10 years later. Ten years ago next week, I picked my first ever five stock sampler for this podcast.

It was five stocks for the next five years. Beautifully, we did review them. Every time I picked a sampler, we'd check in a year later, two years later and three years later. I think for that one, we even checked in five years later, but it's now 10 years since I picked five stock for the next five years. Next week's podcast, we're going to look back, look now, and learn together. I'm excited to kick off our 10 years later episodic series, which will hit on this podcast once every 10 weeks or so. That was the spacing of each of my five stock samplers, about 10 weeks apart. Every 10 weeks or so we'll look back 10 years starting next week. Oh, my gosh, did I already mention my book? Well, yes, I did. As I shared at the start of the year, my 2025 book, Rule Breaker Investing is available for pre order now. I think you know this, especially if you heard the podcast last week. Well, each week until the book launches in just three weeks, I'm sharing a random excerpt. We break open the book to a random page and I read a few sentences. I've been doing this all year long. It's been so much fun to do. This is the third to last page Breaker preview, and here it is. As we get to Page 239 of the book, in fact, this is the page I randomized this week, this is actually after the book has concluded. It's our Rule Breaker Investing Resources page from which I select this brief anecdote, and I quote, ''Explore additional resources for readers and fans of Rule Breaker Investing, including a downloadable bonus chapter and a discussion guide for book clubs and investment clubs to explore and apply key ideas together''. That's this week's page Breaker preview. As you can see, we've got a few additional delights beyond just what's in the book, including that bonus chapter which I am in the midst of scripting as we speak. Well, to join in the fun, you can preorder Rule Breaker Investing, hop on over to amazon.com, barnes and noble.com, or anywhere that you like to buy books online or off just a few weeks away now. Couldn't be more excited to unleash Rule Breaker Investing to the world. I want to thank each of you personally, if you've taken the time already to pre order. That means a lot to me. Well, let's look at some hot takes from Twitter in this past month. Just a couple for you.

The first from one of my favorite new follows on Twitter, Andrew Gibson at Andrew Gibs 53446, Gibs with just one b. Andrew, I've really enjoyed what you've been posting. Thank you so much for lots of fun reactions and learning and sharing on your part. You wrote on Twitter just a little while ago, David, your recent episode with Sam Horn was exceptional. Her knack for keeping it simple sparked 1,000 raised eyebrows, mine included. In just 60 seconds, she pitched the power of clarity, showing how stripping away the fluff can skyrocket success. My favorite gem, Andrew wrote, Sam skips other people's books to protect her own ideas, avoiding those 3:00 AM wake up calls where someone else's voice creeps into her head and stops her next big book idea. It's a brilliant reminder. Simplicity breeds originality and that's a game changer for any innovator tuning in. The only thing I felt neutral about Andrew wrote was E sports in the Olympics. Honestly, I think they'd be amazing. They could create an exciting video game competition that people, especially the younger crowd would totally embrace. Nevertheless, I totally get where Sam's coming from. Then, Andrew, you quote, Reiner Knizia the great game designer. Knizia said '' The goal is to win, but it is the goal that is important, not the winning''. You concluded thanks for bringing another home run to the podcast sound waves totally jacked for the next episode with Chris Hill and his Foolish guest Fool on. Well, indeed, you continued and reacted one week later. I'm just going to share that too, a fun exchange because Andrew you then followed up with this episode was better than I expected and the bar was high. Right off the bat, Chris hits with some self deprecating humor and had me rolling with his opening line, and you hit right back with the medication and kombucha line. I'm still taking notes, all the quotes and the experience from your careers. Working parallel together is gold, that can only be found from years of hard mining together. No shortcuts. I'm with Chris. Andrew concludes, I'd buy all the Rule Breaker merch. Bring on the Foolish baseball jerseys too, like my brother at Tom Gardner on Twitter X. Like at Tom Gardner's baseball Uni, this episode rocked.

Thanks, guys. Fool on and go twins. We'll go twins, indeed. Twins need a lot of help these days, Andrew. I do want to mention at Chris Hill ALX, that's our pal Chris Hill responded. Thanks for the kind words, Andrew. I stand by my suggestions around Rule Breaker merch. I think that stuff would sell. Hashtag magnets. Well, let me thank again Chris Hill for his wonderful job, being the first non Gardner host of the Rule Breaker Investing podcast at Chris Hill ALX. A delight to be with you. See you down the line. Five mailbag items for you this week. First one up, Amit Somani writing in from Bangalore, India. Always great to hear from you Amit. Dear David, I had never heard of Sam Horn prior, but bought two of her books since your fantastic episode. I just want to say, Amit, that makes me really happy. I'm sure it makes Sam happy too because she's an author. Authors love to sell books, but even more so we could learn from her what a personality she is, what a force for good she's trying to be in this world. I know it brings a big smile to Sam's face to hear that from you this week. In fact, I was trading notes with her and learned it was her birthday this past week, so happy birthday to Sam Horn, as well. She's got a new fan in India. Amit, you went on. I love the interesting discussion on AI on both sides of the trade. Got me thinking about the human advantage going forward. The use of AI in the life of a day to day Foolish investor deserves an episode in its own, possibly a mailbag. Pause there. I'll just say back, thank you for that. I really enjoy thinking about how AI isn't a brand new thing for investors. AI has been operating for a few decades now. A lot of people have been trying to use computers to trade in and out of the market and make as much money as they can. If you've done well as an investor over the last 5, 10 or 25 years, you've been competing in a largely AI driven world as an investor. If you've done well, then I think you're going to continue doing well, even as more and more AI comes into the market because yes, Amit and all my fellow Fools listening, the AIs are on both sides of the trade, pretty much always have been programmatic, algorithmic computer driven trading on both sides of the trade for a long time now. The point I was trying to make with Chris last week and I'm sure we'll continue talking about going forward, most of the AIs that I see, most of the program trading is incredibly short term, so it doesn't really phase me much as an investor. You went on with your note, Amit. Also was delighted to hear about the process you've used to write your book.

Reminded me of Jerry Seinfeld's writing process for his book, Is This Anything? He took all his notes of over a couple of decades and he tested each one of them before he got them in the sitcom and then eventually the book. Seems very analogous to your own approach and I appreciate you pointing that out. As well, it also reminds me of a great book called Little Bets by Peter Sims, where he tells the story of Chris Rock, the comedian and how Chris Rock manufactures his own comedy from one year to the next. He starts in a very humble place. The intro of that book, pictures Chris Rock, I think it's in New Jersey somewhere, but a small dive bar, and there he is with a yellow legal pad haltingly reading some of his new material just to see how the few people in the bar that night react. From there, he goes and keeps leveling up the jokes themselves in his own performance and all of a sudden he's in Madison Square Garden with the material he started on in that small dive bar. Yes, I think building small things up into bigger and better things is a great way to approach life. I'm glad to hear. I didn't know that about Jerry Seinfeld. Amit, I'm glad to hear that from you. You closed with, I've preordered a couple of copies of your book to friends addresses in the US. I hope they can bring those along when they travel to India, regards Amit Somani writing in again from Bangalore. Well, thank you, Amit. Always great to hear from you. I look forward to you getting that book and I hope to sign it for you as well someday. Fool on, my friend. On to Rule Breaker Mailbag Item Number 2, this one from Joe.

Hi, David. In February of this year, I turned all of my focus from sports betting to investing. I grew up in a house where we didn't talk about money and I was clueless on the stock market. I knew I was missing something, so I decided that at 43, it was time to get serious about planning for retirement. What a mistake waiting this long. Joe writes, but I'm glad I at least found my path now and I've gotten my 10-year-old started off on the right path. Motley Fool Money and the RBI podcasts were the first two podcasts that I started listening to in order to learn more. I've learned so much from you and your team. Thank you. Well, you are so very welcome, Joe. My question is this. If you were a new investor, starting with your first $1,000 today, would you be more likely to invest in Rule Breaker style ETFs rather than in individual stocks? Fool on, signed Joe. Well, first off, Joe, I'm absolutely delighted that at still the very young age of 43 with probably, I hope at least 50 years of compounding ahead of you, maybe even more, you're going to be very well rewarded for starting at the age of 43. Sure, it would have been great to start at 33, 23 or 13. I'm delighted you've started your 10 year at 10. That will be a great gift to them, which I think they'll start to figure out as they hit their 30s, 40s, and 50s, what a great job dad did. But you're asking very specifically how to get started yourself. With that first $1,000, I would be opening up an account where I don't have any commissions. I'd be looking for zero commission accounts, so there's no friction costs.

There's nothing penalizing you from creating a well diversified portfolio from the very start. I always am going to favor 20 or so investments. Although if you do invest in funds like index funds or other broad ETFs, you can make that a large portion of your overall holdings and then have fewer investments alongside. You don't necessarily need 20. If you've got a huge holding in a diversified index fund like the Vanguard Total Market fund, you could have, I would say 75% of your money, let's say, $750 in that. Not sure what the present minimum investment is for that fund. That's just an example. Then with the $250 left over, you could buy five stocks, $50 each. That's the approach that I like a lot, Joe. I think it's so important for us to start from a broad, diversified base. I want to tell you that I hope you'll consider investing $30 in my Rule Breaker Investing book because I speak very specifically to how to start and then maintain a portfolio in Part 3 of the book. Most of us don't have any real coaching about how to start or manage our portfolios. After early on in the book talking about our habits as investors and then in the middle of the book talking about what traits we're looking in the stocks that we're picking, yes, I do love to pick stocks direct, the final third of the book is all about answering the question that you're asking here. I'm going to give it short shrift by just speaking to it briefly, but I want you to know that I think without any commission costs, you should feel free to be able to buy up to 20 different investments, and it's particularly helpful to have an account that allows you to buy fractional shares so that you can buy, let's say, $50 worth of a stock that might be trading at $150 a share. A generation ago, you and I when we were much younger, that was impossible to do, but now you can buy one third of a share of stock if you've opened the right account at the right brokerage offering those services and for free with no commissions.

David Gardner: It's from that place and it's a beautiful place, whether you're 10-years-old, 43, or I'm 59, it's a great place for us all to start investing today. We can start with no commissions and we can allot any amount of money generally into any sized price per share of stock. The final question for you would just be, do you want to buy individual stocks directly? I like a mix. In fact, I would probably if there were a few ETFs I liked or if I had a broad S&P 500 index fund, I would be scoring my own stock picks against those in my own portfolio. Then going forward, Joe, with that next $1,000, if you find your stocks are outperforming your funds and you're feeling good about it, you might want to start putting all of that next $1,000 directly into stocks themselves. I'm fully invested pretty much and always have been directly in stocks. On the other hand, let's pretend that you got in a little bit too deep, you're not that confident with your individual stock picking. You find that your ETFs or funds are outperforming your initial few stocks that you picked. Well, with that next $1,000, you could start allocating more toward those ETFs or funds if that's more where your energy and feelings lie at the time. I think you can learn and live as you go. That's my thought. I might have a thought or two about sports betting in a second, but my gosh, who is here, but Motley Fool Chief Investment Officer, Andy Cross, Andy, welcome back to Rule Breaker Investing.

Andy Cross: David, thanks for having me. Great to be here.

David Gardner: As always. Now, Andy, I just shared my short answer to Joe's approach with that first $1,000 and the question was, basically, should he allocate to ETFs or stocks? Thoughts back from you?

Andy Cross: Well, Joe, first of all, congratulations on getting started with investing into businesses, the markets. David, as we've talked about for, gosh, 30 plus years. The stock market is just the greatest wealth creation entity out there, I think, for regular people and far better than the sports betting. Joe, congratulations on making that move. I think ETFs for a person just really starting to invest to get broad exposure to the markets and even parts of the market like growth investing. Although not too niche, I would say very broad, I think that's great for a beginner investor.

David Gardner: Thank you for that, Andy. I'm even comfortable with somebody having virtually everything that they have invested in funds and the Motley Fools counseled to use IEX funds for 30 plus years. Andy, you don't have to agree with this, I bet you do, but I think everyone should own one stock. One company that you know well, of course, I think you should own a lot more than that, but at least one stock. In fact, that was my message on the bigger pockets money podcast earlier this week as I get to be on other people's podcasts this next month, is everyone should own one stock and learn more from the business. You'll learn more about the world when you're more invested in individual companies, Andy, than just in broad funds where you're like, I guess I own everything.

Andy Cross: David, I agree. I think investing in businesses speaks to our capitalistic nature. I think the opportunity to invest specifically in innovative technology or just companies that you like and follow, I think is fun and I think it's educational and it puts a little bit more interest, I think into that investment when you plunk down that dollar and make that investment into a company versus an ETF or a wider market so I agree with you. I think everyone should own at least one stock. David, we used to talk about indexing a few years ago at the Motley Fool, and that was starting with indexes, then broadening out to stocks as you get more and more comfortable with investing. Moving to, hey, to have a few stocks, you got to buy your first stock. I think that's a great approach for all investors to go.

David Gardner: There you go, Joe, from Andy and from me, I do want to mention, it's a lot to overcome growing up in a household where nobody talks about money. Congratulations to you that you've gotten there and that you've changed that culture for the next generation of your own family. I do want to say, Andy, before we move on to mailbag item Number 3, which is really why I invited you. You didn't just randomly happen into our dens or our cars or the jog that were on Andy, I specifically want you for the next mailbag item, but I do want to point out that sports betting, while now legal I always think it should have been, by the way, but it's just not a good place to put your money. You are an expected loser. Every time you make a bet, the chances in volume, sports betting or otherwise, to actually net make money or well against you. When you compare that to the opportunity cost of not investing in stocks, the stock market, on average, nine or 10% annualized on the plus side year after year, it's just not even close. Joe, welcome home.

Let's move on to mailbag item Number 3. This one from John K writing in. Andy, I shared this with you a little bit ahead of time, so I know you've premeditated. There's a fair amount going on in this note. In fact, I think there are two broad themes. One about tracking our portfolios, and then the second about building our portfolios. Maybe a theme of this month's mailbag is portfolio management. We just spoke to it a little bit with Joe. Let's now go to John K. Hello, David, I'm a 40-year-old Fool. I've been a stock advisor member for going on five years. I joined just in time for you to announce your retirement from picking stocks. I've gained a lot of knowledge, happiness, and I'm starting to see some overall gains after a rough start through my membership and your podcast. However, there's been one thing that I've hoped to gain insight on throughout the years. How do you think about manage and track your portfolio. John goes on, is there a certain app you use? Do you input stocks and numbers into an Excel spreadsheet or Google Sheet? How do you track it accurately against the S&P 500? From listening to you, it seems you constantly have access to your winners and losers. You can identify by how much they are beating or losing to the market. I use the Motley Fool portfolio stock tracker. I also use a free Morning Star portfolio tracker and I update an Excel spreadsheet quarterly, but none of them seem to be completely accurate. I'm about to pause it here, Andy, because we want to discuss this. But John adds on briefly. For example, my dividends are not taken into account. I guess I could add them in, but that seems more time consuming than I would think necessary. I am getting by with my method, but I'm sure I could be doing a better job and maybe even save myself some time. Let's pause the note right there, Andy. What are a couple of the first top of mind thoughts you have as you hear John's question?

Andy Cross: Well John, congratulations on just thinking about tracking your investments. That's the start, David, We play the game and we score ourselves. We've done that at the Motley Fool for almost 30 years, and I know you've been a proponent and advocate of that, and that's great. That is fundamental to the Motley Fool. In fact, I think we are one of the very early adopters of being present and transparent with our returns. John, that's great you're thinking about that. I do agree, David, that on a stock by stock basis, many of the tools out there are lacking when it comes to comparing the returns versus the S&P 500 or the market or some index especially when it comes to dividend investments. Now, overall, for example, at the Motley Fool, you can link your brokerage account into our tracking system. There are other tools out there to do something similar. I think the brokerages do a pretty good job nowadays of tracking the overall portfolio performance. But again, on a stock by stock basis is not quite up to speed. Our scorecards obviously track stock by stock because that's what we are really focused on as much, especially at stock advisor and Rule Breakers and hidden gems or monthly recommendation services. Dividends is the tricky part, David, because especially if you're reinvesting those dividends, how do you count for the performance? That's a little bit nuanced, very similar to John, I use Excel spreadsheets. I use my brokerage firm and I use the Motley Fool tracking software just like John does to try to determine how I am doing. Overall, I care mostly about the performance of my portfolio, my overall performance. But I do like to see the stocks that I've bought and that I've reinvested dividends, how they have compared, and that's where I start using some of the spreadsheets to tracking the individual stock performance or looking at the holdings that we have on our scorecards or on our scorecard tracking tool at the Motley Fool.

David Gardner: Well, said, Andy, it's funny, I'm very similar to you and that's my way of saying, neither of us is using a silver bullet. We're basically using a few different tools or approaches in order to track different things. I want to say, first of all, Andy, to your point right near the end where you're just talking about your overall portfolio. John K, Andy, and everyone listening, that's probably the easiest and most important thing to follow in a way. You can just look at your portfolio amount at the start of the year. Look at it at the end of the year. You want to adjust for any money you've added during the year and you can go deep math on that and be really serious about it or you can be a little bit lighter. But keeping things really high level, not losing the forest for the trees, I think just tracking your overall performance versus the market, Andy, you and I would both agree, that's the most important thing of all. A real minority of people in my experience, Andy, even do that.

Andy Cross: I think that's true, David, as I think you're going to get to, even fewer people and fewer systems even track at the stock basis because so many people out there sadly don't invest in stocks or care really about the individual level, or they're not holding long enough, they're trading and out. Yes, I think the portfolio level because it includes your cash investments, it includes maybe other investments you have at that brokerage house. Of course, through the Motley Fool or other services that can amalgamate different portfolios, David, I manage probably when I include my family and all the different accounts I have access to 7, 8, 9 portfolios. [inaudible]. My kids accounts. I have multiple accounts for my kids, 529, 401ks, 403b, pulling those all together and I've talked to other investors about this, it is a real challenge to get those all together in a holistic view of your overall financial health. It is important to think about that. But unfortunately, the tools out there are a little bit lacking.

David Gardner: Often, John K, when I'm quoting the performance of the stock that I've picked, I have the special benefit of just looking at that row in Motley Fool Stock Advisor or Motley Fool Rule Breakers because I was the one who picked the stock back on that date. I have the whole company working behind me because that's being tracked and scored and when dividends come out, we adjust our cost basis for those in some of these cases. I'm the lazy bum who gets not to have to do it myself because our company is tracking the performance of stock advisor picks or Rule Breaker picks. But when left to my lonesome, I am a big Google Sheets fan. I am all about creating my own little spreadsheets for a portfolio I might be tracking or individual stocks. I keep it really simple. I don't worry too much about dividends, Andy and everybody else listening. When you don't invest in that many dividend paying stocks, it makes it easier to track accurately. Certainly Rule Breaker Investing tends, ironically, maybe along with Warren Buffett to not be invested in that many stocks that pay dividends. But for the most part, I'm always tagging the date I picked the stock, the cost basis, where I got the stock, what the S&P 500 was closing at on that day. Even if you didn't note it on that day, you can go back using historical pricing and see what the S&P 500 was on any given day. Then I'm already comparing how that stock does against the market every day going forward. Of course, when you're using a spreadsheet like Google Sheets, they update in real time all the time, so I can go in right away and see how those last 10 stocks that I picked at what price on what day how each of them is doing, and then how they're doing against the market. I think both of us, Andy, are cobbling together what makes the most sense and maybe we don't need to track all nine of those accounts that you are managing or maybe some count for more than others.

Andy Cross: Well, that's exactly right, David. Some do count for more than others and more I'm more active in. In preparation for our conversation, I was just looking through some of my accounts. There are ways, especially for those dividends and those that I reinvest dividends. It lays out what the reinvested dividend price was. It doesn't compare it against the S&P 500, but you can download that information into the spreadsheet so if you really want to get specific from those reinvested dividends, and of course, I don't even reinvest all my dividends back into stocks. I might take into cash that goes into the overall portfolio performance. There are ways to do that. I think the spirit of it is a little bit more important. What I tend to track always is my initial buy price. When I actively go in and add more, if I'm going to add, I just did this morning. I'm going to go in and buy more of company XYZ, not XYZ, the ticker, just company ABC, whatever it might be to buy that company. If I'm actively going in there, that's right track more importantly than the individual dividend reinvestment prices that I think John is worried about.

David Gardner: It's funny, we're now in our 32nd, almost 33rd year of business, Andy, at the Motley Fool. We've done different things for our members in this direction over time. At one point, we were trying to create the world's greatest portfolio tracker and we started to not resource that as much as we were allocating what to do with our business because brokerage firms themselves are basically enabling most people just to track how they're doing. It started to make more sense for us to allow you to hook in your brokerage account if you wanted. But most people were just using Schwab or Fidelity to track. The Motley Fool trying to go out there and kill it for people when there wasn't that much demand, except for really hardcore users meant we didn't really go down that alley too far. It's interesting. It's sad in some ways. I wish there were the amazing all in one portfolio tracker. I sure wish it had the Motley Fool brand on it. It's not like we haven't tried over the years. Andy, don't you think at some point, this will get better and better solved? I think in some ways, we serve members better today than we did 10 years ago.

Andy Cross: Well, I think that's right, David, and I have seen very expensive tools out there. I think I was speaking to the Johns out there who are more interested in getting 85% of the way there with basically free tools or through their subscription with the Motley Fool. I am aware of much more expensive tools out there. I do this in a lot more sophisticated manner. They are out there. But for the regular investor, those out there, I think tying to the information through your brokerage statement, through a linking with the Motley Fool or just directly through the brokerage house that you work with and a combination of something like Google Sheets using some downloads from your brokerage, I think can get you pretty close.

David Gardner: Well, that was the first half of John's note. That was our conversation, thank you, Andy, about how we track stocks. I know, John, you're trying to save yourself some time.

David Gardner: You don't necessarily have to get down in the weeds as often as you might think you do. At a high, high level, just tracking your overall portfolio and how it did this year and how the S&P 500 did this year is a pretty good start and puts you well ahead of most others. Andy and I had some other ideas in there for you as well. Andy, the second part of John's note, totally different topics, still talking about portfolios, but now we're talking about how to grow one. Let's shift there for this 40-year-old who is going on five years with Motley Fool Stock Advisor, and we want to thank you, John, for your business and for being a loyal person who stays with us in Good Times of Bad. Andy, starting just before the pandemic and watching your stock skyrocket and then get as minded, crushed in 2022, this man is showing some resilience here in Year 5, and that's exactly what Foolish investing is all about. John goes on and I quote, ''Something I have no idea about is how I should think about my portfolio in terms of allocation and adding stocks. When I first started investing, I somewhat randomly chose $1,800 as a full position. With some wiggle room, as I invested in Vanguard, which doesn't allow fractional shares,'' John goes on. Typically, anywhere from $1600-2,000, I consider a full position depending on the share price and how close I can get to that $1,800 figure. Now I hear Fools all the time speaking about adding a new stock at a certain percentage of their portfolio. I've heard the recommendation to buy in thirds. Now, Andy comes the last part of his note where he puts it all out there. You as our Chief Investment Officer, now we're not providing individual advice. Neither Andy nor I can be permissioned in this context to give you personalized direct advice, John, but we're going to speak broadly to somebody who is building and managing his own portfolio. Here it is, Andy. John says, I currently own 46 stocks. With NVIDIA and CrowdStrike, each above 10% of my stock portfolio. Most stocks are between 1% and 5%. I've got a handful with as low as 0.1% allocation, either because they are big losers, John writes. He's just started position by buying one or two shares, or because he lost conviction after starting a small entry position. He usually dedicates $500 per month to his portfolio. John goes on, and Andy, I'm going to flag this. We want an answer from you on this one coming up. Should I be using that $500 to build up to about $1,800 per position? Should my full position amount go up over time as my portfolio goes up, I'm going to flag that. That's number 2. Should I take into account my pension and 403B accounts when considering my portfolio? Taking a 3% position in a new stock looks very different when I start adding those in. I'm going to flag that for number 3, Andy. You didn't know you were going to be getting an exam at the end of this mailbag item. One more, should I think about how much I initially invest in a stock and then try to make it even across all of the stocks that I have conviction in, or as my portfolio grows, should I just raise my full position amount to keep up with my portfolios? That's number 4. He points out this would have the effect of taking me longer to build a full position because I have a steady amount that's going toward stocks each month. He even throws in one at the end. How do I balance adding to my winners with taking new positions without continually raising my allocation percentage in my top-performing stocks? Any guidance would be greatly appreciated. Thank you for all the joy and wisdom you bring. Fool on, John, last initial K. Well, this is a great note. There's a lot going on in this note. This podcast typically tries to stay under an hour, and we're pretty good at that. We're not going to go terribly deep here, Andy. But I've flagged four things going on there, and I just love to hear some of your thoughts. The first one we talked about is should he be allowing his trickling money, let's say, $500 here, 500 there to lump up to a number that represents a new position, 1,800 for him, or should he just be investing that 500 each time as it comes in?

Andy Cross: Actually, David, if you don't mind, I think we have to take the pension in the 403B question first.

David Gardner: Love it. Let's do that. We're jumping to number 3 because you are our chief investment officer. You think about these things more organizedly than I do. He's asking should he take into account his pension and 403B accounts when considering this stock portfolio, these 46 stocks that he has? Let's start there, Andy. What's your thought?

Andy Cross: I will tell you how I think about it, David, because you can also throw into should I add my real estate and my home and all of those things in there? I didn't have a chance to catch with Robert Brokamp, one of our retirement experts here. Just celebrate 26 years of Foolishness. I will say, Robert, thank you so much for all the years you've brought to the Motley Fool and all your guidance and humor and fun to personal finance and retirement kindness. I will say, David, I think about it about the money that I influence and the investments I can make when I'm thinking about how I'm allocating capital from an allocation perspective. For me, it's mostly focused on those accounts that I am investing stocks and equities into on a regular basis. Whether that is new money coming in or I'm just managing that, for example, if I have a cash account that has stocks in their taxable account, but I'm not really adding more money into it, I count that. The stock part to my 401K that I'm investing in regularly. I count that. Any of those accounts I'm adding to my kids, I will count that when I think about my company or my household allocation strategy. The ones that are more they're just ETFs or funds or things like that in my house, I don't consider that as part of my really allocating. It's really the money that I am actively managing when I think about how I'm allocating capital at a stock-by-stock basis.

David Gardner: That's good. When John said taking a 3% position in a new stock looks very different when you start factoring those things in, Andy, your response back is, let's talk, John, about the money that you were really actively investing, and let's size it accordingly. Now returning back, having answered number 3, we're going to go back to number 1. Number 1, Andy is, should he let money trickle in and lump up, or should he just inject every time he saves money into the market?

Andy Cross: I like the latter approach, David. I think essentially what's considered dollar-cost averaging money. Again, this is how I do it. Money comes in. I'm constantly say twice a month, based on our paychecks here at the Motley Fool, and I'm thinking that money is coming into some of my accounts, and now I'm thinking about how to invest that. Sometimes, as actively like, you know what? I'm not going to invest this month for whatever reason. But typically, it's I'm setting up my strategy of these are the ones that stocks I'm going to buy and add into based on my current allocation or my interest in new positions.

David Gardner: Love that I totally agree with that. We have two more then and then we'll finish what is one of our longer mailbag items in Rule Breaker investing history. Yet I hope it's worth going this deep. Thank you, John, for asking. Should he make that full position amount go up over time as his portfolio goes up? Andy, I might also add, if it goes down, would he want to size down? What's your thought?

Andy Cross: Well, it's interesting this question, David, because I was just making some changes to the amount of dollars that I was investing into my kids' 529 accounts. As I made that change, I saw there was an option, hey, do you want to increase this every year? I said, wow, that's a great idea. Hopefully, over time, as we know, the markets go up, I'm expecting hopefully that my account will grow, not only just because of adding money to it, in this case, a 529. I said, that's a good idea. I should add a little bit more. Maybe not every month change that amount, but maybe over the course of a year or so if your portfolio certainly has grown, now, if it has dropped, if you go through a period like 2021, David, when the stocks are 2022, I should say, into 2023 when the stocks are way down, you want to be a little bit careful because of the allocation, you don't want to be over allocating to positions based on because the weight to the portfolio, if the portfolios gone down might be a little bit significantly different. But let's just say in general over years, I think it is a good idea to continue to maybe just increase that dollar amount because if your portfolio has grown, the percentage, John, and this is the important point, the percentages that you're investing in a position will be impacted by the overall value of the portfolio.

David Gardner: Again, I strongly agree, Andy. I'd point out that John is reflecting on his five years of being an investor. He started in his mid-30s. God bless you. Great job, John, and there you are going through the ups and downs of COVID, and you've built out a 46-stock portfolio. Congratulations. That is absolutely phenomenal, I think. What a great base to build from. He's just though, Andy reflecting on five years and everyone listening at home, some of us have been invested more like five decades, and if you really think about his question in light of a longer time frame, the answer becomes even more obvious. Absolutely. You want to size up or down depending. You want to size appropriately the percentage to your overall net worth or that overall where you have agency over the allocation of your net worth, as Andy was pointing out, whatever you really are allocated, you want to size that appropriately. It's going to grow over time as the markets go up, and once you look at that question, from let's say a 25-year viewpoint, you start saying, you're going to be investing a lot more. To establish a new position than the smaller amounts you started with back in the day. You and I, Andy, are big fans of buying in thirds or incrementally dollar-cost averaging into full positions. There's no need to wait to hit that bigger number. You should just be pursuing it. I like every two weeks myself. Anything else you want to add?

Andy Cross: David, I will say, I think as I was reflecting on some of not just today but just over the past few months and thinking about experience as an investor, that not building into positions and companies that I really favored when I look back, it's not so much that I missed this or didn't get this, it's just building into positions on companies that I really believed in. I think that memory muscle, activating that muscle, is really important, John, and maybe you've been doing some of that because you have these nice positions in NVIDIA and CrowdStrike. But I think that's an important lesson for any investor, especially those who are adding money routinely into positions. It is continuing to add to winners and build those positions up over time for those businesses that you believe in, because if they do well and you have a higher allocation, obviously, your portfolio will perform better over time.

David Gardner: Well, thank you, Andy Cross. Great thoughts, both to Joe, who at the age of 43, transitioned from sports betting to truly investing, and then from John, age 40. Been with a Fool for five years now, trying to figure out what are the right ways to allocate and grow that portfolio over time. These are the questions, Andy, that you've been asked for a few decades. These will never change. You and I will do this mailbag item next year or five years from now because these are the questions so many of us have, and there really isn't a lot of coaching or background advice for people who are looking to build out their own stock market portfolios over time. Again, a minority of people in the world that are doing that, and we're here to serve. Thank you, Andy Cross.

Andy Cross: David, thank you so much for having me. You're right. It can get a little bit nervy, and it can get complex, just for investors who are just starting out, or those of us like me who have been at this for a while and still have questions about how they think about that allocation. I really appreciate the opportunity to talk to John and Joe, and other members of the Rule Breaker family, because it is a great question and a great concept to really have some deeper sense and knowledge of. Fool on.

David Gardner: Two more mailbag items. It does occur to me to mention, John, that the last third of my Rule Breaker investing book, which comes out in just a couple of weeks, is all about starting and then maintaining your portfolio. Part 3, the six principles of the Rule Breaker portfolio. I hope that'll be helpful for you as well as you answer some of those nuts and bolts, day-to-day questions about running that wonderful portfolio you've started. Onto Mailbag item number 4, this from longtime Fool Vince Granary. Lovely note, Vince, thank you. Hi, David. Your podcast aspires to help its listeners with investments, but also with life, a tall order, indeed. Let me share a few vignettes that suggest you're doing pretty well in that regard. A few weeks back, you mentioned that you were a history major. Well, actually, I said I was a literature major, but they're all humanities, Vince, who's counting? I'll just correct it by saying a few weeks back, you mentioned that you were a literature major and did not use traditional mathematical algorithms or spreadsheet models to analyze and value companies. Go to pause it right there just to say, I do think spreadsheets are helpful, and I've certainly used them and even some math over time. There is some math I really like, but I do most people have turned investing if they're doing it into individual stocks and researching them into math exercises when I think they're missing so much by only using the left side of their brain. I do think, yes, Vince, our edge, as Rule Breakers, is often that we bring both halves of the brain into our analysis. Anyway, you continue.

This wasn't news to me as a longtime Fool and Rule Breaker podcast listener from the very beginning. But I know and respect a number of folks who do produce rigorous mathematical analysis to support their investing decisions, and quite successfully. No surprise there, as there are many paths to being a successful investor, but recent events, Vince, goes on, made me wonder if the quants of the world are a little bit more like you than advertised. You see, two of who I consider to be quant-driven investors presented their models for their recent buys. Their models and approach were different, but their process was similar. I'd become familiar with their techniques, and at first, neither stock would make the cut. Implied growth rates, terminal multiples, and discount rates suggested these stocks were way overvalued. But I was surprised to find that neither analyst discarded their stock. Instead, it was a tweak here. Let's optimize, i.e, raise the cash flow margin. Or there, let's lower the discount rate and voilà, Vince writes two screaming buys. This sounds judgmental, but that's not intentional. What they did was factor in the traits of the Rule Breaker to provide a different perspective, like you've been doing for decades. Finally, the Dean valuation Aswath Damodaran released a 10-minute video on valuation and corporate life stages. The first point he made about valuation is that you cannot value the company properly only using spreadsheets, models, and numbers. ''A good valuation always has a story embedded within it.'' He says, Fool on indeed.

David Gardner: You have one more thing to share, but I'm going to pause right there just briefly to speak to this. I would say, it's always worth learning the math. It's always worth doing the math. But a long time ago, I started figuring out it wasn't just about the math. If you try to make it just about the math, you never buy the great companies of your time. As I wonder at one point early in my book, Rule Breaker Investing, why is it that so much of the investing classics of your so much investment teaching cause people who study that and listen to that to miss the best stocks of their generation? That has been my experience watching people not buy Amazon, not buy NVIDIA, not buy Netflix and the list goes on, not buy Tesla because of what are often quant-driven or mathematical reasons. I do think it's very worthwhile for us not to just look at the math and you're describing cases of people who purport to be valuation driven or math driven, and yet, when it comes to their advice, all of a sudden they're tossing the math aside. One part of me totally loves that they do that, but then the other part of me wonders, do you really want to build your foundation on a mathematical foundation, if you're an investment researcher, if you're not going to follow through with that? Anyway, I really love this close to your note, Vince. You said, "Let me leave you with a story about life.

More specifically, my recent 50-year high school reunion. I was tasked with creating and presenting the trivia contest, which was an enjoyable job, really a treat. Did you know that Eagles' guitarist Joe Walsh played at a high school dance at my school?" Well, no, I didn't know that, Vince. Love it. "Anyway, it was a great evening, but there was lots of concern about the times in which we live, expressed by many of the hundred or so in attendance. Before I left the podium, I had an opportunity to share what has become my favorite non-biblical quote that you have highlighted on a few episodes of the RBI Podcast. It's Kevin Kelly's excellent observation that if you only listen to the news, you will think it's never been worse. But if you study history, you will realize that things have never been better." Vince closes, "Many of my classmates made a point to come by and tell me how much they appreciated me saying that. To use your Thomas Jefferson reference, my candle lost nothing as I lit others' candles that night and the result was a larger, warmer glow.

Thanks to you, lighting my fire, David. Fool on." Vince Greenery. Well, I do love that story, Vince, and I'll tell you, I know I'm talking probably too much about my book this week. Maybe it's because I've been waiting a year for it to come out and we're just a couple of weeks away. But maybe my favorite single chapter in my book is near the end. It's entitled Excelsior, a word that means a lot to me for those who followed me over the years. That was one of my favorite pieces of writing I've ever done, and I hope it will stand the test of time. I hope it'll jump out of a mere investing book and I hope it will raise some eyebrows in the words of our friend Sam Horn. Excelsior, I think you get it, Vince, and you spread that light, that night. Good on you. Well, often I say, did I save the best for last? I always leave it rhetorical because I leave it in the ears of the listener. Let's go to Rule Breaker Mailbag Item Number 5. This is from longtime fellow Fool and friend of the Fool, Jum. "Hi, David, and Fool family. It's been a while since I last wrote in, and I hope all's well with you. This year hasn't been the easiest for me, but I'm doing my best to cope and stay grateful for what we have. One of the hardest parts of this year was saying goodbye to our beloved dog at the end of June. He was almost 18 years old and truly a member of our family. Even though we were blessed with so many years with him, letting go, was absolutely heartbreaking." I want to mention, and I'll leave it up to Jum in case she wants to share this via social media, but she sent just two beautiful pictures of her family dog. Jum, if you feel inspired to tweet one of those out, I hope you'll share with others who might be interested to see what a beautiful creature you had as part of your family life for almost two decades. It's heartbreaking and it's beautiful and I thank you for sharing.

Now, she goes on with her nut. I'm especially grateful for the work of Michael Hebb and his talking about Death Over Dinner concept. That's something we featured before on this podcast. What a fun conversation that was. Let's Talk About Death Over Dinner is the book. She's referencing Michael Hebb appearing a couple of times in the past on Rule Breaker Investing. If you're just hearing this for the first time and you find yourself interested in the topic, I completely recommend to you new listener, googling Michael Hebb Rule Breaker Investing and see what you find and learn. Jum goes on, "It might sound unusual, but I found that the same approach can help prepare for saying goodbye to a beloved pet. While, of course, my dog couldn't take part in those conversations, my husband and I began talking about it early on over many dinners, so that when the time came, we could make decisions together that honored his life. As painful as it was, we took comfort in knowing he passed peacefully in our arms and that we did right by him. I'm still grieving and far from back to normal, but I'm slowly doing better. On a lighter note, I've been catching up on RBI Podcast episodes. I didn't realize how much I'd missed from Rick Engdahl's non-retirement step-down as podcast producer, to the Market Cap Game Show, to the Shirzad Chamine Positive Intelligence interview, and more. This month's Authors in August has been a real highlight. Your conversation with Sam Horn was both inspiring and deeply informative. It prompted me to pick up her audiobook right away. I'm halfway through." Jum goes on. "I have two thoughts I wanted to share. First, when I listen to the podcast, I secretly hope she narrated her own audiobook, and she did. I love it when authors read their own work because they know exactly how they want their message to come across. Sam's narration is captivating, clear, warm, and expressive. It's a joy to listen to.

Second, I have a feeling this is going to be one of the most influential life-improving books I'll read in my lifetime. I wish I had found her work sooner. If more people apply the techniques she teaches, the world would without question, be a better place. That said," Jum goes on, "I do think there's a prerequisite to fully benefiting from talking on eggshells, like the ability to pause and truly put yourself in someone else's shoes. Without that, it's hard to see beyond yourself. My question for Sam is, if you could recommend three books to serve as companions or prerequisites to your own, what would they be?" Jum closes out. "Thank you for the thought, care, and inspiration you bring to your audience each week in a year filled with both joy and heartbreak. Your work has been a steady companion, something I could turn to for comfort, insight, and a little light on the harder days. For that and for the many ways you and the RBI community you've created touched my life, I'm deeply grateful. As I write this, I like to imagine my sweet old boy curled up nearby listening into, tail wagging at the sound of kindness and good stories. He taught me so much about love, patience, and living fully in the moment, and I carry those lessons with me every day. Forever a Fool. Jum." There's a postscript. "Hello, Bart, my new producer, welcome to the Rule Breaker Investing family. I'm confident you'll fit right in. I'll help you keep track of how many 3, 2, 1 go you let David slip in. LOL.

Also, David, your Author in August episode featuring yourself just aired right as I'm sending this email. I can't wait to listen. You already know I'm a big fan of authors who read their own audiobooks, so thank you for that. Maybe you could also answer the same question I asked Sam in the mailbag, what would be three prerequisite books to read in order to fully understand and benefit from your book?" That was Rule Breaker Mailbag Item Number 5. Well, two responses for you. Jum, thanks for reaching out, first of all, and for a beautiful note. The first one comes from Sam Horn. I texted her just before sitting down to record today and she dropped back a short note in advance to answer your question. What did she write? She said, "First of all, David and Jum, I'm going into a consult, so this is going to be short. But first, thank you." She goes on, "The answer to this will be a surprise. Read Viktor Frankl's Man's Search for Meaning as a reminder of the agency we have to be a good person despite what's happening around us. Second, this isn't a surprise. Read Got Your Attention." That's Sam's book that we talked about a couple of weeks ago on the podcast, her book from 10 years ago or so because it's about keeping it brief so people don't give us grief, which is the key to connecting these days.

You can hear Sam's sing songy rhyming style in that line. It's about keeping it brief so people don't give us grief, which is the key to connecting these days. Those were a couple of responses that Sam shared, and thank you, Sam, for being available to participate and help out on this mailbag. By the way, I might as well preannounce that that conversation with Sam Horn was definitely one of our top podcasts of the year and is already a besties. When we have our besties award at the end of the year, I hope Sam will have some time to come back on and join us and throw down more Foolish wisdom, which by the way, is not an oxymoron. Then to respond to your question of me, Jum, what are three books that I might suggest that would prepare you to better fully understand Rule Breaker Investing when it comes out in three weeks? I think the first one I would go with is Peter Lynch's wonderful book One Up on Wall Street. Many hearing me right now will have already read it. It is a true generational classic and it's one that was so inspirational for me in my mid 20s when I first sat down to read it. I certainly feel like I'm in the Lynchean tradition and speaking to Lynch some of the time throughout Rule Breaker Investing, and so I would have to start with One Up on Wall Street. Second, I think I'm, like Sam, going to recommend one of my own here, Rule Breakers, Rule Makers. That was the first time I wrote about the six traits of Rule Breaker stocks. It came, wow, more than a generation ago. I always count generations as 25 years. That book came out 26 years ago. I wrote it 27 years ago, but it really was the first articulation of Rule Breaking, and in some ways, I go a little bit deeper in places on picking stocks in that book than even I do in this upcoming book. This upcoming book is doing more than just what I was doing back then, and Rule Breakers, Rule Makers, that 1999 Motley Fool book, I wrote the first half, Rule Breakers, my brother Tom wrote the second half, Rule Makers. Well, I only wrote half a book back then talking about Rule Breakers, but it definitely sets up in a lot of ways this book.

Finally, the third book is one I've never read myself, but I still think it could be helpful for anybody who's serious about reading books in advance of other books to make those books make more sense. I think, by the way, very few people actually do that. But since you asked, Jum, Random Walk Down Wall Street by Burton Malkiel, a book that is much admired and certainly set the tone for a lot of what Vanguard has done over the years, very successfully indexing and all the rest. But the core message of that book runs so counter to what I believe or what I have done on this Earth and what my book advocates. It can be very interesting maybe to see the yang to my yin because Malkiel, who is an academic, advocates that you really can't beat the stock market in any dependable way. It would just be luck to do so. It's just random. You're taking a random walk down Wall Street. It is its own generational classic. It set the tone for a lot of other people. I obviously respect it and I greatly disagree with it. I think it can make sense for people who don't ever want to bother learning about investing. Probably people who are not listening to this podcast, but I would never want that book to dissuade people from searching for, buying, and adding to the great companies of our time, the Rule Breakers. My life has been so greatly enriched because I do not believe it's a random walk down Wall Street.

I hope that's a fun answer for you as well. I don't think Sam Horn or I is requiring anybody to read other books before reading our book. The truth is, for me, anyway, Rule Breaker Investing, I wrote it to be the book that ends all books for me. It's my final stock market book. It should stand on its own without, I think, needing other things to proceed. I hope you love it. Thank you for writing in. Cheers on your 2025, Jum, and cheers to you, dear listener, for joining with me and Andy Cross and many others for this August 2025 Rule Breaker Investing mailbag. It was a lot of fun. Authors in August every year provides a wonderful platform for a mailbag like this one. I look forward next week to joining in with you to kick off our 10 years later episodic series, looking back at how those five stocks for the next five years are doing 10 years later. Fool on.

Andy Cross has positions in Amazon, CrowdStrike, Netflix, and Nvidia. David Gardner has positions in Amazon and Netflix. The Motley Fool has positions in and recommends Amazon, CrowdStrike, Netflix, and Nvidia. The Motley Fool has a disclosure policy.