Rule Breaker Investing Mailbag: "Am I a Fool?"

In this podcast, Motley Fool co-founder David Gardner shares his annual year-forward market call, then works through listener notes that capture the heart of the Foolish journey. We hear from a father investing alongside his 7-year-old son, an investor who audited his own selling history and discovered just how early he'd stepped off some great rides, and Fools thinking carefully about contribution timing, position sizing, and excellence that keeps winning.

Along the way, David revisits core ideas like letting winners run, being a "for" person, and ultimately answers the question that brings the year full circle: How do you know -- really know -- how to answer the question: Am I a Fool?

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.

A full transcript is below.

This podcast was recorded on Dec. 31, 2025.

David Gardner: Once you get to the end of things, it gives you a perspective you never could have had. Because you needed to get to the end of the story in order to see what happened and to then reflect more knowingly on what went before. That's what happens for me every year right around this time. We made it to the end. The end of this year, 2025. You can look back on it. You now see all that happened, all the good, all the bad, all the fair to Midland. We now have the privilege of perspective, what you simply couldn't have had about 2025, 52 weeks ago. We can now all of us, see the whole thing. Zooming out one level, we can now engage in what I call portfolio level thinking. Here we are at the end of it all, 2025. This is the last Rule Breaker Investing podcast of this year. Next week's episode will appear as always on Wednesday at noon Eastern. But next Wednesday is January 2026. Here at the end of it, 2025 we'll close things out as we do every month. It's your mailbag and so let's do it. Only on this week's Rule Breaker Investing.

Welcome back to Rule Breaker Investing. Sure. Happy New Year. A delight to have you join with me this holiday week across the entire world. I just want to review, maybe briefly before we get into it, my market call that I made at the start of this year. Actually, I made it on this very podcast last year. I said in 2025, I think the market's going up this year. Fortunately, from that vantage point in December 2024, I got it right once again. Now, longtime listeners know that I'm smiling, you're smiling with me because I make the same market call every year. In fact, here's my market call for next year, 2026. I think the market's going up this year. I especially remember last year around this time, a lot of people did not think the stock market would rise in 2025. Indeed, a lot of people don't think the stock market will rise in 2026 and they might be right. Because they're right, statistically, 1/3 of the time. But the reason that I'm such a good market timer with an incredible history of correct market timing calls in a world where most people, I think, are flipping their coin, is that I always say I think the market's going up and so I get it right two thirds of the time. So there it is, a reflection on last year's market call and now next year's market call. Well, this is the Mailbag episode for December 2025. Let's look back briefly at the month it was. We've had four podcasts that preceded this one. The first one was Games Games, Games, Volume 7. Continuing our favorite foolish holiday tradition with a fresh set of tabletop game recommendations, moving deliberately from lighter, easy to teach games to deeper, more immersive experiences. If you were not so much of a gamer, you could just hop off the train anytime in an episode, but as always, I did try to balance accessibility and then richness, games for families and casual players early and the more strategic thinky fair later on. All vetted for availability and joy. I'm really happy to say, I've already gotten a lot of notes from people who bought one or more of our Games, Games, Games, Volume 7 and put it under somebody's tree this past month and you know that sparks joy for me. Volume 7 isn't just a gift guide though, it's an invitation to gather and laugh and reconnect around the game table. I think if you have a table like that anywhere in your apartment or your house, I hope that you had an opportunity to spend it with other human beings around you these past few weeks and even more so in the year ahead, Games, Games, Games, Volume 7, our first podcast this month.

Our second was Old, New, Borrowed and Blue Volume 10 returning to one of my more flexible formats where I get to weave together familiar ideas with some new provocations, always a little bit of borrowed wisdom, as well and of course, always to close a touch of blue. Week 3 The Besties of 2025, celebrating the conversations that educated, amused and enriched us most this past year on Rule Breaker Investing, 10 standout episodes, return to the spotlight with many of the voices behind them rejoining for brief reflections on the year that was and the year ahead. We had authors, we had athletes, we had analysts, producers, community members. The Besties every year captures the breadth of what this podcast aims to be thoughtful, optimistic, playful and human and maybe it is ironically my best podcast each year. Ironic, of course, because it can never itself win a bestie. Finally, last week, the Market Cap Game Show Bubble Wrap and Sidewalk Robots brought another round of intuition meets valuation fun as Bill Barker and Matt Argersinger battled through 10 companies, ranging from, packaging legends to autonomous delivery upstarts.

As always, the game delivered and it delivered Bill Barker into our final four March Market Cap Madness coming up in the first quarter of this coming year. Very excited to have all four seats filled. We'll have a march full of the Market Cap Game Show and I hope you enjoyed playing along at home with us because that's half the fun. I always open up every Mailbag episode with some hot takes from Twitter and a couple reflecting on, the first episode of this month. Thank you @gauravkinvestor. Gaurav Kumar simply tweeted out, "Look forward to the Games Games Games episode every year. I think I have bought at least one board game from this list every year." Thank you, Gaurav and Paul Essen @paul_essen. My favorite episode every year, Paul wrote, "Always helpful for coming up with gift ideas for my wife. If you haven't tried it," Paul added, "May I humbly suggest the Slay the Spire board game. My family's been really enjoying it. It's an 8.7/10 on BoardGameGeek, 1-4 players, medium complexity, a cooperative game." Thank you for that, Paul and you and I have gamed together in the past, a former employee at The Motley Fool.

Always good to hear from you, Paul. Slay the Spire, I initially wrote you back that I hadn't really bothered with the board game because I'm a fan of the video game very much. The video game, ironically, is built off of board game mechanics. It's a deck builder. Those of us who have played Dominion or other deck building tabletop card games were interested to see it migrate that mechanic deck building into video games and Slay the Spire over the last seven years or so has been slaying the public as a huge money winner for the independent studio that produced it. Slay the Spire 2 is already on its way soon, but it was all turned back into a board game. I told Paul I felt like I didn't need to play the board game because I already loved the video game. Paul pointed out, the board game enables you to play cooperatively with friends or family and so, guess what, Paul? I bought myself a copy this past week, Slay the Spire. Especially if you're a fan of the video game and would like to play Slay the Spire, in effect, with others around a game table, I will put in a recommendation for it, as well. Thank you, Paul. Then final, Twitter hot take, my favorite of the month. Certainly, I had an exchange with The Investing Monk on Twitter @monkechevaria and what a delight this was. He dropped me a note in early December saying, "Just now, my six-year-old," the Investing Monk wrote, "Climbed into my bed, saw me reading and asked, "Daddy, can I read to you?'" He went on, "I was halfway through Rule Breaker Investing." He wrote, "I handed her the book and there it was, my little girl reading me aloud about letting your winners run high with the biggest smile on her face." Guess it's never too early to learn investing." He tweeted out. Then he went on. He wrote, "When she finished the chapter, I asked her, do you want me to share this story to the author of the book? I have the intuition, he would love to hear about it." He wrote, her eyes went huge, "Can you really do that, daddy?" I smiled, "Baby girl, you can do anything you dream in life.' At David G Fool, she's now waiting for your reply." Late that night, I just dropped a simple tweet back and I wrote to your daughter. The way you read to your dad with joy, curiosity and that big smile makes you a rule breaker already. The best investors are people who keep learning new things and imagining big ideas. Keep reading, keep dreaming and know you can do anything. The close out was a delight to receive. The very next morning, the Investing Monk came back with, "Thank you at David G Fool. First thing this morning, she ran to me shouting, 'Did David answer? Did he?' When I showed her your message, she gasped and whispered, 'I'm a Rule Breaker already. I can do anything,' and hasn't stopped smiling since. You made a little girl very happy and taught her a couple of very important life lessons on the way. Thanks for making the world a better place in so many ways."

That was a very kind close from the Investing Monk. But I've read many Twitter hot takes over Rule Breaker Investing this podcast over the last 10 years or so and that has to be one of my favorites. Cheers to @monkechavaria and that very wise, very foolish six-year-old girl. We have four items on our year end Mailbag. I certainly got more than just this, but part of what I do each month is ask myself, what are the ones that punch most above their weight class that will most educate, amuse and enrich. Again, thank you to all my correspondents and thank you in particular to these four for these exchanges. Mailbag item Number 1 and I absolutely love this one. It's my habit, as I read a lot of Mailbag items to pause at different points and inject a thought or two, but I'm just going to read this one straight through and then give some thoughts at the end. This is from Jake Dunn. "Dear David, as we close out the year, I felt compelled to write in a first for me and express my gratitude for all that you and the Motley Fool have given me, not just as an investor, but as a person. Since joining TMF about four years ago, I've rarely missed an RBI or Stock Advisor podcast episode and often listen in to Motley Fool Money to glean a new perspective about a company or way of thinking about the world at large. I've learned so much about investing, but equally important, my life has been enriched in ways that are hard to measure on a stock chart. One of my favorite parts of becoming a fool is sharing this journey with my oldest son, Alistair. He's only seven, but he loves numbers and has always been curious about my investments, which I've shared openly with him, the ups and the downs. While he's often shocked by short term drops, I'm quick to zoom out and show him that beautiful chart trending up and to the right over the long term.

This summer, we opened a custodial brokerage account for him. My only rule was that a portion goes into a solid market tracking ETF that I would help him pick. Beyond that, he picks his own stocks. He's hooked. Almost every night, when I come home from work, I hear, 'Dad, how my stocks do today?' He's learning patience, the importance of understanding or at least being interested in, the companies he invests in and the overall habit of investing for the future. He loves listening to the RBI podcast during our car rides and knows your voice well. One of our favorite episodes this year introduced a phrase that's become a family mantra. We are for people. While I've been fortunate enough to contribute to a 401(k) with a great company match since my mid 20s, my stock picking journey did not begin until I opened an individual brokerage account in the early spring of 2022. Thank goodness for the Motley Fool being there to help guide me and to talk me off the ledge, as those first months were some rough early waters. My portfolio certainly had a slow start for the first year or so, but with patience and a little faith, I watched as it continues trending up and to the right. I now hold 73 positions and haven't sold a thing in well over a year. Side note, my biggest investing regrets so far have been selling too soon. Early on, despite what I was learning from the Motley Fool, I regularly made the mistakes of selling after a brief pop to cash in on a small profit or emotionally selling a great company after a bad earnings report or some media panic, I guess I'm a bit of a slow learner. As I write this note a few days before Christmas, my portfolio is up 53.77% year to date in 2025. I'm letting my winners run and seeing more and more regularly occurring spiffy pops. Recently, Alistair and I were digging into the bottom of my portfolio, as he likes to point out all my losers; 25 of my 73 holdings are currently down.

He was a little confused when I said, 'That's part of the plan.' He was amazed when I showed him that the returns from my fourth best performing stock alone, CrowdStrike, literally wipe out all of my current 25 losers' losses. He had wide, excited eyes. Have I mentioned, I love the Rule Breaker style of investing. I share this not to boast, but to highlight what your philosophy has made possible for someone like me. An average guy approaching his 40s, not a math whiz by any stretch, busy with the demands of work and raising a young family. By following the simple blueprint you share so generously, I believe I'm building something special for my future and for my family. Thank you, David. Thank you for being a for person. Thank you for your knowledge, positivity and kindness. Thank you for giving me the tools and confidence to invest. You've made a lasting impact on my life and now on my sons, as well, wishing you, your family and everyone at The Motley Fool a joyful holiday season and a wonderful new year with gratitude. Jake Dunn. PS; I just finished your new book. What a fun, digestible read that brings to life the philosophies and lessons you preach week in and week out. Well done." As this note came in and our email address is rbi@fool.com.

Anytime you'd like to consider being featured on our Rule Breaker Investing Mailbag, just email us. That's our email address. It always has been rbi@fool.com and it's monitored in part by Brian Richards, who helps oversee the Rule Breakers franchise at The Motley Fool, my good friend and longtime compatriot brother in arms in service of breaking the rules. Brian sent me this note and he said, "I think you're going to love this one, David, I did, too" and I sure did. To Jake and Alistair Dunn, I just want to say a few things. First of all, I love that Alistair comes back from school every day and says, "Dad, how did our stocks do?" I still do that myself at the age of 59. My dad's still around and I don't call him every day, but every day I do check to see how my stocks did. Some people think that's not the right way to approach it. Some people think, you should just check in once a month or from time to time. Don't get too caught up in the market dynamics one day to the next. But from my standpoint, that would be like saying, well, I shouldn't follow my favorite sports team every day or week. I should just check in every few months or maybe once a year and that would be a much poorer life for me. I love following the game of the stock market I have since I was a kid, just like you, Alistair and I think I always will. I want to say congratulations on your enthusiasm. I know as you're growing you're learning that a bad day isn't that big a deal and even a bad month, bad quarter, or bad year in the grander scheme are not that big of a deal. Alistair, you have a dad who will zoom out and show you the bigger picture anytime you were to get worried. I also want to say to both the Dunns and everybody else who does this, I love that you're tracking against the market. I think it's smart that you selected a market tracking ETF for Alistair's account. It's just a quick way for any of us to see how I'm I doing with all the rest of my own stock picks? How I'm I doing against the market? If you have a little ETF or an index fund, I haven't put that much in one myself, ever, but it's still very helpful to just be tracking how you're doing against that. The third thing I want to say is that the biggest iPop for most people who discover Rule Breaker Investing is exactly what Jake in his note conveyed, which is as he's sharing his portfolio with his son. You see, gosh, about 1/3 of these stocks are actually down. How could that be a good thing? But if you're playing the game right, the game of Rule Breaker Investing right and you're letting your winners run high and you're investing for at least three years and the list goes on of all the principles and all the habits and all the traits I'm looking for that I wrote about in my book this year.

If you're doing that right, you're going to discover, if you let time pass that not even just your best, maybe just your fourth best winner. Literally wipes out the losses of all of your losers and still leaves money on the table, and that's just your fourth best holding, so many humans live in fear of loss, they don't ever want to lose, especially when it comes to their money in the stock market. But if you're a Rule Breaker, you're playing the long game along with me, you're going to see you're going to lose a lot. Yet you'll see that your winners, even not even just your greatest winner, your winners will wipe out all those losers and make you way more money than that. I love that that's been your experience, and I love, Jake, that you got to share that with Alistair, and that both of you are sharing your story through this podcast. Many others are getting to listen to us here at the end of 2025 and to the Duns and to many of my listeners who understand what I'm saying and who are aligned with us, as well. We are for people. Fool on, gentlemen. Rule Breaker Mailbag Item Number 2. This one from Doug Shafer. Doug, thanks for the note. Hi, David. I'm a new Fool, as I discovered your podcasts last summer and have enjoyed them tremendously. A question regarding 403(b) accounts for you. I'm someone who is fortunate enough to max out my 403(b), which is $24,000 for 2025 and will be $24,500 for 2026. My question is, would I be wise to hit that MAX as soon as I can in a year? I'm able to handle contributing $6,125 for the first four months of 2026, and that would get me to the limit. That way, my money is invested sooner. Or should I contribute all 12 months in case there are swings in the market? Thanks, Doug Shafer. Well Dog, anytime I start getting questions about retirement plans, while I have some knowledge, and I have one myself. I'm not an expert, and I don't spend a lot of time thinking about them, but we have people at the Motley Fool who do, and I bet you know that and Robert Brokamp is one such.

Now, I didn't have time to get Robert on for a guest cameo this Mailbag because it's holiday season, and we're all in different places. But I did get Robert to weigh in and give you some advice and answers back. Here are some thoughts, not just for Doug, but for anybody who's thinking, is it the right thing to do, if you could, to max out your retirement earlier in the year as opposed to spreading it across the whole year? Robert had three points, Doug. The first is, he writes, the contribution limit for 2025 is actually $23,500, not $24,000. Robert adds there are additional catch up limits for those who are 50 and older. If Doug actually contributed $24,000, that would be $500 more dollar and you should have. You're going to pay taxes and penalties until it's fixed. And the sooner you fix it by taking a corrective distribution, the better. Now, he writes, Doug may have just mistyped this, but Robert wanted to make sure that I gave the correct number to all of our listeners for when I shared this mailbag item. That's point Number 1. The contribution limit for 2025 is actually $23,500. A point number two, Robert writes, since the market is up more often than down in any given year, I think it's generally best to get money into the market sooner. I want to say with Robert, I agree.

That was going to be my own instinct. Generally, the earlier you get money into something that rises over time, the better you're going to do. There can be reasons sometimes to just go over the whole 12 months. If you're somebody who really has a hard time with market drops, wants to be more conservative, wants to just conservatively dollar-cost average in a mechanical way and just do it equally every month and not feel the storm undran or too much the ups and downs of the market itself. If we face that in 2026, you could just drag it out and just make an equal contribution each month. But I like Robert's math here. Various studies he writes have looked at lump sum investing versus dollar-cost averaging, basically have looked at putting it all in at once versus just taking that amount and spreading it over time, and lump sum usually wins. Of course, those scenarios aren't exactly like your own, Doug Shafer, but Robert says, He bets the principle is the same. Then his third and final point, Robert shares that anyone considering this strategy with an employer sponsored plan that offers a match does need to check with your plan, because to receive the full match, you usually have to contribute an amount to the retirement plan with each paycheck. Of the year. If you max out the account before the final paycheck of the year, you're going to miss out on some of that match. The amount that was missed may be deposited at the very end of the year if your plan offers what's known as a true up feature, but Robert adds, not every plan offers this.

Doug Shafer and anybody else listening to these thoughts, make sure if you do intend to max out your early contributions, make sure if you have a match that you're getting that match, because that match is usually pretty valuable, and if the only way you can get it is to spread your contributions out over the whole year month by month, we would suggest doing that and a merry New Year to you and yours. Robert Brokamp shares dog to you and to everybody else listening. That was Rule Breaker Mailbag Item Number 2. That means we have two left. On to Rule Breaker Mailbag Item Number 3. This one from Ben Stubbins. Hi, David, longtime Fool and Rule Breaker here writing in from the UK. I've been investing with The Motley Fool and following your Rule Breaker philosophy for years, and I've just had one of those, Oh, no, but also, Oh, wow, moments that I thought you might appreciate on the podecast. I've always thought of myself, Ben Wrights, as a long term, hold through volatility, let your winners run investor. I love the idea of owning the next Amazon, Nvidia, MercadoLibre, etc, and I've actually owned a fair few wonderful businesses over the years. But recently, I decided to test how Rule Breakery I really am. Of course, he puts one of my favorite adjectives, "Rule Breaker'y" with that hyphenated y on the end. Ben continues. I went back over my entire investing history and retroactively assigned a minimum holding period to every stock I've ever owned based on the business it is. He has five categories, and here they are. The top one are Rule Breaker category leaders, where he assigns seven plus years to those stocks.

The second is ultra high quality compounders. Ben calls them he gives them five plus years for those. The third, he calls them high growth but volatile stories. For them, he gives them three plus years. The fourth speculative/optionality tiny positions to which he gives two plus years. Finally, the fifth and last category he uses are defensive/income holdings for which he gives himself 3-5 years. Ben continues. I even gave myself a very generous escape hatch, because if the Motley Fool issues an official sell recommendation, my minimum holding for that stock becomes zero from that point on. In other words, I only counted it as too early if I chose to sell before my own minimum holding period and before any Motley Fool sell alert. The result, Ben goes on was Brutal, 72% of the stocks I've sold, I sold earlier than my own minimum holding period and on average, I sold them 839 days. That's more than 2.3 years before that minimum date. Looking back at the names makes it even clearer. I sold Tesla years ago after a modest gain long before its big surge in 2020 and beyond, exactly the let your winners run high story. I thought I was living. Also, I traded in and out of the Trade Desk and Shopify, taking nice profits, but repeatedly stepping off the ride while the businesses continued to compound. Third, I even let go of an early position in Nvidia for a small gain, well before it became the AI infrastructure giant it is today. On paper, I was "Taking profits" and "Managing risk." But in reality, my spreadsheet now shows I was paying a huge behavioral tax on my returns by cutting the flowers and watering the weeds. Even now, I can see the same instinct show up in subtler ways, over trimming winners that make me nervous and tinkering with small positions just so I feel like I'm doing something. It feels prudent in the moment, but my backward looking minimum hold analysis tells a very different story.

The good news is that this has been a huge wake up call. I've now won. Hard coded minimum holding periods into my spreadsheet for every position I own. Two, color coded, which stocks I'm not allowed to sell yet based on his five business types. Three, Ben writes, I'm trying to channel my inner Rule Breaker more faithfully, "Let your winners run. Hi, and let my behavior finally match that philosophy. I don't actually want to know the pound value of what those early cells have cost me, writes this UK fool. I suspect it would be horrifying, but I'm genuinely excited that I've caught this pattern now with 20-30 years of compounding still ahead of me. If this story is useful to other Fools who think they're long-term players but sell a bit too fast, I'd be honored if you shared it on the podcast. Thank you for all you've taught me over the years. The philosophy was right. I just needed to bring my behavior up to its level and in the ultimate Foolish twist, I should confess that ChatGPT wrote this entire email signed Ben Stubbins who lists himself at the end as a very chastened but much wiser Rule Breaker." Well, that was a delight, hard at times to read, Ben feeling for you and yet so happy that you're on the path that you are on now. And I really do want to say, I love that you went back over your whole history and actually took the time to score it to document the actual length of your holding periods, to see the performance that you've generated. I agree with you. You don't need to go back and see what you would have generated. That could be a little daunting. I'm just very glad overall you didn't turn The whole note, the whole mailbag item, and thanks for writing after a few years into an exercise in self-flagellation. That's really not necessary. Our friend Shirzad Shaman would say you've just been given a gift and an opportunity. Yet, indeed, rather than turning your lessons into, I don't know, strike one, strike two, strike three against yourself, you turned it into a better, new approach you're taking, learning driven, hard coded, color coded into that spreadsheet and going forward, you're sharing it out to all as well, because we just did that through this podcast. Thank you, Ben Stubbins for a witty at points, delightful, sometimes sad or hard to read note that as it turns out, the whole thing was written by ChatGPT anyway. Fool on, my friend.

Rule Breaker Mailbag Item Number 4, and I'm going to say something like Item Number 50 something if you count up all of our Rule Breaker Mailbag items here in 2025. This is the very last one of them coming from Federico. Federico, thank you for this note. Hi, David. On a recent ski trip, I had the privilege and joy of hearing your audio book, followed by catching up on Rule Breaker Investing podcasts. What a delight and boost of positivity. Well, thank you so much for that, Federico. Since my last note to you in 2023, which you kindly aired on the podcast back then, I've often thought about writing to you, apologies for the lengthy message here. It's almost three years of messages waiting to be written, packed now into one. I guess this is a seven for one mailbag split. Here it goes, says Federico and indeed, he has seven mini items. I will speak briefly to each, and we will conclude this year of the podcast. Number one, Federico writes, Thank you, fool. Deep thanks to the Motley Fool, and all you do. It changed my life in so many ways. As written last time, I try to grab everything the fool puts out. According to Spotify wrapped, that's the year end Spotify telling you how much time you spent listening to Spotify and what your favorite tracks are. Federico shares. According to Spotify rapped, I'm in the top zero dot 2%, the top one fifth of 1% of Motley Fool Money listeners. He wants to say, by the way, shout out to Emily Flippen for picking Spotify stock, which for me, Federico writes, has been a Fool burger. I truly feel the Motley Fool continues to make me smarter, happier, and richer every day. Thank you. Well, my reply to Number 1 is, thank you, Federico. That's awesome. Number two, Rule Breaker Investing. Congrats, David, and thank you for your incredible new book. Even after listening to you for years, with your book, I learned a lot, reflected on where I am in my investing journey, and had fun reading it. Audio book finished. I'm now going through the eBook for some proper note taking. Thank you for that, Federico.

Also got a couple of paperback copies as Christmas kiss. Well, thank you for that as well. Well, my reply back to you, my friend is, it's actually available in all four formats. It's a hardback book for those of us here in the United States. It's a paperback book everywhere else in the world. It is an audiobook all around the world. That was probably my favorite version of it, because I simply got to read my own stuff. I didn't have to write it. It's hard to write a book, the thing that comes out in hardback or paperback. But once you're handed a script, that's just your own book, and you just get to read it over the course of three days in a studio, well, I had so much fun doing that. I'm so glad you enjoyed the audiobook, as well. Then, yes, the book is also an eBook and for many of us, I'm an eBook reader, mostly. That's probably a preferred version, although statistics show that about seven out of 10 books these days are sold as hardback or paperbacks. Two out of 10 are eBooks and one out of 10 are audio books. I like them all, and I'm delighted that you've experienced all of them, Federico. Thank you, and thanks for sharing it out. His point Number 3. He writes, when is it too much excellence. A few years ago, I read the great Elon Musk biography by Walter Isaacson. It convinced me Elon is brilliant and will lead his businesses to keep winning. Since then, and helped by the Motley Fool and CEO Tom Gardner and his conviction, as well, I kept buying Tesla. Federico writes I bought it 26 times, and I enjoy my three bagger. Tesla is now 11% of my portfolio. I'd be happy to keep adding to Tesla, but I'm unsure about it. Motley Fool Chief Investment Officer Andy Cross says he doesn't add above 10% once a position reaches 10%. Do you have any guideline when one should stop adding? How do you think about that? In my reply back to you, Federico is that I use my sleep number. Sure you came across it in my book, but for those not familiar, I think it's very helpful for each of us to ask, What is the largest percentage I would allow my biggest position in my portfolio to ever get and still sleep well at night? In other words, for your biggest winner, your biggest holding, what percent of your overall net worth of your investing pie would you allow that slice to become and for each of us, that's a personal answer. I've shared mine in my book we've talked about in the podcast. A lot of people have very, very low sleep numbers like one because they're highly diversified in funds where nothing is more than 1% of their net worth and then there are focused investors who might go for a third or more.

They'll allow a single position to grow to be a substantial part of their net worth. For a lot of people, it is probably somewhere around 10%. I would say, just knowing your sleep number ahead of time is going to help you make the best decisions, dear listener, and Federico, as well. Federico, you mentioned, Tesla is now 11% of your portfolio. Some people wouldn't want to keep adding at that point. They would say, I feel good about that. That's my biggest holding, maybe, and I'm not going to really let it grow much above that.If it does keep growing above that, maybe I'll sell off slices of it to put it into other stocks because I want to sleep at night, which is why I introduced the concept of sleep number in my Rule Breaker investing book. I hope that's helpful for you. Let's move on to your point number four. You write IPO anyone. SpaceX's limited-time offer at 100 times sales. What he's referring to is Elon Musk's space company SpaceX and its potential IPO and the chances that it might be trading at a very high multiple if and when SpaceX comes public. Federico went on to say, I asked the AI Gods, What is the David Gardner approach to IPOs? And it told me, wait and see. I don't immediately recall you talking about IPO Federico's rights. Normally, I would also prefer to wait and see myself, let the IPO excitement pass, have some real numbers, and less biased readings from analysts.However, this being Elon and the space industry, you write, both of which magnify my conviction. It makes me really, really want to buy SpaceX, regardless of valuation, which in turn becomes a huge red flag. Your thoughts, Federico adds, meanwhile, I did build a position in Rocket Lab.

Well, my reply back to Mini point number four here is, that's why we buy in thirds and that's something else I talk about in the Rule Breaker Investing book, and we've done for a long time at The Motley Fool. Anytime you feel very uncomfortable about a new position, it might be an IPO, or it might be a stock that's been around for a while. You just are a little bit worried about his volatility or your lack of conviction or understanding of the underlying business. There are many reasons why you might want to do this. But why not just go ahead and take whatever you would allocate to that? Let's say you have $3,000 that you're thinking of investing into SpaceX or any other stock. If you're not feeling fully comfortable, we would suggest put 1,000 in right away. If you're waiting for an IPO, maybe do it that first week, or if it's not an IPO, it's just a stock that you're looking at, go ahead and buy it right away. As studies have shown, Robert Brokamp referenced this in my last mailbag item, you generally are going to be rewarded for getting your money in the market, having it sit outside the market because you're worried or you're predicting or others are predicting the market's going to drop. Sometimes, of course, they're right but most of the time, statistically, you're going to find that you should have just invested. The market will keep rising. That stock may go up, and then it becomes even harder for you to feel like you want to buy into the market or buy into a stock because you feel like you missed it, and people sometimes quit altogether, which is really unfortunate. Buy in thirds, put a third in right away, a third in sometime later, your final third sometime after that. I talk about that more in my book. I won't duplicate it here, but that's the buying and thirds approach that you can take to IPOs or anything else. It sounds like you're a big Elon Musk fan, and SpaceX is certainly a rule-breaking company, and it's fun to be invested in things that clearly have big roles to play in the future. I wouldn't dissuade you from doing that. Whether or not I would buy into the SpaceX IPO myself, I haven't really decided. I do like my Rocket Lab position. Let's move on to your point number 5, Federico.

You wrote starting position. How do you think about starting a full position evolving over time and what's the fair starting line for a new position in an ongoing portfolio? Do you do a fixed amount, or is it a fixed percentage of the total portfolio? For example, Federico goes on, you mentioned you bought Rocket Lab last year. How do you define the fair amount to start after you've done years of investing? Let me just answer this quickly by saying you're asking a really good question. In the book, and often, I'm talking to new investors getting started with their portfolio, and I say things like fair starting line, which is, as you start a portfolio, let's say you started with $10,000, you're going to buy ten stocks, ten positions. I think it's great to put 1,000 in each of the ten. I think it's less great to start loading up on one, two or three of those and underallocate to others. I like a fair starting line, which I like the race track and horses who all get the same starting line. Fair starting line for stocks to start at portfolio is the way I think every new investor should begin. But you're pointing out what if you've been investing for a long time, and you have probably more money than you once started with? What's the right amount of money to put to a new position? For that, Federico, I will direct you and anyone else listening to habit number five of the Rule Breaker investor, which is MAX 5% allocation. What I mean by that is, for an ongoing portfolio, and for even a stock that you're really excited about, maybe a brand new one that you want to put a big position, I would never put more than 5% of your overall net worth into that position. That gives you a high upper target, not to exceed, in my opinion, but you could certainly start lower. You could start at 3% or 1%. Maybe you're starting at 3%, but you're buying in thirds, you're buying 1% initially and then another 1% a month or two later and maybe a final 1% a month or quarter after that.

Again, all of your decisions to make, but I'm just giving you here habit number five, which is to max allocation into a new position at 5% or less of your overall net worth. I hope that helps you. In the end, there's no mechanical single answer to a question like this. A lot of it is just the nuance of your own portfolio. Each of us has a different portfolio, different amounts of knowledge, risk tolerance, and time to invest, and those are all things you should be weighing as you come up with your own personal answer. This has been a really fun mailbag item to respond to. It's very rare I get somebody who hasn't written me in years and gives me seven questions, but we're right near the end, and I really, especially love your final question. But let's do mini item number six here. You write Can two wrongs or more make a right? Fun fact about my investment journey, Federico says, at the age of 20, I received some cash. A family friend advised me to buy four stocks and unfortunately I didn't yet know the Motley Fool ten years passed, and I had done nothing. I was afraid to invest. I didn't know where to start. One day, a friend convinces me to start investing and buy stocks. I go and I put 20% of my cash in a single stock that I knew almost nothing about. The stock doubles in three months, and I close my position. Great result, Federico writes. Terrible process. The whole approach was wrong. However, from there, he writes, I read all the investment books I could get my hands on, and fortunately, a good friend introduced me to the Motley Fool. Fast forward to today, my portfolio of 50 stocks and ETFs has doubled, beating the market.I keep adding and investing, building my roadmap to financial independence. Well, my response to you, Federico, for this one is you are like a lot of people.

A lot of people have that early instinct they should invest, and they might even get, in your case, what a wonderful, generous gift you must have gotten at the age of 20 and yet because they don't really know how to invest, they don't invest, and they sit on it, and they wait, and then that creates its own anxiety because they start seeing ten years later, the market was going up most of the time and some of the companies that they'd known about themselves, maybe even worked for were stocks that had they bought them, they would be much more prosperous at that point. Yet the good news is, even after waiting 10 years from the age of 20, there you are at the age of 30 with still decades and decades ahead of you, finally getting started at that point in your life investing. I think for a lot of us, it just comes down to a nudge, not just from a friend that you should get invested, but maybe that you should get educated. That's the purpose of the Motley fool to educate, to amuse, and to enrich, to make the world smarter, happier, and richer. That's what this podcast has tried to do now, entering the 12th calendar year, where we've been cranking out. I've been cranking out a weekly Rule Breaker investing podcast every single week with the help of such talented producers, one year to the next, one week to the next, no skips, no repeats. If I'm going to brag once at the end of this year for this mailbag, it's that I have never once skipped or repeated a single week since we launched in July of 2015. This podcast is my passion project, as, of course, is my Rule Breaker in dusting book, and they speak to each other. Many of my responses to you, Frederico have been, go back and read that in the book. Go back and check that again but you can also go back and listen to various podcasts where I've shared those same points. Anyway, thank you very much for sharing your experience. Let's go on to the end of this podcast, ending with your final of your seven points. This minimilbag item number seven, and I really do want to speak to this one to close out the year. You write at the end, number seven, Am I a fool? What makes one a fool? A fool, fool.

One day, I would like to be a fool. I try daily. Federico writes to be a fool. But at 39 years old, I'm only at the beginning of my fool journey. I'm thinking, when will I be a fool? Is it at your first ten-bagger? I do have a couple of five baggers: Netflix, CrowdStrike. Is it at your first spiffy pop? In your view, Federico closes. What counts as fool graduation, or is it just a fool, continuous journey? My thought back. Federico and Rule Breakers all. First of all, yes. You're already a fool. I don't say that lightly or as a participation trophy or green ribbon. I say it because being a fool isn't a destination you arrive at. It's a way you choose to travel. There's no fool graduation ceremony. There's no cap, bell, gesture shaped or otherwise, there's no gown, no bell you ring at your first 10X, though congratulations, by the way, on your Netflix and CrowdStrike, those are real accomplishments. A spiffy pop is worth celebrating, absolutely, but it's a milestone, not a license. If there were a single criterion, it wouldn't be a return. It would be how you think and behave over time. Because a fool thinks independently when others are loud. A fool stays optimistic without being naive. A fool plays positive some games. A fool lets winners run, learns in public, and a fool understands that losing is part of winning, not evidence of failure. You don't become a fool when you beat the market once; you become a fool when you stop needing to beat it every week to feel validated. You don't become a fool when you find a great stock. You become a fool when you build a portfolio that reflects your best vision for our future, and then you give it time and you don't become a fool when you're certain. That's for sure. Wait. Did I just contradict myself? Very well, then, I contradict myself. I am large. I contain multitudes.

Thank you, by the way, Walt Whitman. That was a past great quote on this podcast years ago. Anyway, you don't become a fool when you're certain. You become a fool when you're curious, resilient, and still smiling after a mistake. No, Federico. There's no graduation. There's only continuation, and at 39, you're not late. You're early, early enough to compound judgment, early enough to compound temperament, early enough to help others on the path behind you. If you're asking this question, I'm about to ask sincerely. If you're wondering not how much you've made, but who you're becoming as an investor, then you're already well into the journey. Fools don't graduate. They just keep going, and they bring others with them. Federico concluded his note. Have a great holiday season and happy Christmas, cheers and fool on Federico. Well, fool on back to you. That was a delight to share and now to close. Ringing in the new year, English speakers worldwide each year sing should old acquaintance be forgot and never brought to mind. Remember that lyric is actually just a rhetorical question. I don't think 18th-century Scottish poet Robert Burns was suggesting that you forget old acquaintances, and certainly not old friends. Instead, the rhetorical question invites reflection on the value of long-standing relationships and shared memories. The implied answer, of course, is no. We should not forget old friends or the times we've shared. Well, we had some new friends on our year-end final mailback this week and some old friends, too and not only do we not forget them, we remember them and celebrate them. Let's make a habit, by the way of doing what Jake Dunn and the Investing Monk and Ben Stubbins and Federico and others we heard from this week, what they're doing and that is to share out our financial lessons with our kids, with our families, with our friends and sure, with our fellow fools to you, our rule Breaker listeners because that's exactly what happens on this podcast every week, we share it out, and we hope it makes you smarter, happier, and richer. To each of you, I wish some lovely holidays this week, a cracking good start to 2026. Thank you for this year. I'll see you next week. Fool on.

David Gardner has positions in Amazon, MercadoLibre, Netflix, and Tesla. The Motley Fool has positions in and recommends Amazon, CrowdStrike, MercadoLibre, Netflix, Nvidia, Shopify, Tesla, and The Trade Desk. The Motley Fool has a disclosure policy.