ChatGPT Asks & David Answers, Vol. 3
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In June of last year, I asked ChatGPT to come up with five of the most beautiful, challenging, inventive, valuable, provocative, and or capital F foolish questions about Rule Breaker Investing. Well, it did. And I gave my best shots at answering them on that week's podcast. And then in November, I did it again, five new questions. And so was born a new episodic series to the Rule Breaker Investing podcast. This week's

Volume three picks up right where we left off. Five more questions. And in fact, we're rocking a baseball theme. It's that time of year. The five questions are five pitches and the five pitches I'll be swinging at this week are ChatGPT's very best softball, hardball, curveball, scrimmage.

screwball, and knuckleball. So get ready for a mix of depth, whimsy, and surprise as ChatGBT and I go head-to-head once more only on this week's Rule Breaker Investing. It's the Rule Breaker Investing Podcast with Motley Fool co-founder David Gardner.

Welcome back to Rule Breaker Investing. A delight to have you join me here in the middle of April. We're recording this podcast with my producer Rick Engdahl on tax day, April 15th. Happy tax day to all my fellow Americans. And I decided we're going to keep it light and easy this week. I enjoy, I use ChatGBT pretty much every day for many different things across my life. I know a lot of you

For some of you, you know exactly what I'm talking about and you do too. And for others, you may not even know what chat GPT is. Although I think it's fair to assume most people these days know that

The early forerunner in the world of artificial intelligence using large language models is OpenAI with its ChatGPT program. It's one that I pay a monthly subscription to and have used across all areas of my life and with gratitude and enjoyment most of the time, although sometimes it gets things wrong or is stubborn or forgets something I told it. By no means is ChatGPT perfect, but

This week, ChatGPT is a pitcher standing up on the mound, getting ready to throw me five pitches, each aimed at discovering or learning more together about Rule Breaker investing. As I mentioned at the top, this is the third in an episodic series. Therefore, if you like ChatGPT Asks, David Answers this week, you can go back and find the other two wherever you locate back podcasts in your life, Apple, Spotify, etc.

Now, before we get started, as I shared at the start of the year, my 2025 book, Rule Breaker Investing, is available for pre-order now. After 30 years of stock picking, this is my magnum opus, a lifetime of lessons distilled into one definitive guide. And each week until the book launches on September 16th,

I'm sharing a random excerpt. We break open the book to a random page and I read a few sentences. So let's do it. Here's this week's Page Breaker Preview. It's from page 197 of the book. Just a few sentences here. And I quote, Many investment advisors in much of the regulated fund industry, when facing imbalance...

Rebalance. This is the practice of automatically selling positions that have risen in order to reinvest the proceeds into those that have fallen. It enables various investment instruments to achieve their objective to remain well-balanced across their holdings.

end quote. Of course, I say a lot more in that chapter about why I don't really like rebalancing and why I think it causes lots of investors to underperform, but that will be for September 16th. Anyway, that's this week's Page Breaker preview to pre-order my final word on stock picking shaped by three decades.

of market-crushing success. Just type Rule Breaker Investing into amazon.com, barnesandnoble.com, or wherever you shop for fine books. And thank you to you if you've pre-ordered already. That means a lot to me.

Now, before we start with pitch number one, which is the softball, because I like to start it off with the softball. Speaking of sports, I want to mention what happens on this podcast next week. I'm having one of my favorite figures in the world of sports, longtime sports journalist, also professional baseball scout,

Kimball Crosley. Kimball is going to join me next week. And if you're a sports fan, you're in for a treat because I've asked him to look at three to five examples in the world of sports across all sports or sometimes a specific sport where clearly

We need to break the rules. Clearly, people are wrongheaded or doing something crazy. They could do it a lot better if they just adopted a rule breakers mentality. Kimball Crosley is a great rule breaker himself and as an observer of sports and as a longtime early day Bill James fan, for those who know Moneyball, Kimball is one of my heroes when I think about people who really understand sports. We're going to have fun next week.

breaking the rules, discussing how this or that sport or athlete could do it better if they just listen to next week's podcast. So join us next week for Kimball Crosley. Speaking of sports, let's get to pitch number one. Chat, GBT asks, David answers.

All right, pitch number one. I like to start things off with a softball. Why not? So I asked ChatGPT, throw me a softball question, one that would be fun, engaging for new listeners, not particularly challenging. For me, it's a softball after all, and here it is. If a baseball mascot dressed like a giant dollar sign walked up and asked you for the world's simplest explanation of Rule Breaker investing, plus a quick pun, what would you say?

Well, thank you, Chad Chibiti, for that softball question. And I think if I had to boil it all down to that giant dollar sign baseball mascot, I think I would say something like this. Find the greatest companies of your era,

buy into them before most people do, sell out of them way after most people do. And I think that really sums up Rule Breaker Investing. Let's break that down briefly. When I say find the greatest companies of your era, let's focus on the word greatest.

For a sec. To me, the greatest companies are the ones that serve up the most important and innovative products and services, often driven by some form of technology or fresh thinking. The companies that deliver us the things that make us smile, that enrich our lives, that we couldn't do without. Those products and services, those are the greatest companies worldwide.

of every era. And of course, every era is different. Increasingly, technology is driving a lot of our world today in a way that, I don't know, cars were driving it in another era or railroads before that. So I think you have to know where you are in time and embrace not just right at that moment in time, but the 10 years or 25 years going forward.

based on how you see the world evolving. I think those are the greatest companies. Those are the rule breaker stocks, which I've spoken so much about now in our 10th year of this podcast. So that's the greatest part. And that's about finding the stocks. But there's one other part of that simple explanation I gave to the baseball mascot dressed like a giant dollar sign that Chad Chibiti somehow conjured out of nothing. And that is not about the companies. It's about you.

and how you behave, because that really matters. In fact, in my book, Rule Breaker Investing, which I've been reading page breaker previews out of, I intentionally did not start by talking about what we look for in stocks as rule breakers. I very intentionally started part one

about you and your own behavior as an investor, your mindset, your habits. Specifically, what are the habits that you have as an investor? Because if you have a bad habit, let's say, of selling too quickly,

panicking out when Netflix introduces Quickster and all of a sudden loses two-thirds of its value inside of one year. If you jump out of Netflix, then I can tell you Netflix and it's a great rule breaker stock, but you won't benefit from it because how you behave matters even more than what stocks you're looking at. And that's why I said to the giant dollar sign, buy into these stocks before most people do.

sell out of them way after most people do. I think that very simply explains, I hope, Rule Breaker Investing. Again, for longtime listeners, you've heard it all before. I hope you've internalized it. And if you have, I hope you've shared that out for people around you. I hope friends, kids, people at work could say about you, yeah,

he or she is a rule breaker investor. They behave in this crazy to some people way. They think long term. They buy overvalued companies that end up being, in some cases, the best companies of their time. And it only takes a few of those to really make your portfolio beat the market over the course of decades. But it does come down just as much to your own behavior. Now, I'd

I was asked for a quick pun as well. So here's my best shot at that chat, GBT. You know, humans are said to have five senses. And sometimes there's talk of a sixth sense, whatever that might be. But as the person who founded Rule Breaker Investing, I have 16 cents.

Because $0.16 is my cost basis for both Amazon.com stock as well as Nvidia stock. $0.16, it's a beautiful coincidence that over the course of a long period of time and multiple stock splits,

Both of those companies came down to my original cost basis for Motley Fool members, and they're both $0.16. There's my pun. Let's move on to pitch No. 2. This is the hardball.

And here it is. And by the way, again, this is the third in our series. So I've answered some other hard questions before. Here's what ChatGPT had for me this April 2025. And I quote, plenty of once small, innovative companies have soared to incredible success while others have faltered. When conviction meets cold reality, how do you know whether to hold on and give them more time or finally admit your initial thesis was off track?

Well, first of all, that is a good question. That is a very relevant question. I don't even think, ChatGPT, that's that hard. I wouldn't say that's 100-mile-an-hour fastball. I might put that somewhere around 92 miles an hour. But my first answer, my first instinct answering that question about when conviction meets cold reality, how do you know whether to hold on and give them time or finally admit you're off? I would say let them go.

tell you. Let those stocks, let that company, let them show you. And what I mean by that is, if you're a Rule Breaker investor, you already know one of our habits is to invest for at least three years. So by buying to hold...

You're doing something, by the way, very different from most other people, especially institutions. Most of the big money that's moving through the markets every day is institutional money sloshing through, and it's in and out way faster than three years. So just know that what's driving the market at any given moment, this has been true for decades, will very likely be true for decades going forward,

is very short-term money. So simply by investing for a minimum of three years, you're playing the game differently as a rule breaker than the vast majority of other players out there on the field. And by allowing your money to sit in a stock for at least three years, that stock will either be performing for you

or not. You're going to have a front row seat to its successes and its failures after a minimum of three years, but preferably three decades, five years, 10 years. You're going to know that company pretty well.

And so, it's not going to be just a question of, oh my gosh, something crazy happened. I mentioned, let's go there again, I mentioned Quickster earlier for Netflix. I certainly, as somebody who had been holding Netflix for more than five years, when Quickster was announced by Reed Hastings in, I think it was 2011?

I was certainly surprised. The idea was that still with a lot of DVD subscribers, people renting DVDs through the mail, I was one of them, but also new streaming subscribers. The decision made by founder Reed Hastings was we're going to split those two businesses. We're going to have people who just subscribe to the streaming Netflix entertainment service, that new thing we're doing, but we're going to have all of our legacy

customers, they're going to be under a new brand called Quickster. That starts with the letters Q-W-I-K-S-T-E-R. Quickster, that will just be for people who just want DVDs, put them in their Blu-ray machines or whatever. And that was certainly a surprise to me in the market overall. And I mentioned that the stock lost two-thirds of its value within less than a year.

every great Rule Breaker is going to make mistakes. Every one of us stubs our toe at different points in life, and that's just as true of the stocks that you'll hold. Any great Rule Breaker stock will lose a third or more of its value numerous times if you hold it over any long-term holding period. Thinking just now of Nvidia, probably the best-known Rule Breaker today from 2005 through 2024, that 20-year period,

NVIDIA sometimes went sideways for years, and several times, too, the stock lost 50% or more of its value over a gut-wrenching, face-melting year or less.

In fact, let's just look at this January. Just in this January, one of the biggest, most successful, most popular companies of our time, NVIDIA, went from 150 at a high in January down to 86 on April 7th of this month, just eight days ago. That's a 42% loss.

in three months. So yes, this is going to happen over and over. Just because a stock declines, chat TPT, hardball question, doesn't mean that you should sell or you've missed it. I am very successful at letting my companies decline and then come back because great companies, just like great prize fighters, great sports teams will make comebacks when they get down. So that's why I think it's so important. Another great habit of Rule Breaker Investing is to add up

don't double down. So again, chat GPT, when you say, how do you know whether to hold on, give a stock more time, or just finally admit your initial thesis was off the track?

First of all, if you're adding up, never doubling down, I have never made the mistake of adding money to a losing investment that lost and lost and lost from there. I only add new money to winning stocks. So you're going to avoid all kinds of human misery if you just take that rule breaker habit and make it your own. But I think

especially because you're giving these companies time. You will have time to figure out whether you should keep holding or whether the world's changed. Let me give one final example before we move on to pitch number three. My final example will be Whole Foods Market. Whole Foods Market today owned by Amazon, but what a wonderful rule breaker stock that was in the 90s and early aughts. A tremendous winner. The problem is that founder John Mackey and that team did such a great job mainstreaming

organic food and eating healthier and really caring about what we put in our bodies did such a great job mainstreaming that, that they got copied by Walmart and Giant and Safeway and a lot of other players, Kroger, a lot of other players in that industry who said, you know, we can offer organic food now too, now that it's getting so popular and in some cases at lower prices than Whole Foods. So Whole Foods is

didn't do anything wrong itself. It's just the world changed around it. And eventually, I kept holding the stock and it became a loser for a while. Eventually, of course, bought off by Amazon. So every company is different. And sometimes it's not what the company is doing. It's what the world is doing around it. But I think you can let

that company tell you. If you've gotten to know it over time, let it show you whether it's a winner and it's making the right moves in the world and the world is set up to make it succeed or not. And sometimes you'll end up with a whole food situation. Other times you'll end up with NVIDIA watching it get cut in half multiple times as it skyrockets to becoming more than $100

bagger for you over time. So again, every stock is different, but you're just the one you. And even though we change over time, I think the habits that we build matters so much. And I think the best habit of all is to invest for at least three years. There's my hardball answer. Let's move on to pitch number three, the curveball.

All right, on to our curveball now. Even people who don't like baseball probably know what a hardball is or a softball. But not everybody knows a curveball. What was the prompt that I gave ChatGPT? I said, throw me a curve. Surprise me. Maybe with a beautiful question or maybe you perceive I have a blind spot. Point it out. Time for a curveball. And here's what ChatGPT tossed me here for pitch number three. And I quote...

You're known for championing innovation and optimism, but can unchecked optimism become a hidden risk? Where do you personally draw the line between relentlessly believing in a vision and acknowledging the signs that you might need to pull back? Well, I appreciate that curveball chat, GPT. Thank you. First thing I want to say is you asked about unchecked optimism. Can unchecked optimism become a hidden risk? And my answer would be absolutely. I would say unchecked

Unchecked anything can probably become a risk. And that's why the form of optimism that I've always tried to practice that's come naturally to me, I didn't have the words for it, even though as a kid, I was a cheerful kid all the way through. I've always been an optimist. But when Matt Ridley wrote the wonderful book, The Rational Optimist, more than a decade ago, I had found the right language I could use to express to others optimism.

who and what I am as an optimist. Matt Ridley loosely, I'm just going to loosely define, according to Ridley, a rational optimist is someone who maintains an optimistic outlook grounded in rational analysis and supported by evidence. I think that's really important for me. I hope it is for you. Unchecked optimism would probably not be grounded in rational analysis and supported by evidence, but rational optimists

That's how we roll. And that's why I love people like Matt Ridley, who tells the story of humanity through time.

rationally, optimistically. Or Steven Pinker on this podcast years ago talking about his book Enlightenment, now full of evidence, full of data showing how much better the human condition is today than it was 30 years ago or 300 years ago, not even close. So people who are deeply grounded in academia, supported by data-driven insights and evidence, that is the source of my rational optimism. Now,

Apart from rational optimism, because I'm not sure Matt Ridley or Steven Pinker are stock pickers, but I know I am and maybe you are too, there has to be an element of guessing or imagining. I would say you have to have some faith in

in things unseen. I mean, when I first recommended Amazon in my original write-up, which is available for free on the internet, you can just Google Motley Fool Portfolio Amazon 1997 write-up, and I think you'll find a link to what I wrote back then.

I was saying, I think this is going to be more than books. I think this is going to be more than books, music, and DVDs. I think if they really understand e-commerce, I'm not quoting myself directly, but in so many words, I said, I think this can be bigger than just Earth's biggest bookseller or

Some years later, another great rule breaker often talked about by me on this podcast, one of my hundred baggers, intuitive surgical. When we first recommended that in 2005, you had to imagine that robotic assisted surgery, robot assisted surgery would be more than just for the removal of prostate gland in men who had prostate cancer. That's how intuitive surgical started.

you had to have some faith in things unseen and imagine that it could be used for other forms of surgery. Indeed, it has. A big reason that Intuitive Surgical has been such a monster winner. And by the way, looking forward over the next couple of decades, I could imagine most, if not all, surgery becoming robot-assisted. So,

You didn't have evidence of that back then when Amazon started or Intuitive Surgical started. A lot of it was just based on some combination of trying to see a bigger picture. You're also looking at the leadership, maybe the founders or the big shareholders in the eye trying to figure out, are these people smart? Do I want to put my money with them for years?

You're also doing something I try to do a lot. I think I'm good at this. Think backward from the future and just imagine where we're headed and think, how do we get there and what's on the ground today that will lead us there? And then I would say, of course, some guesswork, maybe some probabilities as well. Some mix of seeing the bigger picture, looking the people in the eye, thinking backward from the future and guesswork.

I would say also humility, because you know you're going to be wrong. And it's always worth pointing out, ChatGBT, and anybody especially new to the podcast this week, that I have my fair share of losers. I would say I have more than my fair share of losers, kind of like venture capitalists

usually earn great returns, but based on backing a few big winners and a lot of losers, that's more our style here in Rule Breaker Investing as well. But the beauty of that is you can never lose more than 100%. You can make infinite on the upside. And a lot of people fail to run the math or don't have that in their heads and don't realize it's such a great way to invest, to be willing to lose, to know you're going to be wrong.

And I was thinking about that before we move on to pitch number four, our screwball. I was thinking about that because Jordan Ellenberg, the fantastic mathematician and academic who joined me for authors in August two years ago, his book, How Not to Be Wrong, which I really enjoyed. And we talked about that. If you're inspired by the quote I'm about to give you, I hope you'll go back and listen to my conversation with Jordan. I should have him back on the podcast sometime in the next year or two. But Jordan Ellenberg in his book, How Not to Be Wrong,

had this line. He said, when you reason correctly, you find that you always think you're right, but you don't think you're always right. Such a great line. He goes on to say, as the philosopher W.V.O. Quine put it, quote, to believe something is to believe that it is true. Therefore, a reasonable person believes each of his beliefs to be true. Yet experience has taught him

to expect that some of his beliefs, he knows not which, will turn out to be false.

A reasonable person believes, in short, that each of his beliefs is true and that some of them are false. End quote. I think that is such a beautifully stated quote from the philosopher Q-U-I-N-E. I don't know his work, but that came through Jordan Ellenberg's book, How Not to Be Wrong. When you reason correctly, you find you always think you're right,

but you don't think you're always right. That is such a good mentality for you and me as rule breaker investors. So yeah, too much optimism or unchecked optimism, in your words, ChatGPT, or I would say optimism without any reasonable evidence or any rational grounding isn't valuable. It probably does lead people as investors to take too big a position, maybe too big an initial position in something that he or she is

too optimistic about. And that's why I've always counseled, and we do this at The Motley Fool, a minimum of 20 or 25 stocks as you start your portfolio. These days, you can start very small positions with fractional shares paying no commissions. It's very cheap to start a diversified portfolio from the get-go here in 2025 in a way that was impossible 20 years ago or 31 years ago when we started The Motley Fool. So yeah, I think

chat, GBT, that yes, I am championing innovation and optimism, but it's a grounded form. And part of that is a recognition that sometimes we're going to be wrong. And don't put yourself in harm's way with your portfolio by over-allocating to anything. Balance it out and let those stocks show you over time which ones are going to be your real winners. All right, on to pitch number four. Now,

Even as a baseball fan, I have a hard time explaining exactly how to throw a screwball. I think if you're a baseball fan, you know that a screwball is released by a pitcher. It goes the opposite direction from the way a curveball goes. But just as a phrase goes,

in culture. I think we can all kind of imagine what I mean by screwball. In fact, as I sent this to ChatGBT, my prompt was, give me a screwy question, one that might reverse assumptions or be completely out there in relation to my rule breaker habits, traits, and principles, you know, a screwball. So here's what we have here for volume three. Here's my screwball. Quote, imagine you had to create a new investment strategy

That's the complete opposite of everything you've advocated for, an anti-rule breaker approach. What would it look like? And can you envision a scenario where you might actually use it? Well, that is a fun and I would say very much a screwball question.

I actually have a fun answer because I've already done that. I can precisely describe how I would envision that strategy and what I did with it and what I learned from it, and thereby hangs a tale. If I'm thinking about the opposite of Rule Breaker investing, I'm thinking about short selling because the opposite of buying things that go up over time would be

selling things that go down over time, specifically selling stocks short. This is not a topic I very often speak to on this podcast, and I'll explain why a little bit later, but it's very much a way to invest. Certainly, some people, especially institutionally, some people short stocks. Yes, if you're hearing this for the first time, new investor, that's

There are approaches you can take where you make money on a stock losing value instead of just hoping it gains value over time. So if I think about the opposite of Rule Breaker Investing, I start by saying we're selling things that we want to go down, the opposite of buying things we want to go up.

And there's another opposite, just sticking with the screwball motif here, that would be part of the anti-rule breaker strategy. Because with our approach, we're looking as rule breakers for the best companies of our time. I already spoke to that earlier on this week's podcast, the best, the greatest companies of your time. So instead, what would be the opposite? How about the worst companies?

companies of your time? What about the companies that really seem to add no value, subtract value from society, from shareholders in particular? What about those kinds of companies? And so the anti-rule breaker approach is to find the worst companies on the public markets and short them. And indeed,

I did that earlier in my Motley Fool career. When we launched the Motley Fool on August 4th of 1994 on AOL, we had a real money portfolio that we invested for years in front of America. And sometimes we would take a short position.

in that portfolio. Just as we do with our services today, we would announce ahead of time, allowing our members, our listeners to take action before we would. We would say in a few days, we're going to buy or sell this stock and anybody following along with the full port back in those AOL days could go ahead and act right then and front run us. We said, go right ahead. With that money, $50,000 that eventually became a lot more than that real money invested in our earliest days on our AOL

site. I shorted some companies and I'm going to mention one right now just by way of example. The date was April 30th, 1997. So, just about 28 years ago, almost this week, I found one of the least admired companies in America. I think Fortune or Forbes keeps in America's most admired companies, but also keeps in America's least admired companies. This company was literally

Number one, America's least admired company. It operated in an industry that I don't like very much, one whose whole premise is basically to bilk people out of their own money. And of course, I'm referring to what some people call the gaming industry, but I think of it as gambling. And whether it's sports betting today or pulling a one-armed bandit sitting there, I especially see some older people. It always makes me sad seeing people just sit there and pull one-armed bandits

with dollars in their old age, one after another. Gambling takes many forms, but one thing is for sure, the reason it exists at all is because the house gets your money. In fact, if you really want to think cynically about casinos, and let's do that just for 30 seconds or so,

They're basically trying to create the most welcoming, hospitable atmosphere. Free drinks, sometimes good-looking people serving them, fun, high jinx, lots of sound, noise, bells and whistles. They're trying to lure people in

in order literally to take their money from them. Yes, some people do win roulette, some people do win blackjack, but the reason this industry exists is because most people don't. You're essentially being welcomed in by seemingly hospitable people

who thanks to the house and the 5% to 10% off the top the house takes are literally just taking your money from you. So yeah, I found America's least admired company in an industry that I didn't like. And this company had a huge amount of debt that I was pretty sure it would never be able to pay off.

And over the course of 18 to 24 months, with that short position in place, we watched the S&P 500. This is 97, 98, 99 right in there. The S&P 500 went up 60% in just a couple of years. This stock dropped.

40%. So, if you're with me, there's a gap there of 100 points of what people call alpha. That is, every percentage point that you make better than the market averages is your alpha, and the market went up 60%, our stock went down 40%, so we actually had a 100-point spread over the market averages. It was a huge winner. And to think, now years later, that the chairman of that company would be President of the United States is quite something for me to reflect on.

But yeah, that's a story, true story from the 1990s of what I would describe as an anti-rule breaker approach where we're not buying but selling, selling short, making money off things that go down. And sure enough, bad companies usually do lose money over time. That company ended up going fully bankrupt. We didn't ride it.

all the way down. But that, ChatGPT, is my screwball answer to your screwball question. I love the question. What is an anti-rule breaker approach? What would it look like? And could I envision a scenario where I might actually use it? And I want to close my answer by saying, yeah, we did actually use it and we used it pretty successfully. And here's why I just stopped doing it. Because even though you can short stock successfully, you really can only ever make about 100% of your money.

It's the exact opposite of Rule Breaker Investing. Your gains are curbed.

your losses are actually infinite. If you short a stock and it starts going up against you, you can lose a ton of money. But that's not the reason that I stopped. We didn't have any really bad short. I just decided this is such a short-term game with limited gains. While it's awfully fun to play opposite the market, and we did it well, and we had a few losers too, ultimately, The Motley Fool spends very little of its time these days shorting stocks. We're talking about shorts

simply because it doesn't lead to much that's lucrative? And why wouldn't you instead just want to buy or hold great companies over the course of time and make a lot of money? So I really enjoyed that question. That was a lot of fun. Let's move on to pitch number five.

Pitch number five is our knuckleball. I love closing with the knuck. Now, in baseball, a knuckleball is a pitch that is intentionally thrown such that the ball barely spins at all. So that makes it move unpredictably.

but sometimes highly effectively. There are not many knuckleball pitchers left in professional baseball today, but they're fun to watch. They don't even throw the ball that hard necessarily, but they release it in such a way that the ball doesn't itself spin.

And that causes it to do really weird, unpredictable movements as it speeds toward the plate and the batter. And good knuckleballers can really bamboozle, befuddle the batters that are trying to swing and miss at their pitches. So that's the knuckleball. Now, in the context of a pitch from ChatGPT on this podcast, I interpret that, first of all, as maybe a question that aims at a timeless question that

reminds us of the timelessness of Rule Breaker investing because knuckleballers have existed for many, many decades, even though it's sort of a dying art today. So there's a dependability and a sureness and a lack of spin to this question. But on the other hand,

This question, I said to Chad GPT, should also be unpredictable in terms of where it may go and take us just like a knuckleball. So here's Chad GPT's knuckleball question to close. Pitch number five. When everything around you is swirling in chaos, from economic headlines to industry shakeups,

What remains the single unchanging principle at the core of your investing philosophy, a principle you'd trust even if the future looked impossible to predict? Well, first of all, I think that is a beautiful question. And I think each of us

Maybe rewind, hit 15 seconds back and re-hear that, or maybe I'll re-read it again, because I think each of us could answer this question, not just about our investing, but just about our belief in life. That question is something to think hard about. When everything around you is swirling in chaos from economic headlines to industry shakeups, what remains the single unchanging principle at the core of your philosophy, in this case, investing philosophy, a principle that you'd trust even if the future looked impossible?

to predict, the knuckleball question. So I'm just pausing for a sec, dear listener, for you to think about your own answer to that question, whether it's about your investments or about your own life. And now as I think how I would answer that question, I think I'd go with something like this. Capitalism works. And I would say conscious capitalism

really works. Earlier, I spoke about Matt Ridley, rational optimist, Steven Pinker. These are people who don't just champion human flourishing. They specifically call out, among other things, capitalism as maybe the number one reason that humanity has so greatly improved our longevity, worldwide poverty at near all-time lows,

so many aspects of human flourishing are so much higher than they were before. And it's because of the economic system that is imperfect, but that has been in place for the last couple of centuries. So if I'm thinking about a world swirling in chaos and a principle I trust, even if the future is impossible to predict, I would say capitalism works. And here's why. Because it's based on voluntary exchanges.

You're buying this thing for me that I'm selling to you, whether we're doing that over eBay or on the New York Stock Exchange. We're both making voluntary decisions to exchange something. When you buy a house from somebody, when you buy a burrito at Chipotle, when you buy anything

anything or sell anything in most circumstances anyway. They're voluntary exchanges. It's very unfortunate if they're not voluntary, if they're forced. That's a whole separate topic. But in its purest form, we're talking about the millions upon millions of voluntary exchanges that happen every day, just happen today in our world. And they're done because mutual gains occur. You sold that thing

You got money that you can now use to retire. I bought that thing from you. I'm really going to enjoy using it or living there. Voluntary exchanges for mutual gains. And that's not just always about money. Thomas Jefferson has that great line about how an idea, a great idea is like a candle. He would have said a taper. That's the word he used. But anybody with a bright idea, with a taper, anybody else can walk up

with their unlit candle and gain light from Jefferson's idea, from Jefferson's taper, and his light doesn't dim as a consequence. There's an incredibly great aspect of sharing that is contagious for humans and that's

that often does not involve a loser. There's not a zero sum when you light a candle and we all light our candle off of yours. We all enjoy the light together. I realize I'm speaking in abstract terms. I'm also speaking about optimal situations today.

when it works. And I realize, again, it doesn't always work. There are lots of situations that are not voluntary exchanges. There are lots of places in the world today that do not benefit from how they practice business in their culture. But I would say, especially if you ask, what are the cultures that are fostering innovation? I would say, especially what are the cultures that have entrepreneurship?

As much as people in American society today lionize and celebrate our movie actors, they're also famous, our musicians and rock stars, our athletes. To me, the unsung heroes are the entrepreneurs.

The people who are like, you know what? I grew up with things this way. I think we can do better. Here's an idea I have. Let's try to turn it into a product or service. Let's actually, let's find employees who will work for us. Let's find customers. Let's deploy this better idea out into the world. If you really think about what happens with entrepreneurship,

The richest and greatest societies in time are those that make it easy to start a business, that unleash their visionaries, their problem solvers, their entrepreneurs. Entrepreneurs solve problems for you and me all the time. And the better we can enable them, give them venture capital, hold them accountable to do what they say,

make sure that they abide by the law, all of those things, the better off our society will be. So as I think in closing about this knuckleball, what's the principle I trust, even if the future looked impossible to predict? I trust that voluntary exchanges for mutual gains occur

across planet Earth in huge volume every day, far more than existed 100 or 1,000 years ago. And so I would say as a rational optimist that we will all benefit from the system that's in place, even with its faults and even with its market drops and crazy moments that occur over time. There's a great moment in The Rational Optimist where Matt Ridley points out that philanthropy is

philanthropy flourishes alongside a booming market economy. Philanthropy flourishes in those conditions, and that demonstrates that profitability and altruism are not mutually exclusive. I think a lot of people think there are two opposing forces. You can only have one or the other. Turns out it's both, and they feed

each other. The system that's in place today, which is responsible for so many of the good things that you and I may be taking for granted every minute or day of our life, that system in place today, it's been in place my entire lifetime, I sure hope it will be in place for many more lifetimes going forward. That is the thing, swirling in chaos, the single unchanging principle that is the bedrock of my investing philosophy and why I believe it's worth saving money every two weeks

finding something, whether it's a company you admire, a stock directly or funds and invest and believe that over the course of time, that will go up in value. Looked at over any meaningful period in the past, any graph depicting the performance of the stock market starts in the lower left and goes to the upper right.

That includes every bad moment that occurred all the way along that line graph. Yes, they do occur. ChatGPT, thank you for the knuckleball question. To close this episode of ChatGPT Asks, David Answers. This was Volume 3. I really do appreciate AI so much and I think I'm going to appreciate even more going forward, just like our markets.

It will make mistakes and bad things will happen as a consequence of AI, but net net, it is a tremendous good. And I think you and I should increasingly be using it and investing ourselves in it. So there's a closing thought here at the end of this week's podcast, looking forward to talking sports and how to break the rules and do it better with my friend, Kimball Crosley next week. In the meantime, happy April full on.

As always, people on this program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing at rbi.fool.com.