The 13 Steps to Investing Foolishly
Step 1: What is Foolishness?

Let's start out with what you may be most confused about right now. As a newcomer, you might be wondering just what the heck all this "Fool" stuff is, and why you should spend any time here. You were looking for investment or personal finance information (right?), and now you're suddenly staring a court jester directly in the eye.

Who are these guys?

What is this?

To make a long story short, The Motley Fool name comes directly from the beginning of Act II, scene vii of Shakespeare's As You Like It. In the days when Shakespeare was writing about kings, Fools were the happy fellows who were paid to entertain the king and queen with self-effacing humor that instructed as it amused. Fools were, in fact, the only members of their societies who could tell the truth to the king or queen without having their heads rather unpleasantly removed from their shoulders. In Fooldom, you the reader are the king, and it's our job to tell you the truth about investing and show you how you can manage your own money better than the pros on Wall Street.

The Motley Fool was formed in mid-1993, appeared on America Online a year later, and launched its full site on the World Wide Web in 1997. Its mission was, is, and will always be to educate, to amuse, and to enrich. We're here to help you help yourself with all aspects of personal finance and investing. We don't manage anyone's money but our own, and we're not investment advisers. Again, our interest is solely in educating, amusing, and enriching. (We do have an interest in winning awards for producing the best financial website in the whole dang world, but that's pretty much a pride thing; there sure isn't any prize money that comes with any of these awards.)

Now, when you're plying your trade in the investment world, you normally wouldn't want to be caught dead being called a "Fool," right? We think quite the opposite, of course. We look around at the supposed Wisdom in the world today, the Conventional Wisdom, and wish to put an end to it, to reform it. In fact we're on a mission here -- a mission from Shakespeare.

So what is some of the conventional wisdom so contrary to the Foolish point of view? We'll preview just a few slivers of it now -- suffice it to say that the subsequent 12 steps contain a touch more, and the rest of this website goes into Foolishness in much greater detail.

Conventional wisdom #1: You should just let "experts" invest your money for you by putting your money in managed mutual funds.

Foolish response: Yikes! Did you know that well over three-quarters of all managed mutual funds underperform the stock market's average return? In other words, most of the Wise "professionals" out there are losing to the market's average return in most years -- and they are paying themselves very, very well in the process! Mutual fund managers will try to persuade you they have some special Wisdom or crystal ball. Unfortunately, their impressive-sounding jargon is hogwash when compared to the actual performance of the market averages. If you're ever going to be invested in mutual funds, look only as far as an index fund, which tracks the market's returns at a very low cost.

Conventional wisdom #2: Financial gurus do a good job of predicting the direction of the stock market.

Foolish response: Nope. No one has ever proven the ability to predict the stock market's future consistently and accurately. We are amazed and amused by all the people who still try to do it, and all the journalists who daily (or hourly!) quote them on the matter. Buy and hold good stocks, and don't sweat where anyone's telling you the market's going.

Conventional wisdom #3: Wall Street brokerage firms and professionals are a great asset to our society, and they're worthy of our trust.

Foolish response: Well, they spend hundreds of millions a year on TV commercials insisting so, but... ummmm... not even close. First off, it's not in Wall Street's best interests to teach you. So long as you're in the dark about investing, you'll have to give your money over to Wall Street to manage it for you. That way, Wall Street professionals can charge you (hidden) fees to manage your money. The entire Wall Street industry is built on your not figuring out how to manage your money. And that, on the other hand, is exactly what your fellow Fools are here to help you do -- for FREE.

Further, most brokers are well trained in the subtle art of salesmanship and are paid based on how often you trade, not how well you do. That has created a massive conflict of interest, because the best way to invest is to buy and hold, not buy and sell and buy and sell again.

The Wise have prevailed in the money world for far too long. Now it's finally time that some Fools showed up and leveled the playing field. (Or obliterated the playing field, as the Rule Breaker Portfolio has been doing over the past five years.) By "Fools," of course, we don't just mean ourselves -- we also mean the millions of Foolish readers who come in here every month looking to answer each other's Foolish questions on our discussion boards.

All that we humbly ask is that you use whatever you may learn here for the benefit of good rather than evil, and that if you chance across some other Fool's question that you can help out with on one of our discussion boards, that you give a thought to doing so.

We believe that when you take control of your financial life, you're taking control of your destiny, and that you'll be rewarded by making the decision to do so. By the time you're done with our 13 Steps, you'll be well on your way to a lifetime of successful do-it-yourself investing and extreme Foolishness.

But before we get into all that investing stuff, first a word about your credit card sponsor...

Next Step: Settle Your Finances »

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