Latest / Masters in Business / The Stock Picking Philosophy to Find the Next Amazon with Motley Fool's David Gardner

Transcript

The Stock Picking Philosophy to Find the Next Amazon with Motley Fool's David Gardner · Masters in Business

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Masters in
• 0:11
  Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
• 0:16
  Speaker 2: This week on the podcast, I had so much fun
• 0:19
  Speaker 2: chatting with David Gardner of The Motley Fool.
• 0:21
  Speaker 3: I remember The Fool back in.
• 0:23
  Speaker 2: Ninety three, ninety four when it first launched on AOL.
• 0:28
  Speaker 2: What a fascinating career. If you're a stock picker, if
• 0:31
  Speaker 2: you're someone who really is committed to finding the best
• 0:35
  Speaker 2: companies and then writing them for decades, you're gonna find
• 0:39
  Speaker 2: this conversation really fascinating. I thought his book was really interesting.
• 0:43
  Speaker 2: His whole approach so life to investing is really great.
• 0:46
  Speaker 2: I enjoyed our conversation. I think you will also with
• 0:49
  Speaker 2: no further ado, my discussion with the Mottley Fools.
• 0:54
  Speaker 3: David Gardner, Thank.
• 0:55
  Speaker 4: You, Barry. It's a delight to be with you. Thank
• 0:58
  Speaker 4: you so much.
• 0:59
  Speaker 5: I have a.
• 0:59
  Speaker 2: Vivid recollection of sitting on a trading desk and watching
• 1:03
  Speaker 2: you guys pop on to TV at various times, and
• 1:07
  Speaker 2: as soon as you guys showed up, I'm like, all right,
• 1:09
  Speaker 2: let me pull up and VIDI and Netflix. I knew
• 1:12
  Speaker 2: they would start running and then soon turn around and fade,
• 1:16
  Speaker 2: so as always.
• 1:18
  Speaker 3: I mean just in traday.
• 1:19
  Speaker 2: We'll get a little later to the difference between investing
• 1:24
  Speaker 2: in trading, Yes, sir, but first I have to go
• 1:27
  Speaker 2: back to your background because it's so unusual. University of
• 1:31
  Speaker 2: North Carolina on a Morhead scholarship focused on bachelors in
• 1:36
  Speaker 2: English and creative writing. I assume Wall Street was not
• 1:40
  Speaker 2: the original career plan. It actually was a career plan.
• 1:44
  Speaker 4: As I came to UNC Chapel Hill as a freshman,
• 1:47
  Speaker 4: I was telling people, I think I'm going to go
• 1:49
  Speaker 4: to work on Wall Street. I had a formative summer
• 1:52
  Speaker 4: in between my sophomore and junior year where I worked
• 1:55
  Speaker 4: at Solomon Brothers back in the day, the Good Friend era.
• 1:59
  Speaker 4: I think Michael Lui was writing Liar's Poker somewhere around
• 2:02
  Speaker 4: late eighties.
• 2:02
  Speaker 3: I think you first dropped.
• 2:03
  Speaker 4: The year was nineteen eighty six. Oh that I was
• 2:06
  Speaker 4: probably overlapped with him. At the same time it was
• 2:09
  Speaker 4: I don't recall Michael, and I'm really glad to see
• 2:12
  Speaker 4: where he's guys gone on to Great Heights. But that
• 2:14
  Speaker 4: was the summer I learned I was never gonna want
• 2:16
  Speaker 4: to go work on Wall Street.
• 2:17
  Speaker 1: Uh huh.
• 2:18
  Speaker 4: That was a really wonderful experience. I just realized it's
• 2:22
  Speaker 4: not a culture that I'm gonna probably spend time with
• 2:25
  Speaker 4: as a as an adult, and so that was so helpful.
• 2:28
  Speaker 4: I love the markets. I just wasn't a Wall Street person.
• 2:31
  Speaker 2: And you grew up in a household where markets investing
• 2:34
  Speaker 2: stocks were part of the daily conversation. Your dad helped
• 2:37
  Speaker 2: you win a high high school stock picking contest.
• 2:40
  Speaker 4: Tell us a little bit about that. Sure, it was
• 2:42
  Speaker 4: actually earlier than that, was fifth grade. It was fourth grade.
• 2:45
  Speaker 4: Real my dad probably did with other dads did pick
• 2:48
  Speaker 4: stocks for their son in this all boys school, Saint
• 2:51
  Speaker 4: Albans School I went to in Washington, d C. And
• 2:53
  Speaker 4: I remember he had Harcourt Brace Javanovich, he had Getty Oil.
• 2:57
  Speaker 4: This is bad. These companies aren't around anymore too much.
• 2:59
  Speaker 4: But that was my stock portfolio. And over the course
• 3:02
  Speaker 4: of three months, I outperformed my classmates and so I
• 3:05
  Speaker 4: won a gigantic Hrshey bar. Like to my ten year
• 3:09
  Speaker 4: old eyes, it was the biggest Hrshey Bar I'd ever seen.
• 3:11
  Speaker 4: But it was a wonderful introduction, you know. Back The
• 3:14
  Speaker 4: real exercise then, Barry was just to look in the
• 3:16
  Speaker 4: newspaper to write down sixteen and five eighths where the
• 3:21
  Speaker 4: stocks closed. We would do that once a week over
• 3:23
  Speaker 4: the course of three months and just start understanding the markets.
• 3:26
  Speaker 4: So that was an early experience, but really Dad was
• 3:29
  Speaker 4: so formative for me as an investor.
• 3:31
  Speaker 3: It's always it's always.
• 3:32
  Speaker 2: Fun talking to the youngsters who grew up with decimalization. Yeah,
• 3:37
  Speaker 2: because I vividly recall what's the price up a teeny?
• 3:41
  Speaker 2: You don't get that anymore. It's a it's a whole,
• 3:44
  Speaker 2: it's a whole.
• 3:45
  Speaker 4: Lot of your listeners, do Barry and I've seen.
• 3:48
  Speaker 2: Right, yeah, right up a stick up a half whatever
• 3:50
  Speaker 2: it happened to be. And then how did you end
• 3:53
  Speaker 2: up writing for Lewis Rukaiser's Wall Street newsletter?
• 3:56
  Speaker 4: Yeah? So I started out of college, took a couple
• 4:00
  Speaker 4: of years to read and write and travel a lot,
• 4:02
  Speaker 4: got married without a job, and then it was time
• 4:05
  Speaker 4: at the age of twenty four to get my first job.
• 4:07
  Speaker 4: And as it turns out, the newsletter that was supporting
• 4:10
  Speaker 4: Lewis Rukiser. You remember his show Wall Street Week, sure
• 4:13
  Speaker 4: longest running show on PBS, and he had a newsletter
• 4:16
  Speaker 4: with a financial newsletter, and I got to write the
• 4:18
  Speaker 4: back page of that newsletter for that first job. We're
• 4:21
  Speaker 4: reaching one hundreds of thousands of people, and I could
• 4:23
  Speaker 4: pick whatever topic I wanted, so it was really fun,
• 4:26
  Speaker 4: except it ended up not being fun. And the reason
• 4:28
  Speaker 4: it wasn't fun is because I would pick a subject
• 4:30
  Speaker 4: like discount brokers, which was a brand new, amazing thing
• 4:33
  Speaker 4: back then in nineteen ninety two, schwab what's that? Or Quicken.
• 4:38
  Speaker 4: There's now software you can DVD load onto your computer
• 4:42
  Speaker 4: and track your finances and your stocked. So I would
• 4:45
  Speaker 4: write these up and then the edited version would come
• 4:48
  Speaker 4: back with all of my jokes, color and fun stripped,
• 4:53
  Speaker 4: and the second half freshly written by my editor explaining
• 4:57
  Speaker 4: all the reasons you wouldn't want to use a discount
• 4:59
  Speaker 4: broker or Quicken. And that's because I was instructed. I
• 5:03
  Speaker 4: was never never took a journalism course, but I was
• 5:06
  Speaker 4: just an English major. But they told me, you know,
• 5:08
  Speaker 4: we have to balance it out here. David. In fact,
• 5:11
  Speaker 4: Rukeiser is the personality. He's the color of this newsletter.
• 5:15
  Speaker 1: Not you.
• 5:16
  Speaker 4: We're not we're stripping out of the color. And also
• 5:17
  Speaker 4: you gotta be you gotta talk about the downside of
• 5:20
  Speaker 4: discount brokers and quick and I was like, I don't
• 5:22
  Speaker 4: want to do that. I don't see downside.
• 5:23
  Speaker 2: Well, the downside is you're taking money out of stockbroker's
• 5:27
  Speaker 2: children's mouths.
• 5:29
  Speaker 4: I mean, what's the what's.
• 5:30
  Speaker 3: The downside of paying less to trade?
• 5:33
  Speaker 4: Yeah? Well I discovered that the downside was a job
• 5:36
  Speaker 4: that just was kind of creatively deadening. It doesn't really
• 5:39
  Speaker 4: reflect on Rukeaiser. It was the goal of that newsletter
• 5:42
  Speaker 4: just to you know, supplement his TV show and all
• 5:44
  Speaker 4: the rest. So, but after six months I quit the
• 5:46
  Speaker 4: job because I was just like, this is not fun.
• 5:49
  Speaker 2: There's an argument to be had that Rukaiser was peak
• 5:52
  Speaker 2: financial television and it's been downhill ever since.
• 5:56
  Speaker 4: Like an hour a week is plenty.
• 5:57
  Speaker 5: They was he a half.
• 5:58
  Speaker 3: Hour an hour? I don't even remember, you know, a week.
• 6:01
  Speaker 4: I think it was an hour a week. It was
• 6:02
  Speaker 4: generally Fridays. It would air different Friday mornings, but Friday night.
• 6:05
  Speaker 2: You know, I remember him from Friday Nights.
• 6:08
  Speaker 4: And you remember his wit. He always had a monologue.
• 6:10
  Speaker 2: Very yeah, right, let's go over to our what was
• 6:14
  Speaker 2: it elves wizards?
• 6:15
  Speaker 3: I'm trying to remember elves, right.
• 6:16
  Speaker 2: I think it was elves and It was always fascinating.
• 6:19
  Speaker 2: And you know, it's funny. I've seen as many of
• 6:22
  Speaker 2: those on.
• 6:23
  Speaker 4: YouTube decades later.
• 6:25
  Speaker 2: Yeah, uh that I saw as many as I've seen
• 6:29
  Speaker 2: live on Friday Night.
• 6:30
  Speaker 3: Okay, like I got no plans.
• 6:31
  Speaker 4: All right, let's see what Louis has to say. That's
• 6:34
  Speaker 4: really fun that you would go back and revisit. You know,
• 6:36
  Speaker 4: I'll just say he was he was a wit. He
• 6:38
  Speaker 4: was himself outside of Wall Street. I mean, he's sort
• 6:41
  Speaker 4: of a journalist, but he he he enjoyed bringing together
• 6:46
  Speaker 4: brilliant minds on Wall Street. You know, he had Peter Lynch.
• 6:48
  Speaker 4: He would regularly focus Lynch and others and Saunders. You
• 6:52
  Speaker 4: go down the list of people that he had.
• 6:55
  Speaker 3: I'm trying to remember.
• 6:57
  Speaker 2: Was it poll tutor Jones before the eighty seven crab?
• 7:00
  Speaker 2: Might well have basically saying I'm out of stock, so
• 7:03
  Speaker 2: I'm short. I think something terrible is about to happen,
• 7:06
  Speaker 2: and then Black Monday happened. Was like you there was
• 7:10
  Speaker 2: no other place to see stuff like that, except we
• 7:12
  Speaker 2: take it for granted today that, oh you want to
• 7:15
  Speaker 2: see something, it's out there.
• 7:17
  Speaker 4: Yeah, Bloomberg, the NBC, right, I remember f n N.
• 7:21
  Speaker 2: Was like CN player pre CNBC definitely, and then cnn
• 7:27
  Speaker 2: FN was another one.
• 7:29
  Speaker 3: You were right, and then so now.
• 7:30
  Speaker 4: We're going down memory lane? Is this what is this
• 7:32
  Speaker 4: what your audience wants? Bearing? No lane, I'm enjoying that.
• 7:37
  Speaker 2: But so so let's let's talk about you go from
• 7:42
  Speaker 2: ruke Heiser. Where did the idea with you and your
• 7:46
  Speaker 2: brother working in a shed in the backyard. Where did
• 7:49
  Speaker 2: the idea come from? Hey, I want to put my
• 7:52
  Speaker 2: own ideas with personality into a newsletter, Like, how did
• 7:57
  Speaker 2: that become an actual product?
• 7:59
  Speaker 4: Well, I quit that job with nothing to go to
• 8:01
  Speaker 4: and then my brother's best friend from Brown University. They
• 8:04
  Speaker 4: both went to Brown. Eric said, hey, David, I went
• 8:07
  Speaker 4: to Brown. But shockingly, I really know nothing about investing
• 8:11
  Speaker 4: in the stock market. I'm from great education, great family.
• 8:14
  Speaker 4: I'm a television sports producer. What's going on in stocks?
• 8:17
  Speaker 4: So would you teach me? So I spent a couple
• 8:19
  Speaker 4: of nights just sitting down with Eric, going, you know,
• 8:21
  Speaker 4: here's what I look at, here's what I do. I
• 8:24
  Speaker 4: was raised in a family where you buy individual stocks.
• 8:27
  Speaker 4: We're not just gonna index here, We're gonna be choiceful.
• 8:31
  Speaker 4: And we had so much fun. Eric's like why don't
• 8:33
  Speaker 4: we open up. This is a newsletter. You have no
• 8:34
  Speaker 4: job now, you just work for a newsletter. I was like, okay,
• 8:36
  Speaker 4: let's do that. And then I flipped through a book
• 8:38
  Speaker 4: of quotations one night, and I settled on a fool,
• 8:41
  Speaker 4: A fool, I see a fool in the forest, a
• 8:43
  Speaker 4: Motley fool, and I just thought, you know, Shakespeare, Shakespeare.
• 8:46
  Speaker 4: Those were as you like it at two seene seven
• 8:49
  Speaker 4: for those keeping score at home. But for me, this was,
• 8:51
  Speaker 4: you know, a character I loved studying, certainly going through school,
• 8:54
  Speaker 4: and everyone loves Shakespeare's fools. They could tell the king
• 8:57
  Speaker 4: or queen the truth, and they did so with humor,
• 8:59
  Speaker 4: the only one who could get away with it. That's right.
• 9:01
  Speaker 4: They were given license to tell the truth. So I
• 9:04
  Speaker 4: sort of loved it. Also, great lines like a fool
• 9:07
  Speaker 4: and his money are soon parted, you know, gave us
• 9:09
  Speaker 4: a steep hill to climb as we tried to build
• 9:11
  Speaker 4: trust with people. Why would you call yourselves fools? And
• 9:15
  Speaker 4: it started there, and it started as a print newsletter.
• 9:18
  Speaker 4: You mentioned that bar It was July of nineteen ninety three,
• 9:20
  Speaker 4: was the first issue, forty eight dollars a year. The
• 9:22
  Speaker 4: only people who subscribed our parents' friends. They were the
• 9:25
  Speaker 4: only ones who pay us forty eight bucks a year.
• 9:27
  Speaker 4: Our friends stre sure weren't going to for our financial
• 9:30
  Speaker 4: advice back then. But as we started that newsletter nineteen
• 9:33
  Speaker 4: ninety three early ninety four, we were signing on using
• 9:37
  Speaker 4: our modem our telephone onto AOL, Prodigy and Compu served
• 9:42
  Speaker 4: the big three in the early private online services battle,
• 9:46
  Speaker 4: and we were starting to discover this new medium and
• 9:48
  Speaker 4: getting fascinated by it.
• 9:50
  Speaker 2: And I recalled AOL as a stock was two or
• 9:53
  Speaker 2: three dollars in the early nineties, something really moderate before
• 9:58
  Speaker 2: it had a hillatious run.
• 10:00
  Speaker 4: Straight up for that whole whole decade.
• 10:03
  Speaker 3: What was it like? First of all, you guys got
• 10:06
  Speaker 3: fool dot com today.
• 10:08
  Speaker 4: Nobody else wanted it.
• 10:09
  Speaker 2: Every every proper down, every dictionary word is taken, although
• 10:15
  Speaker 2: who knows what what AI and the slow shift from
• 10:19
  Speaker 2: Google from SEO to AI is going to do to there,
• 10:22
  Speaker 2: you got all these domains, but like domains changed hands
• 10:26
  Speaker 2: for millions of dollars.
• 10:27
  Speaker 4: It's kind of crazy.
• 10:28
  Speaker 3: You went to get full dot com.
• 10:30
  Speaker 4: Nobody nobody's position, Yeah, nobody wants nobody wants full dot com.
• 10:33
  Speaker 2: Oh my god, would so the missed opportunity was a
• 10:37
  Speaker 2: domain squad every proper. Now, so you launched the website,
• 10:42
  Speaker 2: how long was it before it was got some traction?
• 10:44
  Speaker 4: So we really launched first of all, Barry, it was
• 10:46
  Speaker 4: August fourth of nineteen ninety four. It was just on
• 10:48
  Speaker 4: AOL because this is pre Worldwide Web. People were not
• 10:51
  Speaker 4: using that. Seven was Netscape, right, Yeah, I mean I
• 10:54
  Speaker 4: would actually say ninety six ish was when we started
• 10:57
  Speaker 4: coming online on the web. But no, it was just
• 11:00
  Speaker 4: were in fool on AOL. But AOL was going through
• 11:03
  Speaker 4: a period of dynamic growth, so it was fantastic for us.
• 11:06
  Speaker 4: We launched in August. By November we were written up
• 11:09
  Speaker 4: in the New Yorker in the Talk of the Town section,
• 11:11
  Speaker 4: and then we had agents and publishers saying, there's a
• 11:13
  Speaker 4: book here, guys, and we're on television. We're we have
• 11:18
  Speaker 4: a radio show coast to coast. We just we were
• 11:21
  Speaker 4: like the early pioneers who believed in this new medium,
• 11:24
  Speaker 4: and we were going offline as fast as we could.
• 11:28
  Speaker 4: Everybody else was trying to come on online exactly, so.
• 11:31
  Speaker 2: You were you were already and it's almost embarrassing to
• 11:34
  Speaker 2: use the preeze cyberspace so you were online, but.
• 11:38
  Speaker 4: You use on the information super Highway, but all.
• 11:42
  Speaker 2: The traditional media to point towards the website. How long
• 11:46
  Speaker 2: did it take before you kind of said to yourself, Hey,
• 11:50
  Speaker 2: this is real business.
• 11:51
  Speaker 3: I don't have to go get a job. I could
• 11:52
  Speaker 3: just build this.
• 11:53
  Speaker 4: We started at such a good time because AOL, as
• 11:57
  Speaker 4: you'll recall, was a pay hour service right in the
• 12:01
  Speaker 4: beginning anyway, correct, like three dollars twenty five cents. I
• 12:04
  Speaker 4: think there is it to four at one point, and
• 12:06
  Speaker 4: so the business model was remarkable for us. If somebody
• 12:11
  Speaker 4: spent an hour at keyword Fool, we would get ten
• 12:14
  Speaker 4: percent of that. So if they're paying a well four
• 12:17
  Speaker 4: bucks an hour, forty cents for any hour that anybody
• 12:21
  Speaker 4: would spend at our site. And so with a tiny
• 12:24
  Speaker 4: staff and a big dog that was mailing out CDs
• 12:28
  Speaker 4: and DVDs to get onto AOL that serves as cocktail
• 12:32
  Speaker 4: coasters at parties, we really benefited from that ramp, and
• 12:36
  Speaker 4: so we began to be able to hire other people
• 12:39
  Speaker 4: when the so when yeah, that was it.
• 12:41
  Speaker 2: When the CDs started getting mailing, I think they had
• 12:44
  Speaker 2: moved to like, oh, you can eat ten dollars a
• 12:48
  Speaker 2: month or something like that, we're like thirty bucks a
• 12:50
  Speaker 2: month twenty Yeah, I don't remember exactly what it was.
• 12:54
  Speaker 2: I just remembered that that was the end of surprise bills.
• 12:58
  Speaker 2: Oh it's infinite, Okay, great, I'm on twenty four to seven.
• 13:01
  Speaker 4: And that hurt our business a lot. And so it
• 13:04
  Speaker 4: also was a major inflection point, Yeah, because we had
• 13:08
  Speaker 4: built a site that was really fun to visit. We
• 13:12
  Speaker 4: had very active forums, we were publishing multiple times a day,
• 13:16
  Speaker 4: Lots of people were showing it. There were even chat
• 13:18
  Speaker 4: rooms back then, right, people were spending time online and
• 13:20
  Speaker 4: forty cents for every hour. So we were starting to
• 13:22
  Speaker 4: hire people. And then within a few years, AOL went
• 13:25
  Speaker 4: flat rate, and all of a sudden, we had been
• 13:27
  Speaker 4: the stars of AOL. They were putting us forth at
• 13:30
  Speaker 4: their partners conference. We were on the cover of Fortune
• 13:32
  Speaker 4: magazine just three years after we started a print newsletter.
• 13:35
  Speaker 4: We were right out front. And then we became kind
• 13:37
  Speaker 4: of poisoned for AOL in this sense, every hour that
• 13:41
  Speaker 4: anybody spent AOL had to pay connect fee.
• 13:44
  Speaker 3: Now it's a cost instead.
• 13:46
  Speaker 4: Yeah, they're only charging thirty bucks flat a month, And
• 13:49
  Speaker 4: so all of a sudden, magnet sites like ours were
• 13:52
  Speaker 4: not as popular. And then meanwhile AOL understandably no harm,
• 13:56
  Speaker 4: no foul here, but they were starting to launch AOL
• 13:58
  Speaker 4: Finance and AOL Stocks and competing directly with kind of
• 14:03
  Speaker 4: where we'd camped out and built our.
• 14:05
  Speaker 3: Hold might be.
• 14:06
  Speaker 2: Or we're going to launch our own website, whether people
• 14:08
  Speaker 2: access it through you or not.
• 14:10
  Speaker 3: Yeah, that's fine.
• 14:11
  Speaker 4: So and we know how the AOL story ended.
• 14:17
  Speaker 2: At that point, you're thinking, uh, oh, this is a
• 14:20
  Speaker 2: big issue. How long did it take before the website
• 14:24
  Speaker 2: hit the same sort of Oh, this is a self
• 14:27
  Speaker 2: sustaining business.
• 14:28
  Speaker 4: Yeah, So we launched the website alongside our AOL site
• 14:32
  Speaker 4: with our first book, The Motley Full Investment Guide, in
• 14:34
  Speaker 4: the summer of nineteen ninety six, and the website. AOL
• 14:38
  Speaker 4: took part ownership in US, so we gave a minority
• 14:41
  Speaker 4: interest in our company to AOL. And they're like, guys,
• 14:44
  Speaker 4: go out on the web, compete with your own site,
• 14:45
  Speaker 4: compete with us. Ted leonsis, who is a real visionary huh?
• 14:49
  Speaker 4: And TeV was like, guys, no one's making money on
• 14:51
  Speaker 4: the web. Show anybody how to make money here on
• 14:53
  Speaker 4: the web. And so we built our website and we
• 14:56
  Speaker 4: started pointing people to our both our website and our aols.
• 15:00
  Speaker 4: And as it grew and as AOO went flat rate.
• 15:03
  Speaker 4: The good news for us is a lot more people
• 15:05
  Speaker 4: came online at that point, thirty bucks a month versus
• 15:07
  Speaker 4: four dollars an hour a lot that's mainstream. And also
• 15:12
  Speaker 4: good news for us is that we could survive as
• 15:15
  Speaker 4: a free site, so we could now be free for
• 15:16
  Speaker 4: a lot of people. The bad news was we've shifted
• 15:19
  Speaker 4: business models straight up advertising right at that point, it's
• 15:22
  Speaker 4: all about eyeballs and clicks and your customer. Our customer
• 15:26
  Speaker 4: just changed because our customer had been the beloved fellow
• 15:30
  Speaker 4: individual investor who is taking a risk to even go
• 15:32
  Speaker 4: online back in the day. And there they were paying
• 15:35
  Speaker 4: four bucks an hour, and they loved us, and they
• 15:38
  Speaker 4: were our members, and they were paying us directly. All
• 15:40
  Speaker 4: of a sudden, they became the product that we sold
• 15:43
  Speaker 4: to advertisers, right, because that's obviously the free ad business
• 15:47
  Speaker 4: is your custom raise, your eyeballs are now your new product.
• 15:51
  Speaker 2: And as a reminder for the youngsters listening ninety six
• 15:55
  Speaker 2: ninety seven, wait you want me to give my credit
• 15:58
  Speaker 2: card to a random This is such like early days
• 16:01
  Speaker 2: of Amazon, early days of all. All right, there were
• 16:04
  Speaker 2: a handful of companies you might trust, but there's a
• 16:07
  Speaker 2: million websites.
• 16:08
  Speaker 3: I don't trust any of these guys.
• 16:09
  Speaker 1: I heard that.
• 16:10
  Speaker 3: Over and over again.
• 16:11
  Speaker 2: How long was it before you people felt, oh, we
• 16:14
  Speaker 2: could subscribe to this newsletter, we could give these people
• 16:17
  Speaker 2: money to manage what was the forward timeline?
• 16:20
  Speaker 4: So thank you for that memory, because this is very important.
• 16:23
  Speaker 4: Anytime a new technology shows up, it's generally we're fearful
• 16:26
  Speaker 4: about it. What is AI going to do to jobs?
• 16:28
  Speaker 2: Well, back back then, I had a tech buddy who
• 16:32
  Speaker 2: always used to tell me, if you want to know
• 16:34
  Speaker 2: where technology goes, watch the X rated stuff, because they'll
• 16:38
  Speaker 2: be the first with micro payments, they'll be the first
• 16:41
  Speaker 2: with faster than real time and streaming and things like that.
• 16:45
  Speaker 2: And it turns out that that's a big driver of
• 16:47
  Speaker 2: online business even to this day.
• 16:49
  Speaker 4: Yeah, and I think that's that's true. So you're right.
• 16:52
  Speaker 4: Premium experiences in premium services are where the web has
• 16:56
  Speaker 4: ended up. However, there was a whole shift ninety eight
• 17:00
  Speaker 4: nine to two thousand. You really couldn't charge for anything
• 17:03
  Speaker 4: on the web. If we had tried to say you
• 17:05
  Speaker 4: now shall pay for our site or there we have
• 17:07
  Speaker 4: a subscription service, we would have been laughed at. At
• 17:10
  Speaker 4: the same time, though, as a stock picker, I was
• 17:13
  Speaker 4: picking AOL stock saying I think this is an amazing company,
• 17:17
  Speaker 4: and it sure enough was. It ended up being one
• 17:19
  Speaker 4: hundred and fifty bagger at its top. Didn't end there,
• 17:22
  Speaker 4: but it was still a remarkable investment, and lots of
• 17:24
  Speaker 4: people had followed us into AOL and other stocks like
• 17:27
  Speaker 4: the Amazon, and it was really going against conventional wisdom
• 17:32
  Speaker 4: at the time to say by Amazon, by AOL. And
• 17:35
  Speaker 4: so I want people to remember that because now it
• 17:38
  Speaker 4: looks so obvious. I mean, al did n well. Amazon
• 17:41
  Speaker 4: has ended really really well. It hasn't ended right. So
• 17:45
  Speaker 4: it's important to remember those moments because we tend to
• 17:47
  Speaker 4: forget that. We also forget the dawn of AI. This
• 17:50
  Speaker 4: is first dating in this ballgame, and people will look
• 17:52
  Speaker 4: back and go it's also obvious in.
• 17:54
  Speaker 3: Retrospec It's always obvious in retrospect.
• 17:56
  Speaker 4: It is.
• 17:56
  Speaker 2: Indeed, it's at the time, it's really challenging. So last
• 18:01
  Speaker 2: question in this segment, if you were starting the Motley
• 18:04
  Speaker 2: Fool in twenty twenty six instead of nineteen ninety three,
• 18:10
  Speaker 2: So we have social media we have free trading, we
• 18:13
  Speaker 2: have ETFs everywhere the world is so different today than
• 18:18
  Speaker 2: it was forty years ago.
• 18:20
  Speaker 3: What would you do thirty years ago? Anyway? What would
• 18:22
  Speaker 3: you do differently?
• 18:23
  Speaker 2: How would you build a site and a business today
• 18:26
  Speaker 2: this time around?
• 18:27
  Speaker 4: Well, I think, first of all, one thing that we
• 18:30
  Speaker 4: know today that we didn't do back then that I
• 18:32
  Speaker 4: think is very helpful in every era is to be
• 18:34
  Speaker 4: a purpose driven business and to state what is your mission,
• 18:38
  Speaker 4: what is your purpose, and really hue to that, and
• 18:40
  Speaker 4: breathe through that, and hire for that and promote because
• 18:43
  Speaker 4: of that. And conscious capitalism is one of my themes
• 18:47
  Speaker 4: as an investor in a board that I've served on.
• 18:50
  Speaker 4: So I now have those eyes that I didn't have
• 18:52
  Speaker 4: back then, and I think that that is such a
• 18:56
  Speaker 4: strong thing. Most of the best companies I know look
• 18:59
  Speaker 4: at crazy business of fast food chicken. Chick fil A
• 19:04
  Speaker 4: is an amazing company. I wish it were a public
• 19:06
  Speaker 4: market company. It would have been one of my stock picks.
• 19:08
  Speaker 4: But they just fundamentally act differently than McDonald's and their competitors.
• 19:12
  Speaker 4: And it's because it's like a leadership academy. Masquerading is
• 19:16
  Speaker 4: a chicken joint and still closed on Sunday, Yeah, exactly,
• 19:19
  Speaker 4: which is their choice radical And so those are the
• 19:23
  Speaker 4: kinds of companies that I admire, and like, that's what
• 19:24
  Speaker 4: I've always wanted the Motley Fool to be. So I
• 19:27
  Speaker 4: would do that in earnest today in a way that
• 19:30
  Speaker 4: I think would cut through a lot of the noise
• 19:31
  Speaker 4: and people saying there's too many choices and all the
• 19:33
  Speaker 4: rest standing for something and then living that every day.
• 19:37
  Speaker 4: Most of the best companies that I can think of
• 19:39
  Speaker 4: do that, So I would be trying to do that
• 19:41
  Speaker 4: very But yeah, it is a different world. I mean,
• 19:44
  Speaker 4: one thing that's changed, I think for the worst. And
• 19:46
  Speaker 4: I'm an optimist. Almost everybody's mailing it in with index
• 19:49
  Speaker 4: funds these days. Like I was raised in an era
• 19:52
  Speaker 4: where it was kind of normal, at least in my family,
• 19:55
  Speaker 4: buy a stock. These days, the conventional wisdom has become
• 19:58
  Speaker 4: you'd be crazy to by individual stocks, that's so risky,
• 20:03
  Speaker 4: just index And while I admire Jack Bogel deeply and
• 20:07
  Speaker 4: I appreciate indexing, and the Motley Fool has always been
• 20:09
  Speaker 4: a big support of index funds, have we really got
• 20:13
  Speaker 4: an era where you shouldn't even pay attention or care anymore?
• 20:16
  Speaker 4: And you can't probably beat the market because it would
• 20:18
  Speaker 4: just be locked to pick Chick fil A over Kentucky
• 20:20
  Speaker 4: Fried Chicken. I don't think so. I didn't think so
• 20:23
  Speaker 4: back then, and so I would be definitely sounding that
• 20:25
  Speaker 4: loud and clear. Today there's even more big dumb money
• 20:28
  Speaker 4: slashing around than ever before, because so much is just
• 20:30
  Speaker 4: throwing it at everything and not discerning this one versus
• 20:33
  Speaker 4: that one. Huh, really really interesting.
• 20:35
  Speaker 2: Coming up, we continue our conversation with David Gardner, co
• 20:39
  Speaker 2: founder of The Motley Fool, discussing his book Rule Breaker Investing,
• 20:44
  Speaker 2: How to pick the best stocks of the future and
• 20:46
  Speaker 2: Build Lasting Wealth.
• 20:48
  Speaker 4: I'm Barry Ritholts. You're listening to Master's Business.
• 20:51
  Speaker 5: On Bloomberg Radio. I'm Barry Ridhault.
• 21:04
  Speaker 2: You're listening to Masters in Business on Bloomberg Radio. My
• 21:07
  Speaker 2: extra special guest is Dave Gardner. He's the co founder
• 21:11
  Speaker 2: of The Motley Fool and the author of the book
• 21:14
  Speaker 2: Rule Breaker Investing, How to Pick the best stocks of
• 21:16
  Speaker 2: the future and Build Lasting Wealth. So I want to
• 21:22
  Speaker 2: talk a little bit about the philosophy around rule breaking
• 21:28
  Speaker 2: investing and stock selection. One of the things that jumped
• 21:32
  Speaker 2: out of the book from your framework was top dog
• 21:36
  Speaker 2: and first mover, customer love, visionary leadership discuss.
• 21:41
  Speaker 4: Yeah, well, thank you. These are some of the traits
• 21:44
  Speaker 4: that I'm looking for in stocks, and I think before
• 21:46
  Speaker 4: we start this, Barry, I should just again underline I
• 21:49
  Speaker 4: believe it is a worthy thing to choose stocks. I
• 21:53
  Speaker 4: really want to find the best companies of our time,
• 21:57
  Speaker 4: and I want to own them for a long period
• 21:59
  Speaker 4: of time. And actually it's for many people. It's actually
• 22:02
  Speaker 4: easier to find Amazon or eBay back in that era,
• 22:05
  Speaker 4: or Nvidia more recently. But to actually hold them, to
• 22:10
  Speaker 4: hold them to allow them to multiply in the way
• 22:12
  Speaker 4: that they will if you do. In my experience, that's hardest.
• 22:16
  Speaker 3: Let's talk about that, because.
• 22:19
  Speaker 2: Amazon, after the dot com crash plummeted to single digits.
• 22:23
  Speaker 4: Yep.
• 22:23
  Speaker 3: Apple has had.
• 22:24
  Speaker 2: More near death experiences than I can count in Vidio,
• 22:27
  Speaker 2: go down the list, Google, Facebook, testable.
• 22:30
  Speaker 3: Facebook's IPO was a disaster.
• 22:33
  Speaker 2: It got cut in half like within a few months
• 22:35
  Speaker 2: of that, and then they kind of unlocked mobile and
• 22:38
  Speaker 2: it was off to the races. Yeah, Tesla, these companies
• 22:42
  Speaker 2: trade more like cryptocurrencies than companies. How do you find
• 22:48
  Speaker 2: the confidence and the commitment to stay with something down
• 22:51
  Speaker 2: forty sixty eighty percent, So thank you.
• 22:55
  Speaker 4: And I would say, first of all, it's not worth
• 22:57
  Speaker 4: doing that for every investment. If it were some dodgy crypto,
• 23:02
  Speaker 4: I wouldn't be holding. But you used an important phrase
• 23:06
  Speaker 4: a minute or two ago. You said top dog and
• 23:08
  Speaker 4: first mover. So when I look at important emerging industries
• 23:12
  Speaker 4: and I see a company with a large customer base,
• 23:16
  Speaker 4: they may not be profitable yet, but they're doing good
• 23:18
  Speaker 4: things in this world, a world I want to live in,
• 23:21
  Speaker 4: and there's stocks down, there's stock's been cutting aff what's
• 23:25
  Speaker 4: the reason? Sometimes it's the CEO, like Howard Schultz back
• 23:29
  Speaker 4: in the name of Starbucks, was just occasionally conservative and
• 23:32
  Speaker 4: the analysts were surprised as he under promised. And then
• 23:36
  Speaker 4: the stock drops fifteen percent, you know, and we told
• 23:39
  Speaker 4: a story about this going on the View.
• 23:42
  Speaker 2: Yeah, the stock ends up down thirty percent, and that
• 23:44
  Speaker 2: was your last appearance.
• 23:46
  Speaker 3: And then what happened to the Starbucks.
• 23:48
  Speaker 4: It went up thirty times a value and we've never
• 23:49
  Speaker 4: been back on the View. But and by the way,
• 23:52
  Speaker 4: I'll return it at any time. We'd love to close
• 23:54
  Speaker 4: the loop on that story. But yeah, that was nineteen
• 23:56
  Speaker 4: ninety eight early TV appearance, we picked a stock for
• 23:59
  Speaker 4: the the ladies of the view and uh and then
• 24:02
  Speaker 4: it was Starbucks. That's the punchline. By the way, I
• 24:04
  Speaker 4: shouldn't have given that, but yeah, the stock dropped thirty
• 24:07
  Speaker 4: percent in just a couple of months, and we went
• 24:10
  Speaker 4: back on the show to update the story and they
• 24:12
  Speaker 4: booed us good naturedly, and they're like, oh well, and
• 24:16
  Speaker 4: we're like, keep holding though, keep holding. And then they've
• 24:19
  Speaker 4: never invited us back since, and it's gone up thirty
• 24:22
  Speaker 4: thirty three times a value from our first appearance, not
• 24:24
  Speaker 4: even including the thirty three percent drops. So, I mean,
• 24:27
  Speaker 4: that was an iconic moment. I didn't realize it at
• 24:29
  Speaker 4: the time, but as I wrote Rule Breaker Investing, I
• 24:32
  Speaker 4: was just thinking, that's my story, because that's what most
• 24:36
  Speaker 4: people miss. Most people are following the headlines instead of
• 24:39
  Speaker 4: following real progress, and they're chasing stuff. And if you
• 24:43
  Speaker 4: just look and ask who are the movers and shakers
• 24:45
  Speaker 4: delivering products and services electric cars, robotic surgery, coffee houses,
• 24:51
  Speaker 4: better fahitas, the list goes on.
• 24:55
  Speaker 3: Who are the thinking striker Chipotle, Tesla?
• 24:58
  Speaker 4: Yeah? Well actually intuitive so okay, yeah, yeah, but yes,
• 25:02
  Speaker 4: you're thinking exactly the.
• 25:03
  Speaker 3: Company using the robot that did my surgery.
• 25:06
  Speaker 4: Ah, very happy to hear that.
• 25:08
  Speaker 2: And when I'm recall walking into the surgical theater and
• 25:13
  Speaker 2: looking around and saying, oh, this is where the future is,
• 25:16
  Speaker 2: I've just gone twenty years forward because this whole thing
• 25:20
  Speaker 2: is here's the big robot with all the like, Oh,
• 25:22
  Speaker 2: now I understand like the rest of the world we're
• 25:25
  Speaker 2: living in the past. This technology is as cutting edge
• 25:28
  Speaker 2: as it gets. It's it's really amazing.
• 25:30
  Speaker 4: I love that and I'm so glad to hear that
• 25:32
  Speaker 4: for you in successful surgery, which is what we all want,
• 25:35
  Speaker 4: robot or human. But yeah, it turns out there are
• 25:37
  Speaker 4: lots of advantages to robot assisted surgery, and Intuitive Surgical
• 25:41
  Speaker 4: has really been the pure place small companies. Striker is
• 25:44
  Speaker 4: a more bigger, diversified company. Yeah anyway, but.
• 25:47
  Speaker 2: For each of these like I just have been remember
• 25:49
  Speaker 2: with the little logo on the side, the last thing
• 25:52
  Speaker 2: I saw, that's a good thing to do. They're like,
• 25:54
  Speaker 2: this will help you relax. And then the next thing
• 25:56
  Speaker 2: I know, I'm in recovery. But the last thing I
• 25:58
  Speaker 2: saw was the Striker logo.
• 26:00
  Speaker 4: Great story, and you know, so it's funny you mentioned
• 26:03
  Speaker 4: the future and feeling like you're living in the future.
• 26:05
  Speaker 4: That's generally where I try to be as I pick
• 26:08
  Speaker 4: my stocks and just for the fun of it. One
• 26:11
  Speaker 4: of my best stock picks in the last fifteen years
• 26:13
  Speaker 4: been Tesla, which I picked in twenty eleven, still holding
• 26:15
  Speaker 4: and I bought. I've owned a number of Tesla since.
• 26:18
  Speaker 4: And I was driving around in Tesla in twenty thirteen.
• 26:21
  Speaker 4: My license plate in Washington, d C. Is future like
• 26:25
  Speaker 4: no one else thought of it. So I'm watching out
• 26:27
  Speaker 4: for the future in Washington, d C. And I'm driving
• 26:29
  Speaker 4: around going I really am inside the future, and I'm
• 26:32
  Speaker 4: surrounded by not just other cars that aren't yet, but
• 26:35
  Speaker 4: a whole industry, gas stations, etc. Of things is not
• 26:39
  Speaker 4: as much maintenance needed. So that's a great iconic example
• 26:43
  Speaker 4: of for me. Whether it's Starbucks back in the day,
• 26:46
  Speaker 4: which was questionable for a lot of people because it
• 26:48
  Speaker 4: looked like a fad. That was the big wrap on Starbucks'
• 26:51
  Speaker 4: early nineties. Where have coffee houses ever come from? In America?
• 26:55
  Speaker 4: There's no background for this. This is such a fat
• 26:57
  Speaker 4: paying five bucks for coffee? Are you serious? Right? So
• 27:01
  Speaker 4: AOL was all just chat rooms, so all gonna be hype.
• 27:04
  Speaker 4: No one will ever give their credit card over the internet.
• 27:06
  Speaker 4: Tesla electric cars will never work intuitive, surgical. Why would
• 27:10
  Speaker 4: you have a robot when humans can do it just
• 27:12
  Speaker 4: as well? Dot dot dot. The list goes on all
• 27:14
  Speaker 4: the way around.
• 27:15
  Speaker 2: Why would you have a human when a robot can
• 27:17
  Speaker 2: do it that is indeed more not only just as well,
• 27:20
  Speaker 2: but more consistently. Yeah, and it doesn't matter if they
• 27:23
  Speaker 2: had a bad night. It's it's fine the next day.
• 27:26
  Speaker 4: And minimally evasive and speak of the next day. You're
• 27:28
  Speaker 4: walking home the next day, two days.
• 27:30
  Speaker 2: Oh, no, same day you walk out of the hospital.
• 27:32
  Speaker 2: It's kind of terrifying, although you're still on a lot
• 27:35
  Speaker 2: of drugs at that.
• 27:36
  Speaker 5: Yeah.
• 27:36
  Speaker 4: Well, one of my heroes is Clayton Christiansen, who wrote
• 27:39
  Speaker 4: The Innovator's Dilemma, And he's somebody who helped me understand
• 27:42
  Speaker 4: and think about disruptive innovation. And I've always invested in
• 27:45
  Speaker 4: the innovators. And back to your earlier question, Barry, you
• 27:48
  Speaker 4: know I can keep holding my Netflix when it loses
• 27:51
  Speaker 4: two thirds of its value when I believe in Netflix,
• 27:54
  Speaker 4: and I see visible proof every day of how important Amazon.
• 27:59
  Speaker 4: Back in the day, Netflix Tesla. The list goes on
• 28:01
  Speaker 4: the companies we've mentioned, so that helps me hold these companies.
• 28:04
  Speaker 4: If you follow the company as opposed to the zigs
• 28:07
  Speaker 4: and zags on the stock charts or the headlines, you're
• 28:10
  Speaker 4: going to be much more patient, I think as an investor,
• 28:12
  Speaker 4: and that has been my that's been a superhero power
• 28:15
  Speaker 4: for me.
• 28:15
  Speaker 2: So walk us through your stock picking process. How does
• 28:19
  Speaker 2: a company first land on your radar? What sort of
• 28:22
  Speaker 2: analysis do you do? When do you decide you're comfortable
• 28:26
  Speaker 2: to put it on your buy list? And are there
• 28:29
  Speaker 2: any non negotiable checkboxes that you say Nope, that's a knockout.
• 28:34
  Speaker 3: They don't have this.
• 28:34
  Speaker 4: I mean every one of those questions I could possibly
• 28:37
  Speaker 4: fill your ears up. So I will try to be brief.
• 28:39
  Speaker 4: I love the questions in reverse order, by the way,
• 28:42
  Speaker 4: I'll say any non negotiables. I don't invest in companies
• 28:45
  Speaker 4: whose fundamental business is to take money from other people.
• 28:48
  Speaker 4: And so you'll never see me recommend a so called
• 28:50
  Speaker 4: gaming stock. And I think sports betting is a joke
• 28:54
  Speaker 4: and it's while I think it always should have been legal,
• 28:57
  Speaker 4: I think it is a sad waste of money for
• 28:59
  Speaker 4: anybody who does the math and so that would not
• 29:01
  Speaker 4: be on my list. No Madleyful member has ever received
• 29:04
  Speaker 4: a gaming recommendation from that, and they have.
• 29:06
  Speaker 2: Been very destructive, primarily to college age men. There's a
• 29:11
  Speaker 2: growing gambling addiction problem, and these companies just that's their
• 29:16
  Speaker 2: that's their clients.
• 29:17
  Speaker 4: Yep. And I will say I love sports. I know
• 29:20
  Speaker 4: you do too, and I'm happy making a bet with friends.
• 29:23
  Speaker 4: But if you really do the math of a fifty
• 29:25
  Speaker 4: to fifty prospect where the house takes out it's ten percent,
• 29:28
  Speaker 4: and you just do your expect to return and play
• 29:30
  Speaker 4: that forward with all your money, I know where that goes,
• 29:33
  Speaker 4: and you could have had nine to ten percent annualized returns.
• 29:36
  Speaker 2: There's a huge knuckleheads. There's a huge difference between doing
• 29:40
  Speaker 2: a box for the Super Bowl or something. Man, it's
• 29:44
  Speaker 2: fun and betting on free throws. I mean, it's it's
• 29:48
  Speaker 2: just it has nothing to do with sports. That's just
• 29:51
  Speaker 2: the medium by which they are tickling your adrenaline and dopamine.
• 29:55
  Speaker 2: It's it's so and yet these have become giant bastiness.
• 29:59
  Speaker 4: Yeah. And you know, even something as innovative as prediction markets,
• 30:02
  Speaker 4: which I am fascinated by, are also being turned into
• 30:05
  Speaker 4: quick quick money and or sometimes questionable who can influence
• 30:09
  Speaker 4: the outcomes of prediction markets. So these are unfortunate things
• 30:12
  Speaker 4: where I think they're fascinating to follow. But if you're
• 30:15
  Speaker 4: serious about your own money and you would like financial
• 30:17
  Speaker 4: freedom one day, you're making a huge mistake if you
• 30:19
  Speaker 4: go there. So back to your question, that's non negotiable
• 30:22
  Speaker 4: for me. I don't like businesses that just fundamentally lead
• 30:25
  Speaker 4: people who don't know math to give their money away regularly.
• 30:29
  Speaker 4: I don't feel great about that if I'm a shareholder.
• 30:31
  Speaker 3: So let me roll you back a little bit.
• 30:33
  Speaker 2: How does a company typically find its way onto your radar?
• 30:38
  Speaker 2: Is it something you're using or something you hear about? Like,
• 30:40
  Speaker 2: where do most of these ideas come from? So the
• 30:43
  Speaker 2: ideas come from?
• 30:44
  Speaker 4: First of all, I'm an early adopter, So I've got
• 30:46
  Speaker 4: a closet full of things where I bought the thing
• 30:48
  Speaker 4: early first jen and it's not really working or wasn't
• 30:51
  Speaker 4: relevant anymore, and so but it also meant I bought
• 30:54
  Speaker 4: Tesla very early on, and I tried online services with
• 30:58
  Speaker 4: my scratchy phone that sound we can all here if
• 31:00
  Speaker 4: you're over forty years old today of logging onto AOL
• 31:03
  Speaker 4: so I love the new I'm excited by AI and
• 31:07
  Speaker 4: that's not an industry, by the way, that is a
• 31:09
  Speaker 4: plate tectonic shift for our society that's going to create
• 31:11
  Speaker 4: many industries many of us don't even exist yet. Just
• 31:14
  Speaker 4: as we were excited about the Internet with Amazon, where
• 31:16
  Speaker 4: my cost bass today is sixteen cents still holding. Uber
• 31:20
  Speaker 4: hadn't even shown up yet, Google hadn't shown up yet.
• 31:22
  Speaker 4: I mean it's it will be years before AI companies
• 31:25
  Speaker 4: that are amazing, that are great stocks show up, So
• 31:28
  Speaker 4: no one should feel anxious that they don't have an
• 31:31
  Speaker 4: AI portfolio yet. But anyway, so I'm an early adopter,
• 31:35
  Speaker 4: and then I'm connected to a community, the Motley Fool community,
• 31:38
  Speaker 4: our forums, discussion boards, meeting people at book signings, this
• 31:42
  Speaker 4: conversation right now, you mentioned Striker. I probably need to
• 31:45
  Speaker 4: look back at that one. I'm curious how it's done.
• 31:47
  Speaker 4: So I'm just always listening. Of course, social media is
• 31:49
  Speaker 4: full of these kinds of opportunities. So intellectual curiosity is
• 31:54
  Speaker 4: the flame that will burn my whole life long and
• 31:55
  Speaker 4: in many of my fellow fools, and I think my
• 31:58
  Speaker 4: host today as well. So I think that if you're
• 32:00
  Speaker 4: curious and you're asking questions about where society is headed,
• 32:03
  Speaker 4: and you're specifically looking for products and services that will
• 32:07
  Speaker 4: improve our lives and our kids' lives. You're going to
• 32:11
  Speaker 4: be looking, You're going to be fishing in the right pond.
• 32:14
  Speaker 2: So once something falls on your radar, you have six
• 32:18
  Speaker 2: rule breaker criteria. Walk us through those six Yeah, really,
• 32:21
  Speaker 2: that's the heart of the analysis that you do, right
• 32:24
  Speaker 2: it is.
• 32:24
  Speaker 4: It's six traits that I'm looking for, and that's the
• 32:26
  Speaker 4: middle of my book. And I didn't start the book
• 32:29
  Speaker 4: that way, And we can talk about that later if
• 32:30
  Speaker 4: you like, But let me just rattle right now through
• 32:32
  Speaker 4: my six traits of rule breaker investing. And by the way,
• 32:35
  Speaker 4: I have used these now into my fourth decade. I
• 32:37
  Speaker 4: didn't just come up with these yesterday. This is exactly
• 32:40
  Speaker 4: what caused me to pick AOL, Amazon, Tesla, and Nvidia.
• 32:44
  Speaker 4: The list goes on, and some of them are so contrary,
• 32:47
  Speaker 4: which is why I think it works. Number one, top
• 32:49
  Speaker 4: dog and first mover in an important emerging industry. We
• 32:52
  Speaker 4: already spoke to that one. We could go deeply.
• 32:54
  Speaker 2: So for today, that might be in Nvidia, it might
• 32:57
  Speaker 2: be Broadcomb, it might be ASM lithographer, it might be AMD,
• 33:01
  Speaker 2: it could be any of the semiconductors or some of
• 33:04
  Speaker 2: the software companies Google, Microsoft, whoever.
• 33:07
  Speaker 4: Yeah, and also, by the way, restaurant companies, retail. I
• 33:11
  Speaker 4: mean in every industry, I'm asking who's the innovator. I
• 33:15
  Speaker 4: want to know who the innovator? And if you honestly
• 33:17
  Speaker 4: just only focus your stock market attention on the biggest
• 33:21
  Speaker 4: innovator in each industry. Some of them are small emergent,
• 33:24
  Speaker 4: some of them are big, you're going to do so
• 33:26
  Speaker 4: much better.
• 33:26
  Speaker 2: So Starbucks, the third place that was the big driver
• 33:30
  Speaker 2: of them, Chipotle, they came up with a way to
• 33:33
  Speaker 2: assembly line fresh food. Yeah, the fat quality, the fact
• 33:37
  Speaker 2: that it happens to be Mexican based is almost relevent irrelevant.
• 33:41
  Speaker 2: You see Kava today doing the same thing with Mediterranean
• 33:45
  Speaker 2: and I'm sure there are dozens of others coming up.
• 33:47
  Speaker 4: There are. And by the way, not all of these
• 33:48
  Speaker 4: workout as stocks. I certainly have a closet full of
• 33:53
  Speaker 4: bad stock picks as well, and we could talk about
• 33:54
  Speaker 4: that later, but that's very important. If you have sort
• 33:57
  Speaker 4: of a venture capital mentality as you look at the
• 33:59
  Speaker 4: public markets, which is how I describe myself, you need
• 34:02
  Speaker 4: just like a VC, you need to be comfortable with losing.
• 34:05
  Speaker 2: In other words, it's you're looking for here, one hundred
• 34:09
  Speaker 2: investments fifty mark in a workout, thirty'll do okay, but
• 34:13
  Speaker 2: it's the top two or.
• 34:14
  Speaker 3: Three that make it worthwhile.
• 34:15
  Speaker 4: Yeah, and I truly go into all hundreds saying I
• 34:19
  Speaker 4: like this company, I believe in it, and I hope
• 34:20
  Speaker 4: it works out. But I'm never loading up on one,
• 34:23
  Speaker 4: et cetera. So top dog and first mover an important
• 34:25
  Speaker 4: merging industry. Of my six traits, that's the most important.
• 34:29
  Speaker 4: So number two, we're looking for a sustainable competitive advantage,
• 34:34
  Speaker 4: a mote as Buffett likes the sume you bet, And
• 34:37
  Speaker 4: because we're holding stocks for a dead minimum of three years,
• 34:42
  Speaker 4: preferably three decades, sustainable competitive advantage really really matters, and
• 34:48
  Speaker 4: that takes many forms. We could talk about that number three.
• 34:52
  Speaker 4: So the first two are about the company. The third
• 34:53
  Speaker 4: is about the stock. And this is I'm looking for
• 34:56
  Speaker 4: a strong, stellar past price appreciated in the stock.
• 35:01
  Speaker 2: In other words, you're not looking for the cigar stub.
• 35:03
  Speaker 2: To use Ben Graham's the opposite phrase, You're looking for
• 35:07
  Speaker 2: something with a little momentum and where more and more
• 35:11
  Speaker 2: investors are stepping in.
• 35:13
  Speaker 4: There's a chapter in my book and it was an
• 35:15
  Speaker 4: eye opener as I wrote it and realized it where
• 35:18
  Speaker 4: I listed out seven of my best stock picks from
• 35:21
  Speaker 4: Intuitive Surgical to Netflix, to Apple, to Amazon, to Nvidia
• 35:24
  Speaker 4: and a couple of others, and I noticed, and I
• 35:26
  Speaker 4: only realized this in retrospect, that in the three to
• 35:30
  Speaker 4: nine months leading up to my first pick of them,
• 35:34
  Speaker 4: on average, they had risen thirty to ninety percent, and
• 35:40
  Speaker 4: a lot of people, I think most people, when they
• 35:42
  Speaker 4: are researching the stock goes up fifty percent, they're like, oh,
• 35:45
  Speaker 4: that missed it, thirdy right right done? Yeah. And so
• 35:48
  Speaker 4: part of the reason rule breaker investing works is because
• 35:51
  Speaker 4: I'm willing at that point not just to buy it,
• 35:53
  Speaker 4: but to actually be more excited about it. Because clearly
• 35:56
  Speaker 4: the market is noticing what's happening now. And when companies rise,
• 36:01
  Speaker 4: reflexivity starts to show up Barry, they start having more resources,
• 36:04
  Speaker 4: they're getting mentioned on Bloomberg Radio. All of a sudden,
• 36:07
  Speaker 4: a lot of good stuff starts coming to them that
• 36:09
  Speaker 4: strengthens them. That's not a reason to look for another
• 36:12
  Speaker 4: cigar butt and ignore Nvidia. So that is trade number three.
• 36:16
  Speaker 4: Stellar past price appreciation in a world where most people
• 36:19
  Speaker 4: are like by low sell high. I'm looking at the
• 36:22
  Speaker 4: fifty two week low list friends, not the fifty two
• 36:24
  Speaker 4: week high. And when I say friends, I mean that's
• 36:27
  Speaker 4: the average person speaking. I'm looking for the fifty two
• 36:30
  Speaker 4: week high. Give us four, five, and six. Sure, so
• 36:32
  Speaker 4: number four. It's all about the people. We're looking for
• 36:36
  Speaker 4: smart backing and excellent management. So it's the human capital.
• 36:40
  Speaker 4: And this is again in some ways obvious. Yeah, we'd
• 36:43
  Speaker 4: love to have Steve Jobs be our CEO. Yeah we're
• 36:45
  Speaker 4: glad that Jeff Bezos is our CEO or Warren Buffett.
• 36:49
  Speaker 4: But keep in mind, and this is a really hidden
• 36:52
  Speaker 4: in plain site, I think, profound insight that most people
• 36:56
  Speaker 4: don't see even though it's hidden in plain site. There
• 36:59
  Speaker 4: is no number to express the value of the CEO
• 37:02
  Speaker 4: running companies. So we have a whole Wall Street world
• 37:05
  Speaker 4: that's built on valuation ratios, generally off of earnings or
• 37:08
  Speaker 4: cash flow, sometimes off of assets, and they're not including
• 37:12
  Speaker 4: that Elon Musk is the CEO of the company. And
• 37:15
  Speaker 4: by the way, there are a lot of CEOs who
• 37:17
  Speaker 4: are subtracting value from their companies and there's nothing to
• 37:21
  Speaker 4: express that, and so we have a whole world driven
• 37:24
  Speaker 4: off algorithms. That increasing is computer trading. It's not even
• 37:28
  Speaker 4: humans anymore, and they're not noticing or caring. I think
• 37:32
  Speaker 4: about trade Number four, who the heck's running this thing
• 37:35
  Speaker 4: and who's backing it? That matters deeply to me, especially
• 37:38
  Speaker 4: if I'm holding, as I do for three decades. Number five,
• 37:41
  Speaker 4: we're looking for strong consumer brands. I love companies that
• 37:45
  Speaker 4: have raving fans, and it doesn't mean every time that
• 37:48
  Speaker 4: they are consumer brands. Striker Drilling, Intuitive Surgical, these are
• 37:52
  Speaker 4: not consumer brands per se. Although Intuitive Surgical with its
• 37:56
  Speaker 4: Da Vinci surgical robot, you will hear your local on
• 37:59
  Speaker 4: your local radio. If you still listen to it, you'll
• 38:01
  Speaker 4: hear an ad for the hospital bragging in some cases
• 38:04
  Speaker 4: that they have a da Vinci, So there is some
• 38:06
  Speaker 4: brand recognition there. But Starbucks, Netflix, Amazon, These are all
• 38:10
  Speaker 4: my best stock picks, and I bought them years ago
• 38:12
  Speaker 4: and still hold them today, and they all exhibit that
• 38:15
  Speaker 4: strong consumer appeal. And the final probably my favorite secret sauce.
• 38:21
  Speaker 4: So if you're following us, the first two are about
• 38:24
  Speaker 4: the company, that third was the stock. Then the next two,
• 38:26
  Speaker 4: four and five the people and the brand are about
• 38:29
  Speaker 4: the company. Number six is about the stock, and it's
• 38:32
  Speaker 4: specifically that the stock is generally considered capital o overvalued
• 38:40
  Speaker 4: by the world at large, by Wall Street commentators, by
• 38:42
  Speaker 4: people in Barns, CNBC, never Bloomberg Radio, so little contrarian perspective.
• 38:48
  Speaker 4: We are specifically wanting people to call out Tesla as
• 38:51
  Speaker 4: ridiculously overpriced. Amazon will never make money, intuitive surgical. When
• 38:56
  Speaker 4: I first recommended it over one hundred bag or ago,
• 38:58
  Speaker 4: it was at seventy three times. There are people, if
• 39:01
  Speaker 4: they even do pay attention to stocks anymore, that say
• 39:04
  Speaker 4: I would never buy a stock with a price turnings
• 39:06
  Speaker 4: ratio of seventy three. The list goes on.
• 39:07
  Speaker 3: So a lot of.
• 39:08
  Speaker 2: Times when we see stuff, especially with a company that's
• 39:11
  Speaker 2: relatively young, you start to see the company grow into
• 39:17
  Speaker 2: their evaluation. And video is a great example. It was
• 39:20
  Speaker 2: a semi maker, then it was a floating point chip
• 39:24
  Speaker 2: maker for gaming before it did the pivot. It's a
• 39:28
  Speaker 2: full AI because FPUs turns out to be better than
• 39:32
  Speaker 2: CPUs for large language models, and I don't pretend to
• 39:37
  Speaker 2: be a WIZARDPUS then GPS, right, that's right. I don't
• 39:41
  Speaker 2: know what f is floating point unit. But GPUs that's
• 39:44
  Speaker 2: exactly right. But you know, two years ago video was
• 39:49
  Speaker 2: like a seventy five pe. Now it's like a forty
• 39:52
  Speaker 2: pe in falling. Can't some of these overpriced companies just grow?
• 39:58
  Speaker 3: Apple is another sample.
• 40:00
  Speaker 4: For the longest time, people looked at Apple in the two.
• 40:03
  Speaker 2: Thousands when that newfangled iPod came out and said, oh,
• 40:08
  Speaker 2: they don't have any profits whatsoever? Why would I want
• 40:11
  Speaker 2: to own Apple in four or five?
• 40:15
  Speaker 4: So I think that, first of all, let's be clear,
• 40:17
  Speaker 4: there are things that are overvalued that you and I
• 40:20
  Speaker 4: would not want to buy. But if you're following our conversation,
• 40:24
  Speaker 4: if you're buying a top dog and first mover in
• 40:27
  Speaker 4: an important emerging industry with a sustainable competitive advantage, stellar
• 40:30
  Speaker 4: pass price appreciation, excellent management, smart backing, strong consumer appeal,
• 40:35
  Speaker 4: it has all five of those things in place. And
• 40:38
  Speaker 4: then some guy on CNBC is telling you it's blatantly overvalued.
• 40:43
  Speaker 4: It's crazy, No one should ever buy that stock. Amazon
• 40:45
  Speaker 4: dot Bomb cover of Barns. That is the special sauce
• 40:49
  Speaker 4: that causes me to say, bam, now we're buying. Well,
• 40:53
  Speaker 4: the contrary the.
• 40:54
  Speaker 2: Amazon Dot Bomb was I want to say January two
• 40:58
  Speaker 2: thousand and we did. I'd see a giant collapse. What
• 41:02
  Speaker 2: was the cues fell about eighty two percent pize trough.
• 41:05
  Speaker 2: That's a pretty big I experienced it all the way.
• 41:07
  Speaker 2: In fact, our cost basis sixteen cents. It had gone up.
• 41:10
  Speaker 4: It was a thirty bagger. And again, when I'm picking stocks,
• 41:13
  Speaker 4: this is not for my this is not for my
• 41:15
  Speaker 4: own portfolio, This is not this is lots of people
• 41:18
  Speaker 4: following the Motley Fool. These are people subscribing to us.
• 41:21
  Speaker 4: So when I pick a good stock, it feels really good.
• 41:24
  Speaker 4: It's not about me. When I pick a bad stock,
• 41:26
  Speaker 4: it doesn't feel very good. It's not about me or.
• 41:29
  Speaker 2: A big a good stock that hits a buzz sol
• 41:31
  Speaker 2: when a market gets sill act exactly, you could own
• 41:34
  Speaker 2: anything during the financial crisis, everything still got cut in
• 41:38
  Speaker 2: half more or less.
• 41:39
  Speaker 3: It was quite a quite a crash.
• 41:40
  Speaker 4: You're right, Barry. And the truth is that if you
• 41:43
  Speaker 4: follow any of these companies. I've littered our conversation with
• 41:47
  Speaker 4: fifteen to twenty company names that are really fifteen to
• 41:50
  Speaker 4: twenty generationally great stocks. Every single one of these stocks
• 41:54
  Speaker 4: has lost fifty percent or more of its value. More
• 41:56
  Speaker 4: than once, which means that if you'd followed motley ful advice,
• 41:59
  Speaker 4: depending on your timing, you might love me or not
• 42:02
  Speaker 4: like me. You might be like, yeah, I got in there,
• 42:04
  Speaker 4: but got cut in half and I got out. We're
• 42:08
  Speaker 4: holding all the way through. We're buying and we're holding.
• 42:11
  Speaker 4: So I have watched Amazon go. This is kind of
• 42:15
  Speaker 4: pre split. It was at three when we first recommend
• 42:17
  Speaker 4: it went to ninety five down to seven during that
• 42:22
  Speaker 4: you're sure in cross splitz soon after. Yeah, yeah, it's
• 42:25
  Speaker 4: now split down to sixteen cents, which, by the way,
• 42:27
  Speaker 4: is also my cost base is on Nvidia. Thanks to
• 42:29
  Speaker 4: the magic of stock splitz. They both got me at
• 42:32
  Speaker 4: my sixteen cent cost bases still holding. So but to
• 42:36
  Speaker 4: do that, like Nvidia just three years ago lost half
• 42:39
  Speaker 4: its value in one here, this is one of the
• 42:40
  Speaker 4: largest time. It was like four months in half. Yeah,
• 42:43
  Speaker 4: so this is just gonna happen twenty two. This is
• 42:47
  Speaker 4: not gonna happen for companies that are not dynamic. This
• 42:49
  Speaker 4: is not going to happen so much for cyclicals. I
• 42:51
  Speaker 4: mean there will be some cyclicality. These are rule breakers.
• 42:54
  Speaker 4: These are stocks that, by most popular view, were blatantly
• 42:59
  Speaker 4: over value. You should never bought Amazon all the way
• 43:01
  Speaker 4: through et cetera, and so they're going to be more volatile.
• 43:04
  Speaker 4: Netflix was going to get put out of business by Walmart.
• 43:06
  Speaker 4: I don't know if you remember this, but back in
• 43:08
  Speaker 4: the day of the red envelopes, all of a sudden,
• 43:09
  Speaker 4: Walmart said, hey, you can just drop it off at
• 43:12
  Speaker 4: your Walmart your DVD. You don't have to mail it
• 43:14
  Speaker 4: back to Netflix. And that was going to Netflix was
• 43:16
  Speaker 4: supposedly toast then, so I've AOL was going to be toast.
• 43:20
  Speaker 4: It eventually was kind of toast, although it sold out.
• 43:23
  Speaker 4: The merger was the Yeah, but I've watched it's such
• 43:26
  Speaker 4: a key indicator trade number six. When people say it's toast,
• 43:30
  Speaker 4: that not for every stock, but for the rule breakers,
• 43:34
  Speaker 4: that is magic. It has been for me.
• 43:37
  Speaker 2: So I want to ask you about the first stock
• 43:42
  Speaker 2: you purchased where you said, oh, this checks all six boxes.
• 43:45
  Speaker 4: This is my rule breaker. It was AOL.
• 43:49
  Speaker 3: Yeah, definitely, nineteen ninety one, four or five.
• 43:52
  Speaker 4: We literally picked it the day we launched on AOL
• 43:54
  Speaker 4: nineteen ninety four, August fourth, nineteen ninety four. And from
• 43:57
  Speaker 4: that point I watched AOL and and again we were
• 44:01
  Speaker 4: I mean, we're always fully transparent. People are like, wait,
• 44:03
  Speaker 4: you guys are on AOL. Is there a conflict of
• 44:06
  Speaker 4: interest you're recommending AOL stock. Oh, we know what it
• 44:08
  Speaker 4: is because we're on it. We see what this can
• 44:11
  Speaker 4: do for investors and what the future of the companies
• 44:14
  Speaker 4: is pretty self evident. You know you're right, And yet
• 44:17
  Speaker 4: not everybody would have felt that way back then. But
• 44:19
  Speaker 4: it was I mean, we had no inside view of AOL.
• 44:22
  Speaker 4: We were separately domicov, but we watched AOL grow and
• 44:28
  Speaker 4: it was such an object business lesson as an entrepreneur
• 44:30
  Speaker 4: for me, but as a stock picker, I was watching
• 44:34
  Speaker 4: it get called out as the most overvalued stock repeatedly
• 44:38
  Speaker 4: by august bodies like the world economic It's not the
• 44:42
  Speaker 4: world like a foreman today, but basically all the economists
• 44:45
  Speaker 4: in the world. We get together every summer, and two
• 44:47
  Speaker 4: summers in a row, it was like ninety six and
• 44:48
  Speaker 4: ninety seven they voted the most overvalued stock, and it
• 44:52
  Speaker 4: was the stock that we had backed. And our members
• 44:54
  Speaker 4: are like, guys, they're calling the most overvalued again. We're like,
• 44:57
  Speaker 4: this is an amazing company. It went up one hundred
• 44:59
  Speaker 4: fifty times in value, and I learned so much from
• 45:02
  Speaker 4: that experience, and as we mentioned, it didn't end there.
• 45:04
  Speaker 4: It started to drop back and fell back and eventually
• 45:07
  Speaker 4: just kind of got taken over. And you know, you know,
• 45:10
  Speaker 4: merge with time time warner.
• 45:12
  Speaker 2: When people stop calling stuff over valued and every analyst
• 45:16
  Speaker 2: on the street has a strong buy on it, that's
• 45:18
  Speaker 2: usually when you want to.
• 45:20
  Speaker 3: Be on the other side.
• 45:20
  Speaker 4: That right, that can that can be true. I will
• 45:24
  Speaker 4: also always but no, no, no, I definitely appreciate the sentiment,
• 45:27
  Speaker 4: and I smile at that askance with you as well.
• 45:30
  Speaker 4: I will say that we typically just hold well longer
• 45:33
  Speaker 4: than whatever analysts are thinking or saying. We don't really
• 45:35
  Speaker 4: pay attention.
• 45:36
  Speaker 3: So you're not is that what you say? Yeah?
• 45:39
  Speaker 4: No, I mean we love following business. By the way,
• 45:41
  Speaker 4: one thing you asked me to think a little bit
• 45:43
  Speaker 4: about is is there anything that people should be talking
• 45:46
  Speaker 4: more about, especially if something that troubles me? And a
• 45:49
  Speaker 4: quick example would be, I really think we should have
• 45:52
  Speaker 4: companies reporting every three months their financial results. And you
• 45:54
  Speaker 4: may know there's a movement of foot to allow some
• 45:57
  Speaker 4: companies just to report twice a year. I think that's
• 45:59
  Speaker 4: really bad, bad decision, and I hope we don't do that.
• 46:02
  Speaker 4: I hope companies will self report and choose to be
• 46:05
  Speaker 4: transparent on a regular basis with their results.
• 46:07
  Speaker 3: I'm going to take it a step further than you
• 46:09
  Speaker 3: and say.
• 46:10
  Speaker 2: And I wrote this before AI was ubiquitous. If you
• 46:15
  Speaker 2: want to get rid of quarterly reporting instead of going
• 46:17
  Speaker 2: once or twice a year, make it real time and
• 46:21
  Speaker 2: twenty four to seven really cool because you could update that.
• 46:24
  Speaker 2: You could set up technology to update Here's where we are,
• 46:28
  Speaker 2: Here's how close we are, here's our range. You can
• 46:31
  Speaker 2: Monty Carlo what we would likely to do each quarter.
• 46:34
  Speaker 2: And so the problem is the focus on quarterly. If
• 46:38
  Speaker 2: it was all the time, like you can look at
• 46:42
  Speaker 2: your portfolio or your checking account of twenty four seven.
• 46:46
  Speaker 2: You shouldn't, but you can, and it's made I remember
• 46:50
  Speaker 2: in the nineties or in the two thousands, we would
• 46:53
  Speaker 2: be printing stuff out, folding them up, sticking them in an envelope,
• 46:56
  Speaker 2: sending them out, and the quarterly report was the When
• 47:00
  Speaker 2: I was a junior having to do that crap in
• 47:03
  Speaker 2: the mailroom, it was a big deal to quarterly report.
• 47:07
  Speaker 2: Now nobody really thinks about your portfolio quarterly because you
• 47:11
  Speaker 2: can access it whenever you want. It's kinda I think
• 47:14
  Speaker 2: it's absolutely heading in the wrong direction. Yeah, well, so
• 47:17
  Speaker 2: more transparency is you know the theme here. But so
• 47:22
  Speaker 2: for me, I think a lot about you know, what
• 47:25
  Speaker 2: is going to be in the best interests of armchair
• 47:27
  Speaker 2: investors like me, because Barry, we are we're individual investors,
• 47:31
  Speaker 2: and so I'm there representing anybody who is in an
• 47:34
  Speaker 2: investment club or was given a portfolio of stocks and
• 47:37
  Speaker 2: they're trying to figure out how to.
• 47:38
  Speaker 4: Make better decisions. And I think it's so rewarding to
• 47:41
  Speaker 4: pick stocks in a world where it's increasingly called out
• 47:45
  Speaker 4: as crazy talk to actually buy an individual stocks.
• 47:49
  Speaker 2: So we talked earlier about stocks like Apple and Nvidia
• 47:53
  Speaker 2: and Netflix and Amazon that have.
• 47:55
  Speaker 3: All gotten cut in half repeatedly.
• 47:58
  Speaker 2: How do you tell the difference between a stock that's
• 48:01
  Speaker 2: just going through sort of regular volatility versus ge got
• 48:07
  Speaker 2: sliced in half we look at I'm not even talking
• 48:10
  Speaker 2: about the Lehman Brothers or the world Comms of the world.
• 48:13
  Speaker 4: I mean just.
• 48:14
  Speaker 2: Stocks that their best days are behind them. How do
• 48:17
  Speaker 2: you know the difference between just a regular stumble and
• 48:22
  Speaker 2: beginning of the end?
• 48:23
  Speaker 4: Well, first of all, I'd say you can't know. I mean,
• 48:25
  Speaker 4: it would be too headstrong of me to say, here's
• 48:28
  Speaker 4: what you do, here's how you know. So for me,
• 48:31
  Speaker 4: I just like to keep my stocks in place and
• 48:34
  Speaker 4: recognize someone are going to trip. I love horse racing metaphors,
• 48:37
  Speaker 4: and not every horse is gonna win the race. No
• 48:39
  Speaker 4: one's gonna make the race. Some get out to a
• 48:41
  Speaker 4: great start and don't finish well, and I can't always know,
• 48:44
  Speaker 4: but by holding I allow the ones that clearly will
• 48:48
  Speaker 4: win to win so grandly. You know, when you make
• 48:51
  Speaker 4: more than a thousand times your money on Amazon or Nvidia,
• 48:54
  Speaker 4: it doesn't actually matter that you had some dogs in
• 48:57
  Speaker 4: your portfolio. So you can be wrong, and that's okay,
• 48:59
  Speaker 4: because being right is so much more valuable. I will
• 49:03
  Speaker 4: also add, though, to answer your question a little bit
• 49:05
  Speaker 4: more directly. Usually the companies that fall and don't come
• 49:10
  Speaker 4: back are being disrupted. Earlier I mentioned Clayton Christensen innovator's dilemma.
• 49:14
  Speaker 4: You can usually kind of see it that the world
• 49:16
  Speaker 4: is changing. The company might still be best in class,
• 49:20
  Speaker 4: and it may have a famous CEO that everybody loves,
• 49:23
  Speaker 4: but all of a sudden, there's this upstart, might be
• 49:25
  Speaker 4: a whole industry of new players. And when I see
• 49:28
  Speaker 4: that in a company going down, I may not want
• 49:30
  Speaker 4: to hold onto that stock. But if Netflix, which has
• 49:33
  Speaker 4: been a sendent now for twenty plus years every time,
• 49:37
  Speaker 4: if it's down two thirds of its value, which has
• 49:39
  Speaker 4: happened more than once, including Quickstar, I keep holding that one. Right.
• 49:43
  Speaker 4: So the question is, does this company remain a rule breaker?
• 49:47
  Speaker 4: Is it a top dog and still a first mover
• 49:50
  Speaker 4: in an emergent industry? And when it is, I'm going
• 49:53
  Speaker 4: to keep holding that stock.
• 49:55
  Speaker 5: Coming up, we.
• 49:55
  Speaker 2: Continue our conversation with David Gardner, co founder of The
• 49:59
  Speaker 2: Motley Fool, discussing his book Rule Breaker Investing, How to
• 50:03
  Speaker 2: Pick the best stocks of the Future and Build Lasting Wealth.
• 50:07
  Speaker 4: I'm Barry rid Holts.
• 50:08
  Speaker 2: You're listening to Masters in Business on Bloomberg Radio.
• 50:26
  Speaker 5: I'm Barry Ridhults.
• 50:27
  Speaker 2: You're listening to Masters in Business on Bloomberg Radio. My
• 50:30
  Speaker 2: extra special guest is David Gardner. He's the co founder
• 50:34
  Speaker 2: of The Motley Fool and the author of the book
• 50:37
  Speaker 2: Rule Breaker Investing, How to Pick the Best Stocks of
• 50:39
  Speaker 2: the Future and Build Lasting Wealth. When did you realize
• 50:45
  Speaker 2: that Blockbuster was being disrupted by Netflix and ps At
• 50:50
  Speaker 2: one point in the two thousands, Netflix tried to sell
• 50:54
  Speaker 2: themselves to Blockbuster for fifty million dollars and they turned
• 50:57
  Speaker 2: them down.
• 50:58
  Speaker 4: Yeah, it's like Yahoo could have bought Google. You love
• 51:00
  Speaker 4: those stories. But you know, I would say that I
• 51:03
  Speaker 4: never really thought too much about Blockbusters as a stock.
• 51:06
  Speaker 4: I remember we had the CEO on our Motley Ful
• 51:09
  Speaker 4: radio show and at that time Blockbuster maybe had twenty
• 51:11
  Speaker 4: five million customers and Netflix had one million, and he
• 51:14
  Speaker 4: was like, you know, we were watching what they're doing.
• 51:17
  Speaker 4: It's neat what they're doing. I don't think it's a
• 51:19
  Speaker 4: it's not a big scaling thing. You know, it's kind
• 51:21
  Speaker 4: of a niche thing. Do you want to mail your
• 51:23
  Speaker 4: DVD back and forth? And that I think it was
• 51:26
  Speaker 4: John Antiaco, but I mean good Man probably, but wrong.
• 51:29
  Speaker 4: He was wrong. And so it wasn't so much that
• 51:32
  Speaker 4: I ever cared to love Blockbuster. I just was watching
• 51:34
  Speaker 4: this rule breaker emerge and it was doing crazy stuff
• 51:38
  Speaker 4: like you can't just drop it off two blocks away
• 51:42
  Speaker 4: your Blockbuster. You have to mail it and keep a
• 51:44
  Speaker 4: queue and send it back and forth. But the Q
• 51:47
  Speaker 4: is half the value of it.
• 51:48
  Speaker 2: Here's all the movies I want to see, which, by
• 51:51
  Speaker 2: the way, every time I roll into Blockbuster, it's rented
• 51:54
  Speaker 2: and I'm not even talking about a Saturday night, like.
• 51:56
  Speaker 3: On a Wednesday. What do you mean you don't have this?
• 52:00
  Speaker 3: So instead.
• 52:03
  Speaker 2: Just working through the queue, Netflix was like, so the
• 52:07
  Speaker 2: initial question is, wait, you want me to nail DVDs
• 52:10
  Speaker 2: back and forth to Oh, I see how this works,
• 52:13
  Speaker 2: but this will never replace Blockbuster to no late fees?
• 52:17
  Speaker 2: Oh my god, why do I want to give anything
• 52:20
  Speaker 2: to Blockbuster? And it was super disruptive before online streaming.
• 52:25
  Speaker 4: And as a as a master of Business administration, actually
• 52:28
  Speaker 4: I don't have an MBA, but I know I'm on
• 52:30
  Speaker 4: your master business kind of beautiful. But as students of
• 52:33
  Speaker 4: the game, as people who love business, what actually was
• 52:36
  Speaker 4: happening was Netflix was changing the business model of the
• 52:39
  Speaker 4: consumer proposition in the whole industry, right because, as you
• 52:42
  Speaker 4: just pointed out, Blockbuster was a transactional, late fee driven
• 52:46
  Speaker 4: and all of a sudden, you're subscribing to Netflix. You're
• 52:49
  Speaker 4: now in a subscription relationship. Very disruptive. There was no
• 52:53
  Speaker 4: there was really no precedent for that in that industry.
• 52:57
  Speaker 4: So it looked like this crazy thing and it was
• 52:59
  Speaker 4: easy to mock. Why wouldn't you just drop it off
• 53:01
  Speaker 4: a block away mail it to these people, and yet
• 53:05
  Speaker 4: it fundamentally changed the business model forever. And then we're
• 53:08
  Speaker 4: not even talking about streaming, which we don't have to.
• 53:10
  Speaker 4: But they keep innovating.
• 53:12
  Speaker 2: And the you know, the interesting thing is you meant
• 53:15
  Speaker 2: we were mentioning late fees. You know, if you get
• 53:18
  Speaker 2: a late fee from your bank or a bounce check
• 53:21
  Speaker 2: fee or something, it's part of your statement.
• 53:23
  Speaker 3: It's not the same.
• 53:24
  Speaker 2: Thing as showing up and having someone say, give me
• 53:27
  Speaker 2: another seven bucks. What do you mean, give you another
• 53:30
  Speaker 2: seven bucks? It was just like so annoying and alienating.
• 53:36
  Speaker 2: Like I think it's a good rule of thumb, try
• 53:38
  Speaker 2: not to really piss off all of your clients, all
• 53:41
  Speaker 2: of your customers.
• 53:43
  Speaker 4: Not a good long term strategy. I have a small
• 53:45
  Speaker 4: confession to make that Wall Street summer I referenced when
• 53:47
  Speaker 4: I went to Solomon Brothers. We did We had a
• 53:50
  Speaker 4: video out from Blockbuster, and we kept it the whole summer.
• 53:53
  Speaker 4: We just kept not returning and we were irresponsible at
• 53:56
  Speaker 4: college sophomores. And at the end of the summer, I'm
• 53:58
  Speaker 4: not even sure, like we racked up a triple digit
• 54:01
  Speaker 4: late face and the video is twenty bucks to buy
• 54:04
  Speaker 4: exactly by another one. So we had a friend of
• 54:06
  Speaker 4: ours who was British go in with a British accent
• 54:09
  Speaker 4: and explain to Blockbuster that we were renting his place.
• 54:12
  Speaker 4: He doesn't really know about it, but here's this video
• 54:14
  Speaker 4: that he found, and so we kind of got out
• 54:16
  Speaker 4: of that one. It wasn't totally about board. So I'm
• 54:19
  Speaker 4: happy now to admit that this is helpful for me.
• 54:22
  Speaker 4: But yeah, that was kind of the state of things,
• 54:24
  Speaker 4: the anxiety, the angst around returning a video late and
• 54:28
  Speaker 4: not feeling great, you know, from a consumer branding standpoint, right.
• 54:32
  Speaker 2: So yeah, Netflix love them. So let's talk about rule
• 54:35
  Speaker 2: breakers today. They're gonna be in different spaces Biotech, defense tech, obviously,
• 54:42
  Speaker 2: AI and a lot of these areas don't have a
• 54:45
  Speaker 2: whole lot of earnings and they do have a massive
• 54:48
  Speaker 2: cash burn. So how do you think about valuation in
• 54:51
  Speaker 2: the space. Does it not matter if the growth is there?
• 54:54
  Speaker 2: Define the modern era of rule breakers.
• 54:58
  Speaker 4: So I would always be first of all looking at industries,
• 55:00
  Speaker 4: and you just did that some and you know, even
• 55:03
  Speaker 4: something like biotech, which you said, right, that's as you know, Barry,
• 55:08
  Speaker 4: that's multiple industries. I mean, so the internet was never
• 55:12
  Speaker 4: an industry AI is not in this industry. So we're
• 55:15
  Speaker 4: talking about again, huge technologies. I was saying earlier, plate
• 55:19
  Speaker 4: tectonic shifts for our society, and you're looking for the beneficiaries,
• 55:23
  Speaker 4: and you're looking for the visionaries who were starting something
• 55:25
  Speaker 4: that might sound a little crazy, like mailing DVDs back
• 55:28
  Speaker 4: and forth or an electric car, and you want to
• 55:32
  Speaker 4: get invested in those, assuming that you agree with the vision,
• 55:35
  Speaker 4: you think the person is great. You and I were
• 55:38
  Speaker 4: referencing Investment Research Circle nineteen eighties nineties, an annual report
• 55:43
  Speaker 4: being mailed to you through the mail that was about
• 55:45
  Speaker 4: all you had. There weren't online forms or anything. These days,
• 55:48
  Speaker 4: you can watch long form YouTube videos watching any CEO
• 55:51
  Speaker 4: be interviewed and learn a lot about their character, which
• 55:55
  Speaker 4: carries which matters deeply to me. I'm a big character person,
• 55:58
  Speaker 4: so I want to feel really good about the people
• 56:01
  Speaker 4: I'm invested in across my portfolio. So we're looking at
• 56:03
  Speaker 4: important emerging industries and we're not trying to force things
• 56:07
  Speaker 4: that don't exist yet. There's no ultra AI stock, I mean,
• 56:10
  Speaker 4: and Vidia has been an amazing hold for us now
• 56:12
  Speaker 4: twenty one years in counting. It was not an AI company.
• 56:15
  Speaker 4: When I first recommended it. But we're still holding But
• 56:18
  Speaker 4: you know, these things are going to emerge. I already
• 56:20
  Speaker 4: mentioned earlier things like Uber Airbnb didn't show up till
• 56:23
  Speaker 4: more than ten years after the Internet had really started
• 56:26
  Speaker 4: to penetrate American life. And so for me, it's just
• 56:31
  Speaker 4: keeping our eyes out, whether it's genomics or some duo lingo,
• 56:38
  Speaker 4: a video game on your phone where you're learning languages. Again,
• 56:42
  Speaker 4: all of these are from different industries, but they are
• 56:45
  Speaker 4: the innovator. And so yeah, we're staying focused in the
• 56:48
  Speaker 4: modern day go forward on what are the companies that
• 56:52
  Speaker 4: are going to add value to our world in a
• 56:55
  Speaker 4: way that is consumer noticeable. And when they're called overvalued,
• 56:59
  Speaker 4: that's even better for us as rule breaker investors.
• 57:01
  Speaker 2: So let me share some criticism that you share with
• 57:05
  Speaker 2: Warren Buffett of all people. When I'm doing my research
• 57:09
  Speaker 2: for this conversation, one of the things that came up
• 57:12
  Speaker 2: was you have this really good long term track record,
• 57:16
  Speaker 2: but if you've been involved in more recently in the
• 57:19
  Speaker 2: past ten to fifteen years, well, all those amazons, Netflix
• 57:24
  Speaker 2: apples from the early two thousands are driving most of
• 57:27
  Speaker 2: your gains.
• 57:28
  Speaker 3: From what I'm hearing.
• 57:29
  Speaker 2: From you, you're implying that doesn't really a hold true
• 57:34
  Speaker 2: if you look at the Teslas and the Ubers and
• 57:36
  Speaker 2: the more modern positions respond to that criticism, Hey, if.
• 57:40
  Speaker 3: You weren't in it No.
• 57:41
  Speaker 4: Three, you really didn't get any benefit. Well, first of all,
• 57:44
  Speaker 4: I would say that invest every day of your life,
• 57:47
  Speaker 4: every two weeks if you can. Young people, the first
• 57:49
  Speaker 4: thing you should do is open account if you haven't
• 57:51
  Speaker 4: already saved, and with every paycheck, try to put up
• 57:54
  Speaker 4: to ten percent away and put it in. If you want,
• 57:57
  Speaker 4: you can index, but I think you should be buying
• 57:59
  Speaker 4: stocks as well alongside that and learning as you go.
• 58:02
  Speaker 4: And anybody who's playing the long game in the markets,
• 58:06
  Speaker 4: as they start to hit their thirtieth or fortieth year,
• 58:08
  Speaker 4: which is where I am, it's always going to look
• 58:11
  Speaker 4: like all your big winners were the first ten years,
• 58:14
  Speaker 4: because of course they. I mean literally, Amazon is now
• 58:18
  Speaker 4: more than a thousand times of value. For me, I'm
• 58:19
  Speaker 4: not trying to be Amazon guy. You don't walk me.
• 58:22
  Speaker 4: You don't see me walking around going I'm the guy
• 58:24
  Speaker 4: who had Amazon sixteen cents. I also have that for Nvidia.
• 58:28
  Speaker 4: But just by the nature of compounding, Barry, which I
• 58:31
  Speaker 4: think you understand as well as anyone. It's always going
• 58:34
  Speaker 4: to look like all your big winners were early. But
• 58:36
  Speaker 4: you know, whether it's Tesla picked in you know, twenty
• 58:40
  Speaker 4: eleven or Shopify in twenty sixteen, these are all rule breakers.
• 58:45
  Speaker 4: They're not going to hit right away. Shopify has been
• 58:47
  Speaker 4: up and down, but mostly up. It's a great example
• 58:50
  Speaker 4: of a rule breaker circa the last ten years, not
• 58:52
  Speaker 4: the first twenty years. But I never want people to
• 58:55
  Speaker 4: forget we were right there at the beginning with AOL,
• 58:58
  Speaker 4: and we were picking AOL and Amazon and Starbucks. By
• 59:02
  Speaker 4: the way, the list goes on. So I would just say,
• 59:04
  Speaker 4: compounding numbers are always going to make it look like
• 59:07
  Speaker 4: all of your big winners are early in your career.
• 59:10
  Speaker 2: So before I get to my favorite questions, is just
• 59:13
  Speaker 2: one question I'm excited to ask you when you're looking ahead,
• 59:17
  Speaker 2: what trends, what businesses, what ideas generally get your curiosity going?
• 59:23
  Speaker 4: Well, this is this is in the same way that
• 59:27
  Speaker 4: seven up was the on Kola back in the day.
• 59:29
  Speaker 4: This is an unanswer because.
• 59:31
  Speaker 2: By the way, you're talking to a generation I know
• 59:33
  Speaker 2: that has no idea what that means.
• 59:35
  Speaker 4: But you, you and I do, though, and we got
• 59:37
  Speaker 4: some of our peeps listening, So yeah, I should have
• 59:43
  Speaker 4: just answered the question. So I look for companies that
• 59:48
  Speaker 4: are conscious capitalism kinds of companies. I want companies that,
• 59:53
  Speaker 4: first of all, are doing good in this world. By
• 59:55
  Speaker 4: my perception, a lot of people think it's a trade
• 59:57
  Speaker 4: off in life. They think capitalism is greedy and e
• 1:00:00
  Speaker 4: and you know you're abusing workers and it's all about
• 1:00:03
  Speaker 4: maximizing shareholder value. I completely disagree in many cases. Sure
• 1:00:07
  Speaker 4: that exists in the world, but that's not the story
• 1:00:10
  Speaker 4: of Amazon. Amazon is a big, beautiful, amazing enterprise that
• 1:00:14
  Speaker 4: helps save lives during COVID. And yes, they'll get criticized
• 1:00:17
  Speaker 4: for some of the things that they've done. And Jeff
• 1:00:19
  Speaker 4: Bezos is considered an egomaniac by some, but net net please,
• 1:00:24
  Speaker 4: Amazon is a huge value contributor. So that's an example
• 1:00:27
  Speaker 4: of a company. Read Hastings and what he created a Netflix.
• 1:00:30
  Speaker 4: I mean, there's a whole eighty page slide. A lot
• 1:00:32
  Speaker 4: of entrepreneurs have seen about how Netflix does culture that
• 1:00:35
  Speaker 4: they just kind of share out and you could see
• 1:00:37
  Speaker 4: why they're so successful because how they treat their employees
• 1:00:40
  Speaker 4: and the standards that they hold where doing good actually
• 1:00:44
  Speaker 4: leads to doing well. And again many people think that's
• 1:00:47
  Speaker 4: a trade offer. They don't actually think that's real. So
• 1:00:50
  Speaker 4: I specifically want you and I to make our portfolios
• 1:00:53
  Speaker 4: reflect our best vision for our future. And so every
• 1:00:56
  Speaker 4: company that I already like invade against an entire industry
• 1:00:59
  Speaker 4: the gaming in the street earlier, Sorry gamers, but by
• 1:01:02
  Speaker 4: the way, I'm a gamer, but I play video games
• 1:01:04
  Speaker 4: and board games. Not fifty to fifty in the house
• 1:01:06
  Speaker 4: takes ten percent game. But I would say that you're
• 1:01:10
  Speaker 4: looking for the people who are doing good or within
• 1:01:13
  Speaker 4: their industry. They're admired for how they treat their employees,
• 1:01:16
  Speaker 4: how they win for their customers, and how their partners
• 1:01:19
  Speaker 4: and suppliers are proud to be associated with them. And
• 1:01:22
  Speaker 4: guess what, Usually the stocks end up outperforming in a
• 1:01:25
  Speaker 4: world where many people think it's too risky to even
• 1:01:27
  Speaker 4: buy individual stocks. So the more there's big dumb money
• 1:01:31
  Speaker 4: slashing around out there, Barry, the easier it is for
• 1:01:34
  Speaker 4: stock pickers like me, like you, if you like, like
• 1:01:36
  Speaker 4: anybody listening to us, to actually pick and discern the
• 1:01:40
  Speaker 4: good companies hold them longer than Wall Street, longer than
• 1:01:43
  Speaker 4: the headlines than CNBC will be talking about and do
• 1:01:47
  Speaker 4: really well.
• 1:01:48
  Speaker 2: So let's jump to our speed round our favorite questions
• 1:01:51
  Speaker 2: in the last five minutes we have starting with who
• 1:01:54
  Speaker 2: your early mentors who helped shape your career.
• 1:01:57
  Speaker 4: So my father, who at the age of eight teens said,
• 1:02:00
  Speaker 4: here you go, David, I've been investing in this for
• 1:02:02
  Speaker 4: you from birth. This is all you're ever getting from me.
• 1:02:06
  Speaker 4: And I've taught you out of value line that big
• 1:02:08
  Speaker 4: black tome, the numbers of investing. And I know you
• 1:02:11
  Speaker 4: love sports statistics. Another of my mentors, Bill James, the
• 1:02:15
  Speaker 4: awesome baseball statistician. Actually he was a journalist, but James
• 1:02:20
  Speaker 4: who influenced Moneyball of course. Of course, so who I've
• 1:02:23
  Speaker 4: met before, But you know, these these are early people
• 1:02:26
  Speaker 4: who convinced me of the fun of life and that
• 1:02:29
  Speaker 4: it could be counted with numbers. I'm an English major,
• 1:02:32
  Speaker 4: but there's a there's a big left brain going on
• 1:02:34
  Speaker 4: with me with loving loving numbers and baseball stats and
• 1:02:37
  Speaker 4: college basketball stats. Ken Palm, by the way, Ken Palm
• 1:02:40
  Speaker 4: that is a twenty five dollars subscription any sports fan
• 1:02:44
  Speaker 4: would enjoy. So so Peter Lynch, I'm thinking about Clayton Christensen.
• 1:02:51
  Speaker 4: I mentioned. These are all people who really have helped
• 1:02:54
  Speaker 4: me think about what wins.
• 1:02:56
  Speaker 2: Look, you mentioned money ball. Let's talk about books. What
• 1:02:59
  Speaker 2: are so some of your favorites. What are you reading
• 1:03:01
  Speaker 2: right now?
• 1:03:02
  Speaker 4: Yeah, so, first of all, I'm reading right now The
• 1:03:06
  Speaker 4: Score by ten when and the score is an amazing
• 1:03:11
  Speaker 4: but I think the subtitle is something like how to
• 1:03:13
  Speaker 4: stop playing somebody Else's Game? And Nuen is a games philosopher,
• 1:03:19
  Speaker 4: so people are you know, philosophers about ideas or art.
• 1:03:23
  Speaker 4: He specifically looks at games, and his book talks about
• 1:03:27
  Speaker 4: how social media, for example, is sort of a game,
• 1:03:30
  Speaker 4: like as soon as you start imposing likes and follows,
• 1:03:34
  Speaker 4: you're playing somebody else's game. You're playing Twitter X's game
• 1:03:37
  Speaker 4: or Facebook's game. When you have to accept GPA as
• 1:03:41
  Speaker 4: a measure of how well you've done in college, and
• 1:03:43
  Speaker 4: it becomes big and bureaucratic, and everybody's using that. You
• 1:03:47
  Speaker 4: are unfortunately playing somebody else's games. Sometimes you have to
• 1:03:50
  Speaker 4: do it, but being self aware of what is motivating you.
• 1:03:55
  Speaker 4: It is an amazing book and I highly recommend this score.
• 1:03:58
  Speaker 4: I've had my podcast a couple of times. Love the guy.
• 1:04:02
  Speaker 4: I mean, we just couldn't geek out about board games.
• 1:04:04
  Speaker 4: But that's what I'm reading right now. But you know,
• 1:04:05
  Speaker 4: when I think about books, I mean it's a motley
• 1:04:08
  Speaker 4: array of books, Barry, Indeed, I mean The Inevitable by
• 1:04:12
  Speaker 4: Kevin Kelly's a great book about the future. I'm a
• 1:04:14
  Speaker 4: big Kevin Kelly fan. He founded Wired magazine. He's a genius.
• 1:04:18
  Speaker 4: I enjoy Arthur Brooks's columns in the Atlantic. He writes
• 1:04:21
  Speaker 4: about happiness. I really loved his book Love Your Enemies,
• 1:04:25
  Speaker 4: talking about the divisiveness in our country and how to
• 1:04:27
  Speaker 4: solve that. And I would love to see more of that.
• 1:04:30
  Speaker 4: Stephen Pinker and all of his data accumulation around technologies,
• 1:04:35
  Speaker 4: trends in our culture. It seems always to be smart
• 1:04:38
  Speaker 4: to be a pessimist. You always sound smarter when you
• 1:04:41
  Speaker 4: talk something down. And yet we're pinch yourself that you're
• 1:04:44
  Speaker 4: living today. I know we have a lot of problems.
• 1:04:47
  Speaker 4: We have many many better problems. There were many worse
• 1:04:50
  Speaker 4: problems in over human history. Stephen Pinker reminds us of that.
• 1:04:54
  Speaker 2: Right our world and data. Yeahns Rosling saying, there you go, Barry, exactly.
• 1:04:58
  Speaker 2: I was rudely using my phone to get the exact
• 1:05:01
  Speaker 2: name of a book that I'm gonna recommend. To you
• 1:05:03
  Speaker 2: because it's sitting on my desk and the author is
• 1:05:06
  Speaker 2: Danny Funt. Everybody loses and it's all about the tumultuous
• 1:05:13
  Speaker 2: rise of American sports gambling and why it's such glad
• 1:05:18
  Speaker 2: he wrote that. So it's literally waiting for me to
• 1:05:22
  Speaker 2: it's next up. This this giant I love, but it's writing,
• 1:05:29
  Speaker 2: your writing, your moo. I mentioned earlier some streaming time,
• 1:05:34
  Speaker 2: we've been talking about Netflix and Amazon, So tell us
• 1:05:38
  Speaker 2: what are your favorite Netflix or Amazon Prime videos or
• 1:05:42
  Speaker 2: what podcasts are you listening to?
• 1:05:43
  Speaker 4: Thank you? I you know, I really enjoyed Apple's Player
• 1:05:46
  Speaker 4: of Us. If you saw that, it's also in my queue.
• 1:05:49
  Speaker 4: Next up to totally recommend that that's just season one.
• 1:05:53
  Speaker 4: I mean, we had a lot of British comedy fans
• 1:05:56
  Speaker 4: in my family, so shows like Mitchell and Webb the
• 1:05:59
  Speaker 4: Comedy do. Their clips are all over YouTube, but it
• 1:06:03
  Speaker 4: crawt hilarious show streaming. Totally recommend that, not as funny,
• 1:06:08
  Speaker 4: but very British. All creatures great and small, just very
• 1:06:10
  Speaker 4: interesting light exactly, just such a slow horses, great great
• 1:06:16
  Speaker 4: show Apple and or sure I love sci fi. I
• 1:06:20
  Speaker 4: love all the Marvel stuff. By the way, Marvel's been
• 1:06:22
  Speaker 4: an amazing stock for me. It got bought out by Disney,
• 1:06:25
  Speaker 4: so these days we have a very low cost basis.
• 1:06:27
  Speaker 4: You couldn't have gotten because when Disney bought Marvel at
• 1:06:30
  Speaker 4: a huge premium, we Marvel shareholders, we happy for you
• 1:06:33
  Speaker 4: buying a rule breaker that looked over valued. We've ended
• 1:06:36
  Speaker 4: up doing really well. So but you know, and are
• 1:06:38
  Speaker 4: obviously star Wars and I love brands, and I love
• 1:06:41
  Speaker 4: family entertainment.
• 1:06:42
  Speaker 2: So those are some that come to mind. I just
• 1:06:44
  Speaker 2: flew back from San Francisco. On on the flight, I
• 1:06:46
  Speaker 2: rewatched Deadpool and Wolverine, and it's like I forgot how
• 1:06:50
  Speaker 2: much fun that movie? Yeah, really really blessed our final
• 1:06:54
  Speaker 2: two questions, What sort of advice would you give to
• 1:06:57
  Speaker 2: a recent college graduate interest did in a career and investing? Well,
• 1:07:02
  Speaker 2: I would first of all say that you should pick
• 1:07:04
  Speaker 2: individual stocks, and you should pay attention to the game,
• 1:07:07
  Speaker 2: and you.
• 1:07:07
  Speaker 4: Should love it. You should have a lot of fun.
• 1:07:09
  Speaker 4: I mean, I love sports. We've talked to I know
• 1:07:11
  Speaker 4: you do too. We've talked about that. A lot people
• 1:07:13
  Speaker 4: follow their sports teams day to day. I follow the
• 1:07:16
  Speaker 4: markets day to day. And the difference is you actually
• 1:07:19
  Speaker 4: can make serious money by learning and following the market
• 1:07:22
  Speaker 4: in a way you never will as a sports fan.
• 1:07:24
  Speaker 4: And I love sports, and you know sports can be
• 1:07:26
  Speaker 4: a little bit more fun day to day, but the
• 1:07:28
  Speaker 4: markets are open every day. Your NFL team only plays
• 1:07:31
  Speaker 4: on Sundays. And starting to figure out what wins in
• 1:07:34
  Speaker 4: the marketplace, and why is that app on your phone
• 1:07:36
  Speaker 4: not somebody else's app, what's in your fridge, what are
• 1:07:39
  Speaker 4: you wearing? Noticing the things that go on around you.
• 1:07:42
  Speaker 4: This is going to lead to riches, but it's also
• 1:07:43
  Speaker 4: going to open your mind to awareness of what's happening
• 1:07:47
  Speaker 4: in our society. And I do think that people who
• 1:07:49
  Speaker 4: are taught to index and not really care are kind
• 1:07:52
  Speaker 4: of walk and blind in society when they could be
• 1:07:55
  Speaker 4: poking their feelers up seeing what's happening in genomics or
• 1:07:59
  Speaker 4: robotic surgery or whatever. And I'm an English major and
• 1:08:01
  Speaker 4: I care about these things and profiting as a consequence.
• 1:08:04
  Speaker 4: I would also say that any young person start investing yesterday,
• 1:08:08
  Speaker 4: and our final question.
• 1:08:10
  Speaker 2: What do you know about the world of investing today?
• 1:08:12
  Speaker 2: Might have been useful back in nineteen ninety three when
• 1:08:15
  Speaker 2: you were first getting started.
• 1:08:16
  Speaker 4: I would just say that when I first got started
• 1:08:18
  Speaker 4: nineteen ninety three, investing was more of a math exercise
• 1:08:21
  Speaker 4: for me. I was taught by a dad. I mentioned
• 1:08:23
  Speaker 4: value line, lots of ratios that we know. I never
• 1:08:26
  Speaker 4: learned financial statements until I bought how to read a
• 1:08:29
  Speaker 4: financial statement the year after I graduated college, thinking, you know,
• 1:08:34
  Speaker 4: I kind of missed that. I never really did that,
• 1:08:36
  Speaker 4: and so I was very numerically driven. I think what
• 1:08:39
  Speaker 4: I've realized is that using your right brain in a
• 1:08:43
  Speaker 4: world where many people are just using their left brain,
• 1:08:46
  Speaker 4: is where the real values added. My favorite chapter in
• 1:08:49
  Speaker 4: my Rule Breaker investing book points out that most of
• 1:08:54
  Speaker 4: the things that win in business are not actually on
• 1:08:57
  Speaker 4: the financial statements. We've already talked about a few of them.
• 1:08:59
  Speaker 4: Who's running the company That is incredibly important. How about
• 1:09:02
  Speaker 4: the brand value of a company? Most of those are
• 1:09:05
  Speaker 4: never expressed anywhere in the financial statements. The culture of
• 1:09:08
  Speaker 4: the company can it innovate? Those four things are the
• 1:09:12
  Speaker 4: bedrocks as an entrepreneur. I know I see it in
• 1:09:14
  Speaker 4: my own company when we fail and when we succeed.
• 1:09:17
  Speaker 4: None of those is being captured in the financial statements.
• 1:09:19
  Speaker 4: And we're living in a left brain driven algorithmic world
• 1:09:23
  Speaker 4: and so I think here now I see and I
• 1:09:26
  Speaker 4: only think longer term than I ever did before when
• 1:09:28
  Speaker 4: I was thirty years ago. I think longer term today
• 1:09:30
  Speaker 4: at the age of fifty nine than twenty nine, and
• 1:09:32
  Speaker 4: I use my right brain.
• 1:09:34
  Speaker 2: David, thank you so much for being so generous with
• 1:09:37
  Speaker 2: your time. This has been absolutely fascinating.
• 1:09:40
  Speaker 4: We have been speaking with David Gardner.
• 1:09:42
  Speaker 2: He is one of the co founders of the Motleygue
• 1:09:46
  Speaker 2: four and author of the book Let's See If I
• 1:09:49
  Speaker 2: can spit this out, rule Breaker Investing, how to pick
• 1:09:53
  Speaker 2: the best stocks of the future and build lasting Well.
• 1:09:57
  Speaker 4: If you enjoyed this conversation, well.
• 1:10:00
  Speaker 2: Check out any of the six hundred and twenty seven
• 1:10:02
  Speaker 2: we've done over the past dozen years. You can find
• 1:10:06
  Speaker 2: those at YouTube, Spotify, Apple, Bloomberg, wherever you get.
• 1:10:11
  Speaker 3: Your favorite podcasts.
• 1:10:12
  Speaker 2: I would be remiss if I didn't thank the crack
• 1:10:15
  Speaker 2: team that helps these conversations come together each week. Alexis
• 1:10:19
  Speaker 2: Noriega is my video producer. Sean Russo is my researcher.
• 1:10:25
  Speaker 2: Anna Luke is my podcast producer.
• 1:10:28
  Speaker 3: I'm Barry Ridults.
• 1:10:30
  Speaker 2: You've been listening to Masters in Business on Bloomberg Radio