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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

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Speaker 2: This week on the podcast, I had so much fun

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Speaker 2: chatting with David Gardner of The Motley Fool.

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Speaker 3: I remember The Fool back in.

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Speaker 2: Ninety three, ninety four when it first launched on AOL.

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Speaker 2: What a fascinating career. If you're a stock picker, if

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Speaker 2: you're someone who really is committed to finding the best

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Speaker 2: companies and then writing them for decades, you're gonna find

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Speaker 2: this conversation really fascinating. I thought his book was really interesting.

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Speaker 2: His whole approach so life to investing is really great.

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Speaker 2: I enjoyed our conversation. I think you will also with

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Speaker 2: no further ado, my discussion with the Mottley Fools.

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Speaker 3: David Gardner, Thank.

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Speaker 4: You, Barry. It's a delight to be with you. Thank

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Speaker 4: you so much.

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Speaker 5: I have a.

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Speaker 2: Vivid recollection of sitting on a trading desk and watching

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Speaker 2: you guys pop on to TV at various times, and

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Speaker 2: as soon as you guys showed up, I'm like, all right,

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Speaker 2: let me pull up and VIDI and Netflix. I knew

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Speaker 2: they would start running and then soon turn around and fade,

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Speaker 2: so as always.

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Speaker 3: I mean just in traday.

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Speaker 2: We'll get a little later to the difference between investing

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Speaker 2: in trading, Yes, sir, but first I have to go

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Speaker 2: back to your background because it's so unusual. University of

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Speaker 2: North Carolina on a Morhead scholarship focused on bachelors in

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Speaker 2: English and creative writing. I assume Wall Street was not

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Speaker 2: the original career plan. It actually was a career plan.

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Speaker 4: As I came to UNC Chapel Hill as a freshman,

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Speaker 4: I was telling people, I think I'm going to go

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Speaker 4: to work on Wall Street. I had a formative summer

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Speaker 4: in between my sophomore and junior year where I worked

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Speaker 4: at Solomon Brothers back in the day, the Good Friend era.

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Speaker 4: I think Michael Lui was writing Liar's Poker somewhere around

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Speaker 4: late eighties.

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Speaker 3: I think you first dropped.

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Speaker 4: The year was nineteen eighty six. Oh that I was

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Speaker 4: probably overlapped with him. At the same time it was

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Speaker 4: I don't recall Michael, and I'm really glad to see

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Speaker 4: where he's guys gone on to Great Heights. But that

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Speaker 4: was the summer I learned I was never gonna want

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Speaker 4: to go work on Wall Street.

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Speaker 1: Uh huh.

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Speaker 4: That was a really wonderful experience. I just realized it's

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Speaker 4: not a culture that I'm gonna probably spend time with

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Speaker 4: as a as an adult, and so that was so helpful.

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Speaker 4: I love the markets. I just wasn't a Wall Street person.

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Speaker 2: And you grew up in a household where markets investing

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Speaker 2: stocks were part of the daily conversation. Your dad helped

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Speaker 2: you win a high high school stock picking contest.

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Speaker 4: Tell us a little bit about that. Sure, it was

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Speaker 4: actually earlier than that, was fifth grade. It was fourth grade.

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Speaker 4: Real my dad probably did with other dads did pick

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Speaker 4: stocks for their son in this all boys school, Saint

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Speaker 4: Albans School I went to in Washington, d C. And

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Speaker 4: I remember he had Harcourt Brace Javanovich, he had Getty Oil.

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Speaker 4: This is bad. These companies aren't around anymore too much.

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Speaker 4: But that was my stock portfolio. And over the course

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Speaker 4: of three months, I outperformed my classmates and so I

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Speaker 4: won a gigantic Hrshey bar. Like to my ten year

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Speaker 4: old eyes, it was the biggest Hrshey Bar I'd ever seen.

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Speaker 4: But it was a wonderful introduction, you know. Back The

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Speaker 4: real exercise then, Barry was just to look in the

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Speaker 4: newspaper to write down sixteen and five eighths where the

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Speaker 4: stocks closed. We would do that once a week over

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Speaker 4: the course of three months and just start understanding the markets.

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Speaker 4: So that was an early experience, but really Dad was

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Speaker 4: so formative for me as an investor.

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Speaker 3: It's always it's always.

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Speaker 2: Fun talking to the youngsters who grew up with decimalization. Yeah,

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Speaker 2: because I vividly recall what's the price up a teeny?

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Speaker 2: You don't get that anymore. It's a it's a whole,

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Speaker 2: it's a whole.

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Speaker 4: Lot of your listeners, do Barry and I've seen.

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Speaker 2: Right, yeah, right up a stick up a half whatever

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Speaker 2: it happened to be. And then how did you end

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Speaker 2: up writing for Lewis Rukaiser's Wall Street newsletter?

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Speaker 4: Yeah? So I started out of college, took a couple

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Speaker 4: of years to read and write and travel a lot,

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Speaker 4: got married without a job, and then it was time

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Speaker 4: at the age of twenty four to get my first job.

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Speaker 4: And as it turns out, the newsletter that was supporting

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Speaker 4: Lewis Rukiser. You remember his show Wall Street Week, sure

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Speaker 4: longest running show on PBS, and he had a newsletter

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Speaker 4: with a financial newsletter, and I got to write the

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Speaker 4: back page of that newsletter for that first job. We're

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Speaker 4: reaching one hundreds of thousands of people, and I could

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Speaker 4: pick whatever topic I wanted, so it was really fun,

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Speaker 4: except it ended up not being fun. And the reason

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Speaker 4: it wasn't fun is because I would pick a subject

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Speaker 4: like discount brokers, which was a brand new, amazing thing

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Speaker 4: back then in nineteen ninety two, schwab what's that? Or Quicken.

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Speaker 4: There's now software you can DVD load onto your computer

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Speaker 4: and track your finances and your stocked. So I would

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Speaker 4: write these up and then the edited version would come

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Speaker 4: back with all of my jokes, color and fun stripped,

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Speaker 4: and the second half freshly written by my editor explaining

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Speaker 4: all the reasons you wouldn't want to use a discount

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Speaker 4: broker or Quicken. And that's because I was instructed. I

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Speaker 4: was never never took a journalism course, but I was

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Speaker 4: just an English major. But they told me, you know,

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Speaker 4: we have to balance it out here. David. In fact,

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Speaker 4: Rukeiser is the personality. He's the color of this newsletter.

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Speaker 1: Not you.

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Speaker 4: We're not we're stripping out of the color. And also

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Speaker 4: you gotta be you gotta talk about the downside of

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Speaker 4: discount brokers and quick and I was like, I don't

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Speaker 4: want to do that. I don't see downside.

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Speaker 2: Well, the downside is you're taking money out of stockbroker's

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Speaker 2: children's mouths.

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Speaker 4: I mean, what's the what's.

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Speaker 3: The downside of paying less to trade?

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Speaker 4: Yeah? Well I discovered that the downside was a job

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Speaker 4: that just was kind of creatively deadening. It doesn't really

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Speaker 4: reflect on Rukeaiser. It was the goal of that newsletter

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Speaker 4: just to you know, supplement his TV show and all

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Speaker 4: the rest. So, but after six months I quit the

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Speaker 4: job because I was just like, this is not fun.

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Speaker 2: There's an argument to be had that Rukaiser was peak

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Speaker 2: financial television and it's been downhill ever since.

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Speaker 4: Like an hour a week is plenty.

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Speaker 5: They was he a half.

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Speaker 3: Hour an hour? I don't even remember, you know, a week.

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Speaker 4: I think it was an hour a week. It was

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Speaker 4: generally Fridays. It would air different Friday mornings, but Friday night.

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Speaker 2: You know, I remember him from Friday Nights.

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Speaker 4: And you remember his wit. He always had a monologue.

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Speaker 2: Very yeah, right, let's go over to our what was

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Speaker 2: it elves wizards?

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Speaker 3: I'm trying to remember elves, right.

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Speaker 2: I think it was elves and It was always fascinating.

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Speaker 2: And you know, it's funny. I've seen as many of

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Speaker 2: those on.

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Speaker 4: YouTube decades later.

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Speaker 2: Yeah, uh that I saw as many as I've seen

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Speaker 2: live on Friday Night.

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Speaker 3: Okay, like I got no plans.

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Speaker 4: All right, let's see what Louis has to say. That's

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Speaker 4: really fun that you would go back and revisit. You know,

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Speaker 4: I'll just say he was he was a wit. He

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Speaker 4: was himself outside of Wall Street. I mean, he's sort

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Speaker 4: of a journalist, but he he he enjoyed bringing together

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Speaker 4: brilliant minds on Wall Street. You know, he had Peter Lynch.

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Speaker 4: He would regularly focus Lynch and others and Saunders. You

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Speaker 4: go down the list of people that he had.

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Speaker 3: I'm trying to remember.

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Speaker 2: Was it poll tutor Jones before the eighty seven crab?

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Speaker 2: Might well have basically saying I'm out of stock, so

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Speaker 2: I'm short. I think something terrible is about to happen,

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Speaker 2: and then Black Monday happened. Was like you there was

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Speaker 2: no other place to see stuff like that, except we

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Speaker 2: take it for granted today that, oh you want to

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Speaker 2: see something, it's out there.

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Speaker 4: Yeah, Bloomberg, the NBC, right, I remember f n N.

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Speaker 2: Was like CN player pre CNBC definitely, and then cnn

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Speaker 2: FN was another one.

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Speaker 3: You were right, and then so now.

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Speaker 4: We're going down memory lane? Is this what is this

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Speaker 4: what your audience wants? Bearing? No lane, I'm enjoying that.

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Speaker 2: But so so let's let's talk about you go from

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Speaker 2: ruke Heiser. Where did the idea with you and your

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Speaker 2: brother working in a shed in the backyard. Where did

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Speaker 2: the idea come from? Hey, I want to put my

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Speaker 2: own ideas with personality into a newsletter, Like, how did

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Speaker 2: that become an actual product?

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Speaker 4: Well, I quit that job with nothing to go to

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Speaker 4: and then my brother's best friend from Brown University. They

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Speaker 4: both went to Brown. Eric said, hey, David, I went

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Speaker 4: to Brown. But shockingly, I really know nothing about investing

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Speaker 4: in the stock market. I'm from great education, great family.

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Speaker 4: I'm a television sports producer. What's going on in stocks?

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Speaker 4: So would you teach me? So I spent a couple

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Speaker 4: of nights just sitting down with Eric, going, you know,

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Speaker 4: here's what I look at, here's what I do. I

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Speaker 4: was raised in a family where you buy individual stocks.

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Speaker 4: We're not just gonna index here, We're gonna be choiceful.

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Speaker 4: And we had so much fun. Eric's like why don't

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Speaker 4: we open up. This is a newsletter. You have no

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Speaker 4: job now, you just work for a newsletter. I was like, okay,

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Speaker 4: let's do that. And then I flipped through a book

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Speaker 4: of quotations one night, and I settled on a fool,

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Speaker 4: A fool, I see a fool in the forest, a

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Speaker 4: Motley fool, and I just thought, you know, Shakespeare, Shakespeare.

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Speaker 4: Those were as you like it at two seene seven

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Speaker 4: for those keeping score at home. But for me, this was,

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Speaker 4: you know, a character I loved studying, certainly going through school,

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Speaker 4: and everyone loves Shakespeare's fools. They could tell the king

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Speaker 4: or queen the truth, and they did so with humor,

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Speaker 4: the only one who could get away with it. That's right.

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Speaker 4: They were given license to tell the truth. So I

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Speaker 4: sort of loved it. Also, great lines like a fool

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Speaker 4: and his money are soon parted, you know, gave us

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Speaker 4: a steep hill to climb as we tried to build

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Speaker 4: trust with people. Why would you call yourselves fools? And

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Speaker 4: it started there, and it started as a print newsletter.

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Speaker 4: You mentioned that bar It was July of nineteen ninety three,

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Speaker 4: was the first issue, forty eight dollars a year. The

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Speaker 4: only people who subscribed our parents' friends. They were the

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Speaker 4: only ones who pay us forty eight bucks a year.

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Speaker 4: Our friends stre sure weren't going to for our financial

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Speaker 4: advice back then. But as we started that newsletter nineteen

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Speaker 4: ninety three early ninety four, we were signing on using

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Speaker 4: our modem our telephone onto AOL, Prodigy and Compu served

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Speaker 4: the big three in the early private online services battle,

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Speaker 4: and we were starting to discover this new medium and

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Speaker 4: getting fascinated by it.

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Speaker 2: And I recalled AOL as a stock was two or

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Speaker 2: three dollars in the early nineties, something really moderate before

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Speaker 2: it had a hillatious run.

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Speaker 4: Straight up for that whole whole decade.

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Speaker 3: What was it like? First of all, you guys got

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Speaker 3: fool dot com today.

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Speaker 4: Nobody else wanted it.

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Speaker 2: Every every proper down, every dictionary word is taken, although

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Speaker 2: who knows what what AI and the slow shift from

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Speaker 2: Google from SEO to AI is going to do to there,

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Speaker 2: you got all these domains, but like domains changed hands

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Speaker 2: for millions of dollars.

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Speaker 4: It's kind of crazy.

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Speaker 3: You went to get full dot com.

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Speaker 4: Nobody nobody's position, Yeah, nobody wants nobody wants full dot com.

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Speaker 2: Oh my god, would so the missed opportunity was a

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Speaker 2: domain squad every proper. Now, so you launched the website,

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Speaker 2: how long was it before it was got some traction?

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Speaker 4: So we really launched first of all, Barry, it was

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Speaker 4: August fourth of nineteen ninety four. It was just on

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Speaker 4: AOL because this is pre Worldwide Web. People were not

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Speaker 4: using that. Seven was Netscape, right, Yeah, I mean I

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Speaker 4: would actually say ninety six ish was when we started

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Speaker 4: coming online on the web. But no, it was just

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Speaker 4: were in fool on AOL. But AOL was going through

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Speaker 4: a period of dynamic growth, so it was fantastic for us.

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Speaker 4: We launched in August. By November we were written up

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Speaker 4: in the New Yorker in the Talk of the Town section,

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Speaker 4: and then we had agents and publishers saying, there's a

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Speaker 4: book here, guys, and we're on television. We're we have

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Speaker 4: a radio show coast to coast. We just we were

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Speaker 4: like the early pioneers who believed in this new medium,

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Speaker 4: and we were going offline as fast as we could.

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Speaker 4: Everybody else was trying to come on online exactly, so.

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Speaker 2: You were you were already and it's almost embarrassing to

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Speaker 2: use the preeze cyberspace so you were online, but.

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Speaker 4: You use on the information super Highway, but all.

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Speaker 2: The traditional media to point towards the website. How long

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Speaker 2: did it take before you kind of said to yourself, Hey,

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Speaker 2: this is real business.

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Speaker 3: I don't have to go get a job. I could

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Speaker 3: just build this.

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Speaker 4: We started at such a good time because AOL, as

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Speaker 4: you'll recall, was a pay hour service right in the

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Speaker 4: beginning anyway, correct, like three dollars twenty five cents. I

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Speaker 4: think there is it to four at one point, and

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Speaker 4: so the business model was remarkable for us. If somebody

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Speaker 4: spent an hour at keyword Fool, we would get ten

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Speaker 4: percent of that. So if they're paying a well four

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Speaker 4: bucks an hour, forty cents for any hour that anybody

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Speaker 4: would spend at our site. And so with a tiny

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Speaker 4: staff and a big dog that was mailing out CDs

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Speaker 4: and DVDs to get onto AOL that serves as cocktail

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Speaker 4: coasters at parties, we really benefited from that ramp, and

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Speaker 4: so we began to be able to hire other people

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Speaker 4: when the so when yeah, that was it.

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Speaker 2: When the CDs started getting mailing, I think they had

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Speaker 2: moved to like, oh, you can eat ten dollars a

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Speaker 2: month or something like that, we're like thirty bucks a

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Speaker 2: month twenty Yeah, I don't remember exactly what it was.

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Speaker 2: I just remembered that that was the end of surprise bills.

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Speaker 2: Oh it's infinite, Okay, great, I'm on twenty four to seven.

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Speaker 4: And that hurt our business a lot. And so it

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Speaker 4: also was a major inflection point, Yeah, because we had

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Speaker 4: built a site that was really fun to visit. We

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Speaker 4: had very active forums, we were publishing multiple times a day,

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Speaker 4: Lots of people were showing it. There were even chat

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Speaker 4: rooms back then, right, people were spending time online and

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Speaker 4: forty cents for every hour. So we were starting to

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Speaker 4: hire people. And then within a few years, AOL went

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Speaker 4: flat rate, and all of a sudden, we had been

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Speaker 4: the stars of AOL. They were putting us forth at

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Speaker 4: their partners conference. We were on the cover of Fortune

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Speaker 4: magazine just three years after we started a print newsletter.

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Speaker 4: We were right out front. And then we became kind

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Speaker 4: of poisoned for AOL in this sense, every hour that

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Speaker 4: anybody spent AOL had to pay connect fee.

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Speaker 3: Now it's a cost instead.

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Speaker 4: Yeah, they're only charging thirty bucks flat a month, And

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Speaker 4: so all of a sudden, magnet sites like ours were

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Speaker 4: not as popular. And then meanwhile AOL understandably no harm,

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Speaker 4: no foul here, but they were starting to launch AOL

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Speaker 4: Finance and AOL Stocks and competing directly with kind of

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Speaker 4: where we'd camped out and built our.

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Speaker 3: Hold might be.

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Speaker 2: Or we're going to launch our own website, whether people

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Speaker 2: access it through you or not.

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Speaker 3: Yeah, that's fine.

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Speaker 4: So and we know how the AOL story ended.

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Speaker 2: At that point, you're thinking, uh, oh, this is a

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Speaker 2: big issue. How long did it take before the website

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Speaker 2: hit the same sort of Oh, this is a self

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Speaker 2: sustaining business.

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Speaker 4: Yeah, So we launched the website alongside our AOL site

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Speaker 4: with our first book, The Motley Full Investment Guide, in

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Speaker 4: the summer of nineteen ninety six, and the website. AOL

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Speaker 4: took part ownership in US, so we gave a minority

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Speaker 4: interest in our company to AOL. And they're like, guys,

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Speaker 4: go out on the web, compete with your own site,

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Speaker 4: compete with us. Ted leonsis, who is a real visionary huh?

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Speaker 4: And TeV was like, guys, no one's making money on

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Speaker 4: the web. Show anybody how to make money here on

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Speaker 4: the web. And so we built our website and we

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Speaker 4: started pointing people to our both our website and our aols.

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Speaker 4: And as it grew and as AOO went flat rate.

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Speaker 4: The good news for us is a lot more people

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Speaker 4: came online at that point, thirty bucks a month versus

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Speaker 4: four dollars an hour a lot that's mainstream. And also

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Speaker 4: good news for us is that we could survive as

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Speaker 4: a free site, so we could now be free for

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Speaker 4: a lot of people. The bad news was we've shifted

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Speaker 4: business models straight up advertising right at that point, it's

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Speaker 4: all about eyeballs and clicks and your customer. Our customer

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Speaker 4: just changed because our customer had been the beloved fellow

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Speaker 4: individual investor who is taking a risk to even go

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Speaker 4: online back in the day. And there they were paying

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Speaker 4: four bucks an hour, and they loved us, and they

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Speaker 4: were our members, and they were paying us directly. All

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Speaker 4: of a sudden, they became the product that we sold

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Speaker 4: to advertisers, right, because that's obviously the free ad business

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Speaker 4: is your custom raise, your eyeballs are now your new product.

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Speaker 2: And as a reminder for the youngsters listening ninety six

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Speaker 2: ninety seven, wait you want me to give my credit

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Speaker 2: card to a random This is such like early days

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Speaker 2: of Amazon, early days of all. All right, there were

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Speaker 2: a handful of companies you might trust, but there's a

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Speaker 2: million websites.

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Speaker 3: I don't trust any of these guys.

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Speaker 1: I heard that.

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Speaker 3: Over and over again.

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Speaker 2: How long was it before you people felt, oh, we

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Speaker 2: could subscribe to this newsletter, we could give these people

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Speaker 2: money to manage what was the forward timeline?

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Speaker 4: So thank you for that memory, because this is very important.

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Speaker 4: Anytime a new technology shows up, it's generally we're fearful

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Speaker 4: about it. What is AI going to do to jobs?

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Speaker 2: Well, back back then, I had a tech buddy who

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Speaker 2: always used to tell me, if you want to know

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Speaker 2: where technology goes, watch the X rated stuff, because they'll

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Speaker 2: be the first with micro payments, they'll be the first

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Speaker 2: with faster than real time and streaming and things like that.

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Speaker 2: And it turns out that that's a big driver of

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Speaker 2: online business even to this day.

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Speaker 4: Yeah, and I think that's that's true. So you're right.

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Speaker 4: Premium experiences in premium services are where the web has

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Speaker 4: ended up. However, there was a whole shift ninety eight

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Speaker 4: nine to two thousand. You really couldn't charge for anything

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Speaker 4: on the web. If we had tried to say you

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Speaker 4: now shall pay for our site or there we have

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Speaker 4: a subscription service, we would have been laughed at. At

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Speaker 4: the same time, though, as a stock picker, I was

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Speaker 4: picking AOL stock saying I think this is an amazing company,

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Speaker 4: and it sure enough was. It ended up being one

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Speaker 4: hundred and fifty bagger at its top. Didn't end there,

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Speaker 4: but it was still a remarkable investment, and lots of

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Speaker 4: people had followed us into AOL and other stocks like

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Speaker 4: the Amazon, and it was really going against conventional wisdom

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Speaker 4: at the time to say by Amazon, by AOL. And

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Speaker 4: so I want people to remember that because now it

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Speaker 4: looks so obvious. I mean, al did n well. Amazon

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Speaker 4: has ended really really well. It hasn't ended right. So

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Speaker 4: it's important to remember those moments because we tend to

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Speaker 4: forget that. We also forget the dawn of AI. This

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Speaker 4: is first dating in this ballgame, and people will look

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Speaker 4: back and go it's also obvious in.

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Speaker 3: Retrospec It's always obvious in retrospect.

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Speaker 4: It is.

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Speaker 2: Indeed, it's at the time, it's really challenging. So last

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Speaker 2: question in this segment, if you were starting the Motley

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Speaker 2: Fool in twenty twenty six instead of nineteen ninety three,

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Speaker 2: So we have social media we have free trading, we

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Speaker 2: have ETFs everywhere the world is so different today than

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Speaker 2: it was forty years ago.

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Speaker 3: What would you do thirty years ago? Anyway? What would

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Speaker 3: you do differently?

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Speaker 2: How would you build a site and a business today

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Speaker 2: this time around?

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Speaker 4: Well, I think, first of all, one thing that we

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Speaker 4: know today that we didn't do back then that I

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Speaker 4: think is very helpful in every era is to be

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Speaker 4: a purpose driven business and to state what is your mission,

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Speaker 4: what is your purpose, and really hue to that, and

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Speaker 4: breathe through that, and hire for that and promote because

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Speaker 4: of that. And conscious capitalism is one of my themes

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Speaker 4: as an investor in a board that I've served on.

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Speaker 4: So I now have those eyes that I didn't have

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Speaker 4: back then, and I think that that is such a

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Speaker 4: strong thing. Most of the best companies I know look

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Speaker 4: at crazy business of fast food chicken. Chick fil A

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Speaker 4: is an amazing company. I wish it were a public

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Speaker 4: market company. It would have been one of my stock picks.

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Speaker 4: But they just fundamentally act differently than McDonald's and their competitors.

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Speaker 4: And it's because it's like a leadership academy. Masquerading is

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Speaker 4: a chicken joint and still closed on Sunday, Yeah, exactly,

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Speaker 4: which is their choice radical And so those are the

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Speaker 4: kinds of companies that I admire, and like, that's what

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Speaker 4: I've always wanted the Motley Fool to be. So I

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Speaker 4: would do that in earnest today in a way that

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Speaker 4: I think would cut through a lot of the noise

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Speaker 4: and people saying there's too many choices and all the

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Speaker 4: rest standing for something and then living that every day.

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Speaker 4: Most of the best companies that I can think of

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Speaker 4: do that, So I would be trying to do that

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Speaker 4: very But yeah, it is a different world. I mean,

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Speaker 4: one thing that's changed, I think for the worst. And

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Speaker 4: I'm an optimist. Almost everybody's mailing it in with index

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Speaker 4: funds these days. Like I was raised in an era

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Speaker 4: where it was kind of normal, at least in my family,

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Speaker 4: buy a stock. These days, the conventional wisdom has become

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Speaker 4: you'd be crazy to by individual stocks, that's so risky,

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Speaker 4: just index And while I admire Jack Bogel deeply and

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Speaker 4: I appreciate indexing, and the Motley Fool has always been

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Speaker 4: a big support of index funds, have we really got

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Speaker 4: an era where you shouldn't even pay attention or care anymore?

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Speaker 4: And you can't probably beat the market because it would

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Speaker 4: just be locked to pick Chick fil A over Kentucky

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Speaker 4: Fried Chicken. I don't think so. I didn't think so

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Speaker 4: back then, and so I would be definitely sounding that

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Speaker 4: loud and clear. Today there's even more big dumb money

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Speaker 4: slashing around than ever before, because so much is just

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Speaker 4: throwing it at everything and not discerning this one versus

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Speaker 4: that one. Huh, really really interesting.

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Speaker 2: Coming up, we continue our conversation with David Gardner, co

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Speaker 2: founder of The Motley Fool, discussing his book Rule Breaker Investing,

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Speaker 2: How to pick the best stocks of the future and

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Speaker 2: Build Lasting Wealth.

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Speaker 4: I'm Barry Ritholts. You're listening to Master's Business.

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Speaker 5: On Bloomberg Radio. I'm Barry Ridhault.

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Speaker 2: You're listening to Masters in Business on Bloomberg Radio. My

438
00:21:07,840 --> 00:21:11,400
Speaker 2: extra special guest is Dave Gardner. He's the co founder

439
00:21:11,480 --> 00:21:14,240
Speaker 2: of The Motley Fool and the author of the book

440
00:21:14,480 --> 00:21:16,920
Speaker 2: Rule Breaker Investing, How to Pick the best stocks of

441
00:21:16,960 --> 00:21:22,760
Speaker 2: the future and Build Lasting Wealth. So I want to

442
00:21:22,880 --> 00:21:28,160
Speaker 2: talk a little bit about the philosophy around rule breaking

443
00:21:28,320 --> 00:21:32,359
Speaker 2: investing and stock selection. One of the things that jumped

444
00:21:32,359 --> 00:21:36,080
Speaker 2: out of the book from your framework was top dog

445
00:21:36,119 --> 00:21:40,840
Speaker 2: and first mover, customer love, visionary leadership discuss.

446
00:21:41,160 --> 00:21:44,159
Speaker 4: Yeah, well, thank you. These are some of the traits

447
00:21:44,200 --> 00:21:46,919
Speaker 4: that I'm looking for in stocks, and I think before

448
00:21:46,960 --> 00:21:49,800
Speaker 4: we start this, Barry, I should just again underline I

449
00:21:49,920 --> 00:21:53,639
Speaker 4: believe it is a worthy thing to choose stocks. I

450
00:21:53,720 --> 00:21:56,920
Speaker 4: really want to find the best companies of our time,

451
00:21:57,240 --> 00:21:59,080
Speaker 4: and I want to own them for a long period

452
00:21:59,119 --> 00:22:02,159
Speaker 4: of time. And actually it's for many people. It's actually

453
00:22:02,200 --> 00:22:05,760
Speaker 4: easier to find Amazon or eBay back in that era,

454
00:22:05,960 --> 00:22:10,000
Speaker 4: or Nvidia more recently. But to actually hold them, to

455
00:22:10,160 --> 00:22:12,600
Speaker 4: hold them to allow them to multiply in the way

456
00:22:12,640 --> 00:22:15,960
Speaker 4: that they will if you do. In my experience, that's hardest.

457
00:22:16,440 --> 00:22:18,000
Speaker 3: Let's talk about that, because.

458
00:22:19,240 --> 00:22:22,920
Speaker 2: Amazon, after the dot com crash plummeted to single digits.

459
00:22:23,119 --> 00:22:23,359
Speaker 4: Yep.

460
00:22:23,400 --> 00:22:24,480
Speaker 3: Apple has had.

461
00:22:24,359 --> 00:22:27,840
Speaker 2: More near death experiences than I can count in Vidio,

462
00:22:27,920 --> 00:22:30,320
Speaker 2: go down the list, Google, Facebook, testable.

463
00:22:30,680 --> 00:22:33,119
Speaker 3: Facebook's IPO was a disaster.

464
00:22:33,520 --> 00:22:35,639
Speaker 2: It got cut in half like within a few months

465
00:22:35,640 --> 00:22:38,199
Speaker 2: of that, and then they kind of unlocked mobile and

466
00:22:38,280 --> 00:22:42,359
Speaker 2: it was off to the races. Yeah, Tesla, these companies

467
00:22:42,480 --> 00:22:47,879
Speaker 2: trade more like cryptocurrencies than companies. How do you find

468
00:22:48,040 --> 00:22:51,800
Speaker 2: the confidence and the commitment to stay with something down

469
00:22:51,880 --> 00:22:55,240
Speaker 2: forty sixty eighty percent, So thank you.

470
00:22:55,720 --> 00:22:57,640
Speaker 4: And I would say, first of all, it's not worth

471
00:22:57,640 --> 00:23:02,160
Speaker 4: doing that for every investment. If it were some dodgy crypto,

472
00:23:02,280 --> 00:23:05,640
Speaker 4: I wouldn't be holding. But you used an important phrase

473
00:23:06,000 --> 00:23:07,920
Speaker 4: a minute or two ago. You said top dog and

474
00:23:08,000 --> 00:23:11,600
Speaker 4: first mover. So when I look at important emerging industries

475
00:23:12,840 --> 00:23:16,160
Speaker 4: and I see a company with a large customer base,

476
00:23:16,400 --> 00:23:18,800
Speaker 4: they may not be profitable yet, but they're doing good

477
00:23:18,800 --> 00:23:20,720
Speaker 4: things in this world, a world I want to live in,

478
00:23:21,520 --> 00:23:25,200
Speaker 4: and there's stocks down, there's stock's been cutting aff what's

479
00:23:25,240 --> 00:23:29,080
Speaker 4: the reason? Sometimes it's the CEO, like Howard Schultz back

480
00:23:29,080 --> 00:23:32,720
Speaker 4: in the name of Starbucks, was just occasionally conservative and

481
00:23:32,760 --> 00:23:36,240
Speaker 4: the analysts were surprised as he under promised. And then

482
00:23:36,320 --> 00:23:39,520
Speaker 4: the stock drops fifteen percent, you know, and we told

483
00:23:39,520 --> 00:23:41,720
Speaker 4: a story about this going on the View.

484
00:23:42,040 --> 00:23:44,840
Speaker 2: Yeah, the stock ends up down thirty percent, and that

485
00:23:44,960 --> 00:23:46,159
Speaker 2: was your last appearance.

486
00:23:46,480 --> 00:23:48,480
Speaker 3: And then what happened to the Starbucks.

487
00:23:48,080 --> 00:23:49,880
Speaker 4: It went up thirty times a value and we've never

488
00:23:49,960 --> 00:23:51,960
Speaker 4: been back on the View. But and by the way,

489
00:23:52,280 --> 00:23:54,080
Speaker 4: I'll return it at any time. We'd love to close

490
00:23:54,119 --> 00:23:56,080
Speaker 4: the loop on that story. But yeah, that was nineteen

491
00:23:56,160 --> 00:23:59,439
Speaker 4: ninety eight early TV appearance, we picked a stock for

492
00:23:59,760 --> 00:24:02,360
Speaker 4: the the ladies of the view and uh and then

493
00:24:02,440 --> 00:24:04,600
Speaker 4: it was Starbucks. That's the punchline. By the way, I

494
00:24:04,640 --> 00:24:07,920
Speaker 4: shouldn't have given that, but yeah, the stock dropped thirty

495
00:24:07,960 --> 00:24:10,480
Speaker 4: percent in just a couple of months, and we went

496
00:24:10,520 --> 00:24:12,880
Speaker 4: back on the show to update the story and they

497
00:24:12,920 --> 00:24:15,920
Speaker 4: booed us good naturedly, and they're like, oh well, and

498
00:24:16,000 --> 00:24:19,080
Speaker 4: we're like, keep holding though, keep holding. And then they've

499
00:24:19,119 --> 00:24:22,000
Speaker 4: never invited us back since, and it's gone up thirty

500
00:24:22,200 --> 00:24:24,560
Speaker 4: thirty three times a value from our first appearance, not

501
00:24:24,600 --> 00:24:27,360
Speaker 4: even including the thirty three percent drops. So, I mean,

502
00:24:27,720 --> 00:24:29,919
Speaker 4: that was an iconic moment. I didn't realize it at

503
00:24:29,960 --> 00:24:32,040
Speaker 4: the time, but as I wrote Rule Breaker Investing, I

504
00:24:32,160 --> 00:24:36,080
Speaker 4: was just thinking, that's my story, because that's what most

505
00:24:36,080 --> 00:24:39,600
Speaker 4: people miss. Most people are following the headlines instead of

506
00:24:39,640 --> 00:24:43,399
Speaker 4: following real progress, and they're chasing stuff. And if you

507
00:24:43,520 --> 00:24:45,960
Speaker 4: just look and ask who are the movers and shakers

508
00:24:45,960 --> 00:24:50,920
Speaker 4: delivering products and services electric cars, robotic surgery, coffee houses,

509
00:24:51,880 --> 00:24:54,960
Speaker 4: better fahitas, the list goes on.

510
00:24:55,000 --> 00:24:58,359
Speaker 3: Who are the thinking striker Chipotle, Tesla?

511
00:24:58,800 --> 00:25:02,280
Speaker 4: Yeah? Well actually intuitive so okay, yeah, yeah, but yes,

512
00:25:02,359 --> 00:25:03,440
Speaker 4: you're thinking exactly the.

513
00:25:03,359 --> 00:25:06,440
Speaker 3: Company using the robot that did my surgery.

514
00:25:06,480 --> 00:25:08,000
Speaker 4: Ah, very happy to hear that.

515
00:25:08,040 --> 00:25:13,280
Speaker 2: And when I'm recall walking into the surgical theater and

516
00:25:13,320 --> 00:25:15,919
Speaker 2: looking around and saying, oh, this is where the future is,

517
00:25:16,480 --> 00:25:19,960
Speaker 2: I've just gone twenty years forward because this whole thing

518
00:25:20,080 --> 00:25:22,440
Speaker 2: is here's the big robot with all the like, Oh,

519
00:25:22,520 --> 00:25:25,080
Speaker 2: now I understand like the rest of the world we're

520
00:25:25,119 --> 00:25:28,760
Speaker 2: living in the past. This technology is as cutting edge

521
00:25:28,760 --> 00:25:30,360
Speaker 2: as it gets. It's it's really amazing.

522
00:25:30,560 --> 00:25:32,199
Speaker 4: I love that and I'm so glad to hear that

523
00:25:32,320 --> 00:25:34,680
Speaker 4: for you in successful surgery, which is what we all want,

524
00:25:35,000 --> 00:25:37,159
Speaker 4: robot or human. But yeah, it turns out there are

525
00:25:37,200 --> 00:25:41,240
Speaker 4: lots of advantages to robot assisted surgery, and Intuitive Surgical

526
00:25:41,280 --> 00:25:44,240
Speaker 4: has really been the pure place small companies. Striker is

527
00:25:44,240 --> 00:25:47,480
Speaker 4: a more bigger, diversified company. Yeah anyway, but.

528
00:25:47,640 --> 00:25:49,720
Speaker 2: For each of these like I just have been remember

529
00:25:49,760 --> 00:25:51,920
Speaker 2: with the little logo on the side, the last thing

530
00:25:52,000 --> 00:25:54,199
Speaker 2: I saw, that's a good thing to do. They're like,

531
00:25:54,240 --> 00:25:56,040
Speaker 2: this will help you relax. And then the next thing

532
00:25:56,080 --> 00:25:58,000
Speaker 2: I know, I'm in recovery. But the last thing I

533
00:25:58,040 --> 00:25:59,879
Speaker 2: saw was the Striker logo.

534
00:26:00,080 --> 00:26:03,399
Speaker 4: Great story, and you know, so it's funny you mentioned

535
00:26:03,400 --> 00:26:05,440
Speaker 4: the future and feeling like you're living in the future.

536
00:26:05,720 --> 00:26:08,120
Speaker 4: That's generally where I try to be as I pick

537
00:26:08,200 --> 00:26:11,280
Speaker 4: my stocks and just for the fun of it. One

538
00:26:11,320 --> 00:26:12,960
Speaker 4: of my best stock picks in the last fifteen years

539
00:26:13,040 --> 00:26:15,480
Speaker 4: been Tesla, which I picked in twenty eleven, still holding

540
00:26:15,920 --> 00:26:18,440
Speaker 4: and I bought. I've owned a number of Tesla since.

541
00:26:18,640 --> 00:26:21,159
Speaker 4: And I was driving around in Tesla in twenty thirteen.

542
00:26:21,200 --> 00:26:25,280
Speaker 4: My license plate in Washington, d C. Is future like

543
00:26:25,359 --> 00:26:27,600
Speaker 4: no one else thought of it. So I'm watching out

544
00:26:27,600 --> 00:26:29,680
Speaker 4: for the future in Washington, d C. And I'm driving

545
00:26:29,720 --> 00:26:32,320
Speaker 4: around going I really am inside the future, and I'm

546
00:26:32,320 --> 00:26:35,320
Speaker 4: surrounded by not just other cars that aren't yet, but

547
00:26:35,440 --> 00:26:39,119
Speaker 4: a whole industry, gas stations, etc. Of things is not

548
00:26:39,160 --> 00:26:43,120
Speaker 4: as much maintenance needed. So that's a great iconic example

549
00:26:43,240 --> 00:26:46,560
Speaker 4: of for me. Whether it's Starbucks back in the day,

550
00:26:46,840 --> 00:26:48,960
Speaker 4: which was questionable for a lot of people because it

551
00:26:48,960 --> 00:26:51,560
Speaker 4: looked like a fad. That was the big wrap on Starbucks'

552
00:26:51,560 --> 00:26:55,000
Speaker 4: early nineties. Where have coffee houses ever come from? In America?

553
00:26:55,040 --> 00:26:57,159
Speaker 4: There's no background for this. This is such a fat

554
00:26:57,280 --> 00:27:00,480
Speaker 4: paying five bucks for coffee? Are you serious? Right? So

555
00:27:01,040 --> 00:27:04,480
Speaker 4: AOL was all just chat rooms, so all gonna be hype.

556
00:27:04,480 --> 00:27:06,480
Speaker 4: No one will ever give their credit card over the internet.

557
00:27:06,680 --> 00:27:10,760
Speaker 4: Tesla electric cars will never work intuitive, surgical. Why would

558
00:27:10,760 --> 00:27:12,560
Speaker 4: you have a robot when humans can do it just

559
00:27:12,640 --> 00:27:14,919
Speaker 4: as well? Dot dot dot. The list goes on all

560
00:27:14,960 --> 00:27:15,520
Speaker 4: the way around.

561
00:27:15,520 --> 00:27:17,399
Speaker 2: Why would you have a human when a robot can

562
00:27:17,440 --> 00:27:20,480
Speaker 2: do it that is indeed more not only just as well,

563
00:27:20,520 --> 00:27:23,560
Speaker 2: but more consistently. Yeah, and it doesn't matter if they

564
00:27:23,600 --> 00:27:26,560
Speaker 2: had a bad night. It's it's fine the next day.

565
00:27:26,440 --> 00:27:28,680
Speaker 4: And minimally evasive and speak of the next day. You're

566
00:27:28,720 --> 00:27:31,120
Speaker 4: walking home the next day, two days.

567
00:27:30,880 --> 00:27:32,920
Speaker 2: Oh, no, same day you walk out of the hospital.

568
00:27:32,960 --> 00:27:35,600
Speaker 2: It's kind of terrifying, although you're still on a lot

569
00:27:35,640 --> 00:27:36,240
Speaker 2: of drugs at that.

570
00:27:36,400 --> 00:27:36,640
Speaker 5: Yeah.

571
00:27:36,840 --> 00:27:39,160
Speaker 4: Well, one of my heroes is Clayton Christiansen, who wrote

572
00:27:39,200 --> 00:27:42,520
Speaker 4: The Innovator's Dilemma, And he's somebody who helped me understand

573
00:27:42,600 --> 00:27:45,720
Speaker 4: and think about disruptive innovation. And I've always invested in

574
00:27:45,760 --> 00:27:48,520
Speaker 4: the innovators. And back to your earlier question, Barry, you

575
00:27:48,560 --> 00:27:51,680
Speaker 4: know I can keep holding my Netflix when it loses

576
00:27:51,720 --> 00:27:54,879
Speaker 4: two thirds of its value when I believe in Netflix,

577
00:27:54,920 --> 00:27:59,200
Speaker 4: and I see visible proof every day of how important Amazon.

578
00:27:59,280 --> 00:28:01,840
Speaker 4: Back in the day, Netflix Tesla. The list goes on

579
00:28:01,880 --> 00:28:04,720
Speaker 4: the companies we've mentioned, so that helps me hold these companies.

580
00:28:04,920 --> 00:28:07,399
Speaker 4: If you follow the company as opposed to the zigs

581
00:28:07,400 --> 00:28:10,200
Speaker 4: and zags on the stock charts or the headlines, you're

582
00:28:10,240 --> 00:28:12,600
Speaker 4: going to be much more patient, I think as an investor,

583
00:28:12,640 --> 00:28:15,399
Speaker 4: and that has been my that's been a superhero power

584
00:28:15,400 --> 00:28:15,639
Speaker 4: for me.

585
00:28:15,960 --> 00:28:19,480
Speaker 2: So walk us through your stock picking process. How does

586
00:28:19,480 --> 00:28:22,080
Speaker 2: a company first land on your radar? What sort of

587
00:28:22,119 --> 00:28:26,080
Speaker 2: analysis do you do? When do you decide you're comfortable

588
00:28:26,160 --> 00:28:29,560
Speaker 2: to put it on your buy list? And are there

589
00:28:29,640 --> 00:28:34,200
Speaker 2: any non negotiable checkboxes that you say Nope, that's a knockout.

590
00:28:34,240 --> 00:28:34,879
Speaker 3: They don't have this.

591
00:28:34,960 --> 00:28:37,359
Speaker 4: I mean every one of those questions I could possibly

592
00:28:37,400 --> 00:28:39,240
Speaker 4: fill your ears up. So I will try to be brief.

593
00:28:39,320 --> 00:28:41,800
Speaker 4: I love the questions in reverse order, by the way,

594
00:28:42,080 --> 00:28:45,480
Speaker 4: I'll say any non negotiables. I don't invest in companies

595
00:28:45,520 --> 00:28:48,080
Speaker 4: whose fundamental business is to take money from other people.

596
00:28:48,160 --> 00:28:50,400
Speaker 4: And so you'll never see me recommend a so called

597
00:28:50,560 --> 00:28:54,640
Speaker 4: gaming stock. And I think sports betting is a joke

598
00:28:54,840 --> 00:28:57,120
Speaker 4: and it's while I think it always should have been legal,

599
00:28:57,440 --> 00:28:59,320
Speaker 4: I think it is a sad waste of money for

600
00:28:59,320 --> 00:29:01,680
Speaker 4: anybody who does the math and so that would not

601
00:29:01,760 --> 00:29:04,080
Speaker 4: be on my list. No Madleyful member has ever received

602
00:29:04,080 --> 00:29:06,520
Speaker 4: a gaming recommendation from that, and they have.

603
00:29:06,440 --> 00:29:11,440
Speaker 2: Been very destructive, primarily to college age men. There's a

604
00:29:11,440 --> 00:29:16,000
Speaker 2: growing gambling addiction problem, and these companies just that's their

605
00:29:16,240 --> 00:29:17,080
Speaker 2: that's their clients.

606
00:29:17,760 --> 00:29:20,240
Speaker 4: Yep. And I will say I love sports. I know

607
00:29:20,320 --> 00:29:23,000
Speaker 4: you do too, and I'm happy making a bet with friends.

608
00:29:23,400 --> 00:29:25,640
Speaker 4: But if you really do the math of a fifty

609
00:29:25,680 --> 00:29:28,440
Speaker 4: to fifty prospect where the house takes out it's ten percent,

610
00:29:28,880 --> 00:29:30,600
Speaker 4: and you just do your expect to return and play

611
00:29:30,640 --> 00:29:33,080
Speaker 4: that forward with all your money, I know where that goes,

612
00:29:33,120 --> 00:29:36,080
Speaker 4: and you could have had nine to ten percent annualized returns.

613
00:29:36,360 --> 00:29:40,880
Speaker 2: There's a huge knuckleheads. There's a huge difference between doing

614
00:29:40,920 --> 00:29:44,640
Speaker 2: a box for the Super Bowl or something. Man, it's

615
00:29:44,680 --> 00:29:48,120
Speaker 2: fun and betting on free throws. I mean, it's it's

616
00:29:48,320 --> 00:29:51,240
Speaker 2: just it has nothing to do with sports. That's just

617
00:29:51,320 --> 00:29:55,520
Speaker 2: the medium by which they are tickling your adrenaline and dopamine.

618
00:29:55,600 --> 00:29:59,680
Speaker 2: It's it's so and yet these have become giant bastiness.

619
00:29:59,800 --> 00:30:02,479
Speaker 4: Yeah. And you know, even something as innovative as prediction markets,

620
00:30:02,480 --> 00:30:05,840
Speaker 4: which I am fascinated by, are also being turned into

621
00:30:05,960 --> 00:30:09,560
Speaker 4: quick quick money and or sometimes questionable who can influence

622
00:30:09,600 --> 00:30:12,800
Speaker 4: the outcomes of prediction markets. So these are unfortunate things

623
00:30:12,800 --> 00:30:15,200
Speaker 4: where I think they're fascinating to follow. But if you're

624
00:30:15,240 --> 00:30:17,280
Speaker 4: serious about your own money and you would like financial

625
00:30:17,280 --> 00:30:19,720
Speaker 4: freedom one day, you're making a huge mistake if you

626
00:30:19,720 --> 00:30:22,560
Speaker 4: go there. So back to your question, that's non negotiable

627
00:30:22,600 --> 00:30:25,840
Speaker 4: for me. I don't like businesses that just fundamentally lead

628
00:30:25,920 --> 00:30:29,400
Speaker 4: people who don't know math to give their money away regularly.

629
00:30:29,400 --> 00:30:31,320
Speaker 4: I don't feel great about that if I'm a shareholder.

630
00:30:31,480 --> 00:30:33,360
Speaker 3: So let me roll you back a little bit.

631
00:30:33,440 --> 00:30:37,920
Speaker 2: How does a company typically find its way onto your radar?

632
00:30:38,080 --> 00:30:40,840
Speaker 2: Is it something you're using or something you hear about? Like,

633
00:30:40,880 --> 00:30:43,640
Speaker 2: where do most of these ideas come from? So the

634
00:30:43,720 --> 00:30:44,600
Speaker 2: ideas come from?

635
00:30:44,640 --> 00:30:46,560
Speaker 4: First of all, I'm an early adopter, So I've got

636
00:30:46,600 --> 00:30:48,560
Speaker 4: a closet full of things where I bought the thing

637
00:30:48,680 --> 00:30:51,400
Speaker 4: early first jen and it's not really working or wasn't

638
00:30:51,400 --> 00:30:54,720
Speaker 4: relevant anymore, and so but it also meant I bought

639
00:30:54,720 --> 00:30:58,160
Speaker 4: Tesla very early on, and I tried online services with

640
00:30:58,160 --> 00:31:00,360
Speaker 4: my scratchy phone that sound we can all here if

641
00:31:00,360 --> 00:31:03,240
Speaker 4: you're over forty years old today of logging onto AOL

642
00:31:03,320 --> 00:31:07,800
Speaker 4: so I love the new I'm excited by AI and

643
00:31:07,880 --> 00:31:09,480
Speaker 4: that's not an industry, by the way, that is a

644
00:31:09,520 --> 00:31:11,680
Speaker 4: plate tectonic shift for our society that's going to create

645
00:31:11,680 --> 00:31:14,640
Speaker 4: many industries many of us don't even exist yet. Just

646
00:31:14,680 --> 00:31:16,920
Speaker 4: as we were excited about the Internet with Amazon, where

647
00:31:16,920 --> 00:31:20,120
Speaker 4: my cost bass today is sixteen cents still holding. Uber

648
00:31:20,200 --> 00:31:22,480
Speaker 4: hadn't even shown up yet, Google hadn't shown up yet.

649
00:31:22,520 --> 00:31:25,600
Speaker 4: I mean it's it will be years before AI companies

650
00:31:25,800 --> 00:31:28,840
Speaker 4: that are amazing, that are great stocks show up, So

651
00:31:28,880 --> 00:31:31,360
Speaker 4: no one should feel anxious that they don't have an

652
00:31:31,400 --> 00:31:34,800
Speaker 4: AI portfolio yet. But anyway, so I'm an early adopter,

653
00:31:35,200 --> 00:31:38,280
Speaker 4: and then I'm connected to a community, the Motley Fool community,

654
00:31:38,600 --> 00:31:42,360
Speaker 4: our forums, discussion boards, meeting people at book signings, this

655
00:31:42,400 --> 00:31:45,320
Speaker 4: conversation right now, you mentioned Striker. I probably need to

656
00:31:45,320 --> 00:31:47,240
Speaker 4: look back at that one. I'm curious how it's done.

657
00:31:47,360 --> 00:31:49,920
Speaker 4: So I'm just always listening. Of course, social media is

658
00:31:49,960 --> 00:31:54,040
Speaker 4: full of these kinds of opportunities. So intellectual curiosity is

659
00:31:54,080 --> 00:31:55,840
Speaker 4: the flame that will burn my whole life long and

660
00:31:55,920 --> 00:31:58,320
Speaker 4: in many of my fellow fools, and I think my

661
00:31:58,400 --> 00:32:00,720
Speaker 4: host today as well. So I think that if you're

662
00:32:00,800 --> 00:32:03,520
Speaker 4: curious and you're asking questions about where society is headed,

663
00:32:03,720 --> 00:32:07,000
Speaker 4: and you're specifically looking for products and services that will

664
00:32:07,040 --> 00:32:11,360
Speaker 4: improve our lives and our kids' lives. You're going to

665
00:32:11,360 --> 00:32:14,520
Speaker 4: be looking, You're going to be fishing in the right pond.

666
00:32:14,720 --> 00:32:18,440
Speaker 2: So once something falls on your radar, you have six

667
00:32:18,560 --> 00:32:21,800
Speaker 2: rule breaker criteria. Walk us through those six Yeah, really,

668
00:32:21,840 --> 00:32:23,920
Speaker 2: that's the heart of the analysis that you do, right

669
00:32:24,080 --> 00:32:24,440
Speaker 2: it is.

670
00:32:24,480 --> 00:32:26,800
Speaker 4: It's six traits that I'm looking for, and that's the

671
00:32:26,800 --> 00:32:29,240
Speaker 4: middle of my book. And I didn't start the book

672
00:32:29,280 --> 00:32:30,600
Speaker 4: that way, And we can talk about that later if

673
00:32:30,640 --> 00:32:32,720
Speaker 4: you like, But let me just rattle right now through

674
00:32:32,760 --> 00:32:34,680
Speaker 4: my six traits of rule breaker investing. And by the way,

675
00:32:35,040 --> 00:32:37,880
Speaker 4: I have used these now into my fourth decade. I

676
00:32:37,880 --> 00:32:40,360
Speaker 4: didn't just come up with these yesterday. This is exactly

677
00:32:40,400 --> 00:32:44,560
Speaker 4: what caused me to pick AOL, Amazon, Tesla, and Nvidia.

678
00:32:44,800 --> 00:32:47,720
Speaker 4: The list goes on, and some of them are so contrary,

679
00:32:47,720 --> 00:32:49,520
Speaker 4: which is why I think it works. Number one, top

680
00:32:49,560 --> 00:32:52,520
Speaker 4: dog and first mover in an important emerging industry. We

681
00:32:52,560 --> 00:32:54,240
Speaker 4: already spoke to that one. We could go deeply.

682
00:32:54,400 --> 00:32:57,120
Speaker 2: So for today, that might be in Nvidia, it might

683
00:32:57,160 --> 00:33:00,840
Speaker 2: be Broadcomb, it might be ASM lithographer, it might be AMD,

684
00:33:01,320 --> 00:33:04,680
Speaker 2: it could be any of the semiconductors or some of

685
00:33:04,720 --> 00:33:07,320
Speaker 2: the software companies Google, Microsoft, whoever.

686
00:33:07,560 --> 00:33:11,240
Speaker 4: Yeah, and also, by the way, restaurant companies, retail. I

687
00:33:11,240 --> 00:33:15,160
Speaker 4: mean in every industry, I'm asking who's the innovator. I

688
00:33:15,200 --> 00:33:17,160
Speaker 4: want to know who the innovator? And if you honestly

689
00:33:17,280 --> 00:33:21,640
Speaker 4: just only focus your stock market attention on the biggest

690
00:33:21,640 --> 00:33:24,240
Speaker 4: innovator in each industry. Some of them are small emergent,

691
00:33:24,360 --> 00:33:26,280
Speaker 4: some of them are big, you're going to do so

692
00:33:26,360 --> 00:33:26,720
Speaker 4: much better.

693
00:33:26,800 --> 00:33:30,120
Speaker 2: So Starbucks, the third place that was the big driver

694
00:33:30,160 --> 00:33:32,680
Speaker 2: of them, Chipotle, they came up with a way to

695
00:33:33,280 --> 00:33:37,560
Speaker 2: assembly line fresh food. Yeah, the fat quality, the fact

696
00:33:37,600 --> 00:33:41,480
Speaker 2: that it happens to be Mexican based is almost relevent irrelevant.

697
00:33:41,720 --> 00:33:45,320
Speaker 2: You see Kava today doing the same thing with Mediterranean

698
00:33:45,480 --> 00:33:47,480
Speaker 2: and I'm sure there are dozens of others coming up.

699
00:33:47,560 --> 00:33:48,880
Speaker 4: There are. And by the way, not all of these

700
00:33:48,920 --> 00:33:53,240
Speaker 4: workout as stocks. I certainly have a closet full of

701
00:33:53,240 --> 00:33:54,920
Speaker 4: bad stock picks as well, and we could talk about

702
00:33:54,920 --> 00:33:57,320
Speaker 4: that later, but that's very important. If you have sort

703
00:33:57,360 --> 00:33:59,720
Speaker 4: of a venture capital mentality as you look at the

704
00:33:59,720 --> 00:34:02,560
Speaker 4: public markets, which is how I describe myself, you need

705
00:34:02,760 --> 00:34:04,960
Speaker 4: just like a VC, you need to be comfortable with losing.

706
00:34:05,280 --> 00:34:09,000
Speaker 2: In other words, it's you're looking for here, one hundred

707
00:34:09,080 --> 00:34:12,960
Speaker 2: investments fifty mark in a workout, thirty'll do okay, but

708
00:34:13,040 --> 00:34:14,080
Speaker 2: it's the top two or.

709
00:34:14,040 --> 00:34:15,719
Speaker 3: Three that make it worthwhile.

710
00:34:15,960 --> 00:34:19,040
Speaker 4: Yeah, and I truly go into all hundreds saying I

711
00:34:19,120 --> 00:34:20,440
Speaker 4: like this company, I believe in it, and I hope

712
00:34:20,480 --> 00:34:22,759
Speaker 4: it works out. But I'm never loading up on one,

713
00:34:23,440 --> 00:34:25,760
Speaker 4: et cetera. So top dog and first mover an important

714
00:34:25,960 --> 00:34:28,960
Speaker 4: merging industry. Of my six traits, that's the most important.

715
00:34:29,840 --> 00:34:34,000
Speaker 4: So number two, we're looking for a sustainable competitive advantage,

716
00:34:34,120 --> 00:34:36,840
Speaker 4: a mote as Buffett likes the sume you bet, And

717
00:34:37,480 --> 00:34:41,440
Speaker 4: because we're holding stocks for a dead minimum of three years,

718
00:34:42,520 --> 00:34:48,279
Speaker 4: preferably three decades, sustainable competitive advantage really really matters, and

719
00:34:48,320 --> 00:34:51,680
Speaker 4: that takes many forms. We could talk about that number three.

720
00:34:52,040 --> 00:34:53,719
Speaker 4: So the first two are about the company. The third

721
00:34:53,760 --> 00:34:56,759
Speaker 4: is about the stock. And this is I'm looking for

722
00:34:56,800 --> 00:35:00,960
Speaker 4: a strong, stellar past price appreciated in the stock.

723
00:35:01,080 --> 00:35:03,600
Speaker 2: In other words, you're not looking for the cigar stub.

724
00:35:03,680 --> 00:35:06,960
Speaker 2: To use Ben Graham's the opposite phrase, You're looking for

725
00:35:07,000 --> 00:35:10,359
Speaker 2: something with a little momentum and where more and more

726
00:35:11,080 --> 00:35:12,400
Speaker 2: investors are stepping in.

727
00:35:13,680 --> 00:35:15,879
Speaker 4: There's a chapter in my book and it was an

728
00:35:15,880 --> 00:35:18,520
Speaker 4: eye opener as I wrote it and realized it where

729
00:35:18,560 --> 00:35:21,160
Speaker 4: I listed out seven of my best stock picks from

730
00:35:21,160 --> 00:35:24,200
Speaker 4: Intuitive Surgical to Netflix, to Apple, to Amazon, to Nvidia

731
00:35:24,200 --> 00:35:26,880
Speaker 4: and a couple of others, and I noticed, and I

732
00:35:26,920 --> 00:35:30,759
Speaker 4: only realized this in retrospect, that in the three to

733
00:35:30,920 --> 00:35:33,719
Speaker 4: nine months leading up to my first pick of them,

734
00:35:34,680 --> 00:35:39,920
Speaker 4: on average, they had risen thirty to ninety percent, and

735
00:35:40,080 --> 00:35:42,759
Speaker 4: a lot of people, I think most people, when they

736
00:35:42,840 --> 00:35:45,319
Speaker 4: are researching the stock goes up fifty percent, they're like, oh,

737
00:35:45,400 --> 00:35:48,000
Speaker 4: that missed it, thirdy right right done? Yeah. And so

738
00:35:48,280 --> 00:35:51,200
Speaker 4: part of the reason rule breaker investing works is because

739
00:35:51,280 --> 00:35:53,480
Speaker 4: I'm willing at that point not just to buy it,

740
00:35:53,560 --> 00:35:55,920
Speaker 4: but to actually be more excited about it. Because clearly

741
00:35:56,239 --> 00:36:00,840
Speaker 4: the market is noticing what's happening now. And when companies rise,

742
00:36:01,520 --> 00:36:04,799
Speaker 4: reflexivity starts to show up Barry, they start having more resources,

743
00:36:04,920 --> 00:36:07,480
Speaker 4: they're getting mentioned on Bloomberg Radio. All of a sudden,

744
00:36:07,560 --> 00:36:09,200
Speaker 4: a lot of good stuff starts coming to them that

745
00:36:09,360 --> 00:36:12,000
Speaker 4: strengthens them. That's not a reason to look for another

746
00:36:12,080 --> 00:36:16,560
Speaker 4: cigar butt and ignore Nvidia. So that is trade number three.

747
00:36:16,920 --> 00:36:19,839
Speaker 4: Stellar past price appreciation in a world where most people

748
00:36:19,840 --> 00:36:21,960
Speaker 4: are like by low sell high. I'm looking at the

749
00:36:22,000 --> 00:36:24,600
Speaker 4: fifty two week low list friends, not the fifty two

750
00:36:24,640 --> 00:36:27,359
Speaker 4: week high. And when I say friends, I mean that's

751
00:36:27,400 --> 00:36:29,960
Speaker 4: the average person speaking. I'm looking for the fifty two

752
00:36:30,000 --> 00:36:32,200
Speaker 4: week high. Give us four, five, and six. Sure, so

753
00:36:32,360 --> 00:36:35,560
Speaker 4: number four. It's all about the people. We're looking for

754
00:36:36,360 --> 00:36:39,640
Speaker 4: smart backing and excellent management. So it's the human capital.

755
00:36:40,000 --> 00:36:43,359
Speaker 4: And this is again in some ways obvious. Yeah, we'd

756
00:36:43,360 --> 00:36:45,640
Speaker 4: love to have Steve Jobs be our CEO. Yeah we're

757
00:36:45,640 --> 00:36:48,320
Speaker 4: glad that Jeff Bezos is our CEO or Warren Buffett.

758
00:36:49,040 --> 00:36:52,400
Speaker 4: But keep in mind, and this is a really hidden

759
00:36:52,400 --> 00:36:56,160
Speaker 4: in plain site, I think, profound insight that most people

760
00:36:56,200 --> 00:36:59,239
Speaker 4: don't see even though it's hidden in plain site. There

761
00:36:59,280 --> 00:37:02,120
Speaker 4: is no number to express the value of the CEO

762
00:37:02,200 --> 00:37:04,919
Speaker 4: running companies. So we have a whole Wall Street world

763
00:37:05,000 --> 00:37:08,759
Speaker 4: that's built on valuation ratios, generally off of earnings or

764
00:37:08,760 --> 00:37:12,719
Speaker 4: cash flow, sometimes off of assets, and they're not including

765
00:37:12,840 --> 00:37:15,640
Speaker 4: that Elon Musk is the CEO of the company. And

766
00:37:15,680 --> 00:37:17,440
Speaker 4: by the way, there are a lot of CEOs who

767
00:37:17,480 --> 00:37:21,040
Speaker 4: are subtracting value from their companies and there's nothing to

768
00:37:21,120 --> 00:37:24,760
Speaker 4: express that, and so we have a whole world driven

769
00:37:24,800 --> 00:37:28,439
Speaker 4: off algorithms. That increasing is computer trading. It's not even

770
00:37:28,520 --> 00:37:32,200
Speaker 4: humans anymore, and they're not noticing or caring. I think

771
00:37:32,280 --> 00:37:35,279
Speaker 4: about trade Number four, who the heck's running this thing

772
00:37:35,320 --> 00:37:38,080
Speaker 4: and who's backing it? That matters deeply to me, especially

773
00:37:38,120 --> 00:37:41,320
Speaker 4: if I'm holding, as I do for three decades. Number five,

774
00:37:41,560 --> 00:37:45,040
Speaker 4: we're looking for strong consumer brands. I love companies that

775
00:37:45,760 --> 00:37:48,560
Speaker 4: have raving fans, and it doesn't mean every time that

776
00:37:48,600 --> 00:37:52,000
Speaker 4: they are consumer brands. Striker Drilling, Intuitive Surgical, these are

777
00:37:52,040 --> 00:37:56,319
Speaker 4: not consumer brands per se. Although Intuitive Surgical with its

778
00:37:56,400 --> 00:37:59,480
Speaker 4: Da Vinci surgical robot, you will hear your local on

779
00:37:59,520 --> 00:38:01,600
Speaker 4: your local radio. If you still listen to it, you'll

780
00:38:01,600 --> 00:38:04,280
Speaker 4: hear an ad for the hospital bragging in some cases

781
00:38:04,280 --> 00:38:06,160
Speaker 4: that they have a da Vinci, So there is some

782
00:38:06,360 --> 00:38:10,399
Speaker 4: brand recognition there. But Starbucks, Netflix, Amazon, These are all

783
00:38:10,400 --> 00:38:12,759
Speaker 4: my best stock picks, and I bought them years ago

784
00:38:12,800 --> 00:38:15,040
Speaker 4: and still hold them today, and they all exhibit that

785
00:38:15,239 --> 00:38:20,680
Speaker 4: strong consumer appeal. And the final probably my favorite secret sauce.

786
00:38:21,000 --> 00:38:24,000
Speaker 4: So if you're following us, the first two are about

787
00:38:24,040 --> 00:38:26,799
Speaker 4: the company, that third was the stock. Then the next two,

788
00:38:26,840 --> 00:38:29,279
Speaker 4: four and five the people and the brand are about

789
00:38:29,320 --> 00:38:32,239
Speaker 4: the company. Number six is about the stock, and it's

790
00:38:32,239 --> 00:38:39,160
Speaker 4: specifically that the stock is generally considered capital o overvalued

791
00:38:40,320 --> 00:38:42,920
Speaker 4: by the world at large, by Wall Street commentators, by

792
00:38:42,920 --> 00:38:47,640
Speaker 4: people in Barns, CNBC, never Bloomberg Radio, so little contrarian perspective.

793
00:38:48,000 --> 00:38:51,600
Speaker 4: We are specifically wanting people to call out Tesla as

794
00:38:51,719 --> 00:38:56,200
Speaker 4: ridiculously overpriced. Amazon will never make money, intuitive surgical. When

795
00:38:56,200 --> 00:38:58,399
Speaker 4: I first recommended it over one hundred bag or ago,

796
00:38:58,600 --> 00:39:01,200
Speaker 4: it was at seventy three times. There are people, if

797
00:39:01,200 --> 00:39:04,040
Speaker 4: they even do pay attention to stocks anymore, that say

798
00:39:04,080 --> 00:39:05,920
Speaker 4: I would never buy a stock with a price turnings

799
00:39:06,000 --> 00:39:07,680
Speaker 4: ratio of seventy three. The list goes on.

800
00:39:07,880 --> 00:39:08,839
Speaker 3: So a lot of.

801
00:39:08,800 --> 00:39:11,759
Speaker 2: Times when we see stuff, especially with a company that's

802
00:39:11,800 --> 00:39:17,359
Speaker 2: relatively young, you start to see the company grow into

803
00:39:17,480 --> 00:39:20,360
Speaker 2: their evaluation. And video is a great example. It was

804
00:39:20,400 --> 00:39:24,239
Speaker 2: a semi maker, then it was a floating point chip

805
00:39:24,280 --> 00:39:28,600
Speaker 2: maker for gaming before it did the pivot. It's a

806
00:39:28,719 --> 00:39:32,879
Speaker 2: full AI because FPUs turns out to be better than

807
00:39:32,920 --> 00:39:37,319
Speaker 2: CPUs for large language models, and I don't pretend to

808
00:39:37,360 --> 00:39:41,399
Speaker 2: be a WIZARDPUS then GPS, right, that's right. I don't

809
00:39:41,400 --> 00:39:44,520
Speaker 2: know what f is floating point unit. But GPUs that's

810
00:39:44,560 --> 00:39:49,360
Speaker 2: exactly right. But you know, two years ago video was

811
00:39:49,520 --> 00:39:52,640
Speaker 2: like a seventy five pe. Now it's like a forty

812
00:39:52,680 --> 00:39:58,600
Speaker 2: pe in falling. Can't some of these overpriced companies just grow?

813
00:39:58,920 --> 00:40:00,560
Speaker 3: Apple is another sample.

814
00:40:00,880 --> 00:40:04,200
Speaker 4: For the longest time, people looked at Apple in the two.

815
00:40:03,960 --> 00:40:08,680
Speaker 2: Thousands when that newfangled iPod came out and said, oh,

816
00:40:08,120 --> 00:40:11,799
Speaker 2: they don't have any profits whatsoever? Why would I want

817
00:40:11,840 --> 00:40:14,360
Speaker 2: to own Apple in four or five?

818
00:40:15,200 --> 00:40:17,520
Speaker 4: So I think that, first of all, let's be clear,

819
00:40:17,600 --> 00:40:20,000
Speaker 4: there are things that are overvalued that you and I

820
00:40:20,040 --> 00:40:23,680
Speaker 4: would not want to buy. But if you're following our conversation,

821
00:40:24,760 --> 00:40:27,040
Speaker 4: if you're buying a top dog and first mover in

822
00:40:27,080 --> 00:40:30,720
Speaker 4: an important emerging industry with a sustainable competitive advantage, stellar

823
00:40:30,760 --> 00:40:35,640
Speaker 4: pass price appreciation, excellent management, smart backing, strong consumer appeal,

824
00:40:35,920 --> 00:40:38,200
Speaker 4: it has all five of those things in place. And

825
00:40:38,239 --> 00:40:43,000
Speaker 4: then some guy on CNBC is telling you it's blatantly overvalued.

826
00:40:43,040 --> 00:40:45,320
Speaker 4: It's crazy, No one should ever buy that stock. Amazon

827
00:40:45,360 --> 00:40:49,800
Speaker 4: dot Bomb cover of Barns. That is the special sauce

828
00:40:49,840 --> 00:40:53,160
Speaker 4: that causes me to say, bam, now we're buying. Well,

829
00:40:53,239 --> 00:40:54,719
Speaker 4: the contrary the.

830
00:40:54,880 --> 00:40:58,279
Speaker 2: Amazon Dot Bomb was I want to say January two

831
00:40:58,320 --> 00:41:01,560
Speaker 2: thousand and we did. I'd see a giant collapse. What

832
00:41:02,080 --> 00:41:05,440
Speaker 2: was the cues fell about eighty two percent pize trough.

833
00:41:05,480 --> 00:41:07,640
Speaker 2: That's a pretty big I experienced it all the way.

834
00:41:07,680 --> 00:41:10,520
Speaker 2: In fact, our cost basis sixteen cents. It had gone up.

835
00:41:10,880 --> 00:41:13,720
Speaker 4: It was a thirty bagger. And again, when I'm picking stocks,

836
00:41:13,840 --> 00:41:15,560
Speaker 4: this is not for my this is not for my

837
00:41:15,600 --> 00:41:18,319
Speaker 4: own portfolio, This is not this is lots of people

838
00:41:18,400 --> 00:41:21,279
Speaker 4: following the Motley Fool. These are people subscribing to us.

839
00:41:21,280 --> 00:41:24,279
Speaker 4: So when I pick a good stock, it feels really good.

840
00:41:24,320 --> 00:41:26,480
Speaker 4: It's not about me. When I pick a bad stock,

841
00:41:26,560 --> 00:41:29,000
Speaker 4: it doesn't feel very good. It's not about me or.

842
00:41:29,000 --> 00:41:31,759
Speaker 2: A big a good stock that hits a buzz sol

843
00:41:31,800 --> 00:41:34,600
Speaker 2: when a market gets sill act exactly, you could own

844
00:41:34,719 --> 00:41:38,000
Speaker 2: anything during the financial crisis, everything still got cut in

845
00:41:38,080 --> 00:41:39,000
Speaker 2: half more or less.

846
00:41:39,040 --> 00:41:40,920
Speaker 3: It was quite a quite a crash.

847
00:41:40,960 --> 00:41:43,160
Speaker 4: You're right, Barry. And the truth is that if you

848
00:41:43,320 --> 00:41:46,839
Speaker 4: follow any of these companies. I've littered our conversation with

849
00:41:47,040 --> 00:41:50,759
Speaker 4: fifteen to twenty company names that are really fifteen to

850
00:41:50,800 --> 00:41:54,480
Speaker 4: twenty generationally great stocks. Every single one of these stocks

851
00:41:54,480 --> 00:41:56,440
Speaker 4: has lost fifty percent or more of its value. More

852
00:41:56,480 --> 00:41:59,280
Speaker 4: than once, which means that if you'd followed motley ful advice,

853
00:41:59,320 --> 00:42:02,040
Speaker 4: depending on your timing, you might love me or not

854
00:42:02,280 --> 00:42:04,359
Speaker 4: like me. You might be like, yeah, I got in there,

855
00:42:04,400 --> 00:42:08,160
Speaker 4: but got cut in half and I got out. We're

856
00:42:08,160 --> 00:42:11,560
Speaker 4: holding all the way through. We're buying and we're holding.

857
00:42:11,600 --> 00:42:15,080
Speaker 4: So I have watched Amazon go. This is kind of

858
00:42:15,120 --> 00:42:17,760
Speaker 4: pre split. It was at three when we first recommend

859
00:42:17,760 --> 00:42:21,040
Speaker 4: it went to ninety five down to seven during that

860
00:42:22,239 --> 00:42:25,440
Speaker 4: you're sure in cross splitz soon after. Yeah, yeah, it's

861
00:42:25,440 --> 00:42:27,440
Speaker 4: now split down to sixteen cents, which, by the way,

862
00:42:27,480 --> 00:42:29,640
Speaker 4: is also my cost base is on Nvidia. Thanks to

863
00:42:29,680 --> 00:42:32,359
Speaker 4: the magic of stock splitz. They both got me at

864
00:42:32,360 --> 00:42:35,560
Speaker 4: my sixteen cent cost bases still holding. So but to

865
00:42:36,000 --> 00:42:39,239
Speaker 4: do that, like Nvidia just three years ago lost half

866
00:42:39,239 --> 00:42:40,719
Speaker 4: its value in one here, this is one of the

867
00:42:40,800 --> 00:42:43,479
Speaker 4: largest time. It was like four months in half. Yeah,

868
00:42:43,600 --> 00:42:47,040
Speaker 4: so this is just gonna happen twenty two. This is

869
00:42:47,080 --> 00:42:49,600
Speaker 4: not gonna happen for companies that are not dynamic. This

870
00:42:49,680 --> 00:42:51,640
Speaker 4: is not going to happen so much for cyclicals. I

871
00:42:51,640 --> 00:42:54,520
Speaker 4: mean there will be some cyclicality. These are rule breakers.

872
00:42:54,880 --> 00:42:59,480
Speaker 4: These are stocks that, by most popular view, were blatantly

873
00:42:59,480 --> 00:43:01,839
Speaker 4: over value. You should never bought Amazon all the way

874
00:43:01,880 --> 00:43:04,480
Speaker 4: through et cetera, and so they're going to be more volatile.

875
00:43:04,520 --> 00:43:06,760
Speaker 4: Netflix was going to get put out of business by Walmart.

876
00:43:06,800 --> 00:43:08,080
Speaker 4: I don't know if you remember this, but back in

877
00:43:08,080 --> 00:43:09,920
Speaker 4: the day of the red envelopes, all of a sudden,

878
00:43:09,920 --> 00:43:12,120
Speaker 4: Walmart said, hey, you can just drop it off at

879
00:43:12,160 --> 00:43:14,319
Speaker 4: your Walmart your DVD. You don't have to mail it

880
00:43:14,360 --> 00:43:16,440
Speaker 4: back to Netflix. And that was going to Netflix was

881
00:43:16,480 --> 00:43:20,360
Speaker 4: supposedly toast then, so I've AOL was going to be toast.

882
00:43:20,680 --> 00:43:22,920
Speaker 4: It eventually was kind of toast, although it sold out.

883
00:43:23,080 --> 00:43:26,000
Speaker 4: The merger was the Yeah, but I've watched it's such

884
00:43:26,120 --> 00:43:30,320
Speaker 4: a key indicator trade number six. When people say it's toast,

885
00:43:30,800 --> 00:43:34,640
Speaker 4: that not for every stock, but for the rule breakers,

886
00:43:34,880 --> 00:43:36,640
Speaker 4: that is magic. It has been for me.

887
00:43:37,400 --> 00:43:41,920
Speaker 2: So I want to ask you about the first stock

888
00:43:42,040 --> 00:43:45,800
Speaker 2: you purchased where you said, oh, this checks all six boxes.

889
00:43:45,920 --> 00:43:49,040
Speaker 4: This is my rule breaker. It was AOL.

890
00:43:49,360 --> 00:43:52,000
Speaker 3: Yeah, definitely, nineteen ninety one, four or five.

891
00:43:52,120 --> 00:43:54,280
Speaker 4: We literally picked it the day we launched on AOL

892
00:43:54,640 --> 00:43:57,680
Speaker 4: nineteen ninety four, August fourth, nineteen ninety four. And from

893
00:43:57,680 --> 00:44:00,879
Speaker 4: that point I watched AOL and and again we were

894
00:44:01,440 --> 00:44:03,560
Speaker 4: I mean, we're always fully transparent. People are like, wait,

895
00:44:03,600 --> 00:44:06,319
Speaker 4: you guys are on AOL. Is there a conflict of

896
00:44:06,320 --> 00:44:08,680
Speaker 4: interest you're recommending AOL stock. Oh, we know what it

897
00:44:08,760 --> 00:44:11,200
Speaker 4: is because we're on it. We see what this can

898
00:44:11,280 --> 00:44:14,200
Speaker 4: do for investors and what the future of the companies

899
00:44:14,280 --> 00:44:17,399
Speaker 4: is pretty self evident. You know you're right, And yet

900
00:44:17,520 --> 00:44:19,279
Speaker 4: not everybody would have felt that way back then. But

901
00:44:19,400 --> 00:44:22,400
Speaker 4: it was I mean, we had no inside view of AOL.

902
00:44:22,440 --> 00:44:27,920
Speaker 4: We were separately domicov, but we watched AOL grow and

903
00:44:28,000 --> 00:44:30,880
Speaker 4: it was such an object business lesson as an entrepreneur

904
00:44:30,920 --> 00:44:34,000
Speaker 4: for me, but as a stock picker, I was watching

905
00:44:34,040 --> 00:44:38,160
Speaker 4: it get called out as the most overvalued stock repeatedly

906
00:44:38,280 --> 00:44:42,120
Speaker 4: by august bodies like the world economic It's not the

907
00:44:42,160 --> 00:44:45,200
Speaker 4: world like a foreman today, but basically all the economists

908
00:44:45,239 --> 00:44:47,200
Speaker 4: in the world. We get together every summer, and two

909
00:44:47,239 --> 00:44:48,759
Speaker 4: summers in a row, it was like ninety six and

910
00:44:48,840 --> 00:44:52,200
Speaker 4: ninety seven they voted the most overvalued stock, and it

911
00:44:52,239 --> 00:44:54,560
Speaker 4: was the stock that we had backed. And our members

912
00:44:54,560 --> 00:44:57,640
Speaker 4: are like, guys, they're calling the most overvalued again. We're like,

913
00:44:57,960 --> 00:44:59,760
Speaker 4: this is an amazing company. It went up one hundred

914
00:44:59,760 --> 00:45:02,440
Speaker 4: fifty times in value, and I learned so much from

915
00:45:02,440 --> 00:45:04,759
Speaker 4: that experience, and as we mentioned, it didn't end there.

916
00:45:04,800 --> 00:45:07,520
Speaker 4: It started to drop back and fell back and eventually

917
00:45:07,680 --> 00:45:10,560
Speaker 4: just kind of got taken over. And you know, you know,

918
00:45:10,680 --> 00:45:11,920
Speaker 4: merge with time time warner.

919
00:45:12,040 --> 00:45:16,200
Speaker 2: When people stop calling stuff over valued and every analyst

920
00:45:16,239 --> 00:45:18,479
Speaker 2: on the street has a strong buy on it, that's

921
00:45:18,600 --> 00:45:20,080
Speaker 2: usually when you want to.

922
00:45:20,040 --> 00:45:20,839
Speaker 3: Be on the other side.

923
00:45:20,960 --> 00:45:24,080
Speaker 4: That right, that can that can be true. I will

924
00:45:24,080 --> 00:45:27,600
Speaker 4: also always but no, no, no, I definitely appreciate the sentiment,

925
00:45:27,680 --> 00:45:30,080
Speaker 4: and I smile at that askance with you as well.

926
00:45:30,520 --> 00:45:33,560
Speaker 4: I will say that we typically just hold well longer

927
00:45:33,600 --> 00:45:35,839
Speaker 4: than whatever analysts are thinking or saying. We don't really

928
00:45:35,840 --> 00:45:36,800
Speaker 4: pay attention.

929
00:45:36,480 --> 00:45:38,919
Speaker 3: So you're not is that what you say? Yeah?

930
00:45:39,000 --> 00:45:41,439
Speaker 4: No, I mean we love following business. By the way,

931
00:45:41,719 --> 00:45:43,200
Speaker 4: one thing you asked me to think a little bit

932
00:45:43,239 --> 00:45:46,439
Speaker 4: about is is there anything that people should be talking

933
00:45:46,480 --> 00:45:49,000
Speaker 4: more about, especially if something that troubles me? And a

934
00:45:49,040 --> 00:45:52,080
Speaker 4: quick example would be, I really think we should have

935
00:45:52,120 --> 00:45:54,920
Speaker 4: companies reporting every three months their financial results. And you

936
00:45:54,960 --> 00:45:57,120
Speaker 4: may know there's a movement of foot to allow some

937
00:45:57,160 --> 00:45:59,359
Speaker 4: companies just to report twice a year. I think that's

938
00:45:59,480 --> 00:46:02,600
Speaker 4: really bad, bad decision, and I hope we don't do that.

939
00:46:02,640 --> 00:46:05,040
Speaker 4: I hope companies will self report and choose to be

940
00:46:05,120 --> 00:46:07,280
Speaker 4: transparent on a regular basis with their results.

941
00:46:07,800 --> 00:46:09,600
Speaker 3: I'm going to take it a step further than you

942
00:46:09,680 --> 00:46:10,400
Speaker 3: and say.

943
00:46:10,760 --> 00:46:15,360
Speaker 2: And I wrote this before AI was ubiquitous. If you

944
00:46:15,400 --> 00:46:17,839
Speaker 2: want to get rid of quarterly reporting instead of going

945
00:46:17,920 --> 00:46:21,080
Speaker 2: once or twice a year, make it real time and

946
00:46:21,120 --> 00:46:24,279
Speaker 2: twenty four to seven really cool because you could update that.

947
00:46:24,960 --> 00:46:28,200
Speaker 2: You could set up technology to update Here's where we are,

948
00:46:28,320 --> 00:46:31,160
Speaker 2: Here's how close we are, here's our range. You can

949
00:46:31,239 --> 00:46:33,640
Speaker 2: Monty Carlo what we would likely to do each quarter.

950
00:46:34,120 --> 00:46:38,759
Speaker 2: And so the problem is the focus on quarterly. If

951
00:46:38,760 --> 00:46:42,480
Speaker 2: it was all the time, like you can look at

952
00:46:42,520 --> 00:46:45,560
Speaker 2: your portfolio or your checking account of twenty four seven.

953
00:46:46,040 --> 00:46:50,200
Speaker 2: You shouldn't, but you can, and it's made I remember

954
00:46:50,239 --> 00:46:53,040
Speaker 2: in the nineties or in the two thousands, we would

955
00:46:53,080 --> 00:46:56,920
Speaker 2: be printing stuff out, folding them up, sticking them in an envelope,

956
00:46:56,960 --> 00:47:00,600
Speaker 2: sending them out, and the quarterly report was the When

957
00:47:00,600 --> 00:47:03,360
Speaker 2: I was a junior having to do that crap in

958
00:47:03,360 --> 00:47:06,960
Speaker 2: the mailroom, it was a big deal to quarterly report.

959
00:47:07,120 --> 00:47:11,920
Speaker 2: Now nobody really thinks about your portfolio quarterly because you

960
00:47:11,960 --> 00:47:14,640
Speaker 2: can access it whenever you want. It's kinda I think

961
00:47:14,680 --> 00:47:17,160
Speaker 2: it's absolutely heading in the wrong direction. Yeah, well, so

962
00:47:17,320 --> 00:47:21,640
Speaker 2: more transparency is you know the theme here. But so

963
00:47:22,680 --> 00:47:25,080
Speaker 2: for me, I think a lot about you know, what

964
00:47:25,520 --> 00:47:27,560
Speaker 2: is going to be in the best interests of armchair

965
00:47:27,600 --> 00:47:30,960
Speaker 2: investors like me, because Barry, we are we're individual investors,

966
00:47:31,000 --> 00:47:34,000
Speaker 2: and so I'm there representing anybody who is in an

967
00:47:34,080 --> 00:47:37,400
Speaker 2: investment club or was given a portfolio of stocks and

968
00:47:37,400 --> 00:47:38,480
Speaker 2: they're trying to figure out how to.

969
00:47:38,400 --> 00:47:41,239
Speaker 4: Make better decisions. And I think it's so rewarding to

970
00:47:41,640 --> 00:47:45,680
Speaker 4: pick stocks in a world where it's increasingly called out

971
00:47:45,800 --> 00:47:49,680
Speaker 4: as crazy talk to actually buy an individual stocks.

972
00:47:49,760 --> 00:47:53,800
Speaker 2: So we talked earlier about stocks like Apple and Nvidia

973
00:47:53,840 --> 00:47:55,560
Speaker 2: and Netflix and Amazon that have.

974
00:47:55,520 --> 00:47:58,160
Speaker 3: All gotten cut in half repeatedly.

975
00:47:58,840 --> 00:48:01,560
Speaker 2: How do you tell the difference between a stock that's

976
00:48:01,640 --> 00:48:07,759
Speaker 2: just going through sort of regular volatility versus ge got

977
00:48:07,840 --> 00:48:10,480
Speaker 2: sliced in half we look at I'm not even talking

978
00:48:10,480 --> 00:48:12,960
Speaker 2: about the Lehman Brothers or the world Comms of the world.

979
00:48:13,360 --> 00:48:14,120
Speaker 4: I mean just.

980
00:48:14,360 --> 00:48:17,840
Speaker 2: Stocks that their best days are behind them. How do

981
00:48:17,880 --> 00:48:21,840
Speaker 2: you know the difference between just a regular stumble and

982
00:48:22,280 --> 00:48:23,160
Speaker 2: beginning of the end?

983
00:48:23,400 --> 00:48:25,640
Speaker 4: Well, first of all, I'd say you can't know. I mean,

984
00:48:25,680 --> 00:48:28,759
Speaker 4: it would be too headstrong of me to say, here's

985
00:48:28,760 --> 00:48:31,080
Speaker 4: what you do, here's how you know. So for me,

986
00:48:31,480 --> 00:48:34,560
Speaker 4: I just like to keep my stocks in place and

987
00:48:34,800 --> 00:48:37,800
Speaker 4: recognize someone are going to trip. I love horse racing metaphors,

988
00:48:37,840 --> 00:48:39,360
Speaker 4: and not every horse is gonna win the race. No

989
00:48:39,520 --> 00:48:41,200
Speaker 4: one's gonna make the race. Some get out to a

990
00:48:41,200 --> 00:48:44,080
Speaker 4: great start and don't finish well, and I can't always know,

991
00:48:44,520 --> 00:48:48,400
Speaker 4: but by holding I allow the ones that clearly will

992
00:48:48,440 --> 00:48:51,359
Speaker 4: win to win so grandly. You know, when you make

993
00:48:51,400 --> 00:48:54,240
Speaker 4: more than a thousand times your money on Amazon or Nvidia,

994
00:48:54,760 --> 00:48:57,239
Speaker 4: it doesn't actually matter that you had some dogs in

995
00:48:57,280 --> 00:48:59,600
Speaker 4: your portfolio. So you can be wrong, and that's okay,

996
00:48:59,600 --> 00:49:03,520
Speaker 4: because being right is so much more valuable. I will

997
00:49:03,520 --> 00:49:05,360
Speaker 4: also add, though, to answer your question a little bit

998
00:49:05,400 --> 00:49:09,960
Speaker 4: more directly. Usually the companies that fall and don't come

999
00:49:10,000 --> 00:49:14,320
Speaker 4: back are being disrupted. Earlier I mentioned Clayton Christensen innovator's dilemma.

1000
00:49:14,360 --> 00:49:16,600
Speaker 4: You can usually kind of see it that the world

1001
00:49:16,719 --> 00:49:20,000
Speaker 4: is changing. The company might still be best in class,

1002
00:49:20,040 --> 00:49:22,800
Speaker 4: and it may have a famous CEO that everybody loves,

1003
00:49:23,080 --> 00:49:25,080
Speaker 4: but all of a sudden, there's this upstart, might be

1004
00:49:25,080 --> 00:49:28,200
Speaker 4: a whole industry of new players. And when I see

1005
00:49:28,280 --> 00:49:30,799
Speaker 4: that in a company going down, I may not want

1006
00:49:30,800 --> 00:49:33,680
Speaker 4: to hold onto that stock. But if Netflix, which has

1007
00:49:33,719 --> 00:49:37,040
Speaker 4: been a sendent now for twenty plus years every time,

1008
00:49:37,600 --> 00:49:39,600
Speaker 4: if it's down two thirds of its value, which has

1009
00:49:39,600 --> 00:49:43,560
Speaker 4: happened more than once, including Quickstar, I keep holding that one. Right.

1010
00:49:43,640 --> 00:49:47,000
Speaker 4: So the question is, does this company remain a rule breaker?

1011
00:49:47,160 --> 00:49:49,919
Speaker 4: Is it a top dog and still a first mover

1012
00:49:50,080 --> 00:49:53,480
Speaker 4: in an emergent industry? And when it is, I'm going

1013
00:49:53,520 --> 00:49:54,560
Speaker 4: to keep holding that stock.

1014
00:49:55,080 --> 00:49:55,719
Speaker 5: Coming up, we.

1015
00:49:55,719 --> 00:49:59,080
Speaker 2: Continue our conversation with David Gardner, co founder of The

1016
00:49:59,120 --> 00:50:03,640
Speaker 2: Motley Fool, discussing his book Rule Breaker Investing, How to

1017
00:50:03,760 --> 00:50:07,000
Speaker 2: Pick the best stocks of the Future and Build Lasting Wealth.

1018
00:50:07,320 --> 00:50:08,440
Speaker 4: I'm Barry rid Holts.

1019
00:50:08,480 --> 00:50:15,160
Speaker 2: You're listening to Masters in Business on Bloomberg Radio.

1020
00:50:26,239 --> 00:50:27,120
Speaker 5: I'm Barry Ridhults.

1021
00:50:27,160 --> 00:50:30,160
Speaker 2: You're listening to Masters in Business on Bloomberg Radio. My

1022
00:50:30,640 --> 00:50:34,200
Speaker 2: extra special guest is David Gardner. He's the co founder

1023
00:50:34,280 --> 00:50:37,040
Speaker 2: of The Motley Fool and the author of the book

1024
00:50:37,280 --> 00:50:39,719
Speaker 2: Rule Breaker Investing, How to Pick the Best Stocks of

1025
00:50:39,760 --> 00:50:45,160
Speaker 2: the Future and Build Lasting Wealth. When did you realize

1026
00:50:45,239 --> 00:50:50,680
Speaker 2: that Blockbuster was being disrupted by Netflix and ps At

1027
00:50:50,680 --> 00:50:54,080
Speaker 2: one point in the two thousands, Netflix tried to sell

1028
00:50:54,120 --> 00:50:57,560
Speaker 2: themselves to Blockbuster for fifty million dollars and they turned

1029
00:50:57,560 --> 00:50:58,000
Speaker 2: them down.

1030
00:50:58,200 --> 00:51:00,680
Speaker 4: Yeah, it's like Yahoo could have bought Google. You love

1031
00:51:00,719 --> 00:51:03,799
Speaker 4: those stories. But you know, I would say that I

1032
00:51:03,840 --> 00:51:06,920
Speaker 4: never really thought too much about Blockbusters as a stock.

1033
00:51:06,960 --> 00:51:08,960
Speaker 4: I remember we had the CEO on our Motley Ful

1034
00:51:09,080 --> 00:51:11,759
Speaker 4: radio show and at that time Blockbuster maybe had twenty

1035
00:51:11,760 --> 00:51:14,759
Speaker 4: five million customers and Netflix had one million, and he

1036
00:51:14,880 --> 00:51:17,439
Speaker 4: was like, you know, we were watching what they're doing.

1037
00:51:17,840 --> 00:51:19,600
Speaker 4: It's neat what they're doing. I don't think it's a

1038
00:51:19,719 --> 00:51:21,920
Speaker 4: it's not a big scaling thing. You know, it's kind

1039
00:51:21,920 --> 00:51:23,200
Speaker 4: of a niche thing. Do you want to mail your

1040
00:51:23,280 --> 00:51:26,040
Speaker 4: DVD back and forth? And that I think it was

1041
00:51:26,120 --> 00:51:29,440
Speaker 4: John Antiaco, but I mean good Man probably, but wrong.

1042
00:51:29,600 --> 00:51:32,319
Speaker 4: He was wrong. And so it wasn't so much that

1043
00:51:32,360 --> 00:51:34,840
Speaker 4: I ever cared to love Blockbuster. I just was watching

1044
00:51:34,880 --> 00:51:38,520
Speaker 4: this rule breaker emerge and it was doing crazy stuff

1045
00:51:38,600 --> 00:51:42,200
Speaker 4: like you can't just drop it off two blocks away

1046
00:51:42,200 --> 00:51:44,239
Speaker 4: your Blockbuster. You have to mail it and keep a

1047
00:51:44,360 --> 00:51:46,840
Speaker 4: queue and send it back and forth. But the Q

1048
00:51:47,239 --> 00:51:48,680
Speaker 4: is half the value of it.

1049
00:51:48,960 --> 00:51:51,040
Speaker 2: Here's all the movies I want to see, which, by

1050
00:51:51,040 --> 00:51:54,280
Speaker 2: the way, every time I roll into Blockbuster, it's rented

1051
00:51:54,320 --> 00:51:56,879
Speaker 2: and I'm not even talking about a Saturday night, like.

1052
00:51:56,880 --> 00:51:59,480
Speaker 3: On a Wednesday. What do you mean you don't have this?

1053
00:52:00,680 --> 00:52:02,120
Speaker 3: So instead.

1054
00:52:03,160 --> 00:52:06,719
Speaker 2: Just working through the queue, Netflix was like, so the

1055
00:52:07,080 --> 00:52:10,839
Speaker 2: initial question is, wait, you want me to nail DVDs

1056
00:52:10,920 --> 00:52:13,840
Speaker 2: back and forth to Oh, I see how this works,

1057
00:52:13,880 --> 00:52:17,880
Speaker 2: but this will never replace Blockbuster to no late fees?

1058
00:52:17,960 --> 00:52:20,400
Speaker 2: Oh my god, why do I want to give anything

1059
00:52:20,480 --> 00:52:25,360
Speaker 2: to Blockbuster? And it was super disruptive before online streaming.

1060
00:52:25,120 --> 00:52:28,520
Speaker 4: And as a as a master of Business administration, actually

1061
00:52:28,560 --> 00:52:29,920
Speaker 4: I don't have an MBA, but I know I'm on

1062
00:52:30,000 --> 00:52:33,600
Speaker 4: your master business kind of beautiful. But as students of

1063
00:52:33,640 --> 00:52:36,440
Speaker 4: the game, as people who love business, what actually was

1064
00:52:36,480 --> 00:52:39,759
Speaker 4: happening was Netflix was changing the business model of the

1065
00:52:39,760 --> 00:52:42,360
Speaker 4: consumer proposition in the whole industry, right because, as you

1066
00:52:42,440 --> 00:52:45,880
Speaker 4: just pointed out, Blockbuster was a transactional, late fee driven

1067
00:52:46,239 --> 00:52:49,359
Speaker 4: and all of a sudden, you're subscribing to Netflix. You're

1068
00:52:49,400 --> 00:52:53,000
Speaker 4: now in a subscription relationship. Very disruptive. There was no

1069
00:52:53,760 --> 00:52:57,360
Speaker 4: there was really no precedent for that in that industry.

1070
00:52:57,400 --> 00:52:59,640
Speaker 4: So it looked like this crazy thing and it was

1071
00:52:59,680 --> 00:53:01,839
Speaker 4: easy to mock. Why wouldn't you just drop it off

1072
00:53:01,880 --> 00:53:05,080
Speaker 4: a block away mail it to these people, and yet

1073
00:53:05,120 --> 00:53:08,600
Speaker 4: it fundamentally changed the business model forever. And then we're

1074
00:53:08,640 --> 00:53:10,359
Speaker 4: not even talking about streaming, which we don't have to.

1075
00:53:10,440 --> 00:53:12,279
Speaker 4: But they keep innovating.

1076
00:53:12,080 --> 00:53:15,160
Speaker 2: And the you know, the interesting thing is you meant

1077
00:53:15,239 --> 00:53:18,239
Speaker 2: we were mentioning late fees. You know, if you get

1078
00:53:18,239 --> 00:53:20,960
Speaker 2: a late fee from your bank or a bounce check

1079
00:53:21,000 --> 00:53:23,640
Speaker 2: fee or something, it's part of your statement.

1080
00:53:23,680 --> 00:53:24,760
Speaker 3: It's not the same.

1081
00:53:24,520 --> 00:53:27,480
Speaker 2: Thing as showing up and having someone say, give me

1082
00:53:27,520 --> 00:53:30,600
Speaker 2: another seven bucks. What do you mean, give you another

1083
00:53:30,640 --> 00:53:36,320
Speaker 2: seven bucks? It was just like so annoying and alienating.

1084
00:53:36,440 --> 00:53:38,560
Speaker 2: Like I think it's a good rule of thumb, try

1085
00:53:38,600 --> 00:53:41,839
Speaker 2: not to really piss off all of your clients, all

1086
00:53:41,880 --> 00:53:42,759
Speaker 2: of your customers.

1087
00:53:43,000 --> 00:53:45,120
Speaker 4: Not a good long term strategy. I have a small

1088
00:53:45,120 --> 00:53:47,839
Speaker 4: confession to make that Wall Street summer I referenced when

1089
00:53:47,840 --> 00:53:50,640
Speaker 4: I went to Solomon Brothers. We did We had a

1090
00:53:50,719 --> 00:53:53,680
Speaker 4: video out from Blockbuster, and we kept it the whole summer.

1091
00:53:53,800 --> 00:53:56,239
Speaker 4: We just kept not returning and we were irresponsible at

1092
00:53:56,239 --> 00:53:58,839
Speaker 4: college sophomores. And at the end of the summer, I'm

1093
00:53:58,880 --> 00:54:01,400
Speaker 4: not even sure, like we racked up a triple digit

1094
00:54:01,520 --> 00:54:03,800
Speaker 4: late face and the video is twenty bucks to buy

1095
00:54:04,000 --> 00:54:06,279
Speaker 4: exactly by another one. So we had a friend of

1096
00:54:06,280 --> 00:54:09,040
Speaker 4: ours who was British go in with a British accent

1097
00:54:09,080 --> 00:54:12,080
Speaker 4: and explain to Blockbuster that we were renting his place.

1098
00:54:12,120 --> 00:54:14,279
Speaker 4: He doesn't really know about it, but here's this video

1099
00:54:14,440 --> 00:54:16,919
Speaker 4: that he found, and so we kind of got out

1100
00:54:16,920 --> 00:54:19,279
Speaker 4: of that one. It wasn't totally about board. So I'm

1101
00:54:19,280 --> 00:54:21,560
Speaker 4: happy now to admit that this is helpful for me.

1102
00:54:22,040 --> 00:54:24,280
Speaker 4: But yeah, that was kind of the state of things,

1103
00:54:24,320 --> 00:54:28,399
Speaker 4: the anxiety, the angst around returning a video late and

1104
00:54:28,440 --> 00:54:32,400
Speaker 4: not feeling great, you know, from a consumer branding standpoint, right.

1105
00:54:32,280 --> 00:54:35,479
Speaker 2: So yeah, Netflix love them. So let's talk about rule

1106
00:54:35,520 --> 00:54:42,400
Speaker 2: breakers today. They're gonna be in different spaces Biotech, defense tech, obviously,

1107
00:54:42,480 --> 00:54:45,960
Speaker 2: AI and a lot of these areas don't have a

1108
00:54:45,960 --> 00:54:48,840
Speaker 2: whole lot of earnings and they do have a massive

1109
00:54:48,880 --> 00:54:51,840
Speaker 2: cash burn. So how do you think about valuation in

1110
00:54:51,880 --> 00:54:54,439
Speaker 2: the space. Does it not matter if the growth is there?

1111
00:54:54,920 --> 00:54:58,600
Speaker 2: Define the modern era of rule breakers.

1112
00:54:58,160 --> 00:55:00,680
Speaker 4: So I would always be first of all looking at industries,

1113
00:55:00,719 --> 00:55:03,440
Speaker 4: and you just did that some and you know, even

1114
00:55:03,480 --> 00:55:08,080
Speaker 4: something like biotech, which you said, right, that's as you know, Barry,

1115
00:55:08,120 --> 00:55:12,319
Speaker 4: that's multiple industries. I mean, so the internet was never

1116
00:55:12,360 --> 00:55:15,000
Speaker 4: an industry AI is not in this industry. So we're

1117
00:55:15,040 --> 00:55:19,160
Speaker 4: talking about again, huge technologies. I was saying earlier, plate

1118
00:55:19,239 --> 00:55:23,200
Speaker 4: tectonic shifts for our society, and you're looking for the beneficiaries,

1119
00:55:23,239 --> 00:55:25,919
Speaker 4: and you're looking for the visionaries who were starting something

1120
00:55:25,960 --> 00:55:28,400
Speaker 4: that might sound a little crazy, like mailing DVDs back

1121
00:55:28,440 --> 00:55:32,080
Speaker 4: and forth or an electric car, and you want to

1122
00:55:32,080 --> 00:55:35,320
Speaker 4: get invested in those, assuming that you agree with the vision,

1123
00:55:35,760 --> 00:55:38,600
Speaker 4: you think the person is great. You and I were

1124
00:55:38,640 --> 00:55:42,960
Speaker 4: referencing Investment Research Circle nineteen eighties nineties, an annual report

1125
00:55:43,040 --> 00:55:45,040
Speaker 4: being mailed to you through the mail that was about

1126
00:55:45,040 --> 00:55:47,800
Speaker 4: all you had. There weren't online forms or anything. These days,

1127
00:55:48,080 --> 00:55:51,880
Speaker 4: you can watch long form YouTube videos watching any CEO

1128
00:55:51,960 --> 00:55:55,120
Speaker 4: be interviewed and learn a lot about their character, which

1129
00:55:55,160 --> 00:55:58,720
Speaker 4: carries which matters deeply to me. I'm a big character person,

1130
00:55:58,920 --> 00:56:01,080
Speaker 4: so I want to feel really good about the people

1131
00:56:01,120 --> 00:56:03,520
Speaker 4: I'm invested in across my portfolio. So we're looking at

1132
00:56:03,520 --> 00:56:07,000
Speaker 4: important emerging industries and we're not trying to force things

1133
00:56:07,080 --> 00:56:10,440
Speaker 4: that don't exist yet. There's no ultra AI stock, I mean,

1134
00:56:10,480 --> 00:56:12,719
Speaker 4: and Vidia has been an amazing hold for us now

1135
00:56:12,719 --> 00:56:15,280
Speaker 4: twenty one years in counting. It was not an AI company.

1136
00:56:15,560 --> 00:56:17,960
Speaker 4: When I first recommended it. But we're still holding But

1137
00:56:18,160 --> 00:56:20,080
Speaker 4: you know, these things are going to emerge. I already

1138
00:56:20,080 --> 00:56:23,879
Speaker 4: mentioned earlier things like Uber Airbnb didn't show up till

1139
00:56:23,960 --> 00:56:26,760
Speaker 4: more than ten years after the Internet had really started

1140
00:56:26,760 --> 00:56:31,520
Speaker 4: to penetrate American life. And so for me, it's just

1141
00:56:31,680 --> 00:56:37,360
Speaker 4: keeping our eyes out, whether it's genomics or some duo lingo,

1142
00:56:38,680 --> 00:56:42,480
Speaker 4: a video game on your phone where you're learning languages. Again,

1143
00:56:42,680 --> 00:56:45,279
Speaker 4: all of these are from different industries, but they are

1144
00:56:45,320 --> 00:56:48,239
Speaker 4: the innovator. And so yeah, we're staying focused in the

1145
00:56:48,280 --> 00:56:52,279
Speaker 4: modern day go forward on what are the companies that

1146
00:56:52,400 --> 00:56:55,000
Speaker 4: are going to add value to our world in a

1147
00:56:55,000 --> 00:56:58,919
Speaker 4: way that is consumer noticeable. And when they're called overvalued,

1148
00:56:59,120 --> 00:57:01,480
Speaker 4: that's even better for us as rule breaker investors.

1149
00:57:01,719 --> 00:57:05,399
Speaker 2: So let me share some criticism that you share with

1150
00:57:05,640 --> 00:57:08,920
Speaker 2: Warren Buffett of all people. When I'm doing my research

1151
00:57:09,120 --> 00:57:11,719
Speaker 2: for this conversation, one of the things that came up

1152
00:57:12,320 --> 00:57:16,440
Speaker 2: was you have this really good long term track record,

1153
00:57:16,880 --> 00:57:19,800
Speaker 2: but if you've been involved in more recently in the

1154
00:57:19,840 --> 00:57:23,960
Speaker 2: past ten to fifteen years, well, all those amazons, Netflix

1155
00:57:24,000 --> 00:57:27,520
Speaker 2: apples from the early two thousands are driving most of

1156
00:57:27,560 --> 00:57:28,280
Speaker 2: your gains.

1157
00:57:28,600 --> 00:57:30,000
Speaker 3: From what I'm hearing.

1158
00:57:29,800 --> 00:57:34,160
Speaker 2: From you, you're implying that doesn't really a hold true

1159
00:57:34,240 --> 00:57:36,560
Speaker 2: if you look at the Teslas and the Ubers and

1160
00:57:36,640 --> 00:57:40,560
Speaker 2: the more modern positions respond to that criticism, Hey, if.

1161
00:57:40,480 --> 00:57:41,520
Speaker 3: You weren't in it No.

1162
00:57:41,680 --> 00:57:44,760
Speaker 4: Three, you really didn't get any benefit. Well, first of all,

1163
00:57:44,800 --> 00:57:47,080
Speaker 4: I would say that invest every day of your life,

1164
00:57:47,160 --> 00:57:49,280
Speaker 4: every two weeks if you can. Young people, the first

1165
00:57:49,280 --> 00:57:51,000
Speaker 4: thing you should do is open account if you haven't

1166
00:57:51,000 --> 00:57:54,400
Speaker 4: already saved, and with every paycheck, try to put up

1167
00:57:54,440 --> 00:57:57,280
Speaker 4: to ten percent away and put it in. If you want,

1168
00:57:57,360 --> 00:57:59,280
Speaker 4: you can index, but I think you should be buying

1169
00:57:59,360 --> 00:58:02,280
Speaker 4: stocks as well alongside that and learning as you go.

1170
00:58:02,800 --> 00:58:05,960
Speaker 4: And anybody who's playing the long game in the markets,

1171
00:58:06,240 --> 00:58:08,920
Speaker 4: as they start to hit their thirtieth or fortieth year,

1172
00:58:08,960 --> 00:58:11,480
Speaker 4: which is where I am, it's always going to look

1173
00:58:11,600 --> 00:58:14,320
Speaker 4: like all your big winners were the first ten years,

1174
00:58:14,400 --> 00:58:17,920
Speaker 4: because of course they. I mean literally, Amazon is now

1175
00:58:18,000 --> 00:58:19,920
Speaker 4: more than a thousand times of value. For me, I'm

1176
00:58:19,960 --> 00:58:21,880
Speaker 4: not trying to be Amazon guy. You don't walk me.

1177
00:58:22,240 --> 00:58:24,120
Speaker 4: You don't see me walking around going I'm the guy

1178
00:58:24,120 --> 00:58:27,480
Speaker 4: who had Amazon sixteen cents. I also have that for Nvidia.

1179
00:58:28,080 --> 00:58:31,040
Speaker 4: But just by the nature of compounding, Barry, which I

1180
00:58:31,080 --> 00:58:34,080
Speaker 4: think you understand as well as anyone. It's always going

1181
00:58:34,120 --> 00:58:36,480
Speaker 4: to look like all your big winners were early. But

1182
00:58:36,600 --> 00:58:40,520
Speaker 4: you know, whether it's Tesla picked in you know, twenty

1183
00:58:40,760 --> 00:58:44,600
Speaker 4: eleven or Shopify in twenty sixteen, these are all rule breakers.

1184
00:58:45,200 --> 00:58:47,880
Speaker 4: They're not going to hit right away. Shopify has been

1185
00:58:47,960 --> 00:58:50,320
Speaker 4: up and down, but mostly up. It's a great example

1186
00:58:50,320 --> 00:58:52,680
Speaker 4: of a rule breaker circa the last ten years, not

1187
00:58:52,800 --> 00:58:55,240
Speaker 4: the first twenty years. But I never want people to

1188
00:58:55,280 --> 00:58:58,000
Speaker 4: forget we were right there at the beginning with AOL,

1189
00:58:58,080 --> 00:59:02,040
Speaker 4: and we were picking AOL and Amazon and Starbucks. By

1190
00:59:02,040 --> 00:59:04,720
Speaker 4: the way, the list goes on. So I would just say,

1191
00:59:04,840 --> 00:59:07,120
Speaker 4: compounding numbers are always going to make it look like

1192
00:59:07,240 --> 00:59:09,760
Speaker 4: all of your big winners are early in your career.

1193
00:59:10,280 --> 00:59:12,640
Speaker 2: So before I get to my favorite questions, is just

1194
00:59:13,120 --> 00:59:17,520
Speaker 2: one question I'm excited to ask you when you're looking ahead,

1195
00:59:17,800 --> 00:59:23,479
Speaker 2: what trends, what businesses, what ideas generally get your curiosity going?

1196
00:59:23,880 --> 00:59:27,560
Speaker 4: Well, this is this is in the same way that

1197
00:59:27,680 --> 00:59:29,800
Speaker 4: seven up was the on Kola back in the day.

1198
00:59:29,840 --> 00:59:31,880
Speaker 4: This is an unanswer because.

1199
00:59:31,840 --> 00:59:33,880
Speaker 2: By the way, you're talking to a generation I know

1200
00:59:33,960 --> 00:59:35,400
Speaker 2: that has no idea what that means.

1201
00:59:35,520 --> 00:59:37,760
Speaker 4: But you, you and I do, though, and we got

1202
00:59:37,800 --> 00:59:43,680
Speaker 4: some of our peeps listening, So yeah, I should have

1203
00:59:43,720 --> 00:59:47,800
Speaker 4: just answered the question. So I look for companies that

1204
00:59:48,800 --> 00:59:52,920
Speaker 4: are conscious capitalism kinds of companies. I want companies that,

1205
00:59:53,000 --> 00:59:55,640
Speaker 4: first of all, are doing good in this world. By

1206
00:59:55,680 --> 00:59:57,600
Speaker 4: my perception, a lot of people think it's a trade

1207
00:59:57,600 --> 01:00:00,040
Speaker 4: off in life. They think capitalism is greedy and e

1208
01:00:00,680 --> 01:00:03,680
Speaker 4: and you know you're abusing workers and it's all about

1209
01:00:03,680 --> 01:00:07,600
Speaker 4: maximizing shareholder value. I completely disagree in many cases. Sure

1210
01:00:07,640 --> 01:00:10,120
Speaker 4: that exists in the world, but that's not the story

1211
01:00:10,160 --> 01:00:13,760
Speaker 4: of Amazon. Amazon is a big, beautiful, amazing enterprise that

1212
01:00:14,080 --> 01:00:17,440
Speaker 4: helps save lives during COVID. And yes, they'll get criticized

1213
01:00:17,480 --> 01:00:19,160
Speaker 4: for some of the things that they've done. And Jeff

1214
01:00:19,200 --> 01:00:23,920
Speaker 4: Bezos is considered an egomaniac by some, but net net please,

1215
01:00:24,040 --> 01:00:27,720
Speaker 4: Amazon is a huge value contributor. So that's an example

1216
01:00:27,720 --> 01:00:30,520
Speaker 4: of a company. Read Hastings and what he created a Netflix.

1217
01:00:30,560 --> 01:00:32,840
Speaker 4: I mean, there's a whole eighty page slide. A lot

1218
01:00:32,840 --> 01:00:35,400
Speaker 4: of entrepreneurs have seen about how Netflix does culture that

1219
01:00:35,440 --> 01:00:37,240
Speaker 4: they just kind of share out and you could see

1220
01:00:37,560 --> 01:00:40,320
Speaker 4: why they're so successful because how they treat their employees

1221
01:00:40,480 --> 01:00:44,320
Speaker 4: and the standards that they hold where doing good actually

1222
01:00:44,400 --> 01:00:47,560
Speaker 4: leads to doing well. And again many people think that's

1223
01:00:47,600 --> 01:00:50,080
Speaker 4: a trade offer. They don't actually think that's real. So

1224
01:00:50,600 --> 01:00:53,480
Speaker 4: I specifically want you and I to make our portfolios

1225
01:00:53,520 --> 01:00:56,720
Speaker 4: reflect our best vision for our future. And so every

1226
01:00:56,760 --> 01:00:59,480
Speaker 4: company that I already like invade against an entire industry

1227
01:00:59,520 --> 01:01:02,040
Speaker 4: the gaming in the street earlier, Sorry gamers, but by

1228
01:01:02,040 --> 01:01:04,200
Speaker 4: the way, I'm a gamer, but I play video games

1229
01:01:04,200 --> 01:01:06,880
Speaker 4: and board games. Not fifty to fifty in the house

1230
01:01:06,880 --> 01:01:10,640
Speaker 4: takes ten percent game. But I would say that you're

1231
01:01:10,680 --> 01:01:13,560
Speaker 4: looking for the people who are doing good or within

1232
01:01:13,600 --> 01:01:16,760
Speaker 4: their industry. They're admired for how they treat their employees,

1233
01:01:16,800 --> 01:01:19,360
Speaker 4: how they win for their customers, and how their partners

1234
01:01:19,360 --> 01:01:21,720
Speaker 4: and suppliers are proud to be associated with them. And

1235
01:01:22,000 --> 01:01:25,320
Speaker 4: guess what, Usually the stocks end up outperforming in a

1236
01:01:25,360 --> 01:01:27,800
Speaker 4: world where many people think it's too risky to even

1237
01:01:27,880 --> 01:01:31,240
Speaker 4: buy individual stocks. So the more there's big dumb money

1238
01:01:31,280 --> 01:01:34,200
Speaker 4: slashing around out there, Barry, the easier it is for

1239
01:01:34,280 --> 01:01:36,600
Speaker 4: stock pickers like me, like you, if you like, like

1240
01:01:36,640 --> 01:01:40,440
Speaker 4: anybody listening to us, to actually pick and discern the

1241
01:01:40,440 --> 01:01:43,080
Speaker 4: good companies hold them longer than Wall Street, longer than

1242
01:01:43,080 --> 01:01:46,960
Speaker 4: the headlines than CNBC will be talking about and do

1243
01:01:47,160 --> 01:01:47,920
Speaker 4: really well.

1244
01:01:48,600 --> 01:01:51,560
Speaker 2: So let's jump to our speed round our favorite questions

1245
01:01:51,600 --> 01:01:54,680
Speaker 2: in the last five minutes we have starting with who

1246
01:01:54,760 --> 01:01:57,400
Speaker 2: your early mentors who helped shape your career.

1247
01:01:57,600 --> 01:02:00,640
Speaker 4: So my father, who at the age of eight teens said,

1248
01:02:00,640 --> 01:02:02,480
Speaker 4: here you go, David, I've been investing in this for

1249
01:02:02,520 --> 01:02:05,200
Speaker 4: you from birth. This is all you're ever getting from me.

1250
01:02:06,120 --> 01:02:08,280
Speaker 4: And I've taught you out of value line that big

1251
01:02:08,320 --> 01:02:11,560
Speaker 4: black tome, the numbers of investing. And I know you

1252
01:02:11,600 --> 01:02:14,840
Speaker 4: love sports statistics. Another of my mentors, Bill James, the

1253
01:02:15,040 --> 01:02:20,040
Speaker 4: awesome baseball statistician. Actually he was a journalist, but James

1254
01:02:20,040 --> 01:02:23,640
Speaker 4: who influenced Moneyball of course. Of course, so who I've

1255
01:02:23,760 --> 01:02:26,400
Speaker 4: met before, But you know, these these are early people

1256
01:02:26,480 --> 01:02:29,880
Speaker 4: who convinced me of the fun of life and that

1257
01:02:29,960 --> 01:02:32,080
Speaker 4: it could be counted with numbers. I'm an English major,

1258
01:02:32,120 --> 01:02:34,040
Speaker 4: but there's a there's a big left brain going on

1259
01:02:34,160 --> 01:02:37,080
Speaker 4: with me with loving loving numbers and baseball stats and

1260
01:02:37,400 --> 01:02:40,600
Speaker 4: college basketball stats. Ken Palm, by the way, Ken Palm

1261
01:02:40,720 --> 01:02:43,720
Speaker 4: that is a twenty five dollars subscription any sports fan

1262
01:02:44,280 --> 01:02:50,920
Speaker 4: would enjoy. So so Peter Lynch, I'm thinking about Clayton Christensen.

1263
01:02:51,000 --> 01:02:54,080
Speaker 4: I mentioned. These are all people who really have helped

1264
01:02:54,080 --> 01:02:55,560
Speaker 4: me think about what wins.

1265
01:02:56,720 --> 01:02:59,680
Speaker 2: Look, you mentioned money ball. Let's talk about books. What

1266
01:02:59,720 --> 01:03:01,680
Speaker 2: are so some of your favorites. What are you reading

1267
01:03:01,760 --> 01:03:02,280
Speaker 2: right now?

1268
01:03:02,640 --> 01:03:06,280
Speaker 4: Yeah, so, first of all, I'm reading right now The

1269
01:03:06,360 --> 01:03:11,000
Speaker 4: Score by ten when and the score is an amazing

1270
01:03:11,040 --> 01:03:13,320
Speaker 4: but I think the subtitle is something like how to

1271
01:03:13,360 --> 01:03:19,360
Speaker 4: stop playing somebody Else's Game? And Nuen is a games philosopher,

1272
01:03:19,800 --> 01:03:23,560
Speaker 4: so people are you know, philosophers about ideas or art.

1273
01:03:23,880 --> 01:03:27,640
Speaker 4: He specifically looks at games, and his book talks about

1274
01:03:27,680 --> 01:03:29,880
Speaker 4: how social media, for example, is sort of a game,

1275
01:03:30,320 --> 01:03:33,240
Speaker 4: like as soon as you start imposing likes and follows,

1276
01:03:34,280 --> 01:03:37,440
Speaker 4: you're playing somebody else's game. You're playing Twitter X's game

1277
01:03:37,520 --> 01:03:41,880
Speaker 4: or Facebook's game. When you have to accept GPA as

1278
01:03:41,920 --> 01:03:43,880
Speaker 4: a measure of how well you've done in college, and

1279
01:03:43,920 --> 01:03:47,080
Speaker 4: it becomes big and bureaucratic, and everybody's using that. You

1280
01:03:47,120 --> 01:03:50,400
Speaker 4: are unfortunately playing somebody else's games. Sometimes you have to

1281
01:03:50,440 --> 01:03:55,160
Speaker 4: do it, but being self aware of what is motivating you.

1282
01:03:55,480 --> 01:03:58,520
Speaker 4: It is an amazing book and I highly recommend this score.

1283
01:03:58,520 --> 01:04:01,960
Speaker 4: I've had my podcast a couple of times. Love the guy.

1284
01:04:02,080 --> 01:04:04,320
Speaker 4: I mean, we just couldn't geek out about board games.

1285
01:04:04,320 --> 01:04:05,920
Speaker 4: But that's what I'm reading right now. But you know,

1286
01:04:05,960 --> 01:04:08,160
Speaker 4: when I think about books, I mean it's a motley

1287
01:04:08,360 --> 01:04:12,320
Speaker 4: array of books, Barry, Indeed, I mean The Inevitable by

1288
01:04:12,400 --> 01:04:14,760
Speaker 4: Kevin Kelly's a great book about the future. I'm a

1289
01:04:14,800 --> 01:04:18,240
Speaker 4: big Kevin Kelly fan. He founded Wired magazine. He's a genius.

1290
01:04:18,920 --> 01:04:21,880
Speaker 4: I enjoy Arthur Brooks's columns in the Atlantic. He writes

1291
01:04:21,880 --> 01:04:25,000
Speaker 4: about happiness. I really loved his book Love Your Enemies,

1292
01:04:25,000 --> 01:04:27,280
Speaker 4: talking about the divisiveness in our country and how to

1293
01:04:27,320 --> 01:04:30,200
Speaker 4: solve that. And I would love to see more of that.

1294
01:04:30,560 --> 01:04:35,360
Speaker 4: Stephen Pinker and all of his data accumulation around technologies,

1295
01:04:35,400 --> 01:04:38,480
Speaker 4: trends in our culture. It seems always to be smart

1296
01:04:38,520 --> 01:04:41,440
Speaker 4: to be a pessimist. You always sound smarter when you

1297
01:04:41,480 --> 01:04:44,920
Speaker 4: talk something down. And yet we're pinch yourself that you're

1298
01:04:44,960 --> 01:04:46,680
Speaker 4: living today. I know we have a lot of problems.

1299
01:04:47,040 --> 01:04:50,320
Speaker 4: We have many many better problems. There were many worse

1300
01:04:50,400 --> 01:04:53,960
Speaker 4: problems in over human history. Stephen Pinker reminds us of that.

1301
01:04:54,160 --> 01:04:58,320
Speaker 2: Right our world and data. Yeahns Rosling saying, there you go, Barry, exactly.

1302
01:04:58,320 --> 01:05:01,040
Speaker 2: I was rudely using my phone to get the exact

1303
01:05:01,120 --> 01:05:03,520
Speaker 2: name of a book that I'm gonna recommend. To you

1304
01:05:03,560 --> 01:05:06,400
Speaker 2: because it's sitting on my desk and the author is

1305
01:05:06,520 --> 01:05:13,840
Speaker 2: Danny Funt. Everybody loses and it's all about the tumultuous

1306
01:05:13,960 --> 01:05:18,920
Speaker 2: rise of American sports gambling and why it's such glad

1307
01:05:18,960 --> 01:05:22,400
Speaker 2: he wrote that. So it's literally waiting for me to

1308
01:05:22,880 --> 01:05:29,120
Speaker 2: it's next up. This this giant I love, but it's writing,

1309
01:05:29,160 --> 01:05:34,160
Speaker 2: your writing, your moo. I mentioned earlier some streaming time,

1310
01:05:34,280 --> 01:05:37,760
Speaker 2: we've been talking about Netflix and Amazon, So tell us

1311
01:05:38,600 --> 01:05:42,160
Speaker 2: what are your favorite Netflix or Amazon Prime videos or

1312
01:05:42,200 --> 01:05:43,640
Speaker 2: what podcasts are you listening to?

1313
01:05:43,720 --> 01:05:46,400
Speaker 4: Thank you? I you know, I really enjoyed Apple's Player

1314
01:05:46,440 --> 01:05:49,040
Speaker 4: of Us. If you saw that, it's also in my queue.

1315
01:05:49,120 --> 01:05:53,480
Speaker 4: Next up to totally recommend that that's just season one.

1316
01:05:53,720 --> 01:05:56,520
Speaker 4: I mean, we had a lot of British comedy fans

1317
01:05:56,560 --> 01:05:59,400
Speaker 4: in my family, so shows like Mitchell and Webb the

1318
01:05:59,440 --> 01:06:02,800
Speaker 4: Comedy do. Their clips are all over YouTube, but it

1319
01:06:03,160 --> 01:06:08,000
Speaker 4: crawt hilarious show streaming. Totally recommend that, not as funny,

1320
01:06:08,000 --> 01:06:10,800
Speaker 4: but very British. All creatures great and small, just very

1321
01:06:10,800 --> 01:06:16,439
Speaker 4: interesting light exactly, just such a slow horses, great great

1322
01:06:16,480 --> 01:06:20,440
Speaker 4: show Apple and or sure I love sci fi. I

1323
01:06:20,440 --> 01:06:22,240
Speaker 4: love all the Marvel stuff. By the way, Marvel's been

1324
01:06:22,240 --> 01:06:24,880
Speaker 4: an amazing stock for me. It got bought out by Disney,

1325
01:06:25,000 --> 01:06:27,000
Speaker 4: so these days we have a very low cost basis.

1326
01:06:27,000 --> 01:06:30,160
Speaker 4: You couldn't have gotten because when Disney bought Marvel at

1327
01:06:30,200 --> 01:06:33,120
Speaker 4: a huge premium, we Marvel shareholders, we happy for you

1328
01:06:33,240 --> 01:06:36,600
Speaker 4: buying a rule breaker that looked over valued. We've ended

1329
01:06:36,680 --> 01:06:38,640
Speaker 4: up doing really well. So but you know, and are

1330
01:06:38,640 --> 01:06:41,120
Speaker 4: obviously star Wars and I love brands, and I love

1331
01:06:41,160 --> 01:06:42,040
Speaker 4: family entertainment.

1332
01:06:42,080 --> 01:06:44,000
Speaker 2: So those are some that come to mind. I just

1333
01:06:44,040 --> 01:06:46,360
Speaker 2: flew back from San Francisco. On on the flight, I

1334
01:06:46,440 --> 01:06:50,680
Speaker 2: rewatched Deadpool and Wolverine, and it's like I forgot how

1335
01:06:50,760 --> 01:06:54,440
Speaker 2: much fun that movie? Yeah, really really blessed our final

1336
01:06:54,480 --> 01:06:57,520
Speaker 2: two questions, What sort of advice would you give to

1337
01:06:57,560 --> 01:07:02,120
Speaker 2: a recent college graduate interest did in a career and investing? Well,

1338
01:07:02,120 --> 01:07:04,200
Speaker 2: I would first of all say that you should pick

1339
01:07:04,240 --> 01:07:06,800
Speaker 2: individual stocks, and you should pay attention to the game,

1340
01:07:07,040 --> 01:07:07,360
Speaker 2: and you.

1341
01:07:07,280 --> 01:07:09,120
Speaker 4: Should love it. You should have a lot of fun.

1342
01:07:09,160 --> 01:07:11,200
Speaker 4: I mean, I love sports. We've talked to I know

1343
01:07:11,240 --> 01:07:13,040
Speaker 4: you do too. We've talked about that. A lot people

1344
01:07:13,120 --> 01:07:15,920
Speaker 4: follow their sports teams day to day. I follow the

1345
01:07:16,000 --> 01:07:19,360
Speaker 4: markets day to day. And the difference is you actually

1346
01:07:19,400 --> 01:07:22,200
Speaker 4: can make serious money by learning and following the market

1347
01:07:22,240 --> 01:07:24,040
Speaker 4: in a way you never will as a sports fan.

1348
01:07:24,400 --> 01:07:26,440
Speaker 4: And I love sports, and you know sports can be

1349
01:07:26,480 --> 01:07:28,440
Speaker 4: a little bit more fun day to day, but the

1350
01:07:28,520 --> 01:07:31,040
Speaker 4: markets are open every day. Your NFL team only plays

1351
01:07:31,040 --> 01:07:34,240
Speaker 4: on Sundays. And starting to figure out what wins in

1352
01:07:34,280 --> 01:07:36,959
Speaker 4: the marketplace, and why is that app on your phone

1353
01:07:36,960 --> 01:07:39,040
Speaker 4: not somebody else's app, what's in your fridge, what are

1354
01:07:39,040 --> 01:07:41,880
Speaker 4: you wearing? Noticing the things that go on around you.

1355
01:07:42,160 --> 01:07:43,919
Speaker 4: This is going to lead to riches, but it's also

1356
01:07:43,960 --> 01:07:47,280
Speaker 4: going to open your mind to awareness of what's happening

1357
01:07:47,280 --> 01:07:49,120
Speaker 4: in our society. And I do think that people who

1358
01:07:49,120 --> 01:07:52,520
Speaker 4: are taught to index and not really care are kind

1359
01:07:52,520 --> 01:07:55,439
Speaker 4: of walk and blind in society when they could be

1360
01:07:55,720 --> 01:07:59,120
Speaker 4: poking their feelers up seeing what's happening in genomics or

1361
01:07:59,200 --> 01:08:01,360
Speaker 4: robotic surgery or whatever. And I'm an English major and

1362
01:08:01,440 --> 01:08:04,560
Speaker 4: I care about these things and profiting as a consequence.

1363
01:08:04,640 --> 01:08:08,000
Speaker 4: I would also say that any young person start investing yesterday,

1364
01:08:08,520 --> 01:08:10,120
Speaker 4: and our final question.

1365
01:08:10,040 --> 01:08:12,240
Speaker 2: What do you know about the world of investing today?

1366
01:08:12,680 --> 01:08:15,080
Speaker 2: Might have been useful back in nineteen ninety three when

1367
01:08:15,080 --> 01:08:16,280
Speaker 2: you were first getting started.

1368
01:08:16,560 --> 01:08:18,400
Speaker 4: I would just say that when I first got started

1369
01:08:18,439 --> 01:08:21,000
Speaker 4: nineteen ninety three, investing was more of a math exercise

1370
01:08:21,040 --> 01:08:23,599
Speaker 4: for me. I was taught by a dad. I mentioned

1371
01:08:23,680 --> 01:08:26,800
Speaker 4: value line, lots of ratios that we know. I never

1372
01:08:26,920 --> 01:08:29,240
Speaker 4: learned financial statements until I bought how to read a

1373
01:08:29,240 --> 01:08:33,960
Speaker 4: financial statement the year after I graduated college, thinking, you know,

1374
01:08:34,040 --> 01:08:35,920
Speaker 4: I kind of missed that. I never really did that,

1375
01:08:36,120 --> 01:08:39,519
Speaker 4: and so I was very numerically driven. I think what

1376
01:08:39,560 --> 01:08:43,439
Speaker 4: I've realized is that using your right brain in a

1377
01:08:43,479 --> 01:08:46,160
Speaker 4: world where many people are just using their left brain,

1378
01:08:46,840 --> 01:08:49,559
Speaker 4: is where the real values added. My favorite chapter in

1379
01:08:49,600 --> 01:08:54,320
Speaker 4: my Rule Breaker investing book points out that most of

1380
01:08:54,360 --> 01:08:57,040
Speaker 4: the things that win in business are not actually on

1381
01:08:57,080 --> 01:08:59,439
Speaker 4: the financial statements. We've already talked about a few of them.

1382
01:08:59,600 --> 01:09:02,559
Speaker 4: Who's running the company That is incredibly important. How about

1383
01:09:02,600 --> 01:09:05,280
Speaker 4: the brand value of a company? Most of those are

1384
01:09:05,320 --> 01:09:08,479
Speaker 4: never expressed anywhere in the financial statements. The culture of

1385
01:09:08,520 --> 01:09:12,120
Speaker 4: the company can it innovate? Those four things are the

1386
01:09:12,160 --> 01:09:14,320
Speaker 4: bedrocks as an entrepreneur. I know I see it in

1387
01:09:14,439 --> 01:09:16,639
Speaker 4: my own company when we fail and when we succeed.

1388
01:09:17,360 --> 01:09:19,559
Speaker 4: None of those is being captured in the financial statements.

1389
01:09:19,600 --> 01:09:23,080
Speaker 4: And we're living in a left brain driven algorithmic world

1390
01:09:23,160 --> 01:09:26,760
Speaker 4: and so I think here now I see and I

1391
01:09:26,800 --> 01:09:28,760
Speaker 4: only think longer term than I ever did before when

1392
01:09:28,800 --> 01:09:30,840
Speaker 4: I was thirty years ago. I think longer term today

1393
01:09:30,840 --> 01:09:32,920
Speaker 4: at the age of fifty nine than twenty nine, and

1394
01:09:32,960 --> 01:09:33,960
Speaker 4: I use my right brain.

1395
01:09:34,840 --> 01:09:37,559
Speaker 2: David, thank you so much for being so generous with

1396
01:09:37,600 --> 01:09:40,600
Speaker 2: your time. This has been absolutely fascinating.

1397
01:09:40,720 --> 01:09:42,679
Speaker 4: We have been speaking with David Gardner.

1398
01:09:42,800 --> 01:09:46,080
Speaker 2: He is one of the co founders of the Motleygue

1399
01:09:46,080 --> 01:09:49,080
Speaker 2: four and author of the book Let's See If I

1400
01:09:49,080 --> 01:09:53,360
Speaker 2: can spit this out, rule Breaker Investing, how to pick

1401
01:09:53,400 --> 01:09:56,639
Speaker 2: the best stocks of the future and build lasting Well.

1402
01:09:57,439 --> 01:10:00,160
Speaker 4: If you enjoyed this conversation, well.

1403
01:10:00,120 --> 01:10:02,320
Speaker 2: Check out any of the six hundred and twenty seven

1404
01:10:02,760 --> 01:10:06,080
Speaker 2: we've done over the past dozen years. You can find

1405
01:10:06,120 --> 01:10:11,200
Speaker 2: those at YouTube, Spotify, Apple, Bloomberg, wherever you get.

1406
01:10:11,080 --> 01:10:12,360
Speaker 3: Your favorite podcasts.

1407
01:10:12,960 --> 01:10:14,960
Speaker 2: I would be remiss if I didn't thank the crack

1408
01:10:15,040 --> 01:10:19,760
Speaker 2: team that helps these conversations come together each week. Alexis

1409
01:10:19,880 --> 01:10:25,120
Speaker 2: Noriega is my video producer. Sean Russo is my researcher.

1410
01:10:25,640 --> 01:10:27,760
Speaker 2: Anna Luke is my podcast producer.

1411
01:10:28,479 --> 01:10:29,720
Speaker 3: I'm Barry Ridults.

1412
01:10:30,040 --> 01:10:34,680
Speaker 2: You've been listening to Masters in Business on Bloomberg Radio