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Ladies and gentlemen, welcome to
the Business Brew. 

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I am your host, Bill Brewster. 
As always, thank you for 

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listening. 
This episode features David 

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Gardner of The Motley Fool. 
David has a new book out. 

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It's called Rule Breaker 
Investing. 

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This is David's. 
This is the culmination of all 

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of his work. 
OK, it's called rule breaker 

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investing. 
How to pick the best stocks of 

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the future and build lasting 
wealth. 

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If you have followed me for a 
little while, you will know that

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David pushed my brain to think 
in a different way. 

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When I first read him, I thought
this guy thinks so, so 

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differently than what I think is
correct that I have to 

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understand why he thinks the way
he does. 

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And I have. 
I've gotten myself to understand

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it and I see the wisdom in it. 
So I hope that you all enjoy 

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this episode. 
I enjoyed it. 

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I refer you to our first episode
that we did. 

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I'll I'll link that in the show 
notes. 

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But that was a heck of an 
interview. 

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I was worried that this one 
would not be as good, but I 

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think it came out pretty pretty 
nicely. 

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Pretty, pretty, pretty good. 
Anyway, nothing in the show is 

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financial advice. 
Everything in this program is 

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for entertainment purposes only.
Please consult your financial 

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advisor before making investment
decisions and do your own due 

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diligence. 
This episode is sponsored by 

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Fiscal dot AI. 
You should listen to my recent 

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podcast with Braden Dennis in 
order to really understand what 

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fiscal AI is and where they're 
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He lays out how they're looking 
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I will tell you that, you know, 

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my experience is on the consumer
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And I can't confirm or deny, but

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So that's probably worth 
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As far as the the standard 
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the greatest analyst in the 
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So probably worth using my 
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I would greatly appreciate it I 
get some money on the backside 

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of that. 
Holler at your boy. 

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I could use the help. 
Anyway, I appreciate you all 

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listening. 
I appreciate Brayden and Fiscal 

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dot AI for sponsoring the show. 
Sign up using the link fiscal 

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dot AI forward slash brew. 
All right, ladies and gentlemen,

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thrilled to be joined by the one
and only David Gardner. 

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David, how you been? 
I've been really well, Bill. 

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It's been a great few years 
since we last talked. 

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The market's been volatile, but 
mostly up and personally and 

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professionally, it's been 
rewarding and fulfilling. 

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But that's what I'd hope for I 
guess any four year period or 

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so. 
So I'm excited to be here with 

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you today. 
I had so much fun talking with 

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you before. 
I'm looking forward to talking 

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about Rule Breaker investing 
well. 

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I thank you for coming back on. 
I have a fair amount of anxiety 

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about this conversation, in part
because I really, you know, am 

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like impressed by you. 
Not to be a fanboy, but two, I 

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was listening to our first 
conversation. 

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I was like, I don't know how I'm
going to do a better interview 

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than that. 
And, you know, it was kind of 

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funny. 
It was at the end of 2021. 

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You said in it, you said, look, 
if 2022 is a down year, that's 

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just kind of how it goes. 2022 
was indeed a down year. 

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Ouch. 
At A at a point it looked as 

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though some of these stocks had 
no chance of coming back and 

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then they've come roaring back. 
So I mean, I, your new book lays

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out the mentality of investing 
for the long term. 

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And I, I think you foreshadowed 
the mentality pretty well in our

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first discussion, But how would 
you say the last three years 

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have have solidified previous 
thoughts or like, how would you,

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you know, 2021 we were talking 
about look, it, it's, it may be 

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frothy, we may have a 
correction. 

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The correction seemed deeper 
than I thought. 

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But do you say that these stocks
have bounced back for the most 

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part? 
They have and you know, I, I do 

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believe that that is what you 
should expect as an investor, as

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somebody live in the United 
States of America today in 2025.

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Now I think that you should 
expect continuously over the 

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course of your life that the 
market will one year and three 

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drop. 
And that particular year Bill, I

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was cut in half. 
My Portfolio was down 50%. 

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Like that was a brutal, that 
wasn't just a, a down year, that

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was a brutal year. 
And I am happy to say yes, all 

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time highs again, I never expect
things to do anything other than

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the writ large probabilities 
that we talked about that two 

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years and three the market 
should go up and over the course

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of time 910% annualized. 
I do count on those things that 

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seems really important to to be 
able to consider foundational or

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bedrock assumptions that you can
make. 

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Therefore, when we do have a 
horrendous year, which I was not

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trying to forecast at the end of
2021, I had absolutely no idea. 

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And it just like, I don't know 
what will happen tomorrow or 

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next year, but but I'm going to 
be invested through all of it. 

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And I've certainly been wildly 
rewarded for for simply being 

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continuously invested my whole 
life. 

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And I'm 59 now. 
I started 18. 

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So I hope I have 41 more years 
to invest that that will hit a 

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Big Magic round Number for me. 
Yeah, that would be nice if I 

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get there. 
But you know, I, I, how's, how 

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have things been with you? 
They've been pretty good. 

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You know, I, I, one of the 
things that we had talked about 

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in that first interview was I, 
I've sort of embraced 

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diversification a little bit 
more. 

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I, I was, I guess a younger me 
before I had kids and before I 

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had like real responsibility. 
I used to want to, you know, I, 

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I think I was a little bit too 
much gas and I've let off the 

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gas a little bit and I'd, I'm, 
you know, it, it's been a little

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bit less stress. 
So I, you know, I don't know, do

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I have to work on my returns? 
I I guess maybe, but I think I 

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need to work on owning the 
businesses and letting them 

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generate the returns and 
whenever they happen they 

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happen. 
Yeah, there's a great line 

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somewhere in my book. 
Most of the great lines in my 

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book are from other people. 
And one of them was from the mom

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of one of our employees who said
to her son Mark at an early age,

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Mark, there are three ways to 
make money in this world. 

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The 1st is with your brain and 
the second is with your brown, 

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and the third is with your 
money. 

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Which one are you interested in?
And Mark said, could you tell me

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more about that third one, 
making money with your money? 

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And that really is literally 
what happens if you if you 

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invest and it is by far the 
easiest way to make money, at 

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least for me. 
I will say my psychology is 

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willing to lose. 
I'm willing to be cut in half 

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just months after I said, I 
don't know what's going to 

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happen next year, Bill. 
And and so I I think that that's

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something that's probably 
disconnected in me. 

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And yet that's for good. 
And so I do try to make money 

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with my brain. 
Very little of the course of my 

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life with my brown wouldn't have
made much. 

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Yeah, well, you and me both. 
With my money though, that that 

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is a that's a neat trick and 
it's not a, it's not a magic 

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trick. 
It feels like magic, especially 

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as you let numbers compound over
the course of your life. 

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But it it really is very logical
and it's a lot more stress free 

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as long as you don't sweat the 
downside. 

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How, how did you get, you know, 
you talk about in the book, what

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one of the things I like about 
in the book is, is you do a good

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job at framing how personalized 
all this can be, right? 

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And and you talk about selling 
down to your sleep number. 

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And you know, how did you 
personally get so comfortable 

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allowing A portfolio to be as 
concentrated as you have allowed

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it to be? 
And has that shifted as you you 

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are maybe closer to the years of
not earning as much income as 

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you were when you started out? 
Yeah, I, I think that I am, I 

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think I've been comfortable 
allowing My Portfolio to be 

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outsized in a few positions 
relatively because the only way 

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those positions ever got there 
is because they earned it. 

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And so when you allow a company 
like Amazon or NVIDIA to blow up

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in your portfolio in the best 
sense of the term, you are as 

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the stock goes up 10 times in 
value or 100 times or my God 

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Bill, 1000 times in value, you 
really get to know it pretty 

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well. 
And also when something gets to 

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be much bigger as those 
companies among some other rule 

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Breakers to have done, they 
actually become safer and 

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stronger. 
They do become more disruptible 

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potentially. 
That's one of the brilliant 

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insights that Clayton 
Christensen offered the world 

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with disruptive innovation, 
which is that bigger companies 

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actually become easier to 
compete with because sort of 

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like the Roman Empire in its 
last 100 years, it just can't 

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guard everything. 
And it just, it's slower moving,

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etcetera. 
And the employees aren't as 

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motivated and there's not as 
much incentive. 

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And so but I'm happy to say for 
just the best companies of our 

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time, that has not been true. 
Alphabet does not strike me as 

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this flabby thing waiting to be 
taken down by gnats and 

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mosquitoes and. 
Well, haven't you heard that 

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it's dead because of AI? 
I have heard that and you know, 

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I will say that it's own AI has 
hurt our business a little bit 

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at The Motley Fool because when 
people searched for things in 

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the past, they would get a link 
to fool.com to define that term 

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or talk more about that company.
And now Gemini just captures it 

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right on the Google screen and 
says, oh, we think you're 

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00:11:37,960 --> 00:11:39,320
probably referring to The Motley
Fool. 

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And here's the definition of 
market capitalization. 

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So yeah, everything is an 
ecosystem constantly changing, 

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which is always worth 
remembering. 

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But I have definitely been 
rewarded for allowing to win in 

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My Portfolio. 
And that does mean that I've 

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been in balance. 
But also I take pains in the 

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book to talk about Sleep Number,
which we can talk more about. 

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Or to point out that even though
I would say a majority of my 

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wealth is concentrated in my top
five positions, I've got 50 ish 

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others. 
And you know, some of those 

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will, will be awesome over time 
and some of my big dogs will 

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will decline or lose a step. 
And so everything is changing 

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all the time. 
And most of the time stuff is 

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going up. 
If we're doing capitalism right 

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and if you and I are making good
calls on what we're investing 

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in, those things should be sort 
of rising over the course of 

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time. 
And I'm OK allowing certain bars

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on my histograph of My Portfolio
holdings, certain bars to be 

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bigger, taller bars because 
those companies went out 

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Netflix, Tesla and earned that 
in the public markets. 

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And I loved what they did at the
start. 

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And I've gotten to be a fan of 
theirs as consumer and investor.

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And so I just feel more 
comfortable. 

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If you told me that I was highly
over invested in a micro cap or 

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in something in a genomics 
company that was new age that I 

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loved but I didn't fully know 
it, I wouldn't feel as 

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comfortable having as much in 
that as as I do in Netflix. 11 

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interest Well, there's a ton of 
interesting things in the book, 

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00:13:09,680 --> 00:13:12,480
but one of the interesting 
things that you had had alluded 

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to is or said not alluded to. 
You said I, I believe that you 

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00:13:17,760 --> 00:13:23,280
said when I have over allocated 
to an initial position, it is 

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00:13:23,280 --> 00:13:25,640
almost never been like a great 
idea. 

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You want to talk a little bit 
about that and some of the the 

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00:13:28,720 --> 00:13:31,640
rule prescription that you have 
around initial positions and how

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you came up with that? 
Yeah, I think that's that's 

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00:13:34,000 --> 00:13:36,400
really important. 
I mean, so much of what I'm 

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00:13:36,400 --> 00:13:40,720
writing about in the book is 
what I've learned, and I'm not 

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00:13:40,720 --> 00:13:44,440
intending it to be a direct 
lesson for anybody reading that 

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00:13:44,440 --> 00:13:46,560
page. 
It's sort of pick and choose, 

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00:13:46,560 --> 00:13:49,240
choose your own adventure. 
We all have free agency, free 

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will. 
We're each unique creatures. 

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00:13:50,760 --> 00:13:53,880
We try to get to know ourselves 
over the course of our lives. 

232
00:13:54,320 --> 00:13:57,160
Just figuring out who you are is
enough for many of us. 

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00:13:57,320 --> 00:14:01,800
So I'm never trying to impose 
what I am or the things that I 

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00:14:01,800 --> 00:14:09,000
do on anybody reading. 
But overall, I guess actually 

235
00:14:09,000 --> 00:14:10,840
let me let me retake that bill 
if I could. 

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00:14:10,880 --> 00:14:13,240
All right. 
We're, we're, we're, we're going

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00:14:13,240 --> 00:14:15,480
to come back into the 
conversation here. 

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00:14:15,480 --> 00:14:22,080
So the question was the the book
talks about a 5% initial 

239
00:14:22,080 --> 00:14:27,440
allocation and you had mentioned
that whenever you come in 

240
00:14:27,920 --> 00:14:31,640
historically it seems and 
whenever you've over. 

241
00:14:31,640 --> 00:14:34,600
Allocated to a new initial 
position, that has not been a 

242
00:14:34,600 --> 00:14:38,000
great idea. 
So how'd you come up with that 

243
00:14:38,000 --> 00:14:40,240
and you know, you want to talk 
about that a little bit? 

244
00:14:40,840 --> 00:14:43,720
Thank you, Bill. 
Yeah, I would say that for me as

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00:14:43,720 --> 00:14:50,720
an investor, typically whenever 
I have initially put in an 

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00:14:50,720 --> 00:14:54,960
exciting amount and at different
stages of our lives, that amount

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00:14:54,960 --> 00:14:57,200
changes, right. 
Probably it augments over the 

248
00:14:57,200 --> 00:14:59,520
course of time. 
But whenever it was an exciting 

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00:14:59,520 --> 00:15:02,680
amount for me generally that 
hasn't worked out for me as an 

250
00:15:02,680 --> 00:15:04,720
investor. 
Most recently, I could just 

251
00:15:04,720 --> 00:15:09,520
think about some of the light 
non public market investing that

252
00:15:09,520 --> 00:15:12,840
I do, a little bit of Angel 
investing, a little bit of VC. 

253
00:15:13,760 --> 00:15:17,000
I'm like I think this could go 
to the moon. 

254
00:15:17,000 --> 00:15:20,960
Therefore, if I put in this 
slightly larger or maybe even 

255
00:15:21,040 --> 00:15:25,320
larger than that amount, this is
going to be amazing. 

256
00:15:25,320 --> 00:15:28,960
Yeah, I'm going to be a king. 
It pretty much never has been. 

257
00:15:29,360 --> 00:15:33,120
And now that it's happened 
several times, I, I'm now clear 

258
00:15:33,320 --> 00:15:37,600
that I shouldn't do that. 
And I in fact, I was saying to a

259
00:15:37,600 --> 00:15:39,880
friend recently, you know, maybe
I should just give up venture 

260
00:15:39,880 --> 00:15:42,240
capital investing. 
I mean, I basically am like a VC

261
00:15:42,240 --> 00:15:44,320
investor but with public market 
companies. 

262
00:15:44,520 --> 00:15:46,880
But whenever I try to go to the 
private market, I just haven't 

263
00:15:46,880 --> 00:15:47,760
done that. 
Great. 

264
00:15:48,360 --> 00:15:50,640
And that friend of mine said, 
well, David, cut yourself a 

265
00:15:50,640 --> 00:15:54,000
little slack here because I 
think you're reflecting on a few

266
00:15:54,600 --> 00:15:57,400
non public investments you've 
made. 

267
00:15:57,840 --> 00:15:59,360
And that's not a big sample 
size. 

268
00:15:59,360 --> 00:16:02,680
Like you bought hundreds, 
recommended hundreds of stocks 

269
00:16:02,680 --> 00:16:04,240
over time. 
And you're cutting yourself 

270
00:16:04,240 --> 00:16:06,640
slack there because you're 
losing a lot there too. 

271
00:16:07,160 --> 00:16:09,040
And it's working out really well
for you. 

272
00:16:09,040 --> 00:16:11,240
And you're not saying I can't do
this, I shouldn't do this. 

273
00:16:11,520 --> 00:16:16,360
So I think, Bill, my answer is 
that if these words are helpful,

274
00:16:18,400 --> 00:16:22,200
then dear listener, dear viewer,
take them to heart. 

275
00:16:22,720 --> 00:16:26,400
But I'm not trying to say my own
experience will be yours. 

276
00:16:26,400 --> 00:16:30,280
We're all different. 
And I guess that all brought me 

277
00:16:30,280 --> 00:16:33,840
back to what I would say is the 
5th habit of the rule Breaker 

278
00:16:33,840 --> 00:16:37,480
investor, which is Max 5% 
allocation. 

279
00:16:37,840 --> 00:16:42,520
And I, I abide by that and I 
recommend that to all. 

280
00:16:42,520 --> 00:16:45,520
We're all different. 
But that just means that I never

281
00:16:45,520 --> 00:16:49,920
enter a position at any point 
that is more than 5% of my net 

282
00:16:49,920 --> 00:16:52,760
worth or overall portfolio and 
you? 

283
00:16:52,760 --> 00:16:54,880
Know what did you say? 
If If it works, all you need is 

284
00:16:54,880 --> 00:16:57,400
a little, and if it doesn't work
all, you'll be glad that all you

285
00:16:57,400 --> 00:16:58,720
had was a little. 
Right, that's right. 

286
00:16:58,720 --> 00:17:01,520
And that's a great line from Tom
Angle, one of the great Motley 

287
00:17:01,520 --> 00:17:07,920
Fool customers slash volunteers 
slash contractors of all time. 

288
00:17:08,480 --> 00:17:11,640
And that is Tom's great line, 
which we have used many times 

289
00:17:11,640 --> 00:17:13,480
around the Fool. 
And I've, I've even seen in 

290
00:17:13,800 --> 00:17:15,800
third party books quoting Tom 
Angle. 

291
00:17:15,800 --> 00:17:19,560
It's a great line if, if it 
really works out, a little is 

292
00:17:19,560 --> 00:17:21,599
all you need. 
And if it doesn't, a little is 

293
00:17:21,599 --> 00:17:24,880
all you wanted. 
And, and so, yeah, but that, 

294
00:17:24,880 --> 00:17:28,240
that, that takes me back to like
how I structured the book 

295
00:17:28,560 --> 00:17:31,960
because while it's natural for 
people to want to hear what's 

296
00:17:31,960 --> 00:17:34,280
the next stock? 
What's the next Amazon, what's 

297
00:17:34,280 --> 00:17:37,560
the next NVIDIA? 
What are the traits that lead 

298
00:17:38,160 --> 00:17:41,040
the to those stocks? 
I very intentionally made the 

299
00:17:41,040 --> 00:17:44,000
first third of the book the 
habits that you and I need to 

300
00:17:44,000 --> 00:17:47,480
have, the mindset that we need 
to have as a rule breaker 

301
00:17:47,480 --> 00:17:52,480
investor because we can give you
great stocks or bad stocks, but 

302
00:17:52,480 --> 00:17:55,280
we can give you great stocks, 
but if you don't behave well 

303
00:17:55,280 --> 00:17:57,560
with them, then it wasn't great 
advice from us. 

304
00:17:57,560 --> 00:18:00,680
If you were to sell something 
because it dropped 20% or you 

305
00:18:00,680 --> 00:18:03,560
have some mechanical rule around
trading in and out of things, 

306
00:18:03,880 --> 00:18:06,320
then you're not going to enjoy 
the great benefits of Intuitive 

307
00:18:06,320 --> 00:18:08,800
Surgical, which has been an 
absolute monster stock over the 

308
00:18:08,800 --> 00:18:11,920
last 20 years. 
And we can pound our chests and 

309
00:18:11,920 --> 00:18:14,560
say how awesome we are that we 
at the Molly full recommended 

310
00:18:14,560 --> 00:18:18,080
Intuitive Surgical at a much, 
much lower cost basis 20 years 

311
00:18:18,080 --> 00:18:19,840
ago. 
But if you didn't participate 

312
00:18:19,840 --> 00:18:21,840
with us, then that's not worth a
lot to use. 

313
00:18:21,840 --> 00:18:25,760
So we need to, we definitely 
want people as investors. 

314
00:18:26,120 --> 00:18:29,520
We want them to behave in the 
best way. 

315
00:18:29,520 --> 00:18:36,000
And for me one of those best 
habits is Max 5% allocation. 

316
00:18:36,760 --> 00:18:41,880
So a good segue there. 
Why don't you talk a little bit 

317
00:18:41,880 --> 00:18:44,360
because look, if somebody is 
looking for the next great rule 

318
00:18:44,360 --> 00:18:47,040
breaker, why don't we talk about
Starbucks in 1990? 

319
00:18:47,040 --> 00:18:48,800
What 8? 
When you got invited on the 

320
00:18:48,800 --> 00:18:50,760
show. 
Or was it 99 whenever it was 90?

321
00:18:50,880 --> 00:18:51,560
8. 
Right. 

322
00:18:51,560 --> 00:18:54,400
I mean, this is how you open up 
the book and it's a great 

323
00:18:54,400 --> 00:18:59,920
illustration of the mindset 
required to, you know, realize 

324
00:18:59,920 --> 00:19:01,880
the benefits. 
So why don't, why don't you tell

325
00:19:01,880 --> 00:19:03,520
that story? 
That story had me chuckling when

326
00:19:03,520 --> 00:19:05,480
I read. 
It I'd be happy to Bill, let me 

327
00:19:05,480 --> 00:19:08,960
also call you out because an 
early version of the book, 

328
00:19:09,000 --> 00:19:14,320
specifically the 1st 50 pages I 
sent to 18 people who I really 

329
00:19:14,320 --> 00:19:16,160
esteem, whose opinion I wanted 
you were. 

330
00:19:16,160 --> 00:19:17,880
One of that makes me thank you 
very much. 

331
00:19:17,880 --> 00:19:20,440
That's a high compliment. 
You were one of them and I 

332
00:19:20,440 --> 00:19:22,080
really appreciate your comments 
back. 

333
00:19:22,400 --> 00:19:24,760
And those are my 17 other beta 
readers. 

334
00:19:24,760 --> 00:19:27,280
It was basically a beta test of 
the 1st 50 pages. 

335
00:19:27,280 --> 00:19:31,640
And so you got to read that more
than a year ago now and the book

336
00:19:31,640 --> 00:19:34,400
is finally coming out in 
September of 2025. 

337
00:19:34,400 --> 00:19:37,760
And that story only gets better 
with time. 

338
00:19:37,760 --> 00:19:40,800
And you know, there's a slightly
longer form version of it in in 

339
00:19:40,800 --> 00:19:42,840
the book. 
I did make it the introduction. 

340
00:19:42,840 --> 00:19:48,800
That's really where we lead off 
the and and so in so many words,

341
00:19:50,200 --> 00:19:52,160
we were going to be on a 
television show. 

342
00:19:52,480 --> 00:19:55,360
It's the view on ABC, which is 
still a television show, which 

343
00:19:55,360 --> 00:19:58,240
is not true of every daytime 
show on ABC or any other 

344
00:19:58,240 --> 00:20:00,000
network. 
Not a small one, right? 

345
00:20:00,040 --> 00:20:03,640
You get your big moment. 
Introducing David Gardner, he's 

346
00:20:03,640 --> 00:20:06,160
going to tell us the the stock 
to own. 

347
00:20:06,240 --> 00:20:08,280
That's right. 
And they had a new host, Lisa 

348
00:20:08,280 --> 00:20:12,640
Ling on on the show younger, so 
the youngest member of the crew.

349
00:20:12,840 --> 00:20:16,520
So they had me and my brother 
Tom on to pick a stock for Lisa 

350
00:20:17,000 --> 00:20:18,840
and we we had a pre interview 
with her. 

351
00:20:18,840 --> 00:20:20,840
We're like, we should pick 
something that Lisa knows, 

352
00:20:20,840 --> 00:20:23,880
something she likes, etcetera. 
And and so we did. 

353
00:20:23,880 --> 00:20:25,640
We decided, OK, this is going to
be the stock. 

354
00:20:25,640 --> 00:20:30,800
So we got to the show and studio
audience had fun, like putting 

355
00:20:30,800 --> 00:20:33,440
it out there, here's the stock, 
here's why we like the stock, 

356
00:20:34,160 --> 00:20:37,640
and Lisa likes this company too.
So let's make it, let's make it 

357
00:20:37,640 --> 00:20:40,880
that stock. 
And then they had us back on six

358
00:20:40,880 --> 00:20:43,280
weeks later, 'cause they're 
like, let's update the story 

359
00:20:43,840 --> 00:20:46,760
just six weeks later. 
Not exactly out of time. 

360
00:20:46,840 --> 00:20:47,720
Yeah. 
Yeah. 

361
00:20:48,240 --> 00:20:53,520
Remarkably, it only took 
Starbucks six weeks to lose 1/3 

362
00:20:53,520 --> 00:20:56,680
of its value. 
So I these dates are seared in 

363
00:20:56,680 --> 00:20:59,360
my mind. 
July 2nd, 1998 was our first 

364
00:20:59,360 --> 00:21:03,400
appearance on The View. 
August 16th, 1998 was our second

365
00:21:03,400 --> 00:21:07,760
and historically to date final 
appearance on The View where we 

366
00:21:07,760 --> 00:21:10,200
basically said we're so sorry. 
You know, we still love the 

367
00:21:10,200 --> 00:21:12,960
company. 
But Lisa, here's the thing. 

368
00:21:12,960 --> 00:21:16,320
Howard Schultz, the CEO of the 
company, basically said while 

369
00:21:16,320 --> 00:21:20,320
they had good earnings that they
just reported, he was favoring 

370
00:21:20,320 --> 00:21:24,200
the lower side of analysts, 
future projections. 

371
00:21:24,320 --> 00:21:29,320
And you know, great companies 
and CE OS tend to over deliver 

372
00:21:29,320 --> 00:21:33,000
as they under promise, under 
promise over deliver. 

373
00:21:33,000 --> 00:21:35,120
That's what we think Howard's 
doing. 

374
00:21:35,360 --> 00:21:37,960
But unfortunately the stock 
dropped like 12% that day and 

375
00:21:37,960 --> 00:21:41,680
then it just kept going down. 
And here we are in 1998 and 

376
00:21:41,680 --> 00:21:45,240
sorry for the stock pick six 
weeks ago, we're down 33%. 

377
00:21:45,240 --> 00:21:50,480
And you know, again, for studio 
audience members who are not 

378
00:21:50,480 --> 00:21:54,000
probably stock market investors 
for the most part, that probably

379
00:21:54,000 --> 00:21:56,320
sounded like a lot. 
And it, it really is a lot of 

380
00:21:56,320 --> 00:21:59,720
people live in fear of losing 
10% or 20%. 

381
00:21:59,720 --> 00:22:02,600
And we have people who will join
a motley full service and call 

382
00:22:02,800 --> 00:22:05,400
after our first bad stock pick 
and they're like, should I, 

383
00:22:05,800 --> 00:22:07,120
should I sell? 
I don't know what to do now. 

384
00:22:07,120 --> 00:22:10,040
I'm losing. 
Should I cancel your service? 

385
00:22:10,040 --> 00:22:14,040
And sometimes they do, sadly. 
So, you know, we are hardwired 

386
00:22:14,040 --> 00:22:17,920
not to want to lose as humans. 
So there we were doing it in a 

387
00:22:18,080 --> 00:22:22,720
in a grand gesture on ABC. 
And yeah, I guess the punchline 

388
00:22:22,720 --> 00:22:25,680
and the reason I put it at the 
front of the book is because 

389
00:22:26,000 --> 00:22:29,080
Starbucks is actually up 34 
times in value from where we 

390
00:22:29,080 --> 00:22:31,520
first picked it before the 33% 
drop. 

391
00:22:31,520 --> 00:22:34,120
You would have gotten an even 
better return if you bought on 

392
00:22:34,120 --> 00:22:37,600
that second appearance and and 
you know, and that's way up over

393
00:22:37,600 --> 00:22:39,680
the market over the same period 
of time. 

394
00:22:39,680 --> 00:22:44,480
And Starbucks is a company that 
has absolutely mushroomed in 

395
00:22:44,480 --> 00:22:46,560
size and for really good 
reasons. 

396
00:22:46,800 --> 00:22:49,040
We could talk more about 
Starbucks, but ultimately this 

397
00:22:49,040 --> 00:22:52,680
is not a story about ABC, Lisa 
Ling or Starbucks. 

398
00:22:53,040 --> 00:22:58,240
It's a story about investing and
what it really looks like, what 

399
00:22:58,240 --> 00:23:02,680
it really feels like in a world 
where that word is tossed around

400
00:23:02,680 --> 00:23:07,280
a lot. 
Bill and I'll all business brew 

401
00:23:07,280 --> 00:23:09,520
fellow listeners. 
The word is tossed around a lot,

402
00:23:09,520 --> 00:23:12,520
but it's being misused a lot 
because really what you're 

403
00:23:12,520 --> 00:23:16,240
getting most of the time is 
trading and information that is 

404
00:23:16,240 --> 00:23:19,320
all about the short term. 
And therefore of interest on 

405
00:23:19,320 --> 00:23:24,560
CNBC, Bloomberg, etcetera, Wall 
Street Journal calling out all 

406
00:23:24,560 --> 00:23:27,920
the grand financial media 
companies of our time doing good

407
00:23:27,920 --> 00:23:29,400
work. 
I appreciate what they're doing,

408
00:23:29,640 --> 00:23:31,600
but they're very, very short 
term focused. 

409
00:23:31,600 --> 00:23:35,520
And so the notion that you would
actually hold Starbucks 27 years

410
00:23:35,520 --> 00:23:37,720
later comes very naturally to 
me. 

411
00:23:38,280 --> 00:23:39,720
That's basically what we've 
done. 

412
00:23:40,440 --> 00:23:45,120
And not just Starbucks, but it's
so contrary, ironically, I think

413
00:23:45,360 --> 00:23:49,680
from the vast majority of 
activity today on the markets 

414
00:23:49,760 --> 00:23:51,520
and the coverage of the markets 
themselves. 

415
00:23:51,520 --> 00:23:54,840
So I, I love the leading off 
Rule Breaker investing with our 

416
00:23:55,040 --> 00:23:58,080
Ling's money thing. 
That was the branded feature 

417
00:23:58,080 --> 00:24:01,560
segment story. 
Because it's in fact, the reason

418
00:24:01,560 --> 00:24:04,000
I even decided to do that, Bill,
just before sending you the 1st 

419
00:24:04,000 --> 00:24:07,640
50 pages of the book was that I 
was speaking to a women's 

420
00:24:07,640 --> 00:24:10,040
investment club here in Old Town
Alexandria, VA. 

421
00:24:10,040 --> 00:24:12,600
I was like, what's a fun story 
just to tell in front of the 

422
00:24:12,600 --> 00:24:14,400
club? 
And I was like, here it is. 

423
00:24:14,400 --> 00:24:17,080
And the best way to tell that 
story is not to say the company 

424
00:24:17,080 --> 00:24:19,360
name in the book. 
I don't say the company name 

425
00:24:19,360 --> 00:24:21,200
until we finish the story 
because you're like, what was 

426
00:24:21,200 --> 00:24:23,120
the stock? 
Yeah, Lisa. 

427
00:24:23,400 --> 00:24:26,040
And so I told it to the women's 
club, and they loved it. 

428
00:24:26,040 --> 00:24:29,320
And I was like, oh, my gosh, 
That is the opening of the book 

429
00:24:29,320 --> 00:24:31,480
right there. 
They just helped me realize that

430
00:24:31,480 --> 00:24:34,240
this is such, such an investing 
story. 

431
00:24:34,640 --> 00:24:39,280
Yeah, well, it's, I mean, one 
thing that I really appreciate 

432
00:24:39,280 --> 00:24:44,400
about the book is, you know, 
look, if you see the traditional

433
00:24:44,400 --> 00:24:49,480
Motley Fool advertising and I I 
totally understand why it is 

434
00:24:49,480 --> 00:24:53,000
this way, but it's like we pick 
this stock at pennies or 

435
00:24:53,000 --> 00:24:55,640
whatever. 
You spend a lot of the book 

436
00:24:56,080 --> 00:24:59,400
talking about the frequency of 
losses and how you have to lose 

437
00:24:59,400 --> 00:25:02,400
to win. 
And I feel like that is a real 

438
00:25:02,400 --> 00:25:07,160
service to the readers because 
you, you do not shy away from 

439
00:25:07,160 --> 00:25:12,960
the fact that it's a slugging 
game and that you know, you are 

440
00:25:12,960 --> 00:25:16,200
going to have the losses. 
An interesting thing that I'd, 

441
00:25:16,200 --> 00:25:19,640
I'd should have known, I guess, 
but I did not realize is you do 

442
00:25:19,640 --> 00:25:22,520
not average down. 
You like to make your stocks get

443
00:25:22,520 --> 00:25:24,560
out of their own mess. 
Do you want to talk a little bit

444
00:25:24,560 --> 00:25:26,440
about that? 
And then like, where did that, 

445
00:25:26,760 --> 00:25:29,920
where did that come from? 
I, I assume it's somewhat 

446
00:25:29,920 --> 00:25:33,720
related to why you don't 
oversize from 5% like. 

447
00:25:33,800 --> 00:25:36,800
But yeah, it's a it's a good way
to keep yourself out of 

448
00:25:36,800 --> 00:25:38,720
disaster. 
Yeah, I think, you know, what's 

449
00:25:38,720 --> 00:25:42,360
funny is that I, I think my 
actual stock selection, the 

450
00:25:42,360 --> 00:25:48,680
choices that I make strike 
people as radical or higher risk

451
00:25:49,760 --> 00:25:54,840
and rule breakery. 
But the underlying mindset and a

452
00:25:54,840 --> 00:25:57,480
lot of the constructs which 
obviously emerge through the 

453
00:25:57,480 --> 00:25:59,920
book are very conservative by 
nature. 

454
00:26:00,480 --> 00:26:04,480
So you have this sort of I'm in 
a weird style box because I'm 

455
00:26:04,480 --> 00:26:09,240
willing to to overpay constantly
for companies that, you know, 

456
00:26:09,480 --> 00:26:11,600
look like they're totally 
overvalued. 

457
00:26:12,480 --> 00:26:17,760
And yet when we're actually 
buying and managing A portfolio,

458
00:26:18,120 --> 00:26:21,680
we're doing things like, hey, no
more than 5% in any initial 

459
00:26:21,920 --> 00:26:23,840
position. 
I want to make it clear they can

460
00:26:23,840 --> 00:26:27,240
go above 5% after that. 
I think that's already clear to 

461
00:26:27,240 --> 00:26:30,840
anybody who knows my work, reads
the book or knows bills stuff 

462
00:26:31,080 --> 00:26:34,400
that you know, we're not talking
about a cut off where you 

463
00:26:34,400 --> 00:26:37,520
rebalance anytime you hit 5%. 
Absolutely not. 

464
00:26:38,240 --> 00:26:42,680
And I, I guess, you know, 
another of my conservative 

465
00:26:43,000 --> 00:26:45,880
approaches or assumptions is 
that I don't want to throw good 

466
00:26:45,880 --> 00:26:49,560
money after bad. 
You know, dandled on my daddy's 

467
00:26:49,560 --> 00:26:52,040
knee. 
As a little investor, I was 

468
00:26:52,040 --> 00:26:57,080
raised to think, let's not throw
good money after bad. 

469
00:26:57,080 --> 00:27:00,840
And really what we mean by that,
of course, is don't add to your 

470
00:27:00,840 --> 00:27:03,800
losers. 
Yeah, which is so contrary, 

471
00:27:03,800 --> 00:27:05,080
right? 
It's it's the old. 

472
00:27:05,080 --> 00:27:08,440
Well, if you liked it, you know,
higher, you should love it lower

473
00:27:09,000 --> 00:27:10,280
but. 
Yeah. 

474
00:27:10,640 --> 00:27:14,640
Like what? 
I guess what, what led you to 

475
00:27:14,640 --> 00:27:20,240
the idea of, you know, I'm, I'm 
just going to make them earn 

476
00:27:20,240 --> 00:27:22,360
their way out of it. 
Yeah. 

477
00:27:22,360 --> 00:27:26,640
So I think that one of the 
benefits of starting The Motley 

478
00:27:26,640 --> 00:27:30,840
Fool in 1993 and then just 
growing a community over 30 

479
00:27:30,840 --> 00:27:36,640
years is you get to watch people
and you meet them at book 

480
00:27:36,640 --> 00:27:40,400
signings and some of them visit 
your office and you have 

481
00:27:40,400 --> 00:27:42,440
employees and all the rest. 
And so you just sort of 

482
00:27:42,440 --> 00:27:47,560
experience how a lot of people 
invest, talk about their money, 

483
00:27:47,560 --> 00:27:52,920
trade in many cases too. 
And so I started to realize 

484
00:27:53,280 --> 00:27:57,560
especially right after 2001 when
the market absolutely cratered, 

485
00:27:58,120 --> 00:28:01,040
especially for Internet 
companies, Amazon went from 95 

486
00:28:01,040 --> 00:28:05,640
down to seven in 18 months and 
our cost was 3. 

487
00:28:06,920 --> 00:28:11,040
So and before it went to 95. 
And then as it went all the way 

488
00:28:11,040 --> 00:28:13,960
back down to seven, I what I 
realized is the only way to 

489
00:28:13,960 --> 00:28:18,760
really lose money, like really 
lose money, become poor using 

490
00:28:18,760 --> 00:28:22,920
the stock market would be to 
have this strong conviction that

491
00:28:22,920 --> 00:28:30,120
something that kind of actually 
sucks, but you don't get that is

492
00:28:30,120 --> 00:28:33,360
going to come back is clearly 
undervalued. 

493
00:28:33,360 --> 00:28:40,200
And having seen people who would
tell me their stories at, you 

494
00:28:40,200 --> 00:28:43,920
know, Motley Fool gatherings, 
talk about how they lost it all 

495
00:28:44,120 --> 00:28:48,160
as a younger investor, It's, 
it's that there's there's really

496
00:28:48,160 --> 00:28:51,040
no other way to lose a ton of 
money on the markets. 

497
00:28:51,240 --> 00:28:53,800
I mean, I guess you could have a
broadly diversified portfolio, 

498
00:28:53,800 --> 00:28:56,000
all of which went down. 
That would be one way. 

499
00:28:56,000 --> 00:29:00,000
But really, the vast majority of
people who would ever go poor, 

500
00:29:00,320 --> 00:29:04,120
which is so sad using the stock 
market would be that they keep 

501
00:29:04,120 --> 00:29:09,040
adding to losers and the company
ends up being, you know, Peloton

502
00:29:10,320 --> 00:29:12,920
and. 
Which arguably is turning a 

503
00:29:12,920 --> 00:29:14,960
corner now, interestingly. 
Enough. 

504
00:29:14,960 --> 00:29:17,560
I do not mean to make it sound 
as if Peloton is toast. 

505
00:29:18,080 --> 00:29:19,720
I I guess I could have gone with
some I mean. 

506
00:29:19,720 --> 00:29:21,240
No, no, I understand what you're
saying. 

507
00:29:21,360 --> 00:29:23,200
I mean, yeah, I see what you're 
saying. 

508
00:29:23,200 --> 00:29:28,880
I mean from 2021 till now. 
Totally, Yeah, yeah, So right. 

509
00:29:28,960 --> 00:29:31,760
Like I, I, I could have gone a 
generation ago and and said like

510
00:29:31,760 --> 00:29:34,840
buy.com, which was, you know, 
competing with Amazon back in 

511
00:29:34,840 --> 00:29:38,440
the day isn't around anymore. 
So I mean, that really is the 

512
00:29:38,440 --> 00:29:44,720
case that as long as you keep 
balancing out and then adding to

513
00:29:44,720 --> 00:29:47,480
the things that go up and 
specifically that is habit 

514
00:29:47,480 --> 00:29:51,000
number two of the rule breaker 
investor add up, don't double 

515
00:29:51,000 --> 00:29:54,840
down. 
So I, I, I really emphasize 

516
00:29:54,840 --> 00:29:59,080
Bill, not adding to losers, but 
I think you're also asking about

517
00:29:59,080 --> 00:30:03,840
that very contrary feeling of 
adding instead to winners. 

518
00:30:04,200 --> 00:30:07,400
And that is a very rule breakery
thing that I say rule breakery 

519
00:30:07,400 --> 00:30:09,240
when things go against our 
natural instincts. 

520
00:30:10,200 --> 00:30:13,360
Yeah. 
Well, so as as I was reading it,

521
00:30:13,360 --> 00:30:17,720
I was thinking, OK, this in a 
way makes no sense. 

522
00:30:17,720 --> 00:30:23,200
David's checklist is looking for
theoretically overvalued 

523
00:30:23,200 --> 00:30:25,440
companies, right? 
The companies that people are 

524
00:30:25,440 --> 00:30:30,240
saying are overvalued and he's 
looking for strong past stock 

525
00:30:30,240 --> 00:30:32,920
performance. 
So you're looking for the things

526
00:30:32,920 --> 00:30:36,800
that have gone up that are 
overvalued and you're not buying

527
00:30:36,800 --> 00:30:39,840
back down. 
How is the how does this make 

528
00:30:39,840 --> 00:30:41,560
any sense? 
This man's a fool. 

529
00:30:42,960 --> 00:30:45,360
But but you know that I sat 
there and I was thinking about 

530
00:30:45,360 --> 00:30:50,000
it and I said, OK, the 
probability that you get 

531
00:30:50,000 --> 00:30:53,240
yourself like if it's overvalued
and the stock has gone up, 

532
00:30:53,280 --> 00:30:56,560
there's the market is not 
completely irrational. 

533
00:30:56,560 --> 00:31:00,080
There's there's almost certainly
some fundamental reason for 

534
00:31:00,080 --> 00:31:02,240
that, right? 
So you're probably fishing in a 

535
00:31:02,240 --> 00:31:05,480
pond of companies that are 
growing in cultural relevance 

536
00:31:06,000 --> 00:31:07,800
and likely the earnings are 
following. 

537
00:31:08,440 --> 00:31:12,360
And if you're not doubling down 
on your losers, you are removing

538
00:31:12,360 --> 00:31:16,640
the risk of ruin from being 
enamored with a company that 

539
00:31:16,640 --> 00:31:18,440
just isn't what you're thinking,
right? 

540
00:31:18,440 --> 00:31:23,560
So I kind of like I saw the 
genius in it, assuming that I 

541
00:31:23,560 --> 00:31:26,600
understand the genius, but I was
like, man, this is this is so 

542
00:31:26,600 --> 00:31:30,280
different, but it's it makes 
actually quite a bit of sense. 

543
00:31:30,680 --> 00:31:33,440
Well, thank you. 
And it has made quite a bit of 

544
00:31:33,440 --> 00:31:35,120
sense. 
And a difference between writing

545
00:31:35,120 --> 00:31:40,200
this book that comes out here in
2025 and my first Rule Breakers 

546
00:31:40,200 --> 00:31:45,920
book, which was 1999, is, is the
performance that we've generated

547
00:31:45,960 --> 00:31:49,520
over the succeeding time. 
And so part of what I can do now

548
00:31:49,520 --> 00:31:54,320
is I can write the same things 
in some ways, in fact, 

549
00:31:54,960 --> 00:31:59,600
surprisingly similar things 26 
years later. 

550
00:31:59,760 --> 00:32:02,680
But now I can say, let's look 
what happened. 

551
00:32:03,000 --> 00:32:05,600
Let's look how the stocks did, 
the ones that won and the ones 

552
00:32:05,600 --> 00:32:07,920
that lost. 
And yes, I always talk about 

553
00:32:07,920 --> 00:32:11,200
both. 
Very important and now I really 

554
00:32:11,320 --> 00:32:14,680
have drawn conclusions about and
I don't think it's in doubt 

555
00:32:14,680 --> 00:32:17,120
anymore. 
Like people would review our 

556
00:32:17,120 --> 00:32:20,040
book back in 1999, rule 
Breakers, rule makers would say 

557
00:32:20,040 --> 00:32:22,600
it sounds crazy. 
I mean, he's basically saying 

558
00:32:22,600 --> 00:32:26,240
he's looking for the companies 
that people say are overvalued 

559
00:32:26,240 --> 00:32:28,800
and and he already wants them, 
as you point out, Bill to have 

560
00:32:28,800 --> 00:32:33,120
gone up before he recommends 
them, which could it's stripped 

561
00:32:33,120 --> 00:32:36,640
down worst form be mere momentum
investing, which is not what it 

562
00:32:36,640 --> 00:32:39,640
is. 
It was, it was thoughtful, it 

563
00:32:39,640 --> 00:32:43,840
was done purposefully, and it 
was enacted with kinetic energy 

564
00:32:43,840 --> 00:32:45,920
one month after the next Pick, 
pick, pick. 

565
00:32:45,920 --> 00:32:49,200
I was picking three stocks a 
month for 20 years for The 

566
00:32:49,200 --> 00:32:51,720
Motley Fool. 
And we saw what happened. 

567
00:32:51,840 --> 00:32:54,320
And it it was, it was incredibly
successful. 

568
00:32:54,720 --> 00:32:57,680
And so I think that there's no 
longer a debate about whether 

569
00:32:57,680 --> 00:32:59,640
you should do that or not. 
It's not the only way, by the 

570
00:32:59,640 --> 00:33:02,960
way, there are many ways to 
invest, but the rule breaker 

571
00:33:02,960 --> 00:33:06,480
investing way I think has 
demonstrated ability to squeeze 

572
00:33:06,480 --> 00:33:10,080
as much juice out of what the 
public markets give us in the 

573
00:33:10,080 --> 00:33:13,320
fruits that they bear for us. 
So that we are squeezing about 

574
00:33:13,320 --> 00:33:17,040
the maximum amount of juice in 
terms of return by following 

575
00:33:17,400 --> 00:33:22,160
these habits and these traits. 
And so, yeah, and it and, and 

576
00:33:22,160 --> 00:33:26,920
you lose there, too, which is 
why we don't add to our losers. 

577
00:33:27,160 --> 00:33:28,560
We're going to stick with what 
wins. 

578
00:33:28,560 --> 00:33:32,000
And in a lot of ways, Bill, I 
love your depiction of yourself 

579
00:33:32,000 --> 00:33:34,080
because you're sitting there 
going, this seems crazy, but 

580
00:33:34,080 --> 00:33:37,120
maybe there's some reason in it.
And you know, I totally can 

581
00:33:37,120 --> 00:33:39,920
appreciate that. 
What what I sometimes like to 

582
00:33:39,920 --> 00:33:44,280
get back in touch with is what 
actually happens graphically 

583
00:33:44,280 --> 00:33:48,480
with the market over the course 
of 25 years, which is it tends 

584
00:33:48,480 --> 00:33:53,200
to go lower left to upper right.
And therefore it's constantly 

585
00:33:53,200 --> 00:33:56,920
making new highs in order to go 
from lower left to upright. 

586
00:33:56,920 --> 00:34:01,000
And that's also true of the 
great stocks of every era, the 

587
00:34:01,000 --> 00:34:03,560
ones that are dragging the 
market in that direction. 

588
00:34:03,960 --> 00:34:09,040
And so it's actually as simple 
as what keeps going up. 

589
00:34:09,360 --> 00:34:12,560
And let's buy some of that 
thing, those things and let's 

590
00:34:12,560 --> 00:34:15,840
realize some of them won't 
always keep going up GoPro. 

591
00:34:16,280 --> 00:34:22,120
But the ones that do Tesla, even
when they go sideways for five 

592
00:34:22,120 --> 00:34:27,360
years, Tesla are going to be, 
are going to lead us to alpha, 

593
00:34:27,440 --> 00:34:29,440
are going to be wild out 
performers for us. 

594
00:34:29,480 --> 00:34:33,080
And so it's as simple as buy the
ones that are going up. 

595
00:34:33,320 --> 00:34:35,400
I mean, I'm obviously 
oversimplifying and having fun, 

596
00:34:35,400 --> 00:34:37,920
but if you're trying to get go, 
this is so contrary. 

597
00:34:38,120 --> 00:34:39,880
Realize it's not really that 
contrary. 

598
00:34:40,040 --> 00:34:44,000
It's actually quite logical. 
It's it's what happens over the 

599
00:34:44,000 --> 00:34:47,520
course of time to the overall 
market or the the winning stocks

600
00:34:47,520 --> 00:34:49,920
that drive the overall market. 
Yeah. 

601
00:34:49,920 --> 00:34:53,880
Well, it it's, I mean, if you're
pulling up a long like a truly 

602
00:34:53,880 --> 00:34:59,680
long term chart and this chart 
is not going up, like what's the

603
00:34:59,680 --> 00:35:02,560
probability that this time is 
different? 

604
00:35:03,200 --> 00:35:07,160
Yeah, I I think it's low. 
Yeah, I mean, and, and the other

605
00:35:07,160 --> 00:35:13,560
thing that it that game can 
really kind of mess with from a 

606
00:35:13,560 --> 00:35:18,560
mathematical standpoint is OK, 
fine, you can swing trade, you 

607
00:35:18,560 --> 00:35:21,040
know, maybe some an industrial 
that never trades it more than 

608
00:35:21,040 --> 00:35:22,840
two times. 
Book and real earnings don't 

609
00:35:22,840 --> 00:35:24,480
move. 
Like fine, you can maybe make 

610
00:35:24,480 --> 00:35:28,680
4X, you know, risk reward if you
buy it really right. 

611
00:35:29,400 --> 00:35:32,920
But I, you know, I don't know 
the math of your strategy. 

612
00:35:32,920 --> 00:35:37,600
What you're looking for is the 
ones that can be 1000% returns 

613
00:35:37,600 --> 00:35:41,480
right or or more right or grow 
infinitely. 

614
00:35:42,280 --> 00:35:45,600
Yes. 
And you know, you said something

615
00:35:45,600 --> 00:35:48,520
earlier, a great phrase I wanted
to call back out and pull back 

616
00:35:48,520 --> 00:35:51,960
up because you were talking 
about how companies that I would

617
00:35:51,960 --> 00:35:55,200
say the rule Breakers, which by 
my definition are the companies 

618
00:35:55,200 --> 00:35:58,560
that start as David and overcome
Goliath and end up the best ones

619
00:35:58,560 --> 00:36:04,480
becoming rule makers. 
These companies have increasing 

620
00:36:04,480 --> 00:36:07,920
amounts of cultural relevance. 
That was the phrase that you, I 

621
00:36:07,920 --> 00:36:10,920
think it was either that or very
near that phrase you threw out 

622
00:36:10,920 --> 00:36:14,320
about 20 minutes ago. 
And that really is an important 

623
00:36:14,400 --> 00:36:17,160
factor that we should all be 
thinking about when we asked 

624
00:36:17,160 --> 00:36:20,480
what are the stocks that can 
rise to the moon or keep going? 

625
00:36:20,480 --> 00:36:22,360
Because by the way, the moon's 
pretty close. 

626
00:36:22,360 --> 00:36:26,120
They're starshot stocks that 
that we've had the experience of

627
00:36:26,120 --> 00:36:27,760
1000%. 
Great. 

628
00:36:27,760 --> 00:36:32,600
But what about 10,000%? 
And, and the only way that 

629
00:36:32,600 --> 00:36:35,720
you're going to get that kind of
investment, two factors. 1, you,

630
00:36:35,840 --> 00:36:38,440
you need something of high, high
cultural influence and 

631
00:36:38,440 --> 00:36:41,080
relevance. 
And two, you need to keep 

632
00:36:41,080 --> 00:36:44,000
holding it because you're never 
going to make 100 bagger if 

633
00:36:44,000 --> 00:36:48,360
you're not willing to let it 
become a 100 bagger. 

634
00:36:48,600 --> 00:36:52,360
And there are a lot of people 
who who are not, they don't have

635
00:36:52,360 --> 00:36:55,400
a habit of doing that or they 
don't have a predisposition to 

636
00:36:55,400 --> 00:36:57,720
allow themselves to win like 
that. 

637
00:36:58,280 --> 00:37:02,400
And again, not everybody should.
And I've had stocks where the IT

638
00:37:02,400 --> 00:37:04,800
went up 10 times the value and I
sold it a loss. 

639
00:37:05,320 --> 00:37:09,120
And that hurts. 
And some people for them that 

640
00:37:09,120 --> 00:37:11,720
would be like, I am quitting 
investing. 

641
00:37:11,800 --> 00:37:15,120
I give up because I had made 10 
times of my money and I just 

642
00:37:15,120 --> 00:37:18,400
sold it a loss. 
And I can only say, you know, 

643
00:37:18,840 --> 00:37:23,040
welcome brother, sister. 
Like I, I have done that and 

644
00:37:23,040 --> 00:37:26,320
I've done that not just in my 
own portfolio publicly. 

645
00:37:26,560 --> 00:37:29,680
I recommended that to people who
pay us for our advice of The 

646
00:37:29,680 --> 00:37:32,960
Motley Fool and we had a nine 
bagger and I'm so sorry. 

647
00:37:32,960 --> 00:37:36,320
We're selling at more than 50% 
overall loss in the position. 

648
00:37:36,440 --> 00:37:37,800
I hope you're enjoying this 
program. 

649
00:37:37,800 --> 00:37:42,160
I'm interrupting it to remind 
you that this show is brought to

650
00:37:42,160 --> 00:37:46,760
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655
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If you don't know what fiscal 

656
00:38:07,040 --> 00:38:10,720
dot AI is, please listen to the 
episode that I did with Braden 

657
00:38:10,720 --> 00:38:12,600
Dennis. 
He lays it all out. 

658
00:38:12,720 --> 00:38:16,280
I think it's a great episode. 
It's one of the ones that I 

659
00:38:16,280 --> 00:38:19,320
think I'm I'm uniquely decent 
at. 

660
00:38:21,400 --> 00:38:24,840
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661
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664
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667
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668
00:38:47,680 --> 00:38:51,200
in the world. 
So why is that you just the the 

669
00:38:51,560 --> 00:38:54,520
starting valuation was just too 
high and the business eroded or 

670
00:38:54,520 --> 00:38:57,320
something like that and then you
held it long enough that it came

671
00:38:57,320 --> 00:38:59,040
back nine times. 
Is that what you're saying? 

672
00:38:59,640 --> 00:39:03,480
Well, I'm thinking specifically,
let's say of 3D systems when 3D 

673
00:39:03,480 --> 00:39:08,640
printing heated up 10 years ago 
and we generally love new trends

674
00:39:08,640 --> 00:39:13,240
and possibilities and there are 
more in our society today than 

675
00:39:13,760 --> 00:39:15,400
30 years ago when we started The
Motley Fool. 

676
00:39:15,400 --> 00:39:19,760
There are more rule breaker 
possibilities and amazing things

677
00:39:19,760 --> 00:39:24,520
coming then we could have 
foreseen a generation ago or 100

678
00:39:24,520 --> 00:39:27,720
years ago. 
And so get excited about all of 

679
00:39:27,720 --> 00:39:31,080
the possibilities that 
technology is going to bring us,

680
00:39:31,080 --> 00:39:34,480
our kids, our grandkids, because
those are the companies that we 

681
00:39:34,480 --> 00:39:37,040
want to own. 
But thinking back to 3D Systems,

682
00:39:37,360 --> 00:39:41,040
it basically shot up. 
I mean, there's a hype cycle, 

683
00:39:41,520 --> 00:39:43,680
Gartner's hype cycle 
specifically. 

684
00:39:43,680 --> 00:39:46,880
I think it's a good framework 
for people to know, and the peak

685
00:39:46,880 --> 00:39:50,480
of inflated expectations is one 
of the phases of that cycle. 

686
00:39:50,480 --> 00:39:51,760
And it's almost always going to 
happen. 

687
00:39:51,760 --> 00:39:55,600
There's no way not to for it to 
happen with AI or the Internet 

688
00:39:55,600 --> 00:39:58,680
or genomics, electric cars, the 
list goes on. 

689
00:39:58,680 --> 00:40:01,040
There's always going to be early
stage. 

690
00:40:01,040 --> 00:40:03,720
We humans can see new 
possibilities. 

691
00:40:04,160 --> 00:40:06,600
That just can't come to market 
soon enough. 

692
00:40:06,840 --> 00:40:09,160
And if they do, they may not 
even be relevant when they 

693
00:40:09,160 --> 00:40:12,800
arrive or they may not work out.
But we can see ahead of that. 

694
00:40:12,800 --> 00:40:15,400
And then people are paying up 
for those stocks in advance of 

695
00:40:15,400 --> 00:40:17,880
that. 
And then, you know, things come 

696
00:40:17,880 --> 00:40:22,240
crashing down and we end up with
deflated expectations. 

697
00:40:22,240 --> 00:40:24,520
And a lot, a lot of times we 
just write it off all together. 

698
00:40:24,800 --> 00:40:27,680
3D printing I think today is a 
bigger business than it was in 

699
00:40:27,680 --> 00:40:32,160
2016, but for that stock anyway,
yeah, that jumped up 9 times in 

700
00:40:32,160 --> 00:40:36,200
value for us in Motley Fool 
Stock Advisor, I think in less 

701
00:40:36,200 --> 00:40:39,320
than two years. 
But then company was trying to 

702
00:40:39,320 --> 00:40:43,520
get big fast by being 
acquisitive and, and you know, 

703
00:40:43,800 --> 00:40:47,640
in the end 3D printing wasn't a 
consumer revolution. 

704
00:40:48,600 --> 00:40:52,760
You I, I, I appreciate some 3D 
printing that I noticed in my, I

705
00:40:52,760 --> 00:40:56,720
don't have my own personal 3D 
printer, but we were for seeing 

706
00:40:56,720 --> 00:40:58,960
that possibility and I think the
market was as well. 

707
00:40:59,120 --> 00:41:02,760
So that's an example, Bill, very
specifically of basically a 10 

708
00:41:02,760 --> 00:41:07,480
bagger that we sold at a more 
than 50% AH. 

709
00:41:07,880 --> 00:41:09,760
So it went up. 
Nine years later. 

710
00:41:09,760 --> 00:41:11,600
And came down. 
Interesting, and I should have 

711
00:41:11,680 --> 00:41:13,640
made that more clear when I 
explained it, but. 

712
00:41:13,640 --> 00:41:18,480
Yeah, well, now we have. 
Yeah, and you know my own habits

713
00:41:18,720 --> 00:41:21,320
can come back to bite me, right?
Because I'm pretty sure as it 

714
00:41:21,320 --> 00:41:26,920
went up three times in value we 
added and then now we're up 9 

715
00:41:26,920 --> 00:41:29,800
times in value and I don't 
remember adding right then. 

716
00:41:30,000 --> 00:41:34,880
But the point is as it devolves 
unravels and and doesn't just 

717
00:41:34,880 --> 00:41:38,920
come back down to earth because 
town closer to hell, the burning

718
00:41:38,920 --> 00:41:41,400
flames of hell somewhere below 
the surface of Earth. 

719
00:41:42,200 --> 00:41:43,760
I was like, yeah, this one 
didn't work out. 

720
00:41:43,760 --> 00:41:45,440
Unfortunately, we also added to 
it. 

721
00:41:45,480 --> 00:41:49,720
So but I'm willing to look like 
an idiot, a common fool if you 

722
00:41:49,720 --> 00:41:51,320
will. 
I'm willing to have egg on my 

723
00:41:51,320 --> 00:41:55,000
face or air ballot from the free
throw line 10 times in a row in 

724
00:41:55,000 --> 00:41:58,800
a way many people probably would
not be OK with. 

725
00:41:59,400 --> 00:42:01,600
I am. 
I do think I benefited from 

726
00:42:01,600 --> 00:42:05,160
that, but it's part of my 
nature, therefore to adopt this 

727
00:42:05,160 --> 00:42:08,560
approach to investing where for 
others it may not make 100% 

728
00:42:08,560 --> 00:42:09,680
sense. 
Yeah. 

729
00:42:10,640 --> 00:42:12,120
Well, that I mean, that makes 
sense to me. 

730
00:42:12,120 --> 00:42:15,040
So one thing that I've heard 
you, I mean this, I think you 

731
00:42:15,040 --> 00:42:17,760
said this on Patrick 
O'shaughnessy's podcast way back

732
00:42:17,760 --> 00:42:21,040
was you said you like to be the 
first to buy and the last to 

733
00:42:21,040 --> 00:42:26,360
sell. 
You know, how do you figure out 

734
00:42:26,360 --> 00:42:31,760
like the, the 3D printing story?
When is it the time that you 

735
00:42:31,760 --> 00:42:36,720
say, OK, maybe this isn't what I
thought, you know, how do you, 

736
00:42:36,720 --> 00:42:38,440
how do you figure out when 
you're the last to sell? 

737
00:42:38,440 --> 00:42:42,360
Because if I recall correctly, 
you had a similar ride on 

738
00:42:42,360 --> 00:42:45,560
NVIDIA, but that was a good one 
to hold. 

739
00:42:46,080 --> 00:42:51,240
So where, where do you sort of 
massage that decision? 

740
00:42:51,240 --> 00:42:53,560
Making. 
Well, first of all, I default, 

741
00:42:53,600 --> 00:42:55,240
as you know, because you've read
the book. 

742
00:42:55,760 --> 00:42:58,680
I, I, I, we invest for at least 
three years. 

743
00:42:58,720 --> 00:43:02,560
So before I were were to enter a
position or recommend a stock, 

744
00:43:03,200 --> 00:43:04,800
I'm I'm there for at least three
years. 

745
00:43:05,360 --> 00:43:08,320
So there are additional 
implications of that, like we 

746
00:43:08,320 --> 00:43:11,280
need to have a sustainable 
competitive advantage, which is 

747
00:43:11,280 --> 00:43:14,120
the second trade of the six 
traits of rule breaker stocks, 

748
00:43:14,400 --> 00:43:17,040
because if we're going to be 
sustaining our investment for a 

749
00:43:17,040 --> 00:43:19,440
long period of time, we darn 
well better have some great 

750
00:43:19,440 --> 00:43:23,640
dynamics in place. 
So I guess, you know, that's 

751
00:43:23,640 --> 00:43:27,280
part of my mentalities. 
I go in right away playing the 

752
00:43:27,280 --> 00:43:30,720
long game. 
And I do believe I don't have 

753
00:43:30,720 --> 00:43:33,440
statistics for this, but I 
believe I'm in the minority of 

754
00:43:33,440 --> 00:43:35,640
the market. 
Well, you had the graph in the 

755
00:43:35,640 --> 00:43:38,680
book that that what the Twitter 
poll that showed the average 

756
00:43:38,680 --> 00:43:41,040
person's 18 months, right? 
Yeah, well, it's not the average

757
00:43:41,040 --> 00:43:41,760
person. 
Market. 

758
00:43:41,760 --> 00:43:44,480
Participant. 
It's actually institutional 

759
00:43:44,480 --> 00:43:47,000
money managers. 
And yeah, it is there in the 

760
00:43:47,000 --> 00:43:49,440
book. 
It was a Twitter pool done by my

761
00:43:49,760 --> 00:43:51,920
friend and fellow former fool 
Joe Magar. 

762
00:43:52,520 --> 00:43:55,800
And it was it was from Bank of 
America and it was surveying 

763
00:43:56,200 --> 00:43:58,480
professional institutional money
managers saying what is your 

764
00:43:58,480 --> 00:44:01,920
time frame? 
And it averages to what I had 

765
00:44:01,920 --> 00:44:06,760
always on my own adopted as my 
answer without any statistics. 

766
00:44:06,760 --> 00:44:10,640
So when Joe showed that it's six
months, I was like, that's what 

767
00:44:10,640 --> 00:44:11,720
I've been saying. 
That's. 

768
00:44:11,760 --> 00:44:13,560
Yeah, that's right. 
It wasn't 18, it was 6. 

769
00:44:13,560 --> 00:44:15,000
I'm sorry. 
What did you, what did you say? 

770
00:44:15,000 --> 00:44:18,160
You said that you thought that 
maybe 18 months is the longest 

771
00:44:18,160 --> 00:44:19,440
that anybody. 
Yeah. 

772
00:44:19,640 --> 00:44:23,560
And you know, whether it's 
6/12/11 or 18, it's not three 

773
00:44:23,560 --> 00:44:25,600
years. 
Yeah, the main point is, and 

774
00:44:25,600 --> 00:44:29,920
again, so many of the people I 
roll with, people who are, you 

775
00:44:29,920 --> 00:44:32,360
know, part of women's investment
clubs, long time Motley Pool 

776
00:44:32,360 --> 00:44:35,280
members, my good friend Bill 
Brewster, others, most people 

777
00:44:35,280 --> 00:44:38,720
have a longer term time frame 
than that. 

778
00:44:38,720 --> 00:44:41,440
And we're talking about your 
money and we're talking about 

779
00:44:41,440 --> 00:44:44,080
your entire life. 
I think we should have whole 

780
00:44:44,080 --> 00:44:48,880
life span Is is the the the real
time frame we should be living 

781
00:44:48,880 --> 00:44:51,440
our lives and investing our 
money. 

782
00:44:51,640 --> 00:44:55,320
And so that's why I'm always 
fully invested at all times and 

783
00:44:55,320 --> 00:44:57,720
that's through every down period
for a stock or the overall 

784
00:44:57,720 --> 00:44:59,240
market. 
I think we should be investing 

785
00:44:59,480 --> 00:45:02,120
getting on that train as early 
as possible. 

786
00:45:02,120 --> 00:45:06,000
First Depot, we can get your 
kids started and and be there 

787
00:45:06,000 --> 00:45:08,680
the our whole lives. 
You will be wildly rewarded and 

788
00:45:09,040 --> 00:45:11,440
there there's a huge opportunity
cost that people have paid by 

789
00:45:11,440 --> 00:45:14,840
not taking that approach. 
So therefore, obviously, yes, we

790
00:45:14,840 --> 00:45:16,720
start with a three-year minimum 
position. 

791
00:45:17,000 --> 00:45:21,520
So Bill, when 3D Systems and 
NVIDIA are both active pics of 

792
00:45:21,520 --> 00:45:26,080
mine and they're both going up, 
I'm like, great, that's what I 

793
00:45:26,080 --> 00:45:29,040
thought. 
These are companies that are top

794
00:45:29,040 --> 00:45:32,320
dogs and 1st movers in important
emerging industries. 

795
00:45:32,320 --> 00:45:35,200
That is the first trade of a 
rule breaker stock. 

796
00:45:35,200 --> 00:45:38,000
They they conform to that. 
They're going up, we're going to

797
00:45:38,000 --> 00:45:40,200
keep holding them. 
And then I keep holding and 

798
00:45:40,200 --> 00:45:43,760
holding some more, and one of 
them gets dunked on and the 

799
00:45:43,760 --> 00:45:46,400
other one goes sideways for 
three years, and we're still 

800
00:45:46,400 --> 00:45:48,800
holding. 
Because I've already experienced

801
00:45:48,880 --> 00:45:52,400
in my life watching great stocks
lose a lot of value and then 

802
00:45:52,400 --> 00:45:54,440
come back. 
And, you know, part of the trick

803
00:45:54,440 --> 00:45:57,320
there of holding is you're 
looking at the company and what 

804
00:45:57,320 --> 00:46:00,280
it's doing, not the stock. 
Because stocks are always 

805
00:46:00,280 --> 00:46:04,240
exaggerating the movements of 
what's actually happening with 

806
00:46:04,240 --> 00:46:07,000
the underlying businesses. 
And, you know, I'm not blaming 

807
00:46:07,000 --> 00:46:08,480
the market. 
The market's trying to forecast 

808
00:46:08,480 --> 00:46:12,320
what this means for the future, 
but we're all guessing, and the 

809
00:46:12,320 --> 00:46:15,240
stock market price discovery 
mechanism is one of the single 

810
00:46:15,240 --> 00:46:18,360
best predictors you'll ever find
for guessing where the world is 

811
00:46:18,360 --> 00:46:22,280
headed. 
So you know much respect to the 

812
00:46:22,280 --> 00:46:27,400
market and how it prices things.
And most of the businesses 

813
00:46:27,400 --> 00:46:31,400
Netflix quick stir 2011 that 
make mistakes, even if 

814
00:46:31,400 --> 00:46:34,840
self-inflicted gunshot wounds. 
These companies are actually 

815
00:46:34,840 --> 00:46:38,680
more resilient and stronger than
you would think from a market 

816
00:46:38,680 --> 00:46:43,440
movements and B, the media, 
which is often integral to 

817
00:46:43,440 --> 00:46:46,880
driving market movements up and 
or down. 

818
00:46:47,320 --> 00:46:51,000
And so you start looking at 
Netflix going, OK, so Quickstir,

819
00:46:51,240 --> 00:46:53,320
I'm a Netflix customer, let 
alone shareholder. 

820
00:46:53,680 --> 00:46:56,240
I don't, I don't like this move.
This is very frustrating. 

821
00:46:56,240 --> 00:47:00,320
I'm going to have to separate my
streaming queue from my DVD 

822
00:47:00,320 --> 00:47:02,320
rental queue. 
This is back when we were still 

823
00:47:02,320 --> 00:47:05,600
renting DVDs and that just feels
customer unfriendly. 

824
00:47:05,600 --> 00:47:09,520
And the stock is dropping and 
Netflix lost 2/3 of its value 

825
00:47:09,760 --> 00:47:13,680
inside of a year based on a 
decision that it made and then 

826
00:47:13,680 --> 00:47:19,720
retracted. 
And the worst we could ever do 

827
00:47:19,720 --> 00:47:22,640
is lose 100% of our money and 
I've never quite done that, 

828
00:47:22,640 --> 00:47:25,520
though I've gotten near. 
The best we can do is infinite 

829
00:47:25,520 --> 00:47:29,440
upside, as you already 
mentioned, and therefore tie 

830
00:47:29,440 --> 00:47:33,720
goes to holding. 
And so when I said on Patrick 

831
00:47:33,720 --> 00:47:37,840
O'shaughnessy's podcast, I try 
to be in ahead of most others, 

832
00:47:37,840 --> 00:47:42,440
never first in I'm not AVC and 
then I try to be out after most 

833
00:47:42,440 --> 00:47:46,080
everybody else. 
When you're out holding the bag 

834
00:47:46,080 --> 00:47:49,320
on a bad stock at the bottom, 
you just look like, again, a 

835
00:47:49,320 --> 00:47:52,400
small F fool. 
And I'm always happy since I 

836
00:47:52,400 --> 00:47:55,480
named myself from the very 
beginning of our paper 

837
00:47:55,480 --> 00:47:57,760
newsletter for parents friends a
fool. 

838
00:47:58,520 --> 00:48:00,240
I'm OK, I'm actually OK with 
that. 

839
00:48:00,240 --> 00:48:03,480
I'm OK people saying you know 
you're an idiot, you suck. 

840
00:48:03,960 --> 00:48:08,080
How could this happen? 
Because the upside of being 

841
00:48:08,080 --> 00:48:12,120
right and just being lazy and 
holding both NVIDIA and 3D 

842
00:48:12,120 --> 00:48:15,840
Systems next to each other is so
amazingly awesome. 

843
00:48:16,440 --> 00:48:19,400
But most people don't know that 
because most people never hold 

844
00:48:19,400 --> 00:48:22,600
stocks long enough to realize 
that Ling's money thing should 

845
00:48:22,600 --> 00:48:26,280
have been a thing. 
And Intuitive Surgical is a 

846
00:48:26,280 --> 00:48:29,680
monster. 
And so is Booking and so so's 

847
00:48:29,680 --> 00:48:34,440
tracks and MercadoLibre other, 
you know, stocks that we haven't

848
00:48:34,440 --> 00:48:36,560
mentioned yet in our time 
together that have just been 

849
00:48:36,840 --> 00:48:39,920
gigantic winners for us at at 
Motley Fool rule Breakers. 

850
00:48:40,360 --> 00:48:43,040
And, and most people don't have 
an experience of having a 

851
00:48:43,040 --> 00:48:47,600
monster winner, like the idea of
a spiffy pop, which you know, 

852
00:48:47,800 --> 00:48:50,160
some of your listeners will 
know, but most of the world 

853
00:48:50,160 --> 00:48:52,480
doesn't know what that is. 
When I say that the idea of 

854
00:48:52,480 --> 00:48:55,080
having that is for many people 
an alien experience, like how 

855
00:48:55,080 --> 00:48:57,600
could you do that? 
And yet it's happened thousands 

856
00:48:57,600 --> 00:49:01,120
and thousands of Times Now for 
for me. 

857
00:49:01,760 --> 00:49:03,800
Too many people chasing teenies 
man. 

858
00:49:04,160 --> 00:49:06,200
There you go. 
And I love that phrase, and I 

859
00:49:06,200 --> 00:49:10,720
think we've had fun with that. 
Indeed, we have Mercardo Libre 

860
00:49:10,720 --> 00:49:14,840
actually was, I was kind of it 
popped into my mind when you 

861
00:49:14,840 --> 00:49:17,320
were talking about what happened
with Starbucks, right. 

862
00:49:17,320 --> 00:49:20,120
Just because this previous 
quarter they kind of invested in

863
00:49:22,080 --> 00:49:26,880
I guess fulfillment expense and 
and maybe took this the the foot

864
00:49:26,880 --> 00:49:29,680
off the gas a little bit on 
profitability in favor of market

865
00:49:29,680 --> 00:49:32,640
share, which we'll see how it 
all turns out. 

866
00:49:32,640 --> 00:49:36,000
But seems to me not the dumbest 
management decision if you're 

867
00:49:36,000 --> 00:49:38,160
actually running the business 
for the long term, right? 

868
00:49:38,480 --> 00:49:44,200
Yeah, I feel really good about 
Marcada Libre and I have for for

869
00:49:44,200 --> 00:49:47,000
well more than a decade it has 
been, it has been the single 

870
00:49:47,000 --> 00:49:50,400
best stock pick for the two 
services I picked for in this 

871
00:49:50,400 --> 00:49:54,640
case a rule Breakers it is AI 
think it's 178 bagger over the 

872
00:49:55,040 --> 00:49:58,480
15 years we've held it and that 
includes, you know, any recent 

873
00:49:58,480 --> 00:50:02,400
drops. 
The company, one of the things 

874
00:50:02,400 --> 00:50:04,880
I've done on my podcast is I did
this over six years. 

875
00:50:04,880 --> 00:50:09,760
I picked 5 stocks as a little 
basket and I did that. 

876
00:50:10,480 --> 00:50:14,880
I did that 30 times in a row 
space by 10 weeks each time. 

877
00:50:15,360 --> 00:50:17,320
And it's just all part of my 
free podcast. 

878
00:50:17,320 --> 00:50:18,880
I was like, hey, these are just 
samplers. 

879
00:50:18,880 --> 00:50:21,680
Like we already own all these 
stocks in our services. 

880
00:50:21,680 --> 00:50:23,440
We have lower cost bases 
usually. 

881
00:50:23,680 --> 00:50:26,040
Then the sampler you're getting 
like the same sample you get a 

882
00:50:26,040 --> 00:50:28,280
Whole Foods when they give you a
little piece of cheese or a 

883
00:50:28,280 --> 00:50:31,800
little sip of wine, a sampler. 
I was saying here are samplers 

884
00:50:31,800 --> 00:50:34,040
of the stock picks from my 
services. 

885
00:50:34,200 --> 00:50:38,360
And the very first five stocks 
sampler I picked was when I 

886
00:50:38,360 --> 00:50:41,280
started my podcast. 
It was the, IT was, It was 

887
00:50:41,280 --> 00:50:43,360
September. 
It was September 2nd. 

888
00:50:43,360 --> 00:50:45,680
You and I are recording this on 
September 2nd. 

889
00:50:45,720 --> 00:50:46,840
Oh, there you go. 
How about? 

890
00:50:46,840 --> 00:50:51,760
2025 and it was literally 10 
years ago today that I picked my

891
00:50:51,760 --> 00:50:55,640
first sampler was called 5 
stocks for the next 5 years and 

892
00:50:56,120 --> 00:50:58,840
it's now 10 years later, which 
is more like my time frame. 

893
00:50:59,400 --> 00:51:03,080
And yeah, I was going back and 
reviewing what I was saying as I

894
00:51:03,080 --> 00:51:07,840
made MercadoLibre one of the 
five stocks I picked 10 years 

895
00:51:07,840 --> 00:51:11,560
ago today. 
And MercadoLibre was at a $5 

896
00:51:11,560 --> 00:51:14,240
billion market cap. 
And I was saying at the time, 

897
00:51:14,480 --> 00:51:16,560
and by the way, I was right, so 
I'm bragging. 

898
00:51:17,080 --> 00:51:21,600
I was saying at the time, 
MercadoLibre at a $5 billion 

899
00:51:21,600 --> 00:51:28,040
market cap today, 10 years ago, 
is basically like saying if you 

900
00:51:28,040 --> 00:51:32,320
could go back in time and buy 
eBay and Amazon in the 1990s at 

901
00:51:32,320 --> 00:51:35,320
their respective market caps, do
you think that would be a good 

902
00:51:35,320 --> 00:51:37,800
buy? 
And the answer is yes, You would

903
00:51:37,800 --> 00:51:42,720
have loved in 2015 to get the 
cost basis of Amazon and eBay 

904
00:51:43,040 --> 00:51:45,920
from 20 years before. 
And I'm really happy to say the 

905
00:51:45,920 --> 00:51:49,160
Maracana Libre's market cap 
today is 122 billion. 

906
00:51:49,440 --> 00:51:51,280
So yeah, that was a hell of a 
buy. 

907
00:51:51,560 --> 00:51:54,440
And by the way, it looked 
overvalued and they probably had

908
00:51:54,440 --> 00:51:58,120
dropped, you know, 30% twice in 
the year leading up to me 

909
00:51:58,120 --> 00:52:01,360
picking the stock and re picking
the stock in 2015. 

910
00:52:01,360 --> 00:52:08,000
Anyway, in some ways, this is 
like a great microcosm of what I

911
00:52:08,000 --> 00:52:12,000
try to do, which is get people 
realizing it's not about where 

912
00:52:12,000 --> 00:52:13,960
things have been, it's about the
future. 

913
00:52:14,320 --> 00:52:17,720
And so, Bill, I love 
MercadoLibre right here today at

914
00:52:17,840 --> 00:52:21,200
$122 billion for the next 10 to 
20 years. 

915
00:52:21,800 --> 00:52:27,520
Didn't you have like one of the 
all time great Amazon calls in 

916
00:52:27,520 --> 00:52:31,280
like 98 when you said something 
along the lines like people say 

917
00:52:31,280 --> 00:52:34,240
it's just a bookstore but think 
about all the other places they 

918
00:52:34,240 --> 00:52:36,160
can go. 
Wasn't that you? 

919
00:52:36,440 --> 00:52:39,880
I'm pretty sure it was you. 
It was I I will say that you 

920
00:52:39,880 --> 00:52:43,120
know, it's I mean, I, I, I can't
say if it's all time great 

921
00:52:43,120 --> 00:52:46,240
because I think others can 
decide what what's like Hall of 

922
00:52:46,240 --> 00:52:48,400
Fame worthy, but. 
Well, it came into my feet. 

923
00:52:48,400 --> 00:52:51,520
Is somebody saying David had one
of the all time great calls? 

924
00:52:51,800 --> 00:52:54,960
Well, I mean, what's fun about 
that is that, you know, we we're

925
00:52:54,960 --> 00:53:00,280
still holding and, and, and it's
right there on the Internet. 

926
00:53:00,280 --> 00:53:05,560
You can Google it for free. 
And it was the summer of 1997. 

927
00:53:06,240 --> 00:53:10,120
And yeah, you could read my 
exact write up from, you know, 

928
00:53:10,120 --> 00:53:14,280
first paragraph to the last one.
And we're now 28 years later and

929
00:53:14,280 --> 00:53:18,720
my cost basis is $0.16. 
So it's, it's been, it's been 

930
00:53:18,720 --> 00:53:21,760
smoking hot. 
And and I mean, what an 

931
00:53:21,760 --> 00:53:25,680
incredible object lesson in what
I ended up calling Rule Breaker 

932
00:53:25,680 --> 00:53:30,480
investing because all of the 
factors, all of the bears, the 

933
00:53:30,480 --> 00:53:34,520
dark clouds you had to see 
through were so evident from the

934
00:53:34,520 --> 00:53:37,960
very beginning, including the 
stock having doubled before I 

935
00:53:37,960 --> 00:53:39,880
picked it. 
Like all of the things that I've

936
00:53:39,880 --> 00:53:43,080
tried to teach the world are 
implicit in that one story. 

937
00:53:43,360 --> 00:53:46,040
And I think it's been maybe the 
best stock you could have owned 

938
00:53:46,480 --> 00:53:50,480
since 1997. 
And in a really weird, this is 

939
00:53:50,480 --> 00:53:54,760
kismet, this is destiny, this is
outside of my own control. 

940
00:53:54,760 --> 00:53:58,400
But in a really weird fun 
coincidence Bill, I would say 

941
00:53:58,400 --> 00:54:01,840
the other stock that is a clear 
rule breaker that would become 

942
00:54:01,840 --> 00:54:07,920
the next generations great stock
is NVIDIA and I picked that and 

943
00:54:07,920 --> 00:54:12,680
my cost basis is the same for 
both really and NVIDIA it is 

944
00:54:12,680 --> 00:54:13,920
$0.16. 
Thanks. 

945
00:54:13,920 --> 00:54:16,680
Well, the next time you get 
anything close to that, 

946
00:54:17,080 --> 00:54:19,440
everybody should. 
That's that's the magic lesson 

947
00:54:19,440 --> 00:54:21,120
right there. 
Well, I guess, but you've had. 

948
00:54:21,120 --> 00:54:23,800
Splits and whatnot, yeah. 
As you well know, those stocks 

949
00:54:23,800 --> 00:54:27,800
were never penny stocks, but 
literally my cost basis is $0.16

950
00:54:27,800 --> 00:54:31,000
now for both of them. 
NVIDIA has split 120 for one 

951
00:54:31,000 --> 00:54:32,320
over the years. 
Wow. 

952
00:54:32,560 --> 00:54:38,280
And so, but, but both of them 
exhibit this, the pattern that 

953
00:54:38,280 --> 00:54:40,840
we're talking about, the six 
traits of rule breaker stocks. 

954
00:54:41,200 --> 00:54:45,520
And, and I was just like I said 
in Patrick's podcast, I was in 

955
00:54:45,520 --> 00:54:48,640
early and we're still holding 
for both of them. 

956
00:54:48,640 --> 00:54:51,800
And they've been, I think 
they've been probably two of the

957
00:54:51,800 --> 00:54:54,960
best stock picks you could have 
made on the markets in the last 

958
00:54:55,160 --> 00:54:57,640
30 years. 
And I used the same methodology 

959
00:54:57,640 --> 00:54:59,720
to pick both. 
And at the time I picked both, 

960
00:55:00,000 --> 00:55:02,840
there were a lot of bears there.
There were a lot of people 

961
00:55:02,840 --> 00:55:04,480
saying I would never buy the 
stock there. 

962
00:55:04,480 --> 00:55:08,720
I'll wait for a dip. 
Yeah, one of the things that I 

963
00:55:08,720 --> 00:55:11,840
like that you did in the book 
was you had like, I don't know, 

964
00:55:11,840 --> 00:55:15,960
call it 8 to 10 charts maybe. 
And they went from the bottom 

965
00:55:16,080 --> 00:55:18,840
left, you know, they, they 
corrected a little bit, but they

966
00:55:18,840 --> 00:55:21,320
were quite a bit higher than 
where they started. 

967
00:55:21,320 --> 00:55:24,480
And you, you said, like, I'm 
proud to say that I recommended 

968
00:55:24,480 --> 00:55:26,440
all these, but not at the bottom
right. 

969
00:55:26,440 --> 00:55:30,080
I, I recommended them after they
had run up a decent amount, 

970
00:55:30,080 --> 00:55:33,520
which, you know, I just, I felt 
like through the book, there was

971
00:55:33,520 --> 00:55:40,400
a real sense of honesty and 
embracing of, you know, the 

972
00:55:40,400 --> 00:55:44,440
things do go wrong. 
And I, and I, I appreciate that 

973
00:55:45,240 --> 00:55:49,040
in an industry where most people
boast about their wins, you kind

974
00:55:49,040 --> 00:55:51,920
of let your wins speak for 
themselves and, and rub your 

975
00:55:51,920 --> 00:55:56,560
face in, in the downside, which 
I believe sets up the new reader

976
00:55:57,000 --> 00:55:59,880
at least, at least you've done 
what you can to prepare somebody

977
00:55:59,880 --> 00:56:02,560
mentally, whether or not they 
have the psychology is sort of 

978
00:56:02,800 --> 00:56:05,200
outside your control. 
I appreciate that Bill. 

979
00:56:05,200 --> 00:56:07,800
And you know that that chapter 
was a lot of fun to write. 

980
00:56:08,320 --> 00:56:13,640
And specifically, that is 
Chapter 9 of the book where I 

981
00:56:13,640 --> 00:56:19,080
talk about trait #3 of Rule 
Breaker stocks, stellar past, 

982
00:56:19,480 --> 00:56:23,560
price appreciation. 
And the fun of writing that 

983
00:56:23,560 --> 00:56:26,960
chapter was realizing, because I
didn't realize it until I 

984
00:56:27,400 --> 00:56:32,960
started to write that chapter 
here a year ago, that seven of 

985
00:56:32,960 --> 00:56:38,960
my best picks ever all together 
had the same chart pattern 

986
00:56:39,600 --> 00:56:45,720
before I picked them. 
They were up 30 to 90% in the 

987
00:56:45,720 --> 00:56:49,920
three to nine months before I 
picked them. 

988
00:56:50,400 --> 00:56:54,720
And so hilariously, that chapter
leads off as you mentioned with 

989
00:56:54,720 --> 00:56:58,080
their stock graphs. 
And in every case it looks like,

990
00:56:58,080 --> 00:57:01,280
you know, you must be bragging, 
Dave, because in the lower left,

991
00:57:01,280 --> 00:57:05,560
you know, it started there and 
then look, it goes up like 80% 

992
00:57:05,560 --> 00:57:09,120
like 6 months. 
And the, the main point is you 

993
00:57:09,120 --> 00:57:12,960
already pulled out is that I 
didn't pick it there at the 

994
00:57:12,960 --> 00:57:14,880
bottom. 
I actually picked it at the end 

995
00:57:14,880 --> 00:57:20,280
of the graph at the top, and 
those weren't my losers. 

996
00:57:20,600 --> 00:57:25,600
Those were my best picks. 
And so it was such an eye opener

997
00:57:25,600 --> 00:57:29,440
for me personally as I wrote the
chapter to put those up. 

998
00:57:29,680 --> 00:57:32,040
And I hope that just jumps out 
to people. 

999
00:57:32,360 --> 00:57:36,720
And again, not every stock that 
you buy at its new high is going

1000
00:57:36,720 --> 00:57:38,840
to work out well. 
There are cyclicals, there are 

1001
00:57:38,840 --> 00:57:40,640
junk stocks, there are meme 
stocks. 

1002
00:57:40,640 --> 00:57:43,760
The list goes on. 
But for what we're talking about

1003
00:57:44,160 --> 00:57:47,520
during our time today, Rule 
Breaker investing, if you're 

1004
00:57:47,520 --> 00:57:50,800
finding companies that comport 
themselves to what I'm looking 

1005
00:57:50,800 --> 00:57:55,320
for, stellar past price 
appreciation, as it turns out, 

1006
00:57:55,800 --> 00:57:59,840
is an excellent indicator of 
future winning results. 

1007
00:57:59,880 --> 00:58:02,760
And it's the opposite of, again,
what most people would think. 

1008
00:58:03,640 --> 00:58:08,160
Well, and I, I think when you 
layer on the 5% Max position 

1009
00:58:08,160 --> 00:58:13,400
size and then the ability to add
up over time, it encourages 

1010
00:58:13,840 --> 00:58:17,200
fishing in a pond where things 
are on average going well. 

1011
00:58:17,640 --> 00:58:20,520
Trying to look for companies 
that you think can dominate 10 

1012
00:58:20,520 --> 00:58:23,280
years out in a world where most 
people are thinking no more than

1013
00:58:23,280 --> 00:58:26,400
six months. 
And you know, it's sort of sets 

1014
00:58:26,400 --> 00:58:29,720
yourself up for maybe playing 
the game in a different. 

1015
00:58:29,720 --> 00:58:33,920
Way very well summarized. 
That is exactly how I would 

1016
00:58:33,920 --> 00:58:37,480
describe what I'm trying to do. 
Do you want to talk? 

1017
00:58:37,480 --> 00:58:42,040
I would be remiss if we didn't 
chat a little bit about the, you

1018
00:58:42,040 --> 00:58:44,120
know, how to build your 
portfolio. 

1019
00:58:44,120 --> 00:58:47,000
What I'm I'm going to, I can't. 
You can think of the words 

1020
00:58:47,000 --> 00:58:48,600
better than I can. 
You wrote the book. 

1021
00:58:49,160 --> 00:58:52,800
So let's let's talk about the 
sentence that you've is sort of 

1022
00:58:52,800 --> 00:58:54,680
the foundation for. 
Portfolio construction. 

1023
00:58:54,680 --> 00:58:58,440
You bet so so the structure of 
the book is 3 parts. 

1024
00:58:58,440 --> 00:59:01,160
Also it's a short book. 
One of the things my. 

1025
00:59:01,160 --> 00:59:03,240
What goes it flies by? 
Thank you. 

1026
00:59:03,240 --> 00:59:06,360
One of the things my wonderful 
editor Craig said is he's, he's 

1027
00:59:06,360 --> 00:59:08,360
a Brit. 
So this is a slightly affected 

1028
00:59:08,360 --> 00:59:10,160
accent. 
He's like David, you know what 

1029
00:59:10,160 --> 00:59:12,720
people like. 
And I was like short books. 

1030
00:59:13,000 --> 00:59:15,320
Like what? 
Do people like short books? 

1031
00:59:15,640 --> 00:59:17,080
Yeah, that's right. 
What? 

1032
00:59:17,120 --> 00:59:19,160
People don't like is 100 pages 
of filler. 

1033
00:59:20,480 --> 00:59:23,160
So I was like, you're right. 
And really, at heart, I think 

1034
00:59:23,160 --> 00:59:25,440
I'm a writer. 
That's what I started out as in 

1035
00:59:25,440 --> 00:59:27,040
school and what I've loved 
doing. 

1036
00:59:27,040 --> 00:59:29,160
And I've written a lot of things
over the years, including more 

1037
00:59:29,160 --> 00:59:31,320
than one book. 
But this is the first book I 

1038
00:59:31,320 --> 00:59:34,760
actually wrote all by myself. 
And with that guidance from 

1039
00:59:34,760 --> 00:59:38,240
Craig, I'm like, you're right. 
Let's make this a fun, ripping 

1040
00:59:38,240 --> 00:59:41,040
good read. 
We're going, we're, we're going 

1041
00:59:41,040 --> 00:59:42,840
to a subject that matters deeply
to me. 

1042
00:59:42,840 --> 00:59:46,480
So it's not that we're treating 
it lightly, but let's make it 

1043
00:59:46,480 --> 00:59:48,200
entertaining. 
That's what we have to do with 

1044
00:59:48,200 --> 00:59:49,600
The Motley Fool. 
Otherwise, we're not very 

1045
00:59:49,920 --> 00:59:53,440
foolish if it's not fun. 
But let's also, you know, let's 

1046
00:59:53,440 --> 00:59:55,560
cover a lot of ground all at 
once. 

1047
00:59:55,760 --> 00:59:59,120
And since this is my final stock
market book, I'm leaving it all 

1048
00:59:59,120 --> 01:00:02,560
out there on the field. 
So the, the organization of the 

1049
01:00:02,560 --> 01:00:05,120
book is 3 parts. 
The first part is the six Habits

1050
01:00:05,120 --> 01:00:07,200
of the Rule Breaker investor. 
We've talked a little bit about 

1051
01:00:07,200 --> 01:00:09,040
that. 
Second part, because we got to 

1052
01:00:09,040 --> 01:00:11,800
talk about stocks, the six 
traits of the rule breaker 

1053
01:00:11,800 --> 01:00:15,320
stock. 
And then the third part in my 

1054
01:00:15,320 --> 01:00:17,680
mind, inevitably, if you're 
talking about habits and then 

1055
01:00:17,680 --> 01:00:21,520
stocks, what results is a 
portfolio yours? 

1056
01:00:21,880 --> 01:00:26,320
And so the six principles of the
rule Breaker portfolio. 

1057
01:00:26,680 --> 01:00:29,680
SO3 lists of 6. 
I like the number six because 

1058
01:00:29,680 --> 01:00:35,240
it's enough to remember, but 
also not too much. 

1059
01:00:35,240 --> 01:00:39,640
So you can keep it in mind. 
I think you can remember all six

1060
01:00:39,640 --> 01:00:41,720
of these. 
At least I can for all three 

1061
01:00:41,720 --> 01:00:43,560
lists. 
If it, if I started saying 7 or 

1062
01:00:43,560 --> 01:00:45,680
8, you wouldn't get it. 
If I said two or three, it's not

1063
01:00:45,680 --> 01:00:47,720
enough. 
So I like the number six. 

1064
01:00:47,960 --> 01:00:52,160
And so the six principles of the
rule breaker portfolio and you 

1065
01:00:52,160 --> 01:00:54,600
know, the very first one is the 
one that matters most. 

1066
01:00:54,600 --> 01:00:58,600
In fact, the 1st in each of my 
lists of 6 is the big, big one 

1067
01:00:58,600 --> 01:01:02,680
that matters most. 
And for portfolios, it's to make

1068
01:01:02,680 --> 01:01:06,440
your portfolio reflect your best
vision for our future. 

1069
01:01:07,280 --> 01:01:10,200
So there's no asset allocation 
in there. 

1070
01:01:10,360 --> 01:01:13,920
There's no numerical guidance. 
There is a very strong belief on

1071
01:01:13,920 --> 01:01:18,920
my part that you and I will do 
better with our portfolios if we

1072
01:01:18,920 --> 01:01:22,800
can look up and down the 
portfolio and say, I love those 

1073
01:01:22,800 --> 01:01:24,880
companies. 
I admire what they do. 

1074
01:01:25,680 --> 01:01:29,160
They express me. 
If my buddy at work saw My 

1075
01:01:29,160 --> 01:01:31,240
Portfolio statement, they'd be 
like, yeah, that's Dave. 

1076
01:01:31,240 --> 01:01:33,320
Yeah, no, he. 
Those are his companies. 

1077
01:01:33,320 --> 01:01:36,680
Just like our books on our 
shelves kind of show who we are 

1078
01:01:36,920 --> 01:01:40,000
to people who pass their eyes 
across our bookshelf, Our books 

1079
01:01:40,000 --> 01:01:42,360
are our friends. 
The exact same thing should be 

1080
01:01:42,360 --> 01:01:45,440
true of your portfolio. 
And obviously we're all seeing 

1081
01:01:45,440 --> 01:01:47,520
different parts of the elephant.
We all have different tastes, 

1082
01:01:47,520 --> 01:01:51,440
passions, interests, hobbies, 
professional insights. 

1083
01:01:51,440 --> 01:01:56,520
We're all unique. 
And I literally strongly believe

1084
01:01:56,520 --> 01:02:00,400
you will do better if you're 
investing right along that 

1085
01:02:00,880 --> 01:02:02,640
dynamic. 
You will literally have better 

1086
01:02:02,640 --> 01:02:06,240
numerical performance then if 
you don't or if you give your 

1087
01:02:06,240 --> 01:02:08,600
money over to somebody else, if 
you just mail it in with an 

1088
01:02:08,600 --> 01:02:11,600
index fund, etcetera, you will 
do better. 

1089
01:02:11,600 --> 01:02:14,920
And that's why it's the most 
important of My Portfolio 

1090
01:02:14,920 --> 01:02:17,240
principles and it's kind of 
about you and getting to know 

1091
01:02:17,240 --> 01:02:21,720
yourself and over the course of 
time, getting smarter about what

1092
01:02:21,720 --> 01:02:25,080
wins. 
We should all be fans of the 

1093
01:02:25,080 --> 01:02:30,040
game and seeing why does this 
person or stock win in that 

1094
01:02:30,040 --> 01:02:31,680
situation, company and those 
don't. 

1095
01:02:32,040 --> 01:02:34,320
We should all constantly be 
learning and leveling up. 

1096
01:02:34,320 --> 01:02:37,480
I'm a video gamer still at 59, 
just as I was at 19. 

1097
01:02:37,760 --> 01:02:40,280
Leveling up is a phrase that 
means a lot to me. 

1098
01:02:40,800 --> 01:02:42,600
What do winners do? 
They win. 

1099
01:02:43,320 --> 01:02:46,320
Let's learn from them. 
And and once you have your own 

1100
01:02:46,320 --> 01:02:48,800
winners, then you have your own 
lessons that you can base your 

1101
01:02:48,800 --> 01:02:51,480
future decisions on. 
And I think your money should be

1102
01:02:51,480 --> 01:02:52,960
inside your circle of 
competence. 

1103
01:02:53,160 --> 01:02:55,840
You should be constantly growing
your circle so that the 

1104
01:02:55,840 --> 01:03:00,600
perimeter keeps extending. 
And yeah, make your portfolio 

1105
01:03:00,600 --> 01:03:03,360
reflect your best vision for our
future. 

1106
01:03:03,360 --> 01:03:06,400
And that phrase our means that 
we need to think beyond 

1107
01:03:06,400 --> 01:03:10,920
ourselves sometimes. 
Like ask yourself, it might be 

1108
01:03:10,920 --> 01:03:14,720
something that you personally as
a pet project or product or 

1109
01:03:14,920 --> 01:03:19,480
stock feels right for you. 
But also get outside your own 

1110
01:03:19,480 --> 01:03:22,320
head and just ask what's 
important for the world at 

1111
01:03:22,320 --> 01:03:25,520
large. 
All of the great stocks of every

1112
01:03:25,520 --> 01:03:28,920
generation are going to be 
monster winners because they 

1113
01:03:28,920 --> 01:03:31,680
were relevant. 
They were adding value to the 

1114
01:03:31,680 --> 01:03:36,000
lives of many, many people. 
And so it's that expansiveness 

1115
01:03:36,240 --> 01:03:37,960
that defines rule Breakers to 
me. 

1116
01:03:37,960 --> 01:03:42,080
And so for our own portfolio, we
want to constantly be learning 

1117
01:03:42,080 --> 01:03:43,760
and growing. 
And especially if you're going 

1118
01:03:43,760 --> 01:03:46,120
to buy stocks directly, which by
the way, is another thing that 

1119
01:03:46,120 --> 01:03:49,200
people will tell you not to do. 
And there's another place where 

1120
01:03:49,440 --> 01:03:53,000
I, as David, love to take on 
Goliath and say that's such a 

1121
01:03:53,000 --> 01:03:56,200
shame if people think that they 
shouldn't buy stocks directly. 

1122
01:03:56,520 --> 01:03:59,960
Doesn't have to be with all your
money, but just tuning out and 

1123
01:03:59,960 --> 01:04:03,560
just going, yeah, I'm just DCA 
ING into whatever. 

1124
01:04:03,800 --> 01:04:05,800
I'm not really sure giving it 
over to my money guy, you, you 

1125
01:04:05,800 --> 01:04:09,600
are robbing yourself of so much 
growth and and fun. 

1126
01:04:10,080 --> 01:04:12,040
And I would say success if you 
do that. 

1127
01:04:12,240 --> 01:04:14,440
And I realize we're all time 
starved and not everybody has 

1128
01:04:14,440 --> 01:04:16,600
time or interest in investing in
stocks directly. 

1129
01:04:16,600 --> 01:04:19,240
But at least for those who want 
to read my book, I'm speaking to

1130
01:04:19,240 --> 01:04:23,200
you because I believe that 
you're the person I'd invest in 

1131
01:04:23,200 --> 01:04:24,960
any group of people. 
If you have that degree of 

1132
01:04:24,960 --> 01:04:30,400
intellectual curiosity, 
willingness to take risk, to be 

1133
01:04:30,400 --> 01:04:34,360
responsible for your own 
actions, I'm investing in you. 

1134
01:04:34,560 --> 01:04:37,160
And you and I are investing in 
companies by doing that. 

1135
01:04:37,160 --> 01:04:40,120
And we're going to we're going 
to win a lot in this world where

1136
01:04:40,120 --> 01:04:41,680
most people don't seem to want 
to do that. 

1137
01:04:41,680 --> 01:04:44,840
So I think I just went off and 
ranted, Bill, I think I lost. 

1138
01:04:44,840 --> 01:04:47,160
No, it's always a good. 
Rant you didn't lose anybody. 

1139
01:04:47,160 --> 01:04:49,440
You didn't lose anybody, 
especially if they, if they're 

1140
01:04:49,440 --> 01:04:52,800
the type of person that gets the
portfolio section then then they

1141
01:04:52,800 --> 01:04:54,280
really are and. 
A minority. 

1142
01:04:54,280 --> 01:04:56,760
The reason I sent you my first 
50 pages is because another 

1143
01:04:56,760 --> 01:05:00,000
thing I learned from Craig, my 
wonderful publisher is one 

1144
01:05:00,000 --> 01:05:03,240
person in three is still reading
non fiction books typically 

1145
01:05:03,240 --> 01:05:07,080
after page 50. 
Therefore, David front load your

1146
01:05:07,080 --> 01:05:09,480
best stuff. 
Let's let's lead off with NVIDIA

1147
01:05:09,480 --> 01:05:11,600
and Ling's money thing. 
And those are great stories and 

1148
01:05:11,600 --> 01:05:13,680
fun to tell. 
But I sure hope that I've 

1149
01:05:13,680 --> 01:05:15,880
written a book that people, if 
they're taking themselves and 

1150
01:05:15,880 --> 01:05:17,440
their money seriously, would 
want to read all the way 

1151
01:05:17,440 --> 01:05:20,000
through. 
It is a short book, but that's 

1152
01:05:20,000 --> 01:05:24,120
that section on portfolios is 
just as important as as anything

1153
01:05:24,120 --> 01:05:26,360
else really. 
And each of the six principles, 

1154
01:05:26,360 --> 01:05:29,600
I think should be really helpful
in a world where many people 

1155
01:05:29,600 --> 01:05:33,600
have not been coached at all on 
how to build or maintain a 

1156
01:05:33,600 --> 01:05:37,800
portfolio that's that's a 
secondary or tertiary thing For 

1157
01:05:37,800 --> 01:05:40,400
most people, if they're even 
investing in stocks, they're 

1158
01:05:40,400 --> 01:05:43,120
like, what's the next one? 
But they don't necessarily have 

1159
01:05:43,360 --> 01:05:46,480
frameworks that they can rely on
to help them build that 

1160
01:05:46,480 --> 01:05:48,240
portfolio over the course of 
their lives. 

1161
01:05:49,240 --> 01:05:52,000
Yeah, well, I mean, I said it to
you in our first interview and 

1162
01:05:52,000 --> 01:05:54,000
I, and I'll say it again. 
One of the things that I 

1163
01:05:54,000 --> 01:05:56,480
appreciate so much about 
stumbling upon your work has 

1164
01:05:56,480 --> 01:06:01,280
been that it's such an 
antithesis to the my 

1165
01:06:01,280 --> 01:06:04,840
interpretation of the 
traditional Buffett teachings 

1166
01:06:05,280 --> 01:06:10,360
and the idea of buying 
overvalued securities and 

1167
01:06:10,360 --> 01:06:16,040
diversifying while, you know, 
the, the, the contrast is 

1168
01:06:16,040 --> 01:06:18,280
concentrate. 
You know, I mean, I, I think 

1169
01:06:18,280 --> 01:06:20,960
Charlie is very misunderstood 
sometimes when he says he'd had 

1170
01:06:20,960 --> 01:06:24,400
50% in his best idea. 
But nevertheless, the quotes out

1171
01:06:24,400 --> 01:06:28,040
there and then you combine that 
with rule #1 is don't lose 

1172
01:06:28,040 --> 01:06:33,200
money, rule #2 is, you know, 
never forget rule #1 It's just 

1173
01:06:33,200 --> 01:06:35,080
such a different method of 
thinking. 

1174
01:06:35,080 --> 01:06:40,160
And I and I think both 
approaches can probably lead to 

1175
01:06:40,160 --> 01:06:43,640
the same path for the right 
personality. 

1176
01:06:43,640 --> 01:06:47,160
I do think your approach is 
almost certainly more anti 

1177
01:06:47,160 --> 01:06:50,200
fragile for most people. 
Appreciate that. 

1178
01:06:50,720 --> 01:06:54,720
And you know, I wanted to talk 
some about what's maybe my 

1179
01:06:54,720 --> 01:06:58,560
favorite chapter in the book and
what would be for me what was 

1180
01:06:58,560 --> 01:07:01,800
the deepest insight. 
And you know, I go there more 

1181
01:07:01,800 --> 01:07:05,480
with business brew than I would 
with the view, right? 

1182
01:07:05,480 --> 01:07:08,480
So this is a conversation, this 
stage of our conversation is 

1183
01:07:08,480 --> 01:07:12,760
about for people who really want
to think hard about valuation, 

1184
01:07:12,880 --> 01:07:15,840
which most people don't and 
really which in some ways I 

1185
01:07:15,840 --> 01:07:18,960
don't. 
But this was the key insight, I 

1186
01:07:18,960 --> 01:07:21,280
think, that I had in recent 
years. 

1187
01:07:21,280 --> 01:07:24,120
So we probably didn't talk about
this four years ago, but in 

1188
01:07:24,120 --> 01:07:29,200
chapter 12 of the book, I 
basically ask, why is this true?

1189
01:07:29,400 --> 01:07:34,080
Like why is this happening? 
That specifically, I am 

1190
01:07:34,240 --> 01:07:41,560
targeting stocks that are quotes
overvalued and by most measures 

1191
01:07:41,760 --> 01:07:46,600
and media reporting and all the 
rest, they're crazy overvalued. 

1192
01:07:47,360 --> 01:07:50,320
Since I completed picking stocks
for The Motley Fool in May of 

1193
01:07:50,320 --> 01:07:53,920
2021, I'm not as actively 
researching or looking at 

1194
01:07:53,920 --> 01:07:56,120
stocks, but I am still adding 
some to My Portfolio. 

1195
01:07:56,400 --> 01:07:58,480
And in recent years, for 
example, a nice rule breaker 

1196
01:07:58,480 --> 01:08:00,760
winner for me. 
I credit my wife Margaret for 

1197
01:08:00,760 --> 01:08:03,440
this even more than myself has 
been Palantir. 

1198
01:08:03,800 --> 01:08:07,600
And so Palantir, once again, 
poster child for crazy 

1199
01:08:07,600 --> 01:08:11,040
overvalued. 
True today, true a year ago, 

1200
01:08:11,040 --> 01:08:15,480
true three years before that. 
And and it's a monster. 

1201
01:08:15,480 --> 01:08:20,640
It's a rule breaker, it's a 
multi bagger and it's so quotes 

1202
01:08:20,960 --> 01:08:24,720
overvalued. 
So in chapter 12, I think I hit 

1203
01:08:24,720 --> 01:08:29,279
on the key insight and you know,
I hope people will buy the book,

1204
01:08:29,600 --> 01:08:32,319
but if you don't and you're 
listening to us right now, I 

1205
01:08:32,319 --> 01:08:35,720
think this gives you a lot, a 
lot of juice. 

1206
01:08:35,960 --> 01:08:40,160
And here it is. 
Most of the things that matter 

1207
01:08:40,160 --> 01:08:45,600
most in business that cause 
businesses to win and lose are 

1208
01:08:45,600 --> 01:08:51,319
not measurable, are not captured
with a number, therefore do not 

1209
01:08:51,319 --> 01:08:53,560
appear in the financial 
statements. 

1210
01:08:54,399 --> 01:08:59,720
And all of the best companies 
therefore look overvalued 

1211
01:08:59,920 --> 01:09:03,560
because all of the conventional 
people are using price to 

1212
01:09:03,560 --> 01:09:06,319
earnings, price to cash flow, 
maybe price to book in some 

1213
01:09:06,319 --> 01:09:11,680
contexts, and they're just doing
ratios off of outputs. 

1214
01:09:12,319 --> 01:09:17,600
They don't look at the inputs 
and specifically I'll give two 

1215
01:09:17,640 --> 01:09:21,880
quick examples. 
Specifically, two of the biggest

1216
01:09:21,880 --> 01:09:25,800
factors for companies that have 
been my biggest winners are who 

1217
01:09:25,800 --> 01:09:31,359
is running that company and the 
brand slash reputation of that 

1218
01:09:31,359 --> 01:09:35,040
company. 
And part of being an 

1219
01:09:35,040 --> 01:09:38,920
entrepreneur myself is that I 
know how important these things 

1220
01:09:38,920 --> 01:09:40,680
are because I see it in my own 
company. 

1221
01:09:41,000 --> 01:09:43,800
And I'm, I'm an acute observer 
of other people's companies 

1222
01:09:43,800 --> 01:09:45,600
because I am an entrepreneur 
myself. 

1223
01:09:46,200 --> 01:09:49,840
And so I know how important it 
is the culture of a company, the

1224
01:09:49,840 --> 01:09:52,080
brand of a company, the, the 
leadership. 

1225
01:09:52,640 --> 01:09:56,720
And there are no numbers for the
things that matter most. 

1226
01:09:56,720 --> 01:10:01,400
And so I believe the big mistake
being made, Bill, is that we're 

1227
01:10:01,400 --> 01:10:05,080
not actually putting a number on
Jeff Bezos and we're not putting

1228
01:10:05,080 --> 01:10:08,280
a number on Howard Schultz. 
We're not putting a number on 

1229
01:10:08,760 --> 01:10:14,040
bad CE OS that subtract value. 
They're out there, no question, 

1230
01:10:14,360 --> 01:10:16,840
people subtracting value from 
the enterprise they're 

1231
01:10:16,840 --> 01:10:20,440
overseeing. 
And so, I mean, is there a more 

1232
01:10:20,440 --> 01:10:22,880
important single input probably 
than that? 

1233
01:10:23,520 --> 01:10:26,240
Probably not. 
In my mind, it's kind of like 

1234
01:10:26,240 --> 01:10:29,080
NFL quarterbacks, they are the 
highest paid. 

1235
01:10:29,280 --> 01:10:32,240
It's about a lot more than them.
The offensive line is almost 

1236
01:10:32,240 --> 01:10:34,800
always underrated, but 
nevertheless, they still are the

1237
01:10:34,800 --> 01:10:37,160
focal point. 
And imagine if we didn't even 

1238
01:10:37,160 --> 01:10:41,040
look at them as we're valuing 
NFL teams because that's what 

1239
01:10:41,040 --> 01:10:44,360
people are doing with stocks 
they're not looking or caring 

1240
01:10:44,360 --> 01:10:46,440
about. 
I mean, they may well speak to 

1241
01:10:46,440 --> 01:10:48,680
it and they may care, but they 
don't have a number and their 

1242
01:10:48,680 --> 01:10:51,840
valuation models don't price in 
Jeff Bezos. 

1243
01:10:51,840 --> 01:10:55,440
And once you start to realize 
that for visionary founder CE 

1244
01:10:55,560 --> 01:10:59,720
OS, in some cases, it's 
incalculable how valuable they 

1245
01:10:59,720 --> 01:11:02,440
are. 
Elon Musk is incalculably 

1246
01:11:02,520 --> 01:11:04,440
valuable. 
I realize there are mixed 

1247
01:11:04,440 --> 01:11:06,720
feelings about him and there are
a lot of Elon haters out there 

1248
01:11:06,720 --> 01:11:09,040
as well. 
But I mean, if you simply look 

1249
01:11:09,040 --> 01:11:12,560
at the value that he's created, 
that he's behind, it is, I 

1250
01:11:12,560 --> 01:11:14,360
believe it's higher than anybody
living today. 

1251
01:11:15,000 --> 01:11:18,800
And and that's one factor. 
I said I'd give two quick 

1252
01:11:18,800 --> 01:11:20,640
examples. 
The second is the brand of a 

1253
01:11:20,640 --> 01:11:22,800
company. 
There is no number on the 

1254
01:11:22,800 --> 01:11:25,080
financial statements for the 
value of Apple's brand, 

1255
01:11:25,080 --> 01:11:30,240
Starbucks's brand, brand. 
And so you have people who are 

1256
01:11:30,640 --> 01:11:37,080
valuation focused, who are 
academics or they're analysts or

1257
01:11:37,080 --> 01:11:40,960
they're just armchair investors,
and they're so focused on their 

1258
01:11:40,960 --> 01:11:46,080
traditional valuation metric. 
And for me, they're missing 

1259
01:11:46,320 --> 01:11:50,640
who's running the company, the 
brand value of the company. 

1260
01:11:50,640 --> 01:11:52,480
There are no numbers on the 
financial statements. 

1261
01:11:52,720 --> 01:11:56,440
I would also add the innovative 
capability of that company. 

1262
01:11:56,640 --> 01:11:58,960
Can they innovate their way out 
of a box or not? 

1263
01:11:59,520 --> 01:12:01,880
I would also say because I've 
seen it first hand, corporate 

1264
01:12:01,880 --> 01:12:05,400
culture, the culture of 
companies is rich and deep. 

1265
01:12:05,840 --> 01:12:10,640
Those things are actually the 
gating factors that create wins 

1266
01:12:11,160 --> 01:12:13,360
in, in in life, business, in the
world. 

1267
01:12:14,000 --> 01:12:18,440
And when they're invisible to 
valuation models, you end up 

1268
01:12:18,440 --> 01:12:23,080
saying about all the greatest 
companies, they're overvalued. 

1269
01:12:23,360 --> 01:12:28,400
And you often end up saying for 
crappy companies that are that 

1270
01:12:28,400 --> 01:12:32,800
have bad features among those 
four that I trotted out that 

1271
01:12:32,800 --> 01:12:36,000
they're so undervalued and that 
they look undervalued to you and

1272
01:12:36,000 --> 01:12:39,040
you're willing to buy them. 
And so I think because I'm 

1273
01:12:39,040 --> 01:12:41,000
trying to leave it all out there
on the field with this stock 

1274
01:12:41,000 --> 01:12:43,920
market book, my final stock 
market book, that's like my 

1275
01:12:43,920 --> 01:12:46,240
grand conclusion. 
And it's just one chapter. 

1276
01:12:46,640 --> 01:12:51,200
But I think it explains why it 
was a stroke of genius 27 years 

1277
01:12:51,200 --> 01:12:54,600
ago when I said I am looking for
things people are calling 

1278
01:12:54,600 --> 01:12:56,360
overvalued. 
And at the time I wrote that and

1279
01:12:56,360 --> 01:12:58,760
said that, I didn't understand 
fully why that would work. 

1280
01:12:59,400 --> 01:13:02,360
I just had watched it work like 
AOL. 

1281
01:13:02,840 --> 01:13:07,440
The first great stock for me was
so overvalued and it went up 150

1282
01:13:07,440 --> 01:13:11,160
times in value as people talked 
it down all the way up Wall of 

1283
01:13:11,160 --> 01:13:13,480
Worry. 
So Bill, I wanted to go there at

1284
01:13:13,480 --> 01:13:15,240
some point in this interview. 
We didn't probably talk about 

1285
01:13:15,240 --> 01:13:17,160
that four years ago because I 
was still thinking it through, 

1286
01:13:17,360 --> 01:13:19,800
but that's sort of where I am on
this and why it works. 

1287
01:13:20,240 --> 01:13:25,360
How much? 
Of the of the results, do you 

1288
01:13:25,360 --> 01:13:29,080
think, OK, let me let me ask 
this in a way that actually 

1289
01:13:29,080 --> 01:13:32,600
makes sense. 
The overvalued portion of what 

1290
01:13:32,600 --> 01:13:39,040
you're looking for, how much of 
of that do you think comes from 

1291
01:13:39,160 --> 01:13:44,160
the life cycle relative to Tam 
and potential Tam expansion that

1292
01:13:44,160 --> 01:13:45,880
these companies end up with? 
Right. 

1293
01:13:45,880 --> 01:13:48,560
You talk about how much Nike 
paid for Tiger. 

1294
01:13:48,840 --> 01:13:52,280
Well, Tiger at 22 is a lot 
different than Tiger at 40, 

1295
01:13:52,720 --> 01:13:56,320
right? 
So like, I mean, I, I, you know,

1296
01:13:56,320 --> 01:14:01,160
I saw that NVIDIA, I mean, I 
opened up the cash flow state. 

1297
01:14:01,160 --> 01:14:03,880
I just went to fiscal AI shout 
out to them. 

1298
01:14:03,880 --> 01:14:06,400
I just went to the cash, you 
know, the cash flow statement 

1299
01:14:06,440 --> 01:14:08,640
for that company. 
I mean, you're looking at a 

1300
01:14:08,640 --> 01:14:14,560
company that in April of 2023 
did what, 7 billion of LTM cash 

1301
01:14:14,560 --> 01:14:17,080
from operations. 
Now it's 77. 

1302
01:14:17,440 --> 01:14:20,360
Incredible. 
Like that is, that is wild. 

1303
01:14:20,400 --> 01:14:26,200
And I realized that AI was maybe
not foreseeable, though some 

1304
01:14:26,200 --> 01:14:28,960
did. 
I, I don't know, you know what, 

1305
01:14:28,960 --> 01:14:31,360
what you had said about it. 
I suspect you saw it. 

1306
01:14:32,920 --> 01:14:35,840
Can you just talk a little bit 
about the size of the company 

1307
01:14:35,840 --> 01:14:38,920
relative to the Tam and then 
also the myth of the law of 

1308
01:14:38,920 --> 01:14:44,720
large numbers? 
You bet, fun topics. 

1309
01:14:45,240 --> 01:14:48,680
So I, I would say first of all 
that, yes, the total addressable

1310
01:14:48,680 --> 01:14:52,080
market is, is something that we 
should be thinking about, no 

1311
01:14:52,080 --> 01:14:54,920
question. 
And, and here we get into in my 

1312
01:14:54,920 --> 01:14:57,520
mind, AVC mentality. 
That's what venture capitalists 

1313
01:14:57,520 --> 01:14:59,320
do. 
They're sitting there at earlier

1314
01:14:59,320 --> 01:15:01,960
stage, Series A, Series B, we 
have a motley flow venture 

1315
01:15:01,960 --> 01:15:05,000
capital fund at Series A like we
do this now too. 

1316
01:15:05,240 --> 01:15:09,120
I'm not on it because I'm not a 
professional VC, but I think it 

1317
01:15:09,120 --> 01:15:11,680
really matters. 
You want to be asking that and 

1318
01:15:11,680 --> 01:15:15,520
you raise a really important 
point, which is it's not fixed. 

1319
01:15:16,520 --> 01:15:19,800
And so for my greatest stock 
picks, and these really were, I 

1320
01:15:19,800 --> 01:15:21,920
think pretty much the greatest 
stocks you could have had on the

1321
01:15:21,920 --> 01:15:25,520
markets over the last 30 years, 
Amazon, NVIDIA, Tesla, the list 

1322
01:15:25,520 --> 01:15:27,160
goes on. 
Intuitive Surgical, we never 

1323
01:15:27,160 --> 01:15:30,600
talk enough about that amazing 
company, but the total 

1324
01:15:30,600 --> 01:15:33,520
addressable markets keep 
expanding. 

1325
01:15:34,240 --> 01:15:36,680
And of course, this is always 
been true, right? 

1326
01:15:38,520 --> 01:15:42,160
Going back to Amazon as Earth's 
biggest bookseller, like that's 

1327
01:15:42,240 --> 01:15:43,720
all they were doing at the 
start. 

1328
01:15:43,760 --> 01:15:47,880
And then they added music and 
videos, and then it became 

1329
01:15:47,880 --> 01:15:49,880
ladders. 
And then all of a sudden they 

1330
01:15:50,120 --> 01:15:53,880
bolted on Amazon Web Services, 
and then they're competing with 

1331
01:15:53,880 --> 01:15:57,840
Netflix on Amazon Prime Video. 
And all of these things emerged 

1332
01:15:57,840 --> 01:16:00,720
over time. 
And I foresaw none of them in 

1333
01:16:00,720 --> 01:16:03,080
1997. 
I don't, not only me, I don't 

1334
01:16:03,080 --> 01:16:05,320
think anybody understood what 
cloud services would be. 

1335
01:16:05,800 --> 01:16:08,520
I'm sure there was a visionary 
that was talking about it maybe 

1336
01:16:08,520 --> 01:16:12,840
in a futuristic book, but there 
was no sense of that popping up 

1337
01:16:12,840 --> 01:16:16,080
for at least a decade. 
So part of what you're doing is 

1338
01:16:16,080 --> 01:16:19,080
you're discovering along with 
the stocks you're owning. 

1339
01:16:20,040 --> 01:16:23,440
If you're finding the top dogs 
in first movers and important 

1340
01:16:23,440 --> 01:16:26,400
emerging industries that stocked
pond you were referring to 

1341
01:16:26,400 --> 01:16:30,120
earlier, Bill, you're you're 
going to over index to to 

1342
01:16:30,120 --> 01:16:32,120
discovering these various sorts 
of companies. 

1343
01:16:32,320 --> 01:16:36,080
And now that I've watched my 
caterpillars become butterflies 

1344
01:16:36,080 --> 01:16:39,640
over and over and butterflies 
become even bigger, crazy, crazy

1345
01:16:39,640 --> 01:16:42,520
butterflies, I know this is this
happens. 

1346
01:16:42,960 --> 01:16:46,720
So I would never have predicted 
when we first recommended NVIDIA

1347
01:16:46,920 --> 01:16:52,920
as a video game graphics card 
company in 2005, tax day 2005, I

1348
01:16:52,920 --> 01:16:57,800
would never have understood what
you just described the, the, the

1349
01:16:57,800 --> 01:17:00,760
cash flow of the company 
becoming and just mushrooming. 

1350
01:17:02,000 --> 01:17:04,800
It's not just not possible to 
know that even five years ago, 

1351
01:17:05,080 --> 01:17:10,080
that's shocking and I know it 
can happen and we're invested in

1352
01:17:10,080 --> 01:17:13,120
such a way by following I think 
the traits I'm laying out that 

1353
01:17:13,120 --> 01:17:16,480
we're discussing, we're putting 
ourselves in great position to 

1354
01:17:16,480 --> 01:17:18,480
have those companies in our 
portfolio. 

1355
01:17:18,760 --> 01:17:20,800
We don't have to be geniuses 
predicting what's going to 

1356
01:17:20,800 --> 01:17:22,880
happen next because that's 
increasingly hard to do. 

1357
01:17:24,160 --> 01:17:27,920
So I think that total 
addressable market is such a 

1358
01:17:27,920 --> 01:17:32,000
valuable statistic. 
I hear you on Tiger at 22 versus

1359
01:17:32,000 --> 01:17:34,560
Tiger at 42. 
I agree with that statement. 

1360
01:17:35,680 --> 01:17:40,440
And the good news is, companies 
are different than human beings.

1361
01:17:40,440 --> 01:17:44,800
Their life cycles can extend, 
and they can actually all of a 

1362
01:17:44,800 --> 01:17:51,280
sudden be 20 times more youthful
and powerful 15 years later than

1363
01:17:51,280 --> 01:17:54,680
they were at their youthful and 
powerful peak, supposedly, 

1364
01:17:54,960 --> 01:17:57,040
right? 
And that's a really beautiful 

1365
01:17:57,040 --> 01:17:59,640
thing to know ahead of time. 
And I've just seen it happen 

1366
01:17:59,640 --> 01:18:02,160
over and over. 
Intuitive Surgical, you know, 

1367
01:18:02,160 --> 01:18:05,760
started by basically trying to 
provide the da Vinci surgical 

1368
01:18:05,760 --> 01:18:09,560
robot for doctors who wanted to 
use robot assisted surgery to 

1369
01:18:09,560 --> 01:18:13,240
remove the male prostate gland 
from men around my age who get 

1370
01:18:13,240 --> 01:18:15,200
prostate cancer. 
That was it. 

1371
01:18:15,600 --> 01:18:17,960
That's all they did. 
And then they're like, except 

1372
01:18:17,960 --> 01:18:22,120
that I think we could also do 
hysterectomies for women. 

1373
01:18:23,000 --> 01:18:27,040
And, you know, now that we think
about it, we could bolt this on 

1374
01:18:27,040 --> 01:18:30,120
or try this new indication. 
Sometimes it was the doctors 

1375
01:18:30,120 --> 01:18:32,480
themselves who love the machine,
wanting to experiment with it. 

1376
01:18:32,960 --> 01:18:36,320
And now more and more forms of 
surgery are becoming robot 

1377
01:18:36,320 --> 01:18:39,040
assisted, which by the way means
that you and I walk off the 

1378
01:18:39,040 --> 01:18:42,840
table minimally invaded a day or
two later when it used to 

1379
01:18:42,840 --> 01:18:46,600
require 3 days of recovering at 
the hospital because we got cut 

1380
01:18:46,600 --> 01:18:50,280
up. 
And we may be living through a 

1381
01:18:50,280 --> 01:18:54,200
time where all surgery will be 
robot assisted before we're 

1382
01:18:54,200 --> 01:18:57,400
done. 
And Intuitive Surgical basically

1383
01:18:57,400 --> 01:19:03,400
has no Pepsi to its Coke. 
If it's Coca-Cola, I cannot find

1384
01:19:03,400 --> 01:19:06,760
the Pepsi. 
Intuitive has a higher R&D line 

1385
01:19:06,920 --> 01:19:09,720
than many of its competitors 
have revenue lines. 

1386
01:19:10,280 --> 01:19:14,640
Blue Ocean my friend out front. 
It is a beautiful company and 

1387
01:19:14,640 --> 01:19:16,440
what what I love about our 
conversation. 

1388
01:19:16,440 --> 01:19:18,440
I love many things and thank you
for having me back. 

1389
01:19:18,440 --> 01:19:21,720
And you know, I think you. 
Dude, anytime, anytime you want 

1390
01:19:21,720 --> 01:19:23,320
to come on, just be like, I want
to come on. 

1391
01:19:23,360 --> 01:19:27,200
You get it like and and and part
of what I love about you is that

1392
01:19:27,200 --> 01:19:30,200
you're very open minded. 
You're not, you're not being a 

1393
01:19:30,200 --> 01:19:33,520
plemicist, you're not defending 
old school valuation techniques 

1394
01:19:33,520 --> 01:19:36,720
or being some wild eyed crazy 
futurist and not being bugged 

1395
01:19:36,720 --> 01:19:38,160
out of that. 
Like I'm always trying to hit 

1396
01:19:38,160 --> 01:19:41,240
golden means generally. 
But I really appreciate that 

1397
01:19:41,400 --> 01:19:42,800
that we're having this 
conversation. 

1398
01:19:42,800 --> 01:19:44,440
So. 
So dude, you've been you've been

1399
01:19:44,440 --> 01:19:48,960
doing it for too long with 
results that make too much sense

1400
01:19:48,960 --> 01:19:52,520
to not at least try to figure 
out where is the genius in this?

1401
01:19:52,520 --> 01:19:54,720
Right? 
Like if, if you just look at 

1402
01:19:54,720 --> 01:19:57,640
that and you say, well, I'm not 
going to even think about it, 

1403
01:19:57,640 --> 01:19:59,720
then like, I don't know, you're 
not, you don't grow. 

1404
01:20:00,440 --> 01:20:02,440
Yeah. 
And because I'm specifically 

1405
01:20:02,440 --> 01:20:06,040
investing trying to Max out my 
returns and, and do that 

1406
01:20:06,040 --> 01:20:09,080
especially for our members, 
because in the end, picking a 

1407
01:20:09,080 --> 01:20:13,440
stock for our members that goes 
up for, you know, hundreds of 

1408
01:20:13,440 --> 01:20:16,960
thousands of people versus just 
me and my little portfolio is 

1409
01:20:16,960 --> 01:20:20,280
much more deeply meaningful both
personally and for the valuation

1410
01:20:20,280 --> 01:20:22,760
of my own company, right? 
You're trying to pass the Bezos 

1411
01:20:22,760 --> 01:20:26,480
test of creating wealth for 
others, right when he wanted the

1412
01:20:26,480 --> 01:20:28,480
list. 
Yeah, no, I I didn't even 

1413
01:20:28,480 --> 01:20:29,800
remember. 
That was the Bezos test. 

1414
01:20:29,800 --> 01:20:32,160
But by its very nature, if 
you're a financial services 

1415
01:20:32,160 --> 01:20:35,040
company, or in our case, an 
advice company, that that's the 

1416
01:20:35,040 --> 01:20:39,120
heart of what you do. 
That's why learning like part of

1417
01:20:39,120 --> 01:20:42,240
the reason I wrote the 1st, 3rd 
of this book, which is material 

1418
01:20:42,240 --> 01:20:45,400
I've never put out before, is 
because I've had those 

1419
01:20:45,400 --> 01:20:47,880
conversations with Motley Fool 
members who are like, you know, 

1420
01:20:47,880 --> 01:20:50,120
I wish I'd stuck with Apple 
because, you know, you guys 

1421
01:20:50,120 --> 01:20:53,600
picked it and then I, you know, 
it went up 100%. 

1422
01:20:53,600 --> 01:20:55,760
I was like, I sold out. 
I sold half because, you know, 

1423
01:20:55,800 --> 01:20:57,080
you're playing with the house's 
money. 

1424
01:20:57,360 --> 01:20:59,880
Silly things that are in 
people's heads about how they 

1425
01:20:59,880 --> 01:21:01,840
should invest because they 
haven't been taught habits. 

1426
01:21:02,440 --> 01:21:06,520
And so I know that we haven't 
maxed out for our own members 

1427
01:21:06,520 --> 01:21:09,520
what they could have done in 
part because they don't have the

1428
01:21:09,520 --> 01:21:12,840
context. 
They didn't have the habits or 

1429
01:21:12,840 --> 01:21:16,440
the portfolio principles that I 
wanted to make sure I laid down 

1430
01:21:16,440 --> 01:21:21,240
here as I exited the stadium and
said, like, this is my final 

1431
01:21:21,240 --> 01:21:23,120
stock market book. 
I want to make sure it's not 

1432
01:21:23,120 --> 01:21:27,320
just about NVIDIA or Amazon. 
It's specifically about holding 

1433
01:21:27,320 --> 01:21:29,600
them. 
And it's specifically about 

1434
01:21:29,600 --> 01:21:32,360
managing A portfolio that lets 
you sleep at night so that you 

1435
01:21:32,360 --> 01:21:35,080
can win with a smile on your 
face and not get stressed out 

1436
01:21:35,360 --> 01:21:39,120
because you're adding to losers 
all the way down or you have too

1437
01:21:39,120 --> 01:21:42,240
big a position in one monster 
stock and you're not sleeping 

1438
01:21:42,240 --> 01:21:45,320
well at night. 
So, so it's the whole context. 

1439
01:21:45,320 --> 01:21:49,320
I think it's, it's, it's the 
habits and the stock trades and 

1440
01:21:49,320 --> 01:21:52,640
the principles of your portfolio
that to me need to all hang 

1441
01:21:52,640 --> 01:21:53,840
together and speak to each 
other. 

1442
01:21:53,840 --> 01:21:57,160
And one thing I say near the end
of the book is I hope any one of

1443
01:21:57,160 --> 01:22:00,040
these 18 chapters is helpful on 
its own. 

1444
01:22:00,280 --> 01:22:03,160
I hope any one of these just UPS
your own game. 

1445
01:22:03,320 --> 01:22:06,120
But when you start letting them 
play into concert like 

1446
01:22:06,120 --> 01:22:08,800
instruments with each other, 
that's really when the beautiful

1447
01:22:08,800 --> 01:22:11,200
music happens. 
And for me, these are the 18 

1448
01:22:11,520 --> 01:22:14,440
that I have going on all the 
time and I'm trying to make them

1449
01:22:14,440 --> 01:22:19,600
simple in 10 page chapters that 
are fun, punchy and give you 

1450
01:22:19,600 --> 01:22:21,840
like more than you knew when you
started. 

1451
01:22:22,040 --> 01:22:25,320
One of the best compliments I've
gotten about my book is from my 

1452
01:22:25,320 --> 01:22:27,280
friend Dan, who's an 
entrepreneur here in Washington,

1453
01:22:27,280 --> 01:22:29,040
DC. 
And he's like, he was my first 

1454
01:22:29,040 --> 01:22:31,880
reader of the full book and he 
actually cancelled all his 

1455
01:22:31,880 --> 01:22:34,160
afternoon appointments to finish
the book because he just started

1456
01:22:34,160 --> 01:22:35,680
in the morning. 
He's like, I can't stop. 

1457
01:22:35,960 --> 01:22:37,440
And he said this is not an 
investing book. 

1458
01:22:37,440 --> 01:22:39,520
This is actually a book for 
entrepreneurs and business 

1459
01:22:39,520 --> 01:22:42,280
people because what you're doing
is you're talking about what, 

1460
01:22:42,280 --> 01:22:45,280
what wins and works in the 
marketplace, but you're actually

1461
01:22:45,280 --> 01:22:48,360
doing it ostensibly from the 
position of picking the stocks 

1462
01:22:49,120 --> 01:22:50,880
of the companies that win in the
marketplace. 

1463
01:22:51,240 --> 01:22:54,640
And I, I, I love that he said 
that because I hope. 

1464
01:22:54,640 --> 01:22:56,640
Well, the companies that win in 
the marketplace are the 

1465
01:22:56,640 --> 01:22:58,280
companies you want to own the 
equity of. 

1466
01:22:58,600 --> 01:23:02,000
Hell yeah on average, right, 
Unless you pay an egregiously 

1467
01:23:02,000 --> 01:23:06,720
expensive multiple. 
And even then, over the long 

1468
01:23:06,720 --> 01:23:09,280
term, a lot of those can still 
end up outperforming. 

1469
01:23:09,280 --> 01:23:11,720
I mean, it's interesting 
because, you know, I mean, 

1470
01:23:11,720 --> 01:23:15,200
there's anyone that doesn't know
the studies of how, you know, 

1471
01:23:15,200 --> 01:23:16,920
overvalued facts tend not to 
perform. 

1472
01:23:16,920 --> 01:23:19,520
You should read the studies, but
also like, think about what 

1473
01:23:19,520 --> 01:23:23,600
we're saying here, right? 
And I don't know. 

1474
01:23:23,680 --> 01:23:25,560
I appreciate you for opening my 
mind. 

1475
01:23:25,560 --> 01:23:28,720
I think it makes a lot of sense.
Well, thanks. 

1476
01:23:28,800 --> 01:23:32,400
You know, I, I, I would be 
remiss if I didn't mention that 

1477
01:23:32,400 --> 01:23:36,480
my mind has been opened 1000 
times over now because of the 

1478
01:23:36,480 --> 01:23:39,080
business we started. 
I mean, so many Motley Fool 

1479
01:23:39,080 --> 01:23:40,800
members, I quote them in the 
book. 

1480
01:23:40,800 --> 01:23:45,080
Some of my best passages are 
just from something somebody put

1481
01:23:45,080 --> 01:23:47,840
up on a, a forum, a Motley Fool 
message board. 

1482
01:23:48,240 --> 01:23:49,680
I was like, that is such a good 
point. 

1483
01:23:49,680 --> 01:23:55,240
So I have been unbelievably 
accelerated and rewarded by just

1484
01:23:55,240 --> 01:23:59,480
having conversations like this 
most of the time online, not on 

1485
01:23:59,480 --> 01:24:03,400
a podcast with so many people 
over the course of years. 

1486
01:24:03,400 --> 01:24:08,760
Like we started The Motley Fool 
as an AOL page like it was pre 

1487
01:24:08,760 --> 01:24:12,080
web, like the world, the phrase 
World Wide Web wasn't out there 

1488
01:24:12,080 --> 01:24:14,640
yet. 
And so but I was there from the 

1489
01:24:14,640 --> 01:24:17,000
earliest days with my dial up 
modem going. 

1490
01:24:17,000 --> 01:24:18,920
This is awesome. 
I'm an investor and I can 

1491
01:24:18,920 --> 01:24:22,800
actually talk to people work in 
this industry who are using the 

1492
01:24:22,800 --> 01:24:25,480
product or service as 
professionals that I'm just 

1493
01:24:25,480 --> 01:24:26,960
researching. 
This is incredible. 

1494
01:24:26,960 --> 01:24:30,600
I, I grew up at a time where the
big step you took as an investor

1495
01:24:30,600 --> 01:24:35,120
was to call the company's, call 
the company's investor relations

1496
01:24:35,280 --> 01:24:38,960
number, which itself was sort of
a, a research item to find out 

1497
01:24:38,960 --> 01:24:41,320
what was the number. 
And it sometimes wasn't toll 

1498
01:24:41,320 --> 01:24:43,560
free. 
So they could mail you their 

1499
01:24:43,560 --> 01:24:47,400
paper annual report from the 
past year, so you could read and

1500
01:24:47,400 --> 01:24:49,960
learn about whether you'd want 
to buy that stock and maybe be 

1501
01:24:49,960 --> 01:24:53,920
assisted by by services like 
Value Line, which was a big 

1502
01:24:53,920 --> 01:24:56,920
black tome of lots of numbers. 
And since I love numbers, I was 

1503
01:24:56,920 --> 01:25:00,400
comfortable with that. 
But I mean, that was investing. 

1504
01:25:00,400 --> 01:25:03,120
And then there I am in my 20s 
going, wait, hold on, this is 

1505
01:25:03,120 --> 01:25:05,000
crazy. 
I can actually, you know, that 

1506
01:25:05,000 --> 01:25:08,560
dial up sound in your computer 
that's in our heads, especially 

1507
01:25:08,560 --> 01:25:10,840
people over the age of let's say
35. 

1508
01:25:11,120 --> 01:25:14,800
I mean, that is amazing. 
I can talk to people and ask 

1509
01:25:14,800 --> 01:25:16,720
them questions about stocks and 
they can ask me back. 

1510
01:25:16,720 --> 01:25:19,840
And that's how the fool started.
So thank you for saying that 

1511
01:25:19,840 --> 01:25:22,920
I've helped open up your mind. 
My mind has been so greatly 

1512
01:25:22,920 --> 01:25:27,880
enriched by so many people over 
the course of 30 plus years just

1513
01:25:27,880 --> 01:25:30,000
running a community site about 
investing. 

1514
01:25:30,400 --> 01:25:32,680
Yeah, I would think so. 
We got we, all right. 

1515
01:25:32,680 --> 01:25:36,280
We got 4 1/2 minutes before you 
got a hard stop here. 

1516
01:25:36,280 --> 01:25:38,320
So I got AI Got a simple 
question for you. 

1517
01:25:38,720 --> 01:25:41,560
How do you defend against AI 
taking some of your content off 

1518
01:25:41,560 --> 01:25:43,680
the fool? 
Yeah, well, first of all, I 

1519
01:25:43,680 --> 01:25:46,680
think the answer is realize 
that's going to happen. 

1520
01:25:46,840 --> 01:25:49,480
And really the truth is the 
content has been taken off the 

1521
01:25:49,480 --> 01:25:52,560
fool by many people for many 
reasons over the years. 

1522
01:25:52,560 --> 01:25:55,880
And I think if you're a secure, 
successful person, you should 

1523
01:25:55,880 --> 01:25:58,920
take some pride in that and say 
go for it. 

1524
01:25:59,680 --> 01:26:03,360
In fact, when they're the a 
couple of years ago when Open AI

1525
01:26:03,360 --> 01:26:06,600
and ChatGPT was just starting to
come out, there was a list of 

1526
01:26:06,600 --> 01:26:09,560
the 20 most scraped sites that 
created Chad GBT. 

1527
01:26:09,560 --> 01:26:12,120
We were #8 at full dot. 
Hey, that's a compliment. 

1528
01:26:12,120 --> 01:26:14,120
I mean, it was. 
Now the New York Times has tried

1529
01:26:14,120 --> 01:26:16,640
to turn that into a lawsuit. 
And I kind of understand why 

1530
01:26:16,640 --> 01:26:18,960
they might cause intellectual 
property should be defended up 

1531
01:26:18,960 --> 01:26:22,720
to a certain point. 
But so, yeah, I, I mean, 

1532
01:26:22,720 --> 01:26:25,880
obviously I'm, I'm proud that 
that we've built up something 

1533
01:26:25,880 --> 01:26:29,920
that people would want to scrape
as much as it has been and is 

1534
01:26:31,360 --> 01:26:33,960
Reddit is also scraped. 
Reddit is very much a community 

1535
01:26:33,960 --> 01:26:36,360
site, kind of like ours. 
Reddit's bigger than we are, 

1536
01:26:36,360 --> 01:26:39,080
even though they started after 
we did, so good on them. 

1537
01:26:39,080 --> 01:26:42,040
But yeah, I, I would say, you 
know, slightly more broadly, one

1538
01:26:42,040 --> 01:26:44,240
of the things I'm writing is a 
bonus chapter for the book, 

1539
01:26:44,240 --> 01:26:47,520
which I'm going to pin up on the
book's website, which is Rule 

1540
01:26:47,520 --> 01:26:49,840
Breaker, investing.com. 
And I'm just going to answer 

1541
01:26:49,840 --> 01:26:52,520
some FAQs, kind of like the one 
you just asked, Bill. 

1542
01:26:53,280 --> 01:26:55,960
We are running out of time, so 
I'll be brief, but I actually 

1543
01:26:55,960 --> 01:27:00,560
think that AI is, is an 
incredible help to our business 

1544
01:27:01,080 --> 01:27:05,320
because it I think enables us to
do a lot of work we couldn't 

1545
01:27:05,320 --> 01:27:07,000
have done as fast as we could 
before. 

1546
01:27:07,000 --> 01:27:10,400
You can now basically take the 
entire market down to a simple 

1547
01:27:10,400 --> 01:27:13,720
screen or write an article that 
pulls insights that we could 

1548
01:27:13,720 --> 01:27:16,120
never have had before. 
Not everybody has the time, 

1549
01:27:16,120 --> 01:27:18,080
interest or insight to build 
machines like that. 

1550
01:27:18,080 --> 01:27:22,120
So 1 great thing my brother Tom,
our CEO, has done is really 

1551
01:27:22,600 --> 01:27:25,520
bring AI into our business. 
And you know, if you're a Motley

1552
01:27:25,520 --> 01:27:29,440
Fool member, you are regularly 
getting AI enhanced content, 

1553
01:27:29,440 --> 01:27:32,840
whether it's words written or 
lists of stocks. 

1554
01:27:33,080 --> 01:27:36,320
And so we're of course embracing
that because just like the 

1555
01:27:36,320 --> 01:27:39,120
Internet showed up about one 
generation ago, we're like, we 

1556
01:27:39,120 --> 01:27:42,480
love this thing, let's go. 
That's our attitude. 

1557
01:27:42,480 --> 01:27:46,640
At the same time, you know, if 
AI ends up, you know, hurting us

1558
01:27:46,640 --> 01:27:49,520
badly over the course of time, 
that will mean that we didn't we

1559
01:27:49,520 --> 01:27:52,160
weren't relevant. 
Maybe AI became more relevant to

1560
01:27:52,160 --> 01:27:53,800
people and you know, we're all 
using it. 

1561
01:27:53,920 --> 01:27:57,000
If AI personally helps me do 
better than I've done, I'm like,

1562
01:27:57,000 --> 01:28:00,840
great, let's go because that 
sounds like I'm doing less work 

1563
01:28:00,840 --> 01:28:04,200
now and getting better returns. 
But I also want to close this 

1564
01:28:04,200 --> 01:28:06,520
answer by saying, and I'm going 
to say this in my bonus chapter,

1565
01:28:06,520 --> 01:28:10,200
but anybody who's been buying 
stocks directly over the last 30

1566
01:28:10,200 --> 01:28:13,120
years has been competing against
AI all the way through. 

1567
01:28:13,120 --> 01:28:16,960
Well, AI just showed up in the 
popular consciousness in a lot 

1568
01:28:16,960 --> 01:28:19,720
of ways. 
Computer algorithmic driven 

1569
01:28:19,720 --> 01:28:23,520
trading has been out there in 
force for decades. 

1570
01:28:23,800 --> 01:28:26,120
For anybody who's been buying 
stocks directly, you've been 

1571
01:28:26,120 --> 01:28:29,120
competing as AI on both sides of
the trade all the way through. 

1572
01:28:29,560 --> 01:28:31,200
And I've done well. 
I've done. 

1573
01:28:31,440 --> 01:28:34,080
I'm not actually worried. 
I don't think AI is about to 

1574
01:28:34,080 --> 01:28:36,320
take away all the alpha that 
everybody had. 

1575
01:28:36,320 --> 01:28:38,640
In fact, most people are dialing
their computers to try to make 

1576
01:28:38,640 --> 01:28:41,320
money inside of a second. 
Yeah, well, I was going to say 

1577
01:28:41,320 --> 01:28:44,800
my sense is your time horizon. 
What AI is trained in is likely 

1578
01:28:44,800 --> 01:28:46,840
quite different. 
I agree, in fact AI doesn't even

1579
01:28:46,840 --> 01:28:49,560
have enough sample size in some 
ways to be meaningful or have 

1580
01:28:49,560 --> 01:28:52,240
deep insights for the long term.
But if and when it does and gets

1581
01:28:52,240 --> 01:28:56,000
that, I'll be using it too, my 
friend, because I love power 

1582
01:28:56,000 --> 01:28:59,320
tools and AI for our business 
has been 1 and I expect for all 

1583
01:28:59,320 --> 01:29:02,680
of us, Me personally, it's been 
an incredible tool for the last 

1584
01:29:02,680 --> 01:29:06,560
two years across all dynamics in
my life, just like the Internet 

1585
01:29:06,560 --> 01:29:09,360
was one generation before. 
So there's a quick thought. 

1586
01:29:09,880 --> 01:29:12,000
All right. 
Well, thanks for coming back on 

1587
01:29:12,000 --> 01:29:14,080
and Congrats on the book. 
People should get it. 

1588
01:29:14,080 --> 01:29:16,880
I'll drop it in the show notes 
and appreciate you. 

1589
01:29:17,040 --> 01:29:18,920
Thank you Bill, really enjoyed 
our conversation. 

1590
01:29:18,920 --> 01:29:20,280
Once again fool on my friend 
all. 

1591
01:29:20,560 --> 01:29:55,280
Right, you too fool on. 
None. 

1592
01:30:22,600 --> 01:30:41,960
Music. 
The.