Five Idle Thoughts of a Summer’s Day, Vol. 2

0:00Fall is the perfect time to refresh and reorganize your space. At the Home Depot, find power tools and tool sets starting at$50 to help tackle DIY projects, home updates, and more. Whether you're drilling brackets to support new shelving or sharpening your hedge trimmer blade with an angle grinder, the Home Depot has the tools you need to check projects off your list. Shop Labor Day savings at the Home Depot and gear up for fall projects with the right tools to keep your projects moving. Summer days have a way of making us slow down, reflect, and muse over the little things in life. I'm in the mood for heading out where my whimsy takes me this week, as the novelist Dorothy Sayers might put it.

0:44It's a sampler, not of five stocks like the ones reviewed last week in my Review of Palooza 2025 episode. Not of five stocks, but of five thoughts. So grab your lemonade, find a comfy spot in the shade, and join me as we explore five idle thoughts of a summer's day, volume two, only on this week's Rule Breaker Investing. It's the Rule Breaker Investing podcast with Motley Fool co-founder David Gardner.

1:18Welcome back to Rule Breaker Investing. Happy summer. I realize that only applies to, I don't know, about half the world. those of us in the northern hemisphere. It is the depth of winter in various places for our southern foolish friends. But indulge me, if you will, wherever you are with some idle thoughts of a summer's day. This is volume two, which means I did this once before. Yep. Last year, this same week, I think I was in the same kind of whimsical mood. And so here I find myself again with you. Thanks for joining me this week for five idle thoughts. Before we get started, I want to mention And next week, I'm excited to welcome back a past guest on this show, Sam Verbeek.

1:57October 12, 2022, join me for an episode we called Two Fools Professional Tennis Player, Sam Verbeek. Well, Sam did something quite remarkable earlier this month. With his mixed doubles partner, he won Wimbledon. Sam, a fellow fool, a supporter of our Motley Fool Foundation and investor all the way through. You can hear his story three years ago in October as an investor and a professional tennis player, but that same man has now become a Wimbledon champion. He'll be joining you and me next week to share some of his experiences around that Wimbledon championship, some updates on his investing, and probably a little bit of life overall, too.

2:39If you are a tennis fan or if you have tennis players or fans in your life, I think you're going to love next week's podcast. And before I lead off with thought number one, as I shared at the start of this year, my 2025 book, Rule Breaker Investing, is available for pre-order now. After 30 years of stock picking, this is my magnum opus. It's a lifetime of lessons distilled into one definitive guide. And each week until the book launches in just two months, oh my gosh, two months from today, the day this podcast comes out, in just two months, I'm sharing a random excerpt. we break open the book to a random page and I read a few sentences.

3:19So let's do it. And I quote, at the end of his landmark work, Candide, Voltaire offers a timeless reminder. In five words, he tells us that while we can't control what happens in the world at large, we can shape our own circumstances. End quote. I'll leave you to guess what those five words are. probably the best known line from Candide for Voltaire fans. Well, that's this week's Page Breaker preview. To pre-order my final word on stock picking, shaped by three decades of market-crushing success, just type Rule Breaker Investing into amazon.com, barnesandnoble.com, or wherever you shop for fine books.

4:01And I'm really pleased and honored, I want to mention this, this is for the first time I'm sharing this, that I got a wonderful endorsement for my book from none other than Morgan Housel, the celebrated author of, well, a number of books at this point, but Psychology of Money has best known. Morgan, a longtime Motley Fool collaborator as well. And Morgan has said about my book, Rule Breaker Investing, few people have helped individual investors understand investing by owning good companies for the long run, as much as David Gardner. This book shows how he built a name for himself over the last 30 years, a delight to read, easy to understand, and packed with wisdom.

4:38And sure enough, a great Morgan Housel quote like that will be on the book jacket as well. Thank you for that endorsement, Morgan, Fool on friend. And congratulations to you on your coming book, The Art of Spending Money, which also comes out this fall. All right, five idle thoughts of a summer's day. Thought number one, I'm just going to call it NVIDIA. NVIDIA did something remarkable last week. If you follow me on Twitter X, I'm at David G. Fool. You might have seen me celebrating something, but if not, let me explain a little bit about what happened last week with NVIDIA. First of all, let me mention that chapter one of my book starts with this line, and I'm somebody who cares about opening lines.

5:19You know, like, call me Ishmael, which is, of course, how Herman Melville started Moby Dick. First lines of books matter, so when I wrote this at the start of chapter one, I did so with real intention, and here it is. NVIDIA tells you all you need to know, if you will, but listen. And as I penned that line and then wrote a lot of chapter one about our initial recommendation of NVIDIA stock in April of 2005 and how we'd added to it over the years and how some years it went sideways and other times it lost two thirds of its value. It's a phenomenal story of long-term success and really some of the greatest success you could find in the public markets of the last few generations, that stock alone.

6:03So for it to be a Motley Fool stock advisor recommendation that I made on tax day of 2005 is always going to raise a smile. But as we got closer to getting to press with Rule Breaker Investing, I started realizing that I didn't want to make this mistake. And I shared this with my editor at Harriman House Publishing, Craig. I said to Craig, you know, I don't want to pin chapter one and the whole opening of the book on any one stock because Rule Breaker Investing is about having many stocks and there have been many great stock picks and also a lot of bad stock picks too. That's also part of Rule Breaker Investing, losing to win.

6:40But I started to say to Craig, and this was earlier this year as we started to fix on the final draft, I started saying, I don't want us to make the mistake of pinning the tail on the NVIDIA donkey and making the game all about how NVIDIA does. And so he and I agreed that we should footnote the very first line of chapter one. So if you're reading chapter one in a couple of months, you already know the first line, but here's the footnote that comes right after it. And I quote, NVIDIA has been a generationally great performer, one of the defining stock picks of my career. But it's important that you understand I'm not telling the story to showcase NVIDIA itself.

7:20Volatile stock that it is, who knows where it will be in another six months, let alone six years. Time will tell. What I'm here to tell is that the habit of letting winners like NVIDIA run high is the only way you'll ever make rule-breaking investments in great stocks. So that's the footnote. And all of that is just preface, prelude for what happened last week. Because for those who may own the stock or follow me on Twitter, You may know that when it tripped over$160 a share last week, that made it a 1 ,000 bagger for Motley Fool Stock Advisor members. For longtime fans, for people who've watched NVIDIA or watched our services, watched my stock picking over the years, my cost basis in the stock is$0.16 at present prices.

8:14Therefore, when NVIDIA trips over$160, it becomes my second 1 ,000 bagger in full history. The first being Amazon. And a really fun coincidence is that my cost basis for both of those stocks is the same number,$0.16. So fun to note that as well. So I guess my idle thought of a summer's day, number one, is just to celebrate NVIDIA, what it represents for us as investors. If you own the stock, you don't have to have had it since 2005. If you've had it for the last five years or the last couple of years, I think you're a pretty happy capital F fool as well. But it's just a beautiful thing to imagine that we as public market shareholders, people who are not insiders, people who are armchair investors, individual investors, you and I, I have no special advantage over Wall Street.

9:02In fact, I probably you and I have some disadvantages, but we should also benefit from our advantages. And one of them is that if you don't NVIDIA in a mutual fund, I assure you that it has been cut down as a holding repeatedly by that mutual fund over the years, because when stocks explode in a good way, they go up. mutual funds have to sell them down in part to keep them at the same relative level to keep them balanced and diversified as funds but if you're a fellow fool who likes to buy individual stocks directly which is what i've done my entire life there's nobody who's selling off your winners for you as they win it is almost unimaginable to have a stock go up a hundred times in value let alone a thousand times in value but i'm here to tell you it's not unimaginable it is not just imaginable it is real and with nvidia having gone up over 170 today as i record well the winners keep winning but idle thought for a summer's day is that nvidia tells you all you need to know if you will but listen and thanks for listening to point number one you know when we first recommended it in April 2005.

10:16It was around 19 and a half. And part of the fun of telling the NVIDIA story in my book is I never split the stock. Of course, the stock has split a number of times. In fact, if you've owned the stock since April 2005, you now have for every share you had back then, you now have 120 shares. Companies split their stocks. We've talked about that many times before in this podcast. And they keep reducing the price to make it affordable to smaller shareholders. And every time they do, if they cut their price in half, you get twice the number of shares. Well, you now have 120 shares for every one you started with.

10:50But I tell the story by ignoring splits overall and comparing that initial cost basis of 19 and a half to today, where the stock is now over$20 ,000 a share. Sometimes stock splits hide from people the real benefits of watching numbers pump up over time. People see 16 cents and would assume I was recommending a penny stock, which I never would. I don't favor penny stocks. NVIDIA never was a penny stock. But when you split your stock that many times and it does that well over the years, it starts looking like you were a penny stock investor. That's why it was fun for me to tell the story without splits.

11:26And to note today, of course, when the book was printed, the stock was only around$16 ,000 a share. Last week or two, it's now up over$20 ,000 a share. Okay, let's move on to idle thought number two. Idle thought number two starts with a reminder of a wonderful conversation I had with Jay Jacob. His last name is spelled J-A-K-U-B and his book, Completing Capitalism, written by Jay Jacob and his writing partner and business partner, Bruno Roche. In Completing Capitalism, which if, by the way, you're a conscious capitalism fan, then you're going to really appreciate this book. I highly recommend it to you.

12:04The authors posit that we limit capitalism when we tend to think of it only in monetary terms. The authors go on to point out in completing capitalism, there are really four types of capital. But most people, most financial reporting, most of us just think of one of them, the money kind, the financial capital, money. And we tend to reduce things down to money. In fact, there are some triple bottom line companies that like to score how they do with the environment or other things but in the end as the authors point out often they're just reducing that back to money as well and completing capitalism and idle thought number two is reminding you of the four types of capital and then offering a pointer or two around your own life goals four types of capital the first okay we've already covered it it's financial capital it's money it's currency it's what enables us to trade.

12:58It's a store of value, et cetera, financial capital. The second form of capital is human capital. It's sort of an unattractive phrase. It sounds dehumanizing to describe you and me, our fellow employees, humanity writ large as human capital. But really, when you get under the hood, it's how we treat each other. How do we treat people at work? How do we treat our customers, our fellow employees, how well is human capital managed by a capitalistic enterprise? Really important to not just how well that enterprise does, but human capital to me is all about human flourishing, which is, I think, what I'm dedicating my life to.

13:39So human capital is a second form of capital. The third form of capital the authors highlight is social capital. And they define that as non-financial relationships that are kind of about community, that affect a community's well-being and prosperity, but in ways that can bring sustainable quality of life increases. Not monetary here, sustainable quality of life increases, which in turn, by the way, positively does impact performance. For example, companies that do social capital really well usually do better with their stock and with their financial capital. So the authors measure social capital by surveying three primary drivers that exist in any business situation or really any geographic location.

14:25And those three are trust and community cohesion and the capacity for collective action. Like if you tried to get everybody in your neighborhood, in your zip code to volunteer to pick up trash with you leading it this coming Saturday morning, how successful would you be in mobilizing your community toward that collective action? How much social capital do you have in that example? So that's the third form of capital. And then the fourth form of capital after financial, human, and social is natural capital. And that would be the environment. That would be the natural world at large, the resources that we never want to take for granted that are themselves powerful and important capital.

15:09So Completing Capitalism, again, a book I completely recommend to you if you've not come across it before. And if you want to cheat, you can just listen to my interview, an author in August interview with Jay Jacob a few years back, Completing Capitalism. But I think I have two personal insights about that. Before I hit them, I just want to give you really good news because the authors say this based on their studies of these four forms of capital. They say, if you, let's say you're a business owner, if you grow any one of the those four forms of capital, if you measure it and do better with that, good news, it pulls up the other three.

15:47So all four forms of capital here, any one of which help the other three. So if you can increase any of them in your personal life, in your business life, or in your neighborhood, it helps all the others. And you can see logically why that would be the case. The better you treat people, the better they treat your customers, the better your customers are treated, the more they're willing to spend for you. The more you take in, the more social capital you can start building, making yourself more of a community asset in your community. And let's hope you're also treating the environment well as well and you have the resources to do so.

16:22So these things all uphold each other. And that is my favorite and most powerful insight from their book. But I had two personal thoughts, two idle thoughts for you before we move on to number three. Thought A is this. Not a bad goal in life for you and for me is to think about all four forms of capital we just covered and to try to create value, to try to provide value to others, yourself in all four of them. I think a lot of people tend to just measure their net worth. It's understandable listening to investing podcasts like this one where we talk about Nvidia, that we're thinking about how much money it might make you, what percentage return you could earn, when you might be able to retire, et cetera, based on a lot of math around a lot of financial capital.

17:11But sure enough, once you get there, and some of my listeners are already there, I think you start to discover with financial independence that it's not really about that anymore. It's much more about how you treat your family, what you do for your community. Are you doing well by the environment? One of the things I care about are our oceans. I live part-time, one of my houses on the ocean. I stare at it and I think about microplastics and how we could do a much better job cleaning up our oceans in the next 50 years than we did in the last 50, plasticking them up. So an opportunity, once you hit a goal in life, a financial capital goal, to really start measuring and scoring your life based on those three other forms that are put forth in the book, Completing Capitalism.

17:56And now you know the four types of capital and how they interrelate. And my thought B, my personal thought B for this one is the advice I give to my kids. And you might want to give to yours someday. Especially if you're an entrepreneur or somebody who's succeeded in the world. You've made money. you've made maybe generational wealth. You're able to pass it on to family members. A great goal, I think, not necessarily for everybody, but it has been for me. I think sometimes if you're in the second generation or third generation, you might feel some pressure or necessity to try to also be a successful entrepreneur or a great athlete, somebody who matches or exceeds their parent in whatever form of capital their parent did a great job with, in this case, financial capital, but I really think nobody in a second or third generation should feel that need.

18:47At least for my kids, I want them to grow up to become their best version of themselves. I'm never going to expect them to try to replicate what I've done. I'd rather they go on to their own pursuits. And one of the ways you can express that, especially if you're the forebear, if you're their ancestor, is to start pointing out the other three forms of capital that they could really make their own name in and not feel as if they're just trying to replicate grandfather's success with whatever grandfather or grandmother's business was. And so I think that focus back on the human capital or social capital or natural capital can be a great calling card for family members of future generations when somebody's done well with financial capital, which by the way, if you bought some NVIDIA or some of our other rule breakers, you might be or getting near that position today.

19:37So idle thought number two, completing capitalism. That book can be about a lot more than just what you may have thought that book was about. Fall is the perfect time to refresh and reorganize your space. At the Home Depot, find power tools and tool sets starting at$50 to help tackle DIY projects, home updates, and more. Whether you're drilling brackets to support new shelving or sharpening your hedge trimmer blade with an angle grinder. The Home Depot has the tools you need to check projects off your list. Shop Labor Day savings at The Home Depot and gear up for fall projects with the right tools to keep your projects moving.

20:16All right, on to idle thought number three. This one's about reality. So I bet you've heard about VR. You might have heard about AR. Maybe you've heard about MR, XR. We're going to talk about DR before we're done here. but these are all various forms of reality and so idle thought of a summer's day number three is about reality now virtual reality is a fully computer generated environment that replaces the real world it's typically experienced through a headset you might have one yourself blocks out your surroundings that's vr let's go through the other r's now ar augmented reality digital images or data overlaid on top of what you're actually seeing.

21:02So you can think about phone filters or, of course, smart glasses that augment, in a sense, real life rather than block it out or replace it. That's AR. Next comes MR. I don't hear this one as often. Maybe you haven't either, but to define our terms, mixed reality is a step beyond augmented reality. Digital objects not only appear in your view, but they also anchor to or hide behind or bounce off real world surfaces. So virtual and physical elements interact believably. That is MR, mixed reality. And then I heard this one the other day and I had to look it up to understand what we were talking about, XR.

21:49If you are, dear listener, a technologist, somebody steeped in this, you already know what XR is, but for the rest of us, I didn't. But XR is just an umbrella label for any immersive tech. So VR, AR, MR, just simply used when you don't want to pick one of those. You're just blithely in an idle thought of a summer's day kind of a way referring to all the R's by saying XR. I did some additional research, just wondering, are there any R's that I'm missing? and I came across DR. I don't think this one is au courant yet. This is more the stuff of academic papers, but DR is diminished reality. So instead of adding visuals, it removes or masks real world elements.

22:34So imagine just erasing a distracting sign that's in your augmented reality views. So DR is diminished reality. And I want to say each of these, VR, AR, MR, XR, and DR, I'm cheering them on. I'm interested in each of these, but I'm here to say I don't thought of a summer's day. Number three, I'm also a really big, in fact, I'm the biggest fan of all of R. and I want you to be a big fan of R too. So the other XRs are of interest, but I personally believe the happiest and most valuable lives will be spent over the next 10 or 100 years by the people who master R. And of course, by R, I simply mean reality.

23:25I have a friend who says, you know what, you should be a big fan of, Dave, and I'm saying that to you now, dear listener, dear fellow fellow, you know what we should be really big fans of? Our reality. Because most of the bad things that happen in this world, most of the delusions and mistakes that are made are when we don't actually acknowledge or see reality. And I'm not a worrier. In fact, I'm quite the opposite. I spend almost no time worrying about anything, possibly to my detriment. But if I were to worry, I'd have a little bit of worry that so many forms of reality are potentially being overlaid on you, me, our kids, and their kids too, whether we're talking about virtual, augmented, mixed, extended, diminished, the list probably will go on.

24:09I think it would be really great to be a master of R. And so that's my challenge to you this week. That's my idle thought. Be really great. Be increasingly good, at least. Be trying to always get better at R. R always connects us to the truth. reality is the truth and here's a great Mark Twain line to cement that do you know this one Twain said if you tell the truth you don't have to remember anything which I really appreciate with my increasingly diminishing memory here at the age of 59 and before I move on to idle thought of a summer's day number four I'm reminded of a pet peeve of mine I was doing a little history checking in fact it was nine years ago this week that on this podcast I first shared this pet peeve which now I get to rock because we're talking about truth and reality.

25:01I get to bring it back here nine years to the week later. This one comes out in various phrases, this pet peeve. It's always going to make me chuckle a little bit, though. Let's go with the phrase, when someone says to you, I'll be honest with you. Now, there are other variations of this, like honestly or frankly. Those aren't quite as good. So yeah, we could just go with the phrase, I'll be honest with you, Or now here in 2025, the most common version of this I'm hearing these days, have you heard this? Are you doing this yourself? Someone will say to me, if I'm being honest, or if I'm being totally honest with you, well, my pet peeve, the humor going on here is, of course, whether it begs the question, are you not always being honest with me?

25:49So anytime I hear somebody saying, if I'm being honest, it by definition to me calls into question everything else they're ever saying to me. And I'm wondering, why are you just telling me now that you're being honest with me in this moment? So some of you, my fellow fools, have reported back to me over the nine years that this is one of those pet peeves that stayed with you too, that you might agree with. Whenever somebody says, if I'm being totally honest, it immediately, in a small but funny way, and this is mainly for laughs, but there is some truth to it too, it calls into question their own integrity and everything else that they've been saying.

26:26Do they know when they say frankly or let me be honest that this need to highlight it for us, that they're being honest with you or me may make you, it makes me anyway, quietly ask, are they not always being honest with me? So in conclusion, frankly, honestly, let me be honest with you. Those are my thoughts if I'm being honest. All right, on to idle thought of a summer's day number four. Now, part of being a summer's day is these are lighter thoughts. I hope my point about being honest or about being a big fan of R are fairly light, not too intense. And I'm going to try to keep this one light as well.

27:11This is a politicized point. I am not making a political point. I don't enjoy talking about politics. I spend very little time thinking about the public sector. I'm a private sector-oriented person, and that's the person I hope I've become for you over the now 11 years into our 11th year of doing this podcast. But I do want to share, because this is a topic that's in the headlines every day, we're going tariffs here. I just wanted to talk briefly about trade and specifically how wonderful and beautiful trade is. When I used earlier the phrase human flourishing we talk about human capital we talk about capitalism from the dawn of humanity somebody traded an item or a thought with somebody else who benefited from that thought or item and as Thomas Jefferson once said likening it to lighting candles which he would call tapers back in 18th century English he says when his candle is lit when his taper is lit it is diminished not by you or I walking up with our candle, our taper, and touching it to his wick and catching our candle on fire as well.

28:20That's the nature of the human sharing of ideas. That you listen to this podcast this week and enable me to share some of my ideas, I am not diminished. In fact, I'm actually raised up that you took the time to listen and or share this podcast this week. Every mailbag, I'm re-lifted up by your questions, and I, of course, try to share back your questions and thoughts through mailbags to raise everybody up further. So there is an incredibly beautiful Jeffersonian sharing of ideas going, and that's one form of trade. But obviously, a much more tangible form is constantly in the headlines these days, where we're hearing about how the United States may not want to trade with you unless you're willing to pay quite a bit more in taxes in order to trade with us.

29:05And in some ways, I understand the instinct there. I understand that a totally out-of-balance trade deficit can be challenging for countries that bear that trade deficit. They're not able to sell their goods as ably and volubly as they are buying goods from other countries. I understand with my econ minor at the undergraduate level some of the aspects of economics. But at a more human level, we all benefit when we get to trade with each other, and raising prices around that diminishes, not helps humanity. And I do regret that as an American, when I travel around, I'm going to be traveling abroad in a little while, that we're not viewed as favorably right now because of the increasing supposed costs borne by trading.