What You Have Learned from David Gardner, Vol. 7

0:00Once a year, well, it happens to you too. You have a birthday. That time of year, every year for me, is mid-May. We've had a tradition with this podcast, which is that you give me a gift, which you did once again this month. Thank you so much. You give me a gift in the form of notes, emails, tweets, sharing what you've learned from this podcast. And then I get to organize these thoughts and share back reflections on some of the cardinal points that you make which in a way summarize Rule Breaker Investing, especially for new listeners. This series is entitled What You Have Learned from David Gardner.

0:39Here in 2026, well, it's volume seven, What You've Learned from Me. Thanks for the birthday present, only on this week's Rule Breaker Investing. It's the Rule Breaker Investing podcast with Motley Fool co-founder David Gardner.

1:01Nine notes I want to share this year And we get to close this podcast with a leprechaun And then a Scotsman So we got that going for us Before we start, let me just mention next week's podcast Next week's podcast is crazy I can't believe what I'm going to try to do I mean, it's just another podcast But it's crazy So circle May 20th And or make sure you're subscribed to Rule Breaker Investing for next week's podcast, which reminds me, by the way, of one other short point. I would really appreciate it if you drop a review of this podcast on Apple Podcasts. I almost never say this. In a world where I know many people, and it clearly works and more power to them, where many people constantly say, like and subscribe to this podcast, or like and subscribe, please, to this YouTube video or channel.

1:52And I basically don't do that, and I haven't done it much for years. That said, it's my birthday week. I turn 60 this week. If you'd like to give me a present, dropping a review on Apple Podcasts or Spotify or Google Play would be really nice and appreciated. On Apple Podcasts, I see we now have 921 ratings for Rule Breaker Investing. 921. That's close to 1 ,000. I'd kind of love to go over 1 ,000. Probably won't happen this week, but you can help me out and help other rule breakers find this podcast. If you take a moment right now or right after listening to throw me some stars, maybe a sentence as well, or paragraph, throw me some stars and make me smile.

2:38Thank you. All right, as I mentioned at the top, one of my favorite birthday presents comes in the form of listeners like you reaching out directly to share what you've learned from me. And now I'm a little bit self-conscious entitling this episode, What You Have Learned from David Gardner, because I'm the first to make jokes, especially about professional athletes who refer to themselves in the third person. You've heard it before, you know, things like, what's ahead for Michael Jordan? And then Michael says, well, Michael Jordan's thinking a lot about his future, that sort of thing. Often it seems like the sports journalists set up the athletes to use third person by asking them questions directly in the third person themselves anyway.

3:21What have you learned from David Gardner is the question, and what you have learned from David Gardner is what I'm sharing back this week. Let's get started again. Nine notes to share closing out with a leprechaun and then a Scotsman. What you have learned, number one. This one from I.A. Conkle. Thank you. You're right. I've learned so much. Been following Motley Fool for 30 years. Key learnings, be patient, invest for the long term, and be in the market. One that doesn't always make sense, you go on considering general financial advice of diversification and having a balanced portfolio, is ride your winners.

4:04Thank you, IA Kunkel. Well, it's a short email, but it packed a punch, really. Be patient, be in the market, and for a long time, and especially I appreciate you underlining the ride your winners, or as I like to say, habit number one of the rule breaker investor, rule number one, let your winners run high. And it's true. This does go contrary to much of the advice you get from the professional financial advice world. There are brokers who over the years say things like, it's time to lock in profits, Janice. Time to lock in profits, I.A. Kunkel. We got a profit. Let's lock it in. That caused a lot of people to trade out of their great position in Apple back in the day or maybe NVIDIA.

4:52And then again, you have financial planners. Again, this is understandable. They want you to not overweight into any one position. What I don't like so much is when they regularly want you to harvest your winners and rebalance those gains back into your losers. Rebalancing not great for stock market portfolios. I understand why some funds do it, but that's really why I invented the sleep number concept, which is principle number four of the Rule Breaker portfolio. Establish your sleep number. IA Kunkel and many others listening, I think you get it. You'll help yourself out a lot by habit number one, letting your winners run high, and then toward your sleep number.

5:33That is the highest percentage you'd let a position get in your portfolio and still be able to sleep at night. So that concept of letting winners run is really going to play out wildly in your favor toward your own prosperity over time, as clearly you've experienced for 30 years now, I.A. Kunkel, and for others listening, The only question is, is it becoming too large? Is that winner or winners in your portfolio becoming too much on your mind? That's a good reason to sometimes pair that position back. Anyway, thank you for sharing what you've learned. That was number one. Let's go to number two.

6:08Thank you, Rich Smith. David, for this year, the thing I've learned from you is to be more appreciative of my mistakes and to see how I can improve as a person and investor. It's been instructive, Rich writes, to see how different five-stock samplers have performed well after their initial three-year timeline, but also to take that concept and apply it on a broader scale. To also borrow from Charlie Munger and appreciate and learn from the mistakes of others has provided much worldly wisdom. While I still fall short on my inner scorecard periodically, I can at least let go of the mental anguish of it all, Rich writes, more easily now and objectively seek ways to keep moving forward and upward.

6:57I wish you the happiest of birthdays filled with much joy and foolishness. Excelsior, Rich Smith. Well, thank you for writing in, Rich. You've been a regular correspondent over the years, and I really appreciate the attention you've thrown our way, and I hope it's been a huge win-win. And I've certainly enjoyed having you as a regular listener. And I loved doing, as you know, my five-stock samplers, picking 30 times over the course of seven years or so, over this podcast's history, picking five stocks at a time, a sampler, if you will, toward a specific theme. I laid out the theme and the stocks that we're going to pick, and then we tracked them.

7:35We followed them a year later. How were they doing? Two years, and then three years. And at that point, I generally shut it all off and finished the game. Because if, as I've often said, if we kept following those samplers every single year, 30 of them, there wouldn't be much else to talk about on this podcast from one year to the next. But as you well know, Rich, and all my regular listeners, just because we stopped tracking after three years the five-stock sampler, by no means did that mean we would close out the positions. Those are some of our best favorite rule-breaker and stock advisor stocks, companies I truly love.

8:09And that's the beauty of doing our 10 years later series, which I tipped off just in the last six months or so. We've done four of them so far. Every 10 weeks, we review 10 years later one of those five stock samplers the very week 10 years later after I picked it. And so that's been a lot of fun to share. And you're right, Rich. It's been fun to see how some of them did okay over three years and were smashingly great over 10. and we've now had at least one that reversed it. It was a good market beater for three years and a big market loser over 10. And by the way, since I gazed over the spreadsheet from time to time where I've tracked all 150 stock picks, I can tell you there's a lot more of that to come.

8:53There are some big time winning samplers and some embarrassingly horrible samplers 10 years later and I'm enjoying reviewing them every 10 weeks as the next one comes due. But my favorite word in your entire short note, Rich was your closing My favorite word Excelsior Thank you for sharing that What you've learned from me Number three I could almost say Birthday gift number three This one from long time listener And a big fan of mine Jum Thank you Jum Hello David Early happy 60th birthday Big one Congratulations on reaching this milestone 60 she writes Is the new 40 With a smiley emoji Sorry I've not been in touch for some time But I have not missed any Rule Breaker Investing episodes The RBI podcast is still what I look forward to each week Work has been busy And I have disabled my use of the X slash Twitter app Sadly, it was plagued by spam I had no time to deal with it But I just can't miss your birthday tradition I'd love to send you this birthday gift Jum goes on You've been a big influence on how I think about investing although there are so many great life lessons I've learned from you, this year, dips, wait for dips, is what I chose.

10:11Thanks to you, I'll tell you three reasons why I will never, John writes, wait for dips. One, I have seen so many bad outcomes and missed opportunities from waiting for a dip. A friend never bought a share of NVIDIA because he was waiting for it to dip to his target price, which it never reached. Two, waiting for dips is timing the market and may cause me to lose time in the market. The same friend decided to sell everything at what he believed was the peak of the stock market and waited in cash to get back in when the market dips. The market kept rising, so he sat on the sidelines waiting. Eventually, the market dipped, giving him a still higher point of entry than when he sold out.

11:04Correct me if I'm wrong and forgive me for what I'm about to say, but I think this is the ultimate dips move. Not only did he get in at a higher point, he also interrupted all the dividend paying periods, his time in the market, and compound interest. Luckily, he did all this in his tax-deferred account. Otherwise, he would have incurred a large amount of tax as well. And three, I understand the good feeling of getting something at a discount. However, it seems counterintuitive to wish for the stock price of a company you want to invest in to fall. If the price dips, it may mean something did not go right, and we should at least be a little bit cautious.

11:47At the same time, I'm learning that waiting only for dips can make me hesitate or miss good opportunities. As an investor, which implies a long-term mindset, if I've done my due diligence and found a great company, I should be happy to start investing at the current price instead of just waiting for the, in quotes, perfect dip. Thank you again for all the lessons over the years I've learned so much from you. I'm truly grateful. I'm a better investor because of your teachings, wishing you a wonderful birthday and many more great years ahead forever a fool, Jum, your biggest fan. Well, what a great note.

12:29I don't have to spend much time summarizing. It's one of my favorite points you've made, Jum. I know. I realize it's a bit edgy coming from me, dips. Wait for dips. But you know I do feel strongly on the point. And I really love it when friends like you, Jum, put it in their own words and drive it home. Dips. wait for dips. Fool on. All right, on to number four, Matthew Green. Hey, David, happy 60th birthday. You've given so many nuggets of truth about investing over the years, but I feel that's low-hanging fruit, so I'll climb a little higher into the tree. You've helped empower me to be resilient, and I am eternally grateful.

13:14Back on August 5th, 2020, COVID was rocking the world and as a physician assistant working in an urgent care turned respiratory assessment center, I was right in the middle of it. It was an immensely stressful environment, but I was able to find an outlet through The Motley Fool. I wrote to you and you read the note in a mailbag. I've been a fan of The Fool since 2018 and your book with Tom was the first investing book I read. Thank you for all you've done. I'm thrilled to hear of the work the Full Community Foundation is doing to spread financial education. Thank you for that, Matt. I myself teach an investing class to a group of high school students.

13:59It's been one of the great honors of my life. Matt goes on in his note to mention his own work now in investing and a book he's written. For those interested, in his own words, it's a book geared more toward people who want to know the basics, but don't want to think about their investments frequently. That's in Matt's own words. You can find Matt and his work patiently investing at patientlyinvesting.com. Well, thank you, Matt Green, for taking the time to write. I'm glad you wrote six years ago, right in the height of COVID. And I can only imagine what you were experiencing on a daily basis.

14:36Most of us were cowering in our homes. I certainly was. And there you were in an urgent care turned respiratory assessment center. So God bless you for the work that you've done. And I'm just delighted that investing has been not just a sidelight for you, but now a real passion for you going forward, writing your book and serving to spread financial education. So thank you. That is a wonderful birthday gift to me. Fool on. All right, on to what you have learned, number five, this one from James Lambeau. When I first picked up a copy of the Rule Breaker Investing book those many years ago, so obviously, James, you're referring to Rule Breakers, Rule Makers, when I first wrote about Rule Breakers in the year 1998, and that was many years ago.

15:22Let's call it 28, shall we? James goes on, I soon became a Fool One member and an avid student of Rule Breaker Investing. When I look at the gains and losses of the shares in the businesses I've purchased over the years, I took to heart your long-held view that winners didn't have a ceiling. And at worst, losers are capped at the value of the initial cost. Wow, James goes on, has that lesson played out well over the years, comforting me along the way, leading to outsized gains in some of the best businesses of our time, with losses, though always painful, thankfully minimized. Many thanks, James Lamble.

16:10Well, you're so welcome, James. And you used a phrase, it's a nondescript phrase in your note, but it's very telling to me. You wrote, when I look at the gains and losses of the shares in the businesses I purchased over the years. And that is a sign to me that you know what you're doing because a true sign of an investor is somebody who doesn't say stocks, although I like the word stocks, somebody who doesn't say names. And I don't like that word when applied as a synonym for stocks or companies or shares. I've invaded against this in the past. I'm pretty sure it's one of my rule breaker investing pet peeves, but when people say names, like what are some names in your portfolio or what are the top performing names today, they might say on CNBC.

16:56And to me, that always shortcuts what's really happening in the world because we're not buying names unless that's all you're really doing. If these companies, if these products and services, if the world around you, that is, I hope, being enriched by what companies are doing, if they're just names to you and you don't otherwise care about the company brand or its effects on the world or how its employees feel about it. I think you're missing a lot. And James, you're clearly not somebody who's doing that because you're talking, as I would, about the businesses we've purchased over the years. And that's the small miracle of the stock market.

17:32You and I get to be part owners of the best businesses of our time, the rule breakers. We get to sit in the boat. It's a sailboat if you're there with me. And we get to let these companies, we're part owners of them, carry us forward over time. And you're so right, James, of course, that our winners will so far outweigh our losers. And so many people don't understand that about the stock market. You do. You know, this puts me in mind of one of my favorite sections of my Rule Breaker Investing book. You referenced my one from 28 years ago. I hope you found and enjoyed my final stock market book, which I published September just a few months ago.

18:10My favorite book I've ever written. But in that book, I'm just going to share an excerpt of one of my favorite sections because it speaks exactly to what we're talking about here, James, and how losing is part of winning. And I quote, losing to win. You will lose and you will lose a lot as a rule breaker investor. Near the end of my stock picking for The Motley Fool, I dedicated an entire podcast to drive this point home, aptly titled Losing to Win. In that November 2020 podcast, I revealed that I had made exactly 389 consecutive monthly rule breakers service picks, two every month since October 2004.

18:54And I wrote in the book, please avert your gaze, nothing to see here, skip the bold and italics, just started getting a couple of paragraphs. Thank you very much. Fully 63 of those 389 stock picks had lost 50 % or more. I hate that It's painful It's shameful People followed, paid for my advice I followed my own advice But I said then And I'll tell you now You need to be prepared for this If you're going to be a rule breaker Because if you're not ready to lose You're not truly a rule breaker You have to be willing to lose And here's why Because even though I had 63 minus 50 % plus losers in the 389 picks I'd made over 16 plus years.

19:50Yep, 63 of them. There's good news. The 63rd best performer I picked, HubSpot, was up 402 % at that point. That's not my best stock. It's not even in my top 50. But HubSpot, at number 63, had already made four times the money that any of my 63 biggest losers had lost. And as of this writing, it's now up 904%. Are you doing the math with me? If the worst you can do is lose 100 % and none of my 63 duds even reach that threshold, and if just my 63rd best pick was up 402%, you can see why, despite so many mind-numbingly bad stock picks, we had one of the great stock market advisory services of all time.

20:48And remember, that's just the 63rd best pick. The best performer in Rule Breakers at that point was Tesla, up 125 times in value since I'd first picked it, still holding, using my six traits of a Rule Breaker stock construct in November 2011. Tesla's gains alone exceeded all of the losses from all those 63 minus 50 % of stocks combined. In fact, the gains from that one Tesla stock pick were more than three times all those horrific losses combined. The only way to uncover this was by following my rule breaker frameworks diligently over a long period of time and discovering the kind of gold that the cat of Monte Cristo once found in a cave, hard to find, mysterious, and immensely lucrative.

21:49Just a punch at home, the second best performer for Rule Breakers then, Mercado Libre, had increased 103 times in value, and there were 60 others in between HubSpot, up 402%, and Tesla and MercadoLibre, all of them having risen from five to 100 times in value. And quote, I don't often excerpt my book. I hope that that was completely on point. I hope it spoke directly to you, James Lambeau, although I think you already get it. I was just echoing what you said back to me using something I took a lot of time, not just to write, but also pick stocks for over many years. And that gold I discovered and shared out in the book that we discovered together, kind of like the Count of Monte Cristo.

22:41Of course, I'm always going to be a sucker for literary illusions. Thanks, James Lambeau, for your note and Fool on. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero?

23:16This is a job for Indeed sponsored jobs.

23:21All right, on to gift number six, Steve Clark. Thanks for writing. David, thanks for teaching me nothing. Or rather, thanks for teaching me that doing nothing is sometimes the best financial move. I'll be honest, Steve writes, my biggest financial challenge is to do nothing when major volatility hits. Over the years, I've made some foolish small F mistakes by selling Chipotle and Netflix during downturns. However, for the most part, I've acted like a fool, capital F, and stayed the course. I think back to why I wanted to own the company in the first place. And if the premise is still sound, then I keep wearing the jersey, even, I appreciate these allusions to my book here, Steve, even quotes after yesterday.

24:13There is so much more, though. I try to invest in the future I'd like to see. Steve says, sorry, I know I butchered that. I have no regrets selling profitable companies I no longer believe in and keeping others that keep limping along. I've followed The Motley Fool for over 20 years, back when it was a paper newsletter. I also turned 60 this year, and thanks to you and The Motley Fool team, I'm in position to be able to enjoy my upcoming retirement. Fool on, Steve Clark. Well, Steve, I always appreciate anyone who has been on this ship of fools for two years, let alone more than 20 of them. And in a lot of ways, I find myself when I read notes like yours saying, this is why we do what we do.

25:04I think a lot of us at The Motley Fool take pride in being there for our members and staying there, staying the course through all kinds of crazy markets, 2001, 2008, 2009, 2020. We have looked through all kinds of crazy markets together And I've got some bad news There will be more crazy markets in future There will be more crazy, sometimes bad things that happen And you and I will be invested during those times And I hope we will be invested through them And I think you get the lesson As do many of my correspondents this week I hope that message is coming through loud and clear I think John put it so well when she said Don't interrupt those compounding returns don't interrupt your financial life just because of a bad year, a bad couple of years, a bad anticipated next quarter or year, a bad time for even one of your biggest holdings or favorite stocks.

25:58Every one of my biggest winners from Netflix to Tesla to Intuitive Surgical to Nvidia to Amazon, the list goes on. Every one of these stocks that I've picked, picked for Motley Fool members, in many cases owned myself, every one of them has gotten cut in half at least once, often more than once when you hold it for years and years. I think you get that. So maybe we're just preaching to the choir, but I bet we're reaching some new ears this week as well. And that's in part why I do what I do. I also just want to say we all make mistakes. But I love that you said, I think back to why I wanted to own the company in the first place.

26:38That gut check for a lot of us is a great aid to holding on to great stocks. Rather than too much focus on what the share price is doing, often in concert with the rest of the market during big sell-offs, let's just ask ourselves, what is the company doing? What is the company doing in the world at large? Snap test for those who are so inclined. And why you own the company in the first place is key. Let's move on to what you have learned, item number seven. And first off, I want to provide some background about this next correspondent. Dr. Armando Sardi, S-A-R-D-I. Dr. Armando Sardi is a renowned surgical oncologist who, for some people that I met personally, has been a miracle worker treating late-stage complex cancers of the abdominal region.

27:29So public service announcement, if you, dear foolish listener, if you're connected to anyone who's received hard diagnoses around advanced stage four abdominal cancer, please just Google Armando Sardi and you'll see who he is operating out of Mercy Medical Center in Baltimore, Maryland. I first got to know Armando via Motley Fool events and is someone who ordered large numbers of Motley Fool books to give out to his whole staff. In fact, this lovely note I'm about to share is a great example of how my own life has been so enriched through the platform of starting The Motley Fool. I had no idea back in the day when we set off our first print newsletter that not only would we reach such distinguished practitioners across many fields, but that in time, some would become my personal friends.

28:24Here we go. Number seven from my friend, Armando Asardi. David, I'd like to wish you a very happy 60th birthday, and many more years of good health. Clearly, the first 60 years have been amazing. In your podcast, which I truly enjoy, you mentioned saying a few words about what I have learned from you. First, you are not only a rule breaker, but also an outlier. I've mentioned in previous emails the benefits of the compounding aspects of investing and how they've helped me and many others, our family, our employees, and friends to whom I've given several of your books. To tell you the truth, Armando writes, I cannot say how many of them actually took advantage of the gift, but several did, and they are very happy they did.

29:09Most importantly, I learned from you how important it is to combine investing, business, and life. They are all interconnected. As you mentioned in your books, you said, I truly enjoy investing and picking stocks, and I do not want to give away that joy. And that's right. In fact, I wrote that in my bonus chapter for Rule Breaker Investing. That is a free download for anybody who'd like to read a bonus chapter. I speak to AI and investing and other things there. You can find that at RuleBreakerInvesting.com. You'll see the bonus chapter is a free download. And that's where I said, I don't want AI picking my stocks for me because I truly do not want to give away that joy.