#292: The Best Stocks According to Wall Street Greats

0:00Now we're getting into the stock picks. So get your pen pads out there and start taking notes. First up is the former voice of the Motley Fool, Chris Hill. He's talking about his three favorite investments.

0:14Hello, hello and happy new year, everyone. Let's hope 2026 will be as kind to us as investors as 2025 was. So looking back at 2025, we've been lucky enough to have some amazing guests on the podcast over the year. So I thought I'd take this episode to highlight some of them. pick out some favorite clips and put them all into one show. I'll mention the episode number if you'd like to go back and listen to the full interviews. We've got a great mix of Wall Street legends, other podcasters, some Irish insights, and some of the best investors in Europe and in the US. Before we get into the show, I just wanted to say that if investing is your new year's resolution for this year, we have the perfect way to get started.

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1:22Okay, so without further ado, let's kick off with the legend that is David Gardner, founder of Motley Fool and the owner of more 100 baggers than anyone in the world. He is here talking about finding great investments early. This is from episode 281 back in October. What do you think most people still get wrong about spotting greatness early? You are like, it's like you have a crystal ball that works. So you have a crystal ball. What is it that differentiates you spotting greatness early from the next person? Well, first of all, thank you. Second, let me say about my crystal ball, my palantir, if you will, that as I gaze into it, it doesn't always tell me the truth and it doesn't always show the future with crystal clear clarity.

2:07And so it's very important for me, and I know you know this about me, to point out how many times I've wronged and how many bad stock picks that I've made and how willing, almost crazily so, how willing I am to lose and to be wrong. So I think that that is a very important theme. And at one point, one of my favorite sections in the book is entitled Losing to Win. And it is one of my cardinal themes that you have to be willing to lose to really win in this world. And anybody who's worked in venture capital would understand that because it's sort of a venture capitalist mentality where we're going to place a number of bets.

2:43We're going to bet on all the horses at the start of the race. and we know that only a few of them are really going to have a great run and only one or two of them well let's go with win place and show let's say three of them could really pay out for us and we understand that there are going to be a number of also rands and uh and we could talk more about my horse racing analogies if we like but truly i think that for us it's a recognition that it's not everything that wins and so you cannot have your heart broken when your favorite share gets cut in half and you realize, oops, I was wrong. The technology is not as relevant as I thought it was, or a new competitor showed up that I wasn't prepared for.

3:24There are any number of reasons that we'll get investments wrong. And what is it that causes us to spy out the winners? I think you started the question with part of it, which is there is ridicule often, or there are often put-downs associated with new startups. And I would say in particular, and I think this is just a human truth over time, it's often because entrepreneurs are very young. And so we think, well, I mean, come on now, he or she dropped out of university. I mean, how much do they really know about how this world works? But I've also discovered that most of the great entrepreneurs usually are great before the age of 30.

4:06And if they are 20 and they've dropped out and started the proverbial garage idea turned into a public company, this is something incredibly admirable and very, very difficult. And if they're in their 20s still running a public company at scale, they're probably a remarkable person. But often the financial media treat them as if they're lucky, naive, etc. Now, this is not always true, and we're not merely being cynical about our financial journalists. Some of our best friends are financial journalists, but I do think there's often a prevailing view that, I mean, Jeff Bezos was just a crazy naive guy to think that people would give their credit cards out over the Internet to buy things or eBay should never work.

4:51because how do you know that somebody will send you the thing that you've supposedly purchased from them on this new medium where you're using your phone to dial up someone else's computer? So whether it's new technologies, new ideas, or the young people who often bring them, there are any number of reasons to dismiss them. And yet I actually usually go the opposite direction. I think that they're probably remarkable and maybe we should at least buy a few shares. Okay. Next up, we have David Quinn from InvestWise here in Ireland. He's talking about the challenges Irish investors face and why we are still catching up when it comes to legislation and taxes on investments.

5:27This was from episode 257 back in April. Okay, I'm gonna throw a very broad question at you, but I don't feel too bad because you seem well able for it. So talk to me about the investing landscape in Ireland as a whole. Do you think it favors the kind of the average investor or the retail investor, the person who's put money aside, a couple of hundred, maybe up to a grand out of their salary once a month? It's getting better. But when I get asked this, I always say that Ireland as a population, maybe this is a little condescending, but we're a little bit like teenagers in that we have one generation of people who have some money now.

6:09And we're learning how to deal with that and still making mistakes. We had our first big lesson in 2008, 2009. That's quite a long time ago now. But I don't think a lot of Irish investors really got the full lesson of what happened in that period and how you should be investing. We don't have generations of education in how to manage money, how to save, where to invest, what the stock market can do. So we tend to, you can see it by the amount of money that's on deposit in the Irish bank, 150 plus billion. um we're still new to investing so we're very comfortable with property and cash and we're not comfortable with anything else now that's not helped by a few structural problems the tax on etfs is penal and complicated and um you know it's completely prohibitive for the average investor i believe and i i know you deal with clients who can uh especially business directors they can have their own um kind of self-directed yeah pensions which which in some form kind of falls into that like isa or ira product of a type which isn't accessible to the average investor but in general i think and we've talked about this at length on the show at this point um how how prohibitive it is and how how much it's removing passive investing as an option for a lot of investors unless they get into a pension and give up a lot of control and add fees and all the rest.

7:41I don't think it's as bad as people make it out, to be honest. It depends on what type of stock you invest in because if you're invested in a high dividend-paying equity portfolio, the 41 % rate is a blend of your income tax rate and your CGT. It's the eight-year rule that does the damage more than the rate, I find, in my own view. And I think that's going to go now in the budget changes, but we get to that. So you have that tax rate as an impediment to proper investing. You have very, very high fees with the traditional providers, the banks and the insurance companies, which is another disincentive.

8:21And also because they pay commissions to advisors, there's lock-in periods of up to five years, five or six years. So you start doing your thousand euros a month into an index equity fund. You can't get the money back out for six years. it's illiquid that's a huge problem for people especially younger people who might need the money for house deposit or you know college fees or whatever so so that those and then our education system doesn't educate people that the stock market is a great uh wealth generator if you're disciplined and behaved and you do the right things it's a magnificent way to create wealth but all we think of is our parents losing everything on bank shares or something like that i get that every time someone comes in to me one of the first questions we actually ask people when they come in our door and start the planning process is to tell us tell them tell us about their parents because we learn a lot of our financial behavior from our parents and our parents had i don't know what age you are mike i'm 51 but our parents had to define benefit pensions so they were sorted for their retirement and they had only really started to generate some wealth and a lot of that might have been stock options in the banks and they got destroyed.

9:31So that's the first experience the Irish middle class had of wealth generation was bank shares and Aircom shares. I was going to bring up Aircom because that almost precedes it. It was a state-sponsored pump and dump nearly. That's right. So it was an absolutely disastrous first experience in the stock market. and index funds were just alien or or a properly diversified portfolio of any description was just alien to people here so we're only starting to learn that now and um i was in london last weekend and the tube was just absolutely covered in uh cheap online trading platforms yeah uh and that was that's a very democratic and uh exciting way for people to start their journey on investing but the scale isn't here in ireland yet for that to be adopted across the board it's still it's still very much a niche and people still get into their bank mostly and say uh i want to save 500 quid a month where shall i go and it goes into irish life multi-asset portfolio three or something sticking with the irish team we have emma farrelly from futurefinancialplanning.ie breaking down the introduction of auto enrollment which is coming into effect today very important one here for a lot of people working in ireland so make sure to listen to this and go back and listen to the full episode.

10:48This is from 272 back in July. Could you expand on that for many people who might have heard about it, but don't really fully grasp what the meaning of it is? Yeah, so basically auto-enrollment will come into legislation from the 1st of January, 2026. What it's going to do is it is going to, it's probably going to bring around 800 ,000 into the, in or I suppose allow up to 800 ,000 people access to some form of pension scheme okay based on being under the age of 60 over the age of 23 and earning over 20 ,000 a year okay so they're your criteria that it kind of starts off with now you have an opt-in option if you want to go into it and you're over 60 or you're under the age of 23 or you're earning less than 20 ,000 but essentially if you're within that bracket and you don't have a payment into a pension provider going through your payroll, you will be pulled into what's called this auto-enrolment.

11:54Okay, so I'll tell you, it's a very kind of basic structure on how the whole thing works. It's starting at 1.5 % contribution from the employee and the employer must match that one and a half percent. Okay. And that's going to rise to six percent over the next 10 years. So by 2036, that one and a half percent will become six percent. Six percent from employer and six percent from the employee. And then you have the what the government do is they make what's called a top up into it. Okay. I think they were essentially trying to make it sound a little like, I don't know if you remember the SSIAs back in the early 2000s, where if you saved, the government gave you a top of 25%.

12:49And, you know, it was fantastic. They were trying to encourage everybody to save. So this is similar, but not similar when it comes to the pension landscape. So you basically what's going to happen is if you so, for example, if someone is in a personal pension and not paying in through their salary, they're also going to be pulled in under this measure. and you're going to have the the top up that the government make is going to be so at the moment we have a 20 tax relief and a 40 tax relief okay depending so once you're if you earn over 44 000 as a single person you go up onto the 40 um tax bracket income tax and that's the tax relief you will you will receive on pension payments if you're contributing if you're um earning over that amount.

13:42So the government contribution is going to be what they said by 30 percent okay so it's going to be in between. So what it means is there'll be a benefit realistically for someone who is on the 20 tax bracket because they will now instead of getting 20 percent relief get 30 but someone that is on a higher earner will be disadvantaged okay because they now will get less tax relief which obviously will be a problem. It'll work the same way in the sense that your pension fund will grow tax-free but it will be much more restrictive. So it's going to be run by the Department of Social Protection. The idea is that the Department of Social Protection and Revenue will work together but the scheme will be run through the Department of Social Protection.

14:33you will have no access to early benefits so 65 will be the earliest you'll be able to access any of your benefits and you won't be able to you'll only be able to put in what is allowed so either the one half percent or that will go up over over over six years or sorry over over 10 years and you can't put in what's called additional voluntary contributions so the individual can't put in any extra money um and you so you know that obviously is going to be an issue and then from an investment point of view there's really not going to be any choice around you know investing in or if there is it'll be extremely limited um it looks like there'll be one investment manager and it probably will be irish life and we don't know for sure yet but they are biggest in the in the country so that's probably who the government will use and then you also are going to have options to opt out and that's after six months but then after two years you're going to be automatically opted back in and auto enrolled back in so it's going to be quite complex

15:49and for it will work I think very well for for certain criteria of people and for people who wouldn't let's say not necessarily have really have any access to pension and it'll bring them in and give them an opportunity that's what it seems to me it's going after a very specific cohort and and serving them specifically and for maybe a lot of listeners who are already contributing to a pension they can kind of skip this five minute part but there's a there's a very important aspect of bringing people in almost whether they like it or not into some form of long-term planning next up is eric bleeker from 24 7 wall street and our favorite ai expert here at my wall street he's talking about what has been essentially the theme of the year for 2025 which is pick and shovel plays in the ai space this is from episode 265 back in june for listeners unfamiliar with the term i'm sure all of our listeners are familiar it comes from the gold rush in san francisco and whatever was 1849 where the individuals who are selling picks and shovels to gold prospectors and miners uh made as much money as the gold prospectors because it didn't matter where they went looking for gold they had they were selling the picks and shovels so who are the pick and shovelers of ai yeah i think you know once again it's it's often surprising to people how many ways you can look to play the trend when a lot of people struggle to come up with ideas or the media focuses on narrow group of stocks.

17:16You could look at NVIDIA. Obviously, they're a key enabling layer to the future of AI, but they have competition. And if you are a big hyperscaler, these national entities building out these data centers, the number one thing you want is a level of competition. And if NVIDIA is your Apple with a highly integrated solution, well, Broadcom is rapidly becoming the Windows where they essentially build custom AI processors. They also control a lot of networking technology that's very valuable. And a lot of companies are going to Broadcom because they don't want to become entirely reliant on NVIDIA.

18:03So that's a very interesting pick. You have the kind of networking layer I've talked about a lot on this show where you go from designing data centers where they didn't need to be so – the connectivity demands were a lot less than they are today. That's putting a lot more demand in areas like the fastest networking technologies. One company I love from this is Fabronet, which has been called kind of the Taiwan semiconductor of designing, you know, optics plays. And we're about to see a lot of innovation in this space. I think they're a company that kind of wins no matter where the technology goes in the years ahead.

18:45And they're a stock I would be happy to buy and hold for 10 years. And then you look at data centers. Okay, you got to buy the land, you got to buy the chips. but there's a huge component of how you power data centers, how you're basically building out all the basic infrastructure. So you could go to things like gas turbines, GE Vernova is one of the most interesting areas. You can look at liquid cooling with a company like Birdip, or you can even go to the power companies that are most advantaged from this trend. A lot of people have been buying different power plays like Constellation Energy that are uniquely positioned to see their profit scale as AI takes off.

19:26And you go even one level deeper. A lot of people have been looking at things like which rare earth metal companies are going to benefit the most from the growth of AI. So you can take it all the way from kind of resources in the ground to power companies, to building the power infrastructure to the chips. And hey, if you didn't even want to buy between Broadcom and NVIDIA, you could always buy Taiwan Semiconductor, a company with a monopoly and incredible growth rates, you can buy the semiconductor equipment company. So to your point, there's never been so many options for picks and shovels in a trend before.

20:04And that's what makes this truly exciting. We're going back to David Gardner here for this next clip, because why wouldn't we when you have a legend like that on the pod and try to get as much out of him as possible. So here he is talking about the power of optimism in investing. Because being like Pollyanna is one thing, but being an optimist is something else. Can you talk a little bit about that? There's a beautiful book called The Rational Optimist by Matt Ridley. And I recommend this book to everybody. If you've not read it before, dear listener, I hope you will take the time because you'll get a tour through human history.

20:38And you'll discover, along with the author, that almost every generation, everyone thought the apocalypse was nigh. And maybe not the capital A apocalypse, but just apocalyptic thinking. It's seductive, isn't it? This notion that we live during such an important time that, of course, things are bad and our children will not unfortunately enjoy the same standard of living that we've had. Humans have thought this, not right now, but almost every generation of recorded history. And yet, when we look backwards, we see the unbelievable progress and human flourishing that I think too many of us, I'll include myself, too often take for granted today.

21:24So that's a rational view of history. It explains why you and I get to have a friendship, even though we've spent precious little time in person together, although we have enjoyed some of that over the years. But here we are seeing each other with video HD clarity across an ocean, having a conversation in real time that can be shared with anybody listening in through their smartphone, which would be hard to explain to a Viking. And all of these things are something that is just the part of everyday life for us. And even the richest people of a century or two ago would not even understand or be able to dream of the things that all of us can take for granted today.

22:07So this is very evident to me, the great goodness and flourishing that has occurred. And I think it's our part. It's our role, right, to carry that banner forward and to continue to make discoveries. Let's cure cancer. Let's let's start to commercialize outer space and start understanding the universe more so than we have up till now. There are so many amazing opportunities from semiconductor chips, artificial intelligence. The internet keeps coming up with new things. It's not like the internet is a fading technology. It truly is a remarkable time that we're living. And I say that even at a slightly dodgy time in US history, if you ever keep up with our headlines, which by the way, I don't spend a lot of time on because I really love business and the private sector, which is much larger than the public sector.

22:52And that's part of, I think, the reason that there's been so much human flourishing over time because of freedoms, both business and financial, that are enabled by entrepreneurs. And so this is my view. I don't know if it sounds rational. It's definitely optimistic. But it served me incredibly well because most people, again, think that things are bad and getting worse. Okay, next we have Dave Quinn again. Here he is talking about why Irish investors like investing in property so much. And this is probably the reason why stocks and shares are so far behind in the mindset of Irish investors. We're going to move on from Ireland now because I know we have a lot of other listeners on the podcast.

23:33But I just want to ask one more question. Why, in your opinion, are Irish investors or the Irish public so focused on property? Is it just because there aren't other options there or is there something more kind of long term behind it? It's a long-term educational piece in that we've seen previous people get wealthy buying investment properties and big gains. And people will be influenced by what they've seen has worked in the past. Typically, that's always the case with investing. And property, anybody who invested in property in the 90s in Ireland did extremely well. Or anywhere, any big city in the world, you know, became multimillionaires.

24:17and if it was leveraged property investment, they became extremely wealthy. So there's that aspect to it. But I think more importantly, it's easy to understand. It doesn't feel volatile. The key to property investment, the one single reason why it's so attractive is because it's hardly ever valued. Yeah. It's not valued. Private equity investments. Yeah. It's not valued every five minutes. And you can't go onto your phone and check the current value of your apartment in Clon Griffin or whatever. it gets valued every time something sells on the property price register so maybe a couple of times a year and um so there's no volatility or very little and you have and in the meantime you have this lovely rent coming in every month which is uh uh you know and you can drive by it and have a look at it and see it's still there so it's tangible yeah in theory it seems really attractive because it doesn't jump around the way equities do and you get a lovely income.

25:17In practice, it's completely different to that, of course, but that's why it's so attractive and remains attractive. Now, and I suppose the third, the first point being the education piece and what people have seen in the past. The second is that perceived lack of volatility and stability. But the third piece then as well is everyone is absolutely desperate to get on the property ladder and we have a massive housing crisis. So there's a shortage. and people see that as being a good investment so you add the three of those together and it's very compelling and if you do like i i'm i don't know if you are but i'm bombarded in my inbox by pension property promoters and uh if you can do it in your pension it seems even more attractive again so it's just it's non-stop stop bombardment of that compelling story and all we hear in the stock market is that uh donald trump or someone else is causing awful trouble and it's volatile thailand's about to crash so i don't blame them in a way yeah there's a lot less noise okay now we have a friend of the pod and the man behind compounding quality one of the most successful investing sub stacks in the world peter schleggers here he is talking about the importance of a long-term mindset and finding economic moats this is from episode 266 back in june what traits do you look for when looking for these potential multi-multi baggers yeah sure i think one of One of the main problems of investing and investors in general is that you think too much on the short term.

26:37So one aha moment for me was when I was at the Goldman Sachs offices in London. I was always a bit young, a bit naive. I was still working in the asset management industry, by the way, so involved in managing an equity fund. And I was a bit young, a bit naive, a bit arrogant, meaning, look, I know the data. I know the statistics, most investors underperform the markets, but I've read everything of Warren Buffett. I've read everything of Charlie Munger. I'm different and I will show them how it's done. That's a bit how I joined the industry initially, naive and a bit arrogant probably. And then I went to the Goldman Sachs offices in London and there you saw thousands of professional investors sitting in one big aula, one big audience.

27:25And all of them were very smart, very hardworking, very ambitious, probably all working 70, 80 hours. And I was looking in the room and the data states that 90%, 90 % of all investors underperform the market. So I was looking around and when you notice that thousand people are sitting there and 900 of them will probably do worse than the market. well it made me a bit afraid meaning I'm not different I'm probably even even dumber than those guys so what am I doing here and I think that's using a long-term mindset can makes the investment game a lot easier because 90 % of investors aren't doing that and when you're focusing too much on quarterly results when you're focusing focusing too much on what's happening in the short term well investing is very hard and i don't think you can under can outperform the market it's what jeff bezos said well markets are highly competitive but when you think with a seven or ten year mindset well almost no one is doing that and that creates a competitive advantage for you as an investor so things get way easier there and i think when we talk about quality investing well the most important thing for a quality investor definitely is the moat or the competitive advantage meaning you want to invest in a company that's very unique where competitors can take away the the market dominance they have right now and in finance you have a term called reversion to the mean meaning when something does really well for a very long period of time well competitors or potential competitors will also see that and they will enter the market.

29:15But the beautiful thing is, and that's why it's so important when a company has a competitive advantage, it's so strong. Well, other companies also see that and they will try to attack the company. They will try to attack the moat. But when the moat is wide enough, when the moat is strong enough, they just can't compete and that company keeps winning. That's why I said at the beginning, well, we don't want to invest in the next big thing. We want to invest in companies that have already won. And the interesting thing, for example, also is you have a very interesting paper, a very interesting study from Michael Mobus, who said when you have a company with a high return on invested capital, which is a great metric and one of the most important metrics for a quality investor, well, reversion to the mean doesn't take place.

29:59Okay, now we're getting into the stock picks. So get your pen pads out there and start taking notes. First up is the former voice of the Motley Fool, Chris Hill. He's talking about his three favorite investments. This is from episode 271 back in July. What are your three favorite investments right now? So I am fortunate in many ways, one of which is I've been investing for long enough that I have enough stocks in my portfolio that I would feel comfortable buying shares, more shares of today and just holding them forever. But in thinking about your question, Ahmed, I decided to take the route of finding investments of different sizes, just the overall worth of the business.

30:46And I inadvertently stumbled upon three companies that create a mnemonic device for your audience. So these are companies that are literally A, B, and C. So the A is Axon Enterprise. The ticker is AXON. It's a company that's about$58 billion in value. For those unfamiliar, this is the company that used to be called Taser. They specialize in non-lethal weapons and law enforcement systems. And it's one of those businesses that I want to see succeed, not just because I'm a shareholder, but because I think it's a business that can provide a public safety, again, with non-lethal technology. And it's$58 billion in market cap.

31:46So it's not the biggest company in the world. It still has room to grow. And it's one I've owned shares of for a number of years and will continue to. Same. And I also am a shareholder. And interestingly, fast fact, I interviewed the founder of Taser and then Exxon, I mean, say, Exxon here on the show many moons ago. And fast fact, interesting fun fact, Taser is named after him, the Tom A. Smith electric rifle, T-A-S-E-R. So I interviewed Tom Smith on the show, and that's how Taser got its name. I did not know that's how to use our credit name so thank you for that nugget so that's a I could not agree more and it it very possibly would be one of my desert island stocks as well and as a share I bought in horizon and is doing very well it's up two or threefold so tell me what's your b b is Berkshire Hathaway which is sitting pretty at a market cap of one trillion.

32:48However, shares are not bad. It's been a good run. Clearly, there are some people who think the run is over or about to be over because I don't know if you've noticed, but shares of Berkshire Hathaway are down 12 % since the beginning of May when Warren Buffett announced that he was going to step down at the end of the year. And I knew this was coming. And Emmett, I think I can count on one hand the number of significant predictions about stocks that I've been right about. But I've been saying for a couple of years now, Buffett's going to announce he's leaving at some point. And when that happens, the stock is going to drop.

33:32And when it drops, I'm going to buy more. And so the Monday after the Berkshire Hathaway annual meeting, shares fell 5%. And I added a bit to my portfolio. And I am now seriously considering possibly adding a bit more. I think the thesis that Greg Abel and the investing team that's in place at Berkshire Hathaway is going to significantly underperform what Warren Buffett has done in his tenure, I just think that's wrong. I understand the people who say, well, look, Warren Buffett gets the quote unquote, the Warren Buffett discount when he's making deals. I suppose that's true to some extent, but I think that the amount of cash that Berkshire Hathaway has on the balance sheet at the moment will enable Greg Abel and his team to get some deals of their own if they want.