Motley Fool Co-Founder David Gardner's Top 10 Stock Picks, One Is Up 138,000% | Stock Club 325

0:01This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. welcome to stock club the podcast where we find and discuss stocks that anyone can buy many of which we believe will go on to grow your wealth next week it's time for investicon which the entire team and guests and attendees are all very excited about i'm not sure we'll actually podcast next week i'll talk to mike in a moment when we go live i hope so but it's all go at my Wall Street headquarters because next Thursday, Mike and I are being joined on stage by some of the greatest investing minds in the world.

0:59And while they are all VIPs, there is none more V to me than my original mentor and Mockley Fool co-founder, David Gardner, whose greatest investing recommendations I'm going to discuss on this podcast. But before I do, I'd like to remind you that every week until next week, we are going to keep a couple of 200 euro discount codes that can only be sent by Investicon CEO Brian Lavery. So if you want one of those, email brian at mywallstreet.com.

1:42This is the first and perhaps the last time you'll see David Gardner live here in Ireland. a man who, among many other insane accomplishments, is on the record for having identified no less than 10 stock recommendations that went on to grow, wait for it, 15 ,000%. In fact, and that was the lowest of the 10. In fact, one went up 138 ,000%, making the final value 1 ,381 times the original. So$1 ,000 invested in that stock when he first said buy would have become nearly$1.4 million. And that's why I say nobody comes close to that. And I'll unveil the stock in a moment. try and guess it. I mean, what stock has been a mega performer?

2:37The name of the market. So I will be asking David, Mike is putting up his hand. You don't get any points here, Mike. I'm going to be asking David on stage for his three best to buy today. We want another repeat. If he wants to give us four, five, six names, we all know it's a game of odds we're playing here. And not every stock goes on to grow twofold, let alone 138 ,000%. So please join us at Investicon Thursday 27th of August in the Market Bar in Dublin and set aside the whole day for booze, laughs, food and above all else, new friends at the best stock investing live event you'll find anywhere.

3:22Okay, Mike, how are you this week? I'm good, I'm good. I'm just reflecting like I know we've always done we've always done a kind of annual live event and it's very funny to think of back to our first one our non-covid online one but our first in-person one in um four dame lane was it our dame tavern that's right uh four dame lane that was a great one great and it was really good like as in i remember um but i remember like you know it was so casual and it was about 40 people in a room and people are standing up and i think we had pints on stage to you know it's developed so much to where it is now and we're bringing david gardner to dublin to do you know one of the best investors of all time i think we're going to make a great argument that he could be right up there in terms of performance just from the stock picks and like in terms of what we do in terms of long-term stock picking terms of kind of going out and ferreling out those life-changing investments there are very few people on a par with him like obviously he's done it in a different way he's not managing funds he's not peter lynch but he's almost he's almost like it's on our side as well he is on the retail side he's not managing institutional money or rich people's money like if you were there in 2005 and 2009 when he's making these picks you could you could be the one up 140 ,000 percent you know so I just I'm very excited and I am that's the thing I mean I was and I am and and that's why I feel this is my calling to pay it forward yeah so I'm really excited to to be bringing it to be one of the people bringing it to Dublin do you know what I mean and to have them speak in front of a majority Irish crowd and and just the impact that will have and like look I'm I'm really really excited and I'm really excited to see how far my Wall Street has come from, you know, a couple of pints upstairs in the pub and we're shouting stock recommendations at each other to having literally one of the world's best investors show up and speak in an Irish crowd.

5:20So it is, it is, it's a really cool full circle moment. It is actually, that was a great event. It was an open bar in the world capital of pubs in a really vibrant pub upstairs. And as they say, it was a long night, which is Irish code language, as I think we discussed on a previous podcast, but it was great fun. But funny, we've had David Gardner on this podcast. I interviewed him here on Stock Club and I noticed only yesterday his interviewer, our very own David McWilliams, went live on the David McWilliams podcast. And David McWilliams, for those who are not, everyone from Ireland knows David McWilliams.

5:58If you're from Ireland and you're listening to this podcast, you most certainly know who he is. If you're from America, I would describe him as the Morgan Housel of Ireland. He has brought economic concepts to the masses with anecdotes and really interesting stories about how things actually work. And he's made remarkably astute predictions on the direction of our economy. So he's an economist. But the two Davids, David McWilliams and David Gardner, were in full flight yesterday. It was nothing short of a masterclass in rule-breaking investing, which is David's wheelhouse. And as I mentioned, I thought it'd be fun to revisit why David made his best recommendations in like what were the best stocks he picked?

6:44Why did he pick them at that time? And maybe have a little chat about what can we learn from that? What can we apply from that intelligence to the market today? So that's what I pitched to you via Slack yesterday, Mike. Yeah, it's a great one because you've done all the work. I just have to sit at it for once. Exactly. throwing comments from the crowd. Heckling. As I said, there are 10 that are up, I said more than 15 ,000%, but in fact, the lowest of his biggest winners is up 16 ,000%. And I'm just going to run through the league table of his greatest recommendations before we dive in a little bit and talk about the businesses.

7:28None of these companies will need an introduction. Maybe one, maybe one. But he, in December 2011, he recommended Tesla, which is up 16 ,000%. In summer of 2006, 20 years ago, he recommended Netflix, which is up 20 ,000%. in 2005, in January 2005, he recommended Booking.com. That's the one I was saying might need an introduction. I wouldn't think so. It's a consumer brand. It's up nearly 23 ,000%. He was at Netflix again in 2006, and it is up 24 ,000%. Netflix again in 2006, and it's up almost 28 ,000%. So moving into fifth position in the league table of his greatest picks, Netflix hits the board again.

8:27He recommended in 2010, so a mere 16 years ago, and it's up 33 ,000%. Now we're coming into a new name known to all on the league table in fourth place. His fourth best individual recommendation came in the oh so recent 2009, and it was for Amazon. and it is up 34 ,000%. And moving into third place, Netflix hits the board again before we bring in a whole new name for second and first place. Netflix was its third greatest recommendation. It was made in 2012, January 2012. It's up 42 ,000%. So just put that in perspective. For every$1 ,000 you dropped into Netflix Netflix, the day David said, buy, you have$421 ,000 now.

9:21Nvidia comes in at second place. He, with his crystal ball, called a buy alert on that in 2012. And it is up 58 ,000%. Two grand into Nvidia, the day David pointed at it and said, that of all the stocks in the world, two grand has turned into about$1.2 million. And in first place, by the widest margin, double, well, well, well over double the second place's return is Nvidia again. But he called it a buy in the year 2004, 22 years ago. David Gardner looked at nvidia and said i'm on they're onto something and that recommendation is up at face melting 138 000 percent so every thousand dollars in that turned into nearly 1.4 million dollars and that type of infinite returns if you like i mean just there is no infinity but that type of infinite return is what compensates all of us for a lifetime of bad decisions you only need one of those 10 that i just listed starting in the worst one tesla which is only up a paltry 16 000 or 160 folds 161 fold you only need one of those to compensate you and pay you richly back for lots of bad decisions um it's a philosophy i've brought into horizon which is only six years old um it only has one 500 percent up and it has a whole load down 70 percent and um i have i wouldn't say no doubt i've low doubt that i uh will not get a 100 bagger because i know what i'm up to but i also know the game i'm at it's a long game and i've learned from david year after year after year since he and i first introduced ourselves to each other in the in the late 90s so bringing it bring the beam within a bit mike um i thought i'd talk about those let's kick off with the best those two recommendations from maple 05 and december 09 for nvidia and say well what was his thesis because in 2004 nvidia was like ai was kind of no it was the title of a movie it's actually funny ai when i was researching this and i was researching his pics i couldn't believe nvidia was public in 04 it was public in the 90s yeah yeah that's right and it goes to show that like yeah no jesus you could have invested it in nvidia's ipo and you sound like a genius now for sure you had no idea what was coming down the pipe in 1997 1998 when it did go public yeah there's yeah it just shows like in fairness there's an awful lot of luck in investing do you know what I mean like there is the little the little gaming company you invested in in 2004 turned into the world's most important company in 2026 for a completely different reason and and it evolved and it was unforeseeable 100 % evolved that wasn't even its final form you know it evolved through a number of industries before it got there as well so it is funny like as in when you hold a business for that long and it is not easy to hold a business for that long but when you do you're gonna just you have to reach a certain level of zen because like you know you do there's no way absolutely must there's no way modern uh nvidia is anywhere close to david's investment thesis at the time no it's a different company everything about it is different um and i think we we've i'm sure we've discussed on the podcast over the years how luck is it has a lot of definitions.

13:12One is when preparation meets opportunity. But anyone who achieves something of brilliance, who does not attribute some of that outcome to luck is a misguided fool, is the truth, because we have to acknowledge that when things go very, very, very well, it was at one point like a leaf in the wind. You know, it's just there is something very delicate about a brilliant outcome. We say this now and David's going to come on stage and be Like I told you 22 years ago, AI is going to be the best thing. I was sure of it. I said it already and you didn't listen to me. But like even the fact that he didn't sell and listening to him on David and Mike Williams' podcast yesterday, how difficult it is to not sell requires a degree of brilliance.

13:59And it's like doing nothing requires brilliance. I have seen and lived the anguish and pain of people who signed up for Horizon. And in the early days, it was the SPAC brigade. And there was a gold rush for special purpose acquisition company listed businesses. And I picked some of them. And I also picked a, I said, here is a 1-A-L-T-I-T-U-D-E. Here's eight stocks with an acronym of Altitude that I think is going to create one of tomorrow's mega winners. And as time has gone by, I'm pretty sure I found one of them in the Altitude stocks. But the other seven are various, varying stories. One of them has gone bust.

14:50The I stood for iRobot, A-L-T-I-T-U-D-E. But one of those acronyms I am so bullish on. And anyone who subscribes to Horizon knows there's barely a month that goes by that I don't go. Yeah, I'm more sure. I'm more sure. But certainty doesn't. Certainty of belief doesn't guarantee an outcome. But it's certainly I am playing the game that David Gardner played. I'm studying businesses in the way that I've learned from him. And I've learned from my own life experience of 28, 29 years of very active investing. And we are going to get him on stage. So let's have a little. Before you go on, no, I did this for each of the stocks because we're talking about how difficult it is to hold.

15:32And like, you know, it's great to throw out the number and say if you invest a grand, you'd be up 1.4 million today. But like that takes no account of the emotional turmoil that goes into being a long-term investor. So I went through kind of the major drawdowns of each of these stocks. So like as in it's not just paying the money up front and then getting the cash today. like is and you really have to work for it by doing nothing which is kind of an inverse statement but so like nvidia it's funny they all kind of follow a similar enough path too but in this nvidia so dave picked it in 2004 that's just coming off the back of a 90 drawdown during the dot-com crash which is you know a ballsy enough pick to be looking at a stock that crazier that but even that was before the original pick but even since then i think there's three separate 60 drawdowns um that's right yeah yeah the second and and then we mentioned as well timing wise so the second recommendation came in december 2009 that's just coming off the back of the great financial crisis as well terrifying time to be a stock pick but in hindsight one of the most profitable so i just thought it was interesting that both the timing of both picks came relatively recently after major crashes and so it just it's more insight into the mind of a stock picker of seeing opportunities where other people are seeing you know the blood on the wall uh what is it that's right on the streets uh yeah so yeah it is interesting maybe on the walls as well um but you're you're so right it's um it's a game of playing the odds you understand that like the the attributes of what makes a great business are there to be they've been extensively documented by various different investing masters and they don't have the same recipe but it's like if you and i went ahead and bought three recipe books and um wanted to make a thai curry those three recipe books would produce would definitely give us a recipe for a thai curry but they'd be very different all probably delicious and the point is a master investor has produced their own recipe for an outcome the outcome we all wish for so the way warren buffett has selected stocks and the way david gardner has elected stocks are as different as chalk and cheese but they had outcomes that were super normal and they were absolutely so different in their philosophy and thinking and i've just spent i spent most of yesterday i spent about six hours rereading every single one of the original Rule Breakers and Stock Advisor newsletters, which in Stock Advisor David and his brother Tom wrote in the very early 2000s right through to today.

18:15So in order to just make sure, when I'm on stage with him, I know exactly what I'm talking about. So let's push on, because I think we have some very interesting things to talk about. And going back to the NVIDIA thesis, as you said, it had nothing to do with artificial intelligence. I mean, he made the recommendation in April 2005 and December 2009. So in 2005, what attracted David to NVIDIA was the growing demand for advanced graphics across video games. And he loves gaming. Every type of game is David's thing. Board games, his collection of board games in his home is absolutely off the charts.

18:56It's like a library of board games. It is literally a library of board games. um when computer games from the playstation one through to today i'm sure he's he's still a gamer so he always had that interest and and he took an interest in the fact that advanced graphics across these games and consoles and mobile devices was a rising trend and unlikely to uh to abate in a short term or at any term for that and nvidia's chips were appearing in microsoft Xbox and Motorola phones and the company had acquired a company called 3DFX which once upon a time was its most important graphics rival so it was very much a story of the time based on what would you say based on what was a runway ahead that was nothing to do with the runway that it actually became and and what caught his attention was the broader direction of travel and all computers were becoming increasingly visual.

19:58All of us now today who work from home know that this machine we sit in front of is grappling every matter of graphics for us constantly and games were getting more sophisticated and a growing number of devices required more powerful graphics processing. And NVIDIA had the technology and the engineering culture to kind of make sure they were as close to the front end edge rather of that demand. And then the 2009 recommendation made was especially important because NVIDIA's CUDA platform was allowing developers to use these graphic processors for work beyond graphics. And that's really in the world of the technology.

20:43That was the birth of the superhero. There was a decision made in NVIDIA. You know what? These are great at graphics, so they're good at other stuff too. and its chips could perform a whole pile of calculations simultaneously, which we know now in the world of quantum, which I'll be talking about in Horizon very shortly, is kind of the golden grail of computing and being able to perform as many calculations as possible together makes something really useful in scientific research and high-performance computing and all types of data-intensive applications and processes. and then AI, cryptocurrency and NVIDIA's eventual dominance of data center computing was not part of the original recommendation, as you rightfully said, Mike.

21:28But he did something more realistic for the time and arguably far more valuable. He identified an unusually innovative company whose technology had applications that were not yet visible. Completely reminds me of Amazon, which I'll talk about in a moment. But here's the thing, Mike. We are talking about 21 years ago where investors required extraordinary superhero patience. Like NVIDIA suffered so many enormous declines, as you said, and it spent years and years going sideways. And David later recalled that it took eight years after the original recommendation for investors to even return to even.

22:10And the spectacular compounding came after that point. And, you know, you and I, Mike, have discussed stocks that were endeared towards many, many times. We do it for a living. And we both have seen the effect that the minute we say this looks good, it falls in price. And you can imagine eight years later still looking at a business in your brokerage account in the red. You might have forgotten why you bought it. You might have forgotten whose lead you followed. and looking at nearly the guts of a decade in the red you can say that was a bad decision and as sure as you will be tempted to sell to book your loss or cut your losses or whatever expression people the years of my age and i'm sorry i'm not trying to bundle you into my age mike but people my age know they sold many things at the wrong time um and and that is the very kind of effect we have to work against um and as i said i'm reminded of the many horizon selections i've made and and as much as one is up 500 i think it's going to going to grow 10x from here another is down 60 and i think it's going to be 100 bagger in the decades ahead it's near the very very bottom of the scorecard it is part of the the altitude it's the u of the altitude stocks that i mentioned there a few moments ago anyway david did not predict the revolution in 2005 i mean seriously while he has a crystal ball.

23:40It ain't that crystal. And he recognized that the world would require exponentially more computing power. And NVIDIA had the ingenuity to keep discovering new uses for its technology. Like think of Amazon, which I said I'm going to discuss. It started with books. Come on. Like anyone who looked at that went, hmm, there might be something else here. But what it really was from David was a bet on optionality and adaptability and an engineering culture that repeatedly reinvented the company and that combination eventually turned nvidia into the greatest performing recommendation of his career and indeed possibly of any public stock recommender's career up 138 000 is something that you just hope will happen in your career because that little L word look will of course come in and sprinkle its magic.

24:34So that was the first or the top two in the league table of the top 10. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense there's no place like chrome check responses set up required compatibility and availability varies 18 plus yeah and like it kind of gives you a bit of i don't know it makes me lament it slightly just in general our current market you know i'm a broken record with this but the private market or capital of venture capital structure that's developed in america over the last 20 years means that you know these big promising companies just they do all they're growing away from public markets away from the average investor they're only trying to brings to mind of stripe small fries compared to what we're going to see in the rpo market this year you know what i mean spacex yeah anthrax open ai they're only coming to market when they're worth trillions of dollars i think anthrax is going for a two trillion dollar valuation do you know what i mean it's a real shame it's it's it's it's a real shame yeah i think when i bought Netflix at its lowest point.

25:52I think its market cap is 250 million. Exactly. Honestly, they'd probably spend that on the Christmas party now. I'd say they genuinely do. And look, there are obviously hidden gems out there worth 250 million, but it's just, I don't know, it's just a different ballgame. And it's actually why I've been concentrating on areas away from the U.S. recently, because they just don't have the same private capital structure in a lot of other countries, basically any other country but the U.S., which means that companies do have to go public to raise money. And then us retailer investors get so much more of a runway with them.

26:26So, yeah, this is just my monthly rant on that whole topic. But it is a shame. But don't forget that we are in the year 2026. In 20 years, hence, it's the year 2046. And you've got to think that in the year 2046, a$500 billion business is going to sound quaint. You know, now I've refrained from saying a trillion dollar business because I still can't get my head there. But in 20 years from now, I'm sure we'll be in the age of multiple businesses valued at 50 trillion. Do you know? So while we all know a trillion is an absurdly large number, inconceivable to most, we don't really know what is a trillion.

27:09We know it's more than a billion. But hell it is. You know, it is something so large. but I do believe we're going to see in the year 2046 businesses worth tens of trillions because that's the direction of travel. It's the way the stock market goes. So when I was running through the league table of David's top 10, one name popped up over and over Netflix, October 04, December 04, June 06, September 06, and June 07. So half of the 10 came from Netflix. And I think it's worth just spending a few moments on that as well, although we've discussed it at so many points across the years here on Stock Club.

27:49And he repeatedly recommended because each stage of its development reinforced his belief that the company's real asset was its relationship with its customers, as opposed to the red envelopes that they used to deliver DVDs in. And again, in that David McWilliams podcast that went live yesterday, he reminded me something I knew, which was his preferences for B2C, business to consumer companies. And in that league table of NVIDIA, Netflix, Booking.com and Tesla, only one is B2B. In NVIDIA, the other giant winners are, in fact, B2C, business to consumer. and Netflix had created an exceptionally convenient alternative to the video shop.

28:34I mean, the history books and every business academic knows that and it offered a broader catalogue, it eliminated late fees, which for anyone who was involved in the DVD and video rental business or being a customer of that business knows it was a horrible sting when you brought back a movie you saw late and you had to pay for it twice. so they got rid of those late fees and they used customer ratings to recommend films which is kind of in those days ingenious and its subscription model generated recurring revenue and at the same time satisfied customers introduced to service to friends just as you do when you find something great you tell your people so when David returned to Netflix in late 2004 the shares had fallen sharply as they have today I mean they've fallen over I can tell you when and where they fell I have it all out.

29:26Yeah. Why, by the way? I went through each stock for the max drawdown. So Netflix, more extreme. Tell me, let's talk. I'm sure you've lived it. But it was more extreme than NVIDIA. It had two 80 % drops. One in 2012. You can tell this story about it really messed up its... Yeah, Quickster or something like that. Quickster thing, yeah. And then the other, 2022. so the post-covid hype um and this is actually when you got in i think uh with the horizon by exactly yeah it was down it was down peak to trough or something like 75 percent um yeah it's crazy and like you know the current one now as well is down i think 45 maybe at its worst i think it's had a bounce back since but yeah it's it's not the company i would bet against um we've seen it take multiple beatings and get back up which is uh which is not could not couldn't agree more i mean nobody has ever successfully bet against reed hastings i'm just looking here at horizon it's up 243 percent since i bought it for the service um and i bought it pretty much fortunately at its low point august 08 uh just because i'd followed it for so many years it was again it's betting against that management team um has never been a solid long term idea just hasn't um at the time when david recommended competition was intense intensifying as it is today uh so he wasn't just buying because the stock had become cheaper he believed the business continued to strengthen despite the declining share price as i believe today is the case also but his most prophetic recommendation came in 06 where he openly acknowledged that dvds through the post would eventually be replaced by what we all do now through the over the air flying through the air into our television or through a fiber optic um and today that sounds like no insight at all it's like what are you talking about of course but don't forget you when you're in a moment and that technology isn't there it's very difficult to say yes this will be everywhere um if you get back in a time machine and go 20 years backwards you'll see why that was visionary not only from the netflix management team but from david gardner who said that that's going to go they're going to deliver dvds through the internet and his insights was that netflix did not have to disappear with dvds and indeed they did not as we all know and And I would take Hazardly Guest at 80 % plus of the people who listen to this podcast give a little bit of their wallet over to Netflix every month.

32:06And the company's brand and its subscriber base and its viewing data and reputation for convenience could and did transfer from physical discs to streaming. And so by late 06, Netflix had more than 5.6 million subscribers. I mean, they do more than that in a quarter now. And quarterly revenue had risen 48 % and profits had doubled. And David also believed Netflix possessed one of the highest net promoter scores in America. And its customers were basically its salespeople. They were telling everybody because it was so good. And then just finally, at that time, as we look at that recommendation before it went on to grow as it did, Walmart had said, right, we're done.

32:48We're getting out of DVDs by mail. So when the biggest, arguably most iconic American brand who have done so many things well in retail decided, ah, we're done. And when Amazon had declined to launch a competing service in America, Netflix stood alone in what looked like an unappealing market. Because if those two aren't doing it, it's kind of squeaky bum time. You're like, hold on, is this business model even a model? but um netflix survived those challenges from much larger companies and continued to gain scale and and again david understood that the that the envelope was temporary but the customer relationship was permanent and netflix uh was never really selling or i should say sending dvds lending dvds to the post it was just what it was doing was selling a convenient access to entertainment um backed by this brand that people loved and and and that is why it is five of the 10 top 10 recommendations that he's made over the years yeah absolutely and it's look there's lessons to be taken from this as well you know like i the david quote we always it's become a new quote in the podcast over the last couple of months what goes up must go upper uh yes it's very much thing but beyond that like you know it's just a realization that the truly best in class stocks can compound year on year for decades do you know what i mean yes i'll always remember bill man uh telling me you know if you walked into any finance class in america and told the professor that chipotle mexican grill would compound cash flows at 20 a year for the next 20 years he'd tell you to get out with the kick up the hole probably but that's what it did and you know yeah in researching and finding the best of the best and doing that work that's all we're out to do um so yeah and and the other thing and i think this is a lesson you can take for like your own personal portfolio and a big one here is that look how many times he repeats himself within this top 10 do you know what i mean you don't actually really have to go outside of your portfolio for the next best investment idea a lot of times it might already be there and it's an awful lot less work for you to do you don't have to go find the next shiny stock if you're still confident in the businesses you own if nothing has changed if you still believe the long-term story then reinvest and keep going with the same stocks as well and like okay you're changing your you're changing your you know your average price point your average entry point for these businesses but like if if they have the same potential that you know netflix did no six it doesn't matter so So, yeah, that's right.

35:33In fact, speaking of Bill, who will also be on stage in Investicon and who also is an utter master at stock investing, he also said something at last year's Investicon, which was the day you know least about a company in the lifetime of its own ownership, of your ownership of that company, is the day you buy it. Like, it is day one. You will watch that company effectively like a hawk as long as you own it. Your ears will prick every time you hear its name when you become a shareholder. And the day you know least about is day one. So it stands, the point you made completely stands to reason. And very often the best investment is something you already own.

36:12And we all live that. Like you buy a home. A lot of people buy a home if they're fortunate enough to buy a home and they invest in that home because it is the best investment that they can see for their cash. And it's a point well made, Mike, and I completely agree. And you know from Horizon that I have a long watch list of businesses that I keep an eye on and properly watch. There's probably between 30 and 50 stocks in there. But when I go to buy a new position every month, more often than not, I buy one of the ones, almost always buy one of the ones I already own. And the reason I do that is because I understand those businesses the most.

36:48And I understand my watch list the second best, and then so on. So it is an absolute reality. So the next one I'm going to talk about comes fourth on the league table. So we did NVIDIA and Netflix. And I'm going to talk about the company that probably everybody knows. Anybody in the first world knows this business. And if they're not customers, they know it very, very well. And it is Amazon. And he, David, recommended it in September 2002. I mean, come on, folks. We're talking 24 years ago. and he recommended it for the Fool's Real Money Portfolio in September 1997. I remember that. So he recommended that stock and that's not on the scorecard I just called out because that probably is the biggest number.

37:39We wouldn't have time to read out how many percentage points that's up. But he recommended that almost 30 years ago, only months after its flotation. He recommended it again for their Stock Advisor service in September 2002, following the collapse of the dot-com market. Again, Rome was on fire, and rather than run out of the city, he ran in. Do you want to take a guess at Amazon's max drawdown from peak to trough after the dot-com bubble burst? Oh, after the dot-com burst. Yeah. Okay, well, I'm going to go with a very safe number, which is halfway, 50 % is my guess. From the dot-com bubble now, this is.

38:20no in other words what you're saying to me between the year 2002 and now what's the maximum share no no no from the top of its peak at the dot-com bubble oh to the bar yeah oh well way more um i'm gonna say 85 percent 94.4 uh that was a savage i mean there's not many businesses that take a 95 94.4 percent hit and get back up to mine going on trillion dollars back up they did yeah it's yeah you know so so loads of on time since then i mean how many online retailers have disappeared i mean the the nuclear apocalypse that was the dot-com bubble which i lived and invested through was oakley business i i still have a yahoo finance portfolio saved which is was my folio um from the 90s and oh i did a tiktok no less on this when i thought i might do tiktok i i did a screen grab of it and talked through it but uh yeah it is scorched earth and in my folio which was a ridiculous 40 or so stocks only two of them had survived but those two had carried me and made better returns than the S &P 500, while the other 38 or so were dead.

39:40So loads of online retailers disappeared. And investors questioned at the time whether Amazon would survive its debt burden. At the time, the company carried 2.3 billion in long-term debt post.com bubble. And it had yet to establish any record of accounting profits. And I heard someone, might have been one of our former hosts here, was James Dunn on Stock Club once said that if you're going into a, like this was like scuba diving, going into business against Jeff Bezos was like scuba diving. And you both decide you're going to stay below the waterline of profit, if you like. Well, you better check out the size of his oxygen tank because he can stay below the profit line for way longer than you.

40:30and that is in fact the strategy that he did. He was driving the bus. He knew exactly what he was doing and this 2.3 billion in long-term debt, which by today's numbers is preposterously coined, it at that time looked ginormous, but this business he decided was going to remain unprofitable while he grabbed market share. Anyway, what caught his attention... What I can say about Amazon. Yeah, I mean, yeah, what caught his attention was that it survived while most of the competition vanished. It was beginning to move from break-even towards that profitability and even had generated a whopping$120 million in free cash flow in the preceding year after all its interest payments.

41:12And he saw much more than a bookseller. And I've opined on this in previous podcasts where I lay on a beach in Australia and read that newsletter out to my girlfriend, who's now my wife, going, this guy in America has recommended Amazon. a bookseller and its market cap is 6 billion. I remember that conversation. And since then, Amazon has built for massive businesses. And we've discussed that for so many podcasts. But books were just the entry point. Once Amazon had developed the infrastructure and the trust required to sell books online, the world was its oyster. It used the same system and machines and robots and factories and what not to sell egg whisks and ice machines and books and bridges and whatever else you needed, a new pair of shorts.

42:02And he could not, David could not have predicted Amazon Web Services or Prime or indeed its third-party marketplace. But he did recognize that Jeff Bezos was building an organization capable of repeating this opportunity. I'm quite sure, I might ask him this at Investacon, i'm pretty sure jeff bezos came to david for advice he certainly interviewed him but it was a very raw interview in the late 90s i remember it relatively clearly clearly enough to say i know what happened what was said is there for me to kind of fill in the banks but i'll see if he can remember i might hit him with that when we're on stage um but anyway in 02 amazon was was no longer I suppose a promise about online shopping, which was the hot conversation back 20-something years ago.