Transcript of The Rule-Breaking Investor: David Gardner's Best Advice for New Investors and Entrepreneurs

On today's episode of Right About Now, I talk to co founder of the Motley Fool. Yes, that Motley Fool, not the band, but one of the oldest newsletters and one of the best insightful platforms, we're getting stock tips. David Garner and I talk all about building Motley Fool, what stock investing looks like today versus the past. And again, it's not what you might think. Just like my advice, it's more practical, but builds and pays over the long term right about now.

There's a great line from The Grateful Dead, Jerry Garcia. He said, We were never trying to be the best at what we did. We were trying to be the only ones doing what we were doing. And there was The Grateful Dead back in the day saying, Go ahead, bootleg our concerts. We don't care. Nobody else will let you record live, but you can do it for us. They understood open source decades before that phrase was known. So that's another great example. Great line. We were never trying to be the best at what we do. We're trying to be the only ones doing what we're doing. And those are the stocks I'm looking for. This is Right About Now with Ryan Alford, a Radcast Network production. We are the number one business show on the planet with over one million downloads a month. Taking the BS out of business for over six years in over 400 episodes. You Ready to start snapping next in Cash & Checks? Well, it starts right about now.

What's up, guys? Welcome to Right About Now. We're always talking about how to get right in business and marketing in life today. Not six years ago, not six 10 years from now. We're not prognosticating. We're just telling you how you can learn from some of the best. There's a bit of a nostalgia here for me today. I saw this name coming across my desk, and it was probably the best internet marketing of 15 years ago. David, hopefully, share with us everything they're doing today. I still see them, but it was really nostalgic for me as I was starting my investment journey. Then to see this name, which you, if you don't know this name, I'll be surprised. He is the co founder of Motley Fool. He is Dave Garner. What's up, brother?

Thank you, Ryan. I really appreciate the invite. Yeah, man.

Motley Fool. I remember the name caught my attention back in the day, and then I signed up for the newsletter and got, I don't know how many emails a week. It was one of the only ones I actually read. It was great writing. It was insightful on investment strategies, stocks you should consider, and validating maybe things I was seeing or thinking about. I've always respected the content and the brand.

Thank you very much. For us, just starting with our name, The Motley Fool, which comes from Shakespeare because we love those characters, the court jesters who could tell the king or queen the truth. They were the only ones in court who could tell the king or queen the truth, and they used humor. We've always taken that seriously at The Fool. We try not to take ourselves seriously. We take our members and, of course, the subject, the stock market seriously. But I think it's really important to be communicators and to do the best that we can as marketers, but also, of course, as deliverers of advice, which is how we butter our bread.

Wisdom. I like it. I didn't realize that you guys were, did you say 30 plus years old at this point?

Yeah, we launched basically as a newsletter, a print newsletter, back in 1993, $48 a year. The only people who'd pay us were our parents' friends. They felt sorry for us. They wanted to get our business going for us. That's how it started. And then the Internet showed up.

No kidding. God, so many angles we could take with that. What's the investment world been watching it for that many years? How it's changed, the evolution, the Internet, all those. That could be a 40-minute or 40-hour discussion, but you condense it, though, because you've been on a I'm sure, was just a company, which I want to talk about, but just investment landscape in general.

Yeah, it's been remarkable just how much it's opened up and become accessible to all. Truly, 35 years ago, Ryan, there was not free stock charts that you could just instantly update themselves over the course of the day in your browser. Back then, literally, you were paying, I think, $50 a year, maybe. I remember paying for a little S&P Standard & Poor's chart guide, which gave me quarterly little stock graphs that I paid 50 a year for to subscribe to. And that's just one simple example of how information that used to be hard to get and expensive has become incredibly accessible today. I'll give you one more quick example. That is when you trade a stock today. We like to buy at the Mollet Pool. We don't sell much. We like to hold long periods of time. That's the way we beat the market. You used to have to pay 50, $100 just to trade a stock, a commission. These days, we're down to a zero commission environment where people don't really have any friction trading costs. And these days, you can also buy fractions of shares. So if you only have $100 and you want to buy Amazon stock or NVIDIA stock and it costs more than $100, you can do it today.

You can buy two-thirds of a share. Back 35 years ago when we started the full, you had to buy round numbers, usually significant, It would be like 50 shares of NVIDIA if you wanted to enter a position paying $50 to $100 just to buy it. Now it's free with fractional shares. You can build a diversified portfolio of 20 stocks, which is a good number to start with, in my opinion, for $100. It's crazy how much more accessible with better information than we had 35 years ago. So it's been pretty much all great, I would say.

Democratization of everything is what we've seen the last 30 years. The Internet has democratized content, distribution, knowledge. Now AI is doing it on fire, and that's what it is. When I think of democratization, it's opening it up to many, making it freely available. But you nailed the right word, friction removal. We've removed friction from what is a wonderful way to save your money, to invest it, to grow your wealth, which is investing in the stock market and equities and all these other things. The Internet opened the door. It put Mollet Fuller as one of the brands, though, that has leveraged that door, but it also democratized it with the knowledge that you guys shared. I did pay for a certain point. I remember for a couple of years of the membership, well worth it, by the way. But all the knowledge you gave for free in the newsletter, It was incredible. You guys were at the forefront of that.

Well, thank you very much. It's important for us as a business, because that's what we are, a for-profit business, to figure out what's the right business model. We've used several. This is really back in the day. When we launched the Molly Full, people paid AOL $4 an hour just to be online. And if they came over to our site on AOL, we got 10% of that. So we would get $0. 40 an hour for every hour anybody spent on our site. That was an incredible cash flow positive business model from the get-go. And then it all got fee. All of a sudden, people are only paying 30 bucks a month for AOL. So we had to shift our model then, and we shifted to a free ad-supported business to really grow big guns, raising venture capital, etc. Eventually, after the dot bomb era ended in 2001, too, we had to shift one more time. We'd had some serious layoffs. It was a brutal year. I remember Amazon stock, which I had recommended to our members at $3 a share, went to $95. And then in 2001, it went from $95 to $7. That's really how bad the world was.

It was really, really tough. And we shifted back to subscription. And that's really how we make money today, most of all, is off of those subscription fees. Ryan, it sounds like we had you for a couple of years. We lost you. I'm sorry, that's on us, not on you. But for us to run a good business, we need to be giving advice that people want to pay attention to, they want to use, they want it to be winning for them. And I'd be the first to say, if we're not doing that for you, cancel us because we're trying to be a value add for you, just like this podcast is for its viewers and fans. I know you're focused on what's the most value we can create for people in 20 minutes.

Yeah, and that's what we want. To that end, what's good investment advice today? I know that's abroad because you got early investors, mid-investors, you got risk tolerance, all those things. What's the Motley Full pattern for investment today?

First of all, we believe more than anything, you should be investing your whole life. So that means whether you've encountered us today at the age of 19, 39, or I'm 59, doesn't matter to me. We're all going to be investing, I hope, for decades. Take that approach. Most people don't. They think you're supposed to buy low and sell high. Those are four of the most harmful words in the English language. I've written a new book called Rulebreaker Investing, where I basically take that to task early on in the book. We shouldn't be selling or trying to time our ways out of the market. We should just be adding and adding and growing some more and realizing one year and three on average, the stock market will lose value. That's history, and we respect it. If I'm fully invested my whole life, which I have been, that means one year and three, I'm going to be like, Man, not a good year, tough year. The other two years, it goes up, and on average, it goes up 9 to 10% annualized. Over the course of your life, if you do the math, the earlier you get on that train, the better off you're going to be.

You should stay on that train, in my opinion. Visit every depot, every stop, and take it to early retirement, which is where I think a lot of people focus their investing. That's their hope. That's the dream, to retire or retire early. There's a big movement around that today. But I think the stock market is the surest, and yet it's often perceived, Ryan, to be a gamble or crazy. But it's actually, if you just look at history and math, you'll see it really is the surest way to get rich slowly. We're not talking about silly meme stocks or some crypto scheme that we're dreaming up here. What we're talking about is real companies like NVIDIA, Amazon, Tesla, Netflix. These are all companies that are active recommendations of ours for years and years. And what we do is we buy and we buy some more, and we keep holding. That's my timeless Motley Full advice for you in terms of how to invest.

It's interesting talking with David Garner. He is the co founder of Motley Full. Rulebreaker investing. The funny thing is, you just gave a lot of practical wisdom. And it's funny, but practical is rulemaking now because it's come full circle.

That is it, my friend. I'm glad you said that because part of the irony and humor, and keep in mind, you're talking to a fool today, and that's what foolish do. They try to make people laugh. And part of the irony and humor is that what is actually daringly unconventional advice today is be patient, find greatness, and keep adding to it, and that will work. And that will and you'd think that I'd be offering something much more challenging, the idea you have to jump in, jump out, or what are the exact things you shouldn't buy, or these kinds of things. And the truth is that if most of us treated our portfolios like we treat our sports team, that's a key analogy for me in Rulebreaker investing. Here we are, NFL season. People go to the home stadium with the home jersey on. And whether their team wins that game or loses that game, they're going to keep the jersey on. And whether their team has a good season or not, they're going to keep that jersey on. But with their money, with their investing. They don't do that, so many of them. They jump in and jump out.

And they don't just stay faithful and loyal and build up strong association with something they love. In this case, their NFL team. But I would say you should love the company's Chipotle for some of us. Awesome company, Great stock, great product. For women, Lululemon, although men, too, these days, another great example of a great brand, Starbucks. These aren't just iconic brands. These are the best stocks that you could have owned over the last 25 years. And it's this same thing that works over the next 25 years, which is I'm glad we're talking today.

It's so funny, an ad agency called Radical. I think I'm a rule breaker to a degree.

I bet you are. Most entrepreneurs are, my friend.

But if you go really watch my videos and if you watch my strategies and you see me on the floor with Fortune 100 companies, 15 years ago and now startups are medium-sized now. There's a practicalness to my approach that is bold, and I challenge brands, but there's this practical reality of tried and true in marketing with human behavior and triggers and hooks and things. There's a lot of practical in the radical, and so I relate to that, brother.

That's really well said. And I will just say, brother, as a fellow entrepreneur, that this is a great news for you and your investing life as well. Because not only Is that your professional life, Ryan, where you're providing that advice for people and you're basically trying to create great brands and great marketing? That is exactly the kinds of companies that we're looking to buy. Here's a great brand. This is a private company. You can't buy stock. But if I could have bought stock in Chick-fil-A over the last 20 years? Oh, my. I would have. But that's a great example. Within its industry, that's the best brand. But if you take that same mentality to every other industry, Netflix, you're going to see that those public companies end up being the best stocks. And there's one other rule-breakery thing that I want to make sure I throw down in a quick minute here, because what's really key is that most people looking at the stock market investing don't notice the brand or put any value on the marketing and the brand. There is no on financial statements that estimates the value of Apple's brand. So you end up with all of the great brands being so-called overvalued in the world's eyes.

People are like, I would never buy Tesla stock. And Tesla is an amazing global brand. If you take a rule breaker approach along with me, you favor branding and marketing. You recognize not only is it powerful for the company to succeed, but most investors aren't even looking at it. They're looking at some chart or zigzags online. They don't really pay attention to the branding, and there's no brand and price to earnings ratios or how we actually value stocks. So that is a deep Rulebreaker secret that I've let you in on. You already get it because you're living it, but it's great news for investors.

Yeah. Sales happen overnight. Brands build over time. And that's back to the whole strategy of time. This show, I had 99 listeners. Eighty-eight of them were my mom seven years ago. But I did stack the wins. I got better, the show gets better, the guests get better, and you build brand. And then you get the co founder of Motley Fool's team reaching out, and you get to talk to the legends that you respect.

And then he comes on and says that brand counts for more than people realize. And you're like, I already knew that.

Yes. He's singing from the playbook in the back. He's like, Amen in a Southern Baptist Church when the preacher says something. Hallelujah. David, I got a good one for you. What was something fun? The biggest thing you were right about, Motley Fool. We all have bombs, not just a dip, but maybe you really wrong on it and something that you were absolutely right on. Yeah.

Well, I mean, I would say I've been absolutely right on my best stock picks. That's pretty easy for me to say and obvious. But the key is that I'm never the first into anything, but I'm usually early. Before I recommended Amazon, Jeff Bezos owned some Amazon before you and I could. But when they came public in that first year, I recommended it, and my cost basis is 16 cents. And it wasn't 16 back then. It's had stock splits that have reduced my cost to 16. It wasn't ever a penny stock, but literally, that's the cost basis for my Motley Poll members who followed me in, 16 cents. And also really fun is NVIDIA, which I would say has been the best stock of the last 20 years. I also have an identical cost basis. Thanks to stock splits, NVIDIA has split 120 shares for one at this point, several different, but that's the math. And so my cost basis on NVIDIA is also 16 cents. When I talk about what makes me smile, these aren't things just for my portfolio. Our whole business is to share that out with people and say, Here's our next pick, NVIDIA, Amazon.

And what's fun about those, and then I'm going to tell you my dark moment, but what's fun about those is when we recommend them, most people are like, I would never buy that right now. Amazon, they're not making any money. Nvidia, that thing's overpriced. It's too volatile. It's already tripled. And that's when we recommended it. And those are the ones that have gone on to make us... Both of those stocks are literally up more than a thousand times in value. And all I did is get in early and stay way past everybody else. And that's really what I'm talking about in Rulebreaker investing. And that's what the Motley Fool is trying to teach people to be patient. It's easy for me to think about something that went really poorly. In 2001, as everything was going down, including Amazon from '95 to '7, we had three separate layoffs at our company, and each one we were like, Well, we're not going to have to do that again. We let 100 people go. We had 435 employees, and we let 100 people go, and we're like, It's not going to get any worse than that. And it did.

A lot of our business back then, and I'm really speaking to the entrepreneurs here because it's about your business model, our business was ad finance. We needed discount brokers Schwab and Ameritrade to advertise on our site, and they started pulling back. And they had never done that in our history. We're like, What do you mean? We've been killing it for you guys. We're bringing you so many new accounts. They're like, Yeah, but have you seen the market? We're pulling back right now. And then a couple of them canceled altogether. And as an entrepreneur, we learned, young people, the very painful lesson that you need to have a good business model. For us, ad-supported ended up not being stable for a business like ours. We shifted back to subscription, where we started that paper newsletter for our parents, friends. That's really what we're running today, except it's digital. It's not paper anymore. But learning the hard, hard lessons of a shift, an inflection point in your business model. And for us, we're market dependent. When the market gets killed, the Motley Bull is not going to be having a good year. Good news, market goes up two years out of three, and it almost always goes lower left to upper right over time.

And so that's why I love my business, even though we take some school of hard knocks sometimes.

As we close out here, David, any stock tips today? Obviously, if anybody's paying attention to notes, including myself, we got AI friend and everything else, we get the show notes locally here being the show producer. I've got my buy the brands. I already knew that, but stick with the tried and true. Any stock tips, though, or anything under the radar that you could share? Sure.

I'll give a couple. My own belief is you should start with five stocks, not the two that I'm going to throw at. And I could be completely wrong about these two, just so you know. But I have been right for a while, and I think it's still early days, even though these companies in some ways have blown up. So here come two companies that I call rule breakers. That means they're the top dog and first mover in an important emerging industry. The first one I'm going to mention is Intuitive Surgical. Ryan, have you ever heard of Intuitive Surgical? No. I would think not. Most people, when I ask them, say no. And that's why I believe in this company, because this is the leader as we shift from a world where human surgeons cut us apart with knives into robot-assisted, minimally invasive surgery, which started for men with the prostate gland removal for prostate cancer, then moved over into hysterectomies for women, and today is increasingly taking over many forms of surgery. And Intuitive Surgical is a company that has virtually no competition at scale as the whole world shifts to this form of surgery.

So this is a long time holding of mine. This has been a fantastic company. And yet someone as talented and knowledgeable as you, and by the way, most other people I talk to haven't even heard of the company. So that's why I like this stock going forward. And then one other example, and I'm probably going to do this again. I'm going to ask you, have you ever heard of Axon enterprise?

No.

Right. Raise your hand, listeners, viewers. No hands. Most people do not have their hands up.

One out of 400, maybe.

Yeah, exactly. Which is, again, why I favor a company like this. This is another rule breaker. That means they're the leader of an important emerging industry. In this case, once I mention their top product, you'll recognize them. They started as taser. As we move from law enforcement shooting people with bullets to zapping them, non-lethal weaponry, the taser, obviously 20 years ago or so, became an important tool. That same company, which once was called Taser, then merged with the police body camera that many of us see law enforcement using today, as well as armor. And all of those videos that law enforcement is required in many cases to shoot today as they go about their daily business. All of that video is going up into the cloud, and it's available at evidence. Com, where police departments subscribe to that video month in and month out for years and years. This company has, again, virtually no identifiable competition, and it's doing something really important, technological and emerging in this world. Those are two companies that I favor. Now, again, if they both go down over the next year, I'm still going to be holding them. I'm never trying to be making short term calls at all.

I'm talking about becoming a part owner. We're wearing the home jersey at our NFL game. I'm proud to be a part owner of these companies. Thanks to the stock market. I've kept that jersey on for years, and it's going to stay on. Ryan, I especially love companies where if they're Coca-Cola, I can't find the Pepsi. And there is no obvious competitor to Intuitive Surgical or Axon enterprise. Those are two I have for you.

Do you know Christopher Lockheed? Have you heard that name? I don't think I do. He's the category king. He believes in creating categories of one. Got it. A lot of those principles you just described, he's been a regular guest. I I'm not going to the beat of my own drum. I form my own opinions. But if I would say there's one person that I would call a mentor of believing a lot of the same principles and then him crystallizing them for me, you and him would enjoy a beer or a coffee or whatever you have because you think alike. That's great.

Well, I hope he's a stock market investor, too, because- He definitely is. I think we're really well-rewarded. We're not jumping in and jumping out or trying to find a hot stock this fall. We're talking about literally buying shares and then adding more and more over time and just staying with your companies in the same way you stay with your sports teams. I bet Christopher is doing that, and I agree with him that especially we're rewarded when we find companies category of one. There's a great line from The Grateful Dead, Jerry Garcia. He said, We were never trying to be the best at what we did. We were trying to be the only ones doing what we were doing. And there was the Grateful Dead back in the day saying, Go ahead, bootleg our concert. We don't care. Nobody else will let you record live, but you can do it for us. They understood open source decades before that phrase was known. So that's another great example. Great line. We We're never trying to be the best of what we do. We're trying to be the only ones doing what we're doing. Those are the stocks I'm looking for.

Yeah, that's what I want on my tombstone. He didn't live by the rules. He just tried to create the ones that made a great life for him.

You bet you. I share that. It's not going to be on my tombstone, I don't think. It's going to be on yours. But I love the line, and I really do think that the more people, especially entrepreneurs, I think have this feeling, more business people than not have a feeling that what they do matters in this world, that we have agency, that you have free will, that you can create. You've created a company, you've created jobs for other people. Keep going, keep creating. Entrepreneurs have that savvy and that can-do spirit. And that's why I find more great leaders in business than I find anywhere else, including politics, for sure.

You practice what you preach, brother. You've been doing it and providing a lot of value to a lot of people, making a lot of people wealthy. If they took your advice on the Motley Bull. I still have some stocks back from the day that have done very well.

That's what I want to hear, Ryan. That's what we're trying to do for people. Good for you that you held.

Yeah, I'm a holder, not a folder. David, Motley Bull speaks for itself, but give me any links or contacts, anything, ways people can learn more about what you guys are doing.

I'm on Twitter X. If anybody wants to connect with me or follow me on @DavidG. That's my initial, David Garda. @davidgfool. I'm on LinkedIn. If anybody wants to join or tap into me. Obviously, the Motley Full is at fool. Com. Nobody else wanted that URL when we bought it 30 years ago, so we took it. And of course, What I'm most excited about is the book that I spent 15 years writing that just comes out this month. It's called Rule Breaker Investing. And that's basically me leaving it all out there on the field. Another sports metaphor. I'm swinging for the fences with that book, and I'm not going to write any more stock market books. That's All the stuff that I've done and believe. It's short and it's funny, so I hope people enjoy it.

Rule Breaker Investing. We will have links to the book and all of Motley Full stuff here on the show. David, incredible wisdom and really love what you've done the last 30 plus years with Motley Full and appreciate you for coming on the show.

Well, thank you, Ryan. Keep up the great work reaching people and helping them add value to their businesses and their lives. There's a lot of crossover between what you're doing and what we're doing. I see you, brother.

Thank you, man. It It's been a pleasure. You know where to find us, rianisright. Com. You'll find links to the book that David's writing. I can tell you, it'll be great. All that stuff has always been great. David's an amazing writer, so I know you will get wisdom, advice, sound, over time, build your brand, grow your stocks, live your life. We love you for making us number one. We'll see you next time, Right About Now.

This has been Right About Now with Ryan Alford, a RADCAST Network production. Visit rianisright. Com for full audio and video versions of show or to inquire about sponsorship opportunities. Thanks for listening.