Buy and Hold: Taking the Bad with the Good

What about the losses in long-term investing? Do the math and see for yourself.

Mar 14, 2014 at 4:15PM

Co-founders Tom and David Gardner look back on The Motley Fool's journey with Amazon.com (NASDAQ:AMZN) since first purchasing it in September 1997. The brothers discuss the ups and downs they've seen with the stock, now a 100-bagger for the Fool.

Amazon rose, then fell, then rose again -- but some multibaggers plummet and never come back. In this video segment, David discusses the inevitable losses that come with the Foolish brand of long-term investing, and how the gains make it all worthwhile.

Not every CEO can be as successful as Jeff Bezos has been with Amazon.

But over the past two years, Motley fool co-founder and CEO Tom Gardner has made it his personal mission sit down with dozens of the world's brightest investors and business minds on behalf of his Motley Fool ONE members — we're talking true American legends like Whole Foods co-CEO John Mackey, Costco founder Jim Sinegal, and even Vanguard founder Jack Bogle — as he scours the globe to find the next great company to provide Amazon-esque returns.

On March 20th, this "crown jewel" service will reopen to new members for only the third time ever. And to celebrate, Tom would like to offer you a front-row seat to watch these visionaries share the keen insights and unparalleled business acumen that got them to where they are in life.

Even if you aren't an investor, the business lessons you'll take from these conversations are priceless. So please click here to access our Motley Fool ONE member lobby and our entire collection of these interviews absolutely FREE of charge!

Tom Gardner: Now, there are some of these huge multibaggers you've had, that have not come back.

David Gardner: Sure.

Tom: How does that fit into your approach as an investor?

David: Well, I can think about Iomega, which back in the day at The Motley Fool -- as you remember, we were on the cover of Fortune magazine and it was partly a story about Iomega. Celera Genomics was a 9-bagger in six months, and we ended up selling not far above cost.

Obviously, I can always think back on times that I wish I'd sold something that I held.

Tom: But the holds end up mathematically massively outweighing ...

David: Yeah, when you take it all and all. Absolutely.

In fact, I gave this talk internally; you heard this two months ago at our monthly huddle at The Motley Fool. I said, "Rule Breakers has had 32 stocks that have lost 50% or more." That's the Rule Breakers service. I know I'm speaking to some members today. Thirty-two stocks have lost 50% or more. That sounds horrible, and it's not easy. In fact, it's painful, and every one of those I'm accountable for.

The good news, though, is that the 32nd best pick in Rule Breakers is up 160%, so you've got to do the math. You've got to be mathematical here. It's not advanced math, but play that forward and you see the incredible benefits of being happy to occasionally give away a 10-bagger and end up at cost, or suffer a 50% loss because you're holding all these other great things as the world is reshaped by these companies and you're a part owner of them, measured in decades.

 David Gardner owns shares of Amazon.com. Tom Gardner has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Feb 1, 2016 at 5:03PM

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