On this episode of Motley Fool Answers, Alison Southwick and Robert Brokamp are joined for a very special podcast crossover event by Motley Fool co-founder (and host of Rule Breaker Investing) David Gardner. The hook? The Brothers Gardner will this week release the third edition of their now-classic tome, The Motley Fool Investment Guide, updated and revised for the world we're investing in today. Looking back at some of David's better picks, it's obvious that he couldn't have predicted precisely what would cause a stock like Marvel to pay off. But even without psychic superpowers, there are ways you can take a stab at reading the future.
A full transcript follows the video.
This video was recorded on Sept. 5, 2017.
Robert Brokamp: You bring up an interesting point in the story of Marvel, as well as NVIDIA, in that you probably couldn't anticipate what was going to happen. It's not like you looked at those companies and were like, "I know what's going to happen here. Marvel is going to get into movies and it's going to be huge." So I wouldn't say it was luck, either. Was it your faith in management that they would be able to make good, strategic decisions in the future?
David Gardner: Well, that's a great question, Robert. And yeah, I'm the first to say I don't know how the future is going to play out. So I think we're all kind of playing probabilities or hunches sometimes. But a lot of the time, if you like the person or believe in the visionary who's running a company, like Reed Hastings at Netflix or Jeff Bezos at Amazon, if you're betting on the jockey, I think that even if you're not quite sure when the race is going to end or where it's headed -- like it's not an oval track with one and a half furlongs and there's this home stretch, you're not really even sure where the horses are headed -- you feel a lot more confident if you've got a great jockey. So I think that's part of it.
But I mean, specifically in those cases, I had no idea NVIDIA would become what it's become today. Marvel, I did have a little bit more sense, in that I didn't recommend the stock before it all took hold. In fact, I recommended it the summer after that first Spider-Man with Tobey Maguire film came out. And it was amazing. The box office of that film was larger than the market capitalization -- the total value of the company.
Gardner: And so I didn't know that The Avengers would show up one day, or Thor would end up being a good movie franchise. But what I did know was that it seemed probable that there would be a Spider-Man 2 and that there might be, with 4,700 other characters, like The Incredible Hulk, and the list goes on, there might be some more here. And so it worked out really well in that regard.
But I think the key here, and we've been underlining these points and we'll just do it again, is that ownership mentality, where you're just wearing the jersey and staying with it unless you see the company not doing good things in the world.
And maybe that's the last point -- and then we have one more story, so I'll be quick here -- but maybe that's the last point about ownership mentality. If you own something, don't you want to feel good about that thing and what it's doing in the world? So if you have an ownership mentality, I think you also are buying companies whose purposes, their products and services, you approve of, whereas I've sometimes said in the past, make your portfolio your best reflection of your hopes for our future. And I think that's really important that we make sure that the dollars that we're investing are aligned with the world that we're trying to create, because, darn it, your dollars are, in a small way, helping to create whatever the future is.
And so the ownership mentality has you saying, "I'm going to invest in things that I believe in, and when they win, I'm going to feel not only much richer" -- and with these companies we're talking about today, you have been -- but you're going to feel great about the world now, with Netflix having undermined a lot of the cable TV companies, or Amazon having added a lot of value and efficiency to my life, anyway, as a lazy shopper. And the list goes on of how good these companies are, and what they do, and the people who work for them, too.
David Gardner owns shares of Amazon and Netflix. Robert Brokamp, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Netflix, and Nvidia. The Motley Fool has a disclosure policy.