20 Years Later, Tom and David Gardner Talk Beginner Investing and The MFIG

Tom and David Gardner recently sat down to talk about what they've learned in their 20-plus years helping the world invest better and what readers can expect in the updated Motley Fool Investment Guide.

By Motley Fool Staff – Updated Sep 15, 2017 at 11:15AM EST

Back in 1996, Tom and David Gardner released the first edition of The Motley Fool Investment Guide.

Their aim was to educate, amuse, and enrich individual investors, and to show how anyone can take control of their own finances.

Over 20 years later, their mission remains the same and they've updated the book to reflect what they've learned in the years since, offer up new examples, and add a new chapter on options investing.

David and Tom sat down with Motley Fool Chief Investment Officer Andy Cross for a behind-the-scenes talk about the book and the Fool's investment ideology. Check out the video and transcript below to enjoy that conversation. If you want to buy a copy of the book, click here.

Transcript

ANDY CROSS:

Welcome to a very special Facebook Live. I'm Andy Cross, the chief investment officer here at The Motley Fool. Twenty-one years ago Tom and David Gardner, the co-founders of The Motley Fool, published The Motley Fool Investment Guide that went on to be a best-selling investment book.

And here we are, 21 years later in 2017, and we're excited to announce that today we are releasing the third edition of The Motley Fool Investment Guide updated for today's investors [and] today's market to help them beat the market and invest better.

I'm thrilled, guys. Joining me in the studio here from The Motley Fool's headquarters in Alexandria, Virginia are Tom and David Gardner, the co-founders and co-authors of the new The Motley Fool Investment Guide. Guys, an exciting day. Thank you so much for joining us here.

TOM GARDNER:

Bravo!

ANDY CROSS:

We have some questions that will come in, hopefully, from viewers. We'll just kick it off. [It's been] 20 years [since we first] published The Motley Fool Investment Guide. Who do you think should benefit from this? Who can benefit from the new edition of The Motley Fool Investment Guide?

DAVID GARDNER:

I think first of all we were writing for anybody who has some money. Has some capital. The biggest challenge for most Americans and, in fact, most people around the world is just to have some capital, to have some savings. And you want to figure out what you should do with it.

The good news is there are a lot of people in this world that do have at least some, and I think that that's the most obvious, initial reader of The Motley Fool Investment Guide. You have some money and you don't know how to invest it. You want to make the best decisions with your money.

And I think the reason the book succeeded (and I hope with our revised edition we'll have a great 2017-2018 plus run) is that we're writing, I think Tom, with some jokes in the common parlance of the lingua franca of everyday English. We're not trying to be imposing in any way. We're Fools. We have fun being Fools. And so I think that we are almost The Un-Investment Guide.

ANDY CROSS:

Tom?

TOM GARDNER:

I like that answer.

ANDY CROSS:

Nothing to add?

TOM GARDNER:

I think that's a great answer.

DAVID GARDNER:

Maybe The Investment Un-Guide. The Investment Un-Guide rather than The Un-Investment Guide.

TOM GARDNER:

I think there are a lot of great investment books out there, and there are a lot of great business books out there. Not so many of them are actually built around two things. Long-term thinking. That's what The Motley Fool is all about. We're not interested in what's going to happen in the next three months to the stock market. We don't talk about it. If we do, it's just a sideline comment to answer in an interview. Somebody's urgent need to know what the S&P 500 will do in a short-term period of time. It's just not interesting to us.

So we're always looking at businesses and we think the subject is tremendously fun and interesting. I mean, here we are on Facebook (FB +2.03%). It's been an unbelievable investment. It sits in front of the faces of billions of people who are using this service and it's been an incredible investment. In fact, I think it will continue to be an incredible investment, but that's just an example of how we think Foolishly, which is that so many of the greatest investments are right in front of us.

They're our monitor away from us, now, as the world gets even more convenient. As everything gets delivered into our house for free, we're getting a showcase of great companies coming into our house on a daily, weekly, monthly basis. And if we take our savings and invest in them, and do a little bit of business research with The Motley Fool to get it done, I think the long-term results are very pleasing. Much better than sitting your cash in the bank.

ANDY CROSS:

Yes. I think Mark Zuckerberg was around 12 when we published The Motley Fool Investment Guide.

DAVID GARDNER:

Yes, and in 20 years Mark Zuckerberg will be Jeff Bezos's age.

ANDY CROSS:

Isn't that amazing?

TOM GARDNER:

Which is an amazing thing. Two of the greatest entrepreneurs in American history and they've been right there with us all the way through The Motley Fool Investment Guide. I see Mark reading the book as a 12-year-old, don't you? I can see him with it.

DAVID GARDNER:

I'm not sure we have the still image that would prove that, but I believe that spiritually or directionally...

TOM GARDNER:

Through the miracle of modern technology, I believe we can produce that photo.

ANDY CROSS:

That's right. In 20 years a lot has changed when you think about the real shift, especially recently, toward passive indexing investing. Do you have a lot in the book about indexing? And just thinking about our own style and the evolution of the investing approach that you two follow, what has changed? What gives the individual investor an edge and how do we think they can benefit from [reading] The Motley Fool Investment Guide?

DAVID GARDNER:

First of all, I think the access to information is much better than ever before. I mean, 20 years ago was far better than 20 years before that, but it was a much different world back then. I remember, for example, Starbucks would not allow investors to listen in on its quarterly conference calls. And for stock market investors, you know this, and if you're not one yet, we hope you read the book and become one.

You'll discover that you can actually listen in on the conference calls of every single public company and hear the CEO answer questions on a quarterly basis. Companies report their earnings four times a year. You can listen to it. But 20 years ago you couldn't. Even though technically and importantly for us, you're a part owner of the company when you buy the stock, you were not allowed ... you were barred ... from listening to conference calls. [It's] shocking to think that that was true 20 years ago.

But now things are much better and that's a quick example of how much better the information is. I mean, these days you can find CEO interviews with almost any CEO of any company in America probably taped within the last year for free on YouTube.

TOM GARDNER:

Twenty years ago you were going to the card catalog at your university or local library. The other thing that's happened is costs have come way down. Transactions at the discount brokers (the few that existed 20 years ago) ran $50 or more per transaction and oftentimes it was actually just related to how many shares you bought, so the price went even higher. And so those costs — the cost of information. David mentioned how much information there is. Just what you would have to pay to get the S&P stock guide. That cost a lot of money and it came once a month. Now it's free and updated in real time.

Most of this is very good. A tremendous amount of information and very inexpensive access to the markets is 95% good. It's 5% bad if somebody is using that information and those low-cost transactions to day trade. To get frenetic with their approach. Those people end up with a really difficult time with their tax accountants at the end of each year and also subpar returns.

ANDY CROSS:

So for someone who might be relatively new to investing [and just starting out], is it much different than [it was] 20 years ago? Just the act of starting out? How do I think about starting to invest? I maybe have some capital, David, in my account. I want to start saving and investing the Motley Fool way. How do I...?

DAVID GARDNER:

Yeah, it's so simple.

TOM GARDNER:

Come on, Andy! Come on! You can do this.

DAVID GARDNER:

You have started, right, as our chief investment officer?

ANDY CROSS:

My kids are just starting right now...

TOM GARDNER:

OK, that's awesome. How old are your children?

ANDY CROSS:

And by the way, we have two-and-a-half and six. I said five the other day.

TOM GARDNER:

What is the two-and-a-half-year-old doing?

ANDY CROSS:

By the way, I said five the other day on another Live Chat and I got...

TOM GARDNER:

And you got in trouble at home. I heard that. But what is the two-and-a-half-year-old doing to advance their investment portfolio?

ANDY CROSS:

They are helping me identify shows on Netflix (NFLX 0.42%).

TOM GARDNER:

Awesome! That's so good. That's so good.

ANDY CROSS:

A lot of toy research. There's a lot of educational toy research.

TOM GARDNER:

You know, so much of Netflix is kids watching, and if parents watch their kids, they can find some great stocks, and there you go. Sorry. David G, how do you get started?

ANDY CROSS:

Like just starting out. Is it much different than it was 20 years ago? Easier? Tom mentioned just like...

DAVID GARDNER:

Yes. What you want to do is you want to open up an account, and put some money in the account, and then figure out what stock or stocks you want to buy first and then start.

ANDY CROSS:

What about someone who doesn't know anything about investing? Like they have money. Maybe they have some index funds. Maybe they have a 401(k) that's invested in index funds, but they want to do better. If they're scared, how do we talk to them?

TOM GARDNER:

I would say the first thing to do is to take the amount of money you have and type that into a calculator or an Excel spreadsheet and just run that forward growing 2% a year or growing 8% a year.

ANDY CROSS:

And 2% is barely what cash gets nowadays.

TOM GARDNER:

Yeah. And you're not really getting that, even, today. But just run it forward at 2%. Run it forward at 8%. That's scenario one.

Scenario two would be now just add a little bit of money each year. That's going to have to take you to an Excel spreadsheet. It's going to take a little bit of time, but what you're going to see is, "Oh my gosh, I'm leaving so much savings, so much capital on the table by not investing."

And those who begin investing early on are the people at the age of 40 who are really choosing their career. Because they have this savings to be able to make the tough choices. If they don't enjoy their job. If they want to go start a company. If they want to go back to school. All those options are open if you get started [investing early], and I think the simplest, first step is just to run compounding on a calculator.

If that sounds odd and you don't know what to do just Google it, and you can figure out exactly how to run forward your savings and see what happens. And you're going to see the curve begin to go like this in your investment portfolio, and it's just going like this if you leave it in savings.

ANDY CROSS:

So thinking about that, Tom, there are lots of ways to be able to do that. Why is it we think investing it in public companies gives the investor the best opportunity to hit that hockey stick curve over the long term? Over 20 years?

TOM GARDNER:

It's easy to get worried about where the market's going and what's happening without even understanding what the market is. The market is a reflection of all of these businesses, in the U.S. and around the world, trying to serve customers something better at a lower price or at a reasonable price. An attractive price.

And so when you invest, you're betting on humanity's ability to innovate. And if you look at what's happened since The Motley Fool Investment Guide came out — the iPhone wasn't out there. What were we using? What was your first cellphone?

DAVID GARDNER:

Motorola (MSI 2.65%).

TOM GARDNER:

Motorola. And what was happening on your Motorola flip phone? Could you text?

DAVID GARDNER:

No. It was just a phone.

TOM GARDNER:

Yeah, it was just a phone.

DAVID GARDNER:

I was a big Palm fan.

ANDY CROSS:

Yup.

DAVID GARDNER:

The Palm Pilot. Loved my Palm Pilots for about 10 years, but yeah. Things are so much better.

TOM GARDNER:

And so what you're looking for, and what David has done so well in his investment approach is finding these emerging companies that have the potential to change the way we live, and to invest in them, and not worry about what's going to happen in the next six months or even a year and a half. Just put your money in as if you're putting it into a bank.

David's cost basis in Amazon (AMZN +0.81%) is $3.21 a share. The stock is at $950. So what happens when you do that again and again, and is it really obscure, difficult, complex, Greek, alphanumerics trying to figure this all out? No. It's looking at Amazon and saying, "I believe in their future. I'm going to get a diversified portfolio and I'm just going to let that business go."

ANDY CROSS:

David, Tom referenced a little bit of your style. Just thinking about the last 20 years, what things have you learned since the publication of The Motley Fool Investment Guide and how has your approach maybe evolved?

DAVID GARDNER:

I developed my own style called Rule Breaker Investing. We now have the new version of the book updated with some more information about that, and I have a podcast called Rule Breaker Investing.

But I didn't know all that. That wasn't in my head, necessarily, back when we first wrote the book. And just to be quick about it, I would say that I'm looking specifically for companies that are disrupting industries. Making new products and services possible that weren't before. That serve the world better.

Something like Netflix which wasn't around 20 years ago. It was close. Somewhere around there. Something like Priceline (PCLN +1.34%) which has been a tremendous stock. Name Your Own Price is how it started, but just the whole idea of e-commerce, frankly. That you could book tickets or buy stuff on eBay (EBAY +0.08%). Those things were barely coming into existence when we first wrote.

But as Tom and I, and many others here at the Fool (you, as well, Andy) certainly we've all kind of gotten more and more aware of finding world-beating companies. I think we were probably much more about math back then and not thinking as much about what companies do or who is running them.

ANDY CROSS:

Right.

DAVID GARDNER:

And today it's so important to all three of us that we be invested in companies that we admire. That we think do good things and that are run by excellent people.

ANDY CROSS:

Tom, let's double-click a little bit on that. I mean, not physically double-click but just talk about it. Who runs the businesses? One change we made in the book is we talk a little bit more about culture and the people who run the [companies]. How has that shaped so much of your investing thinking, specifically around cultures of organizations and leadership teams over the last few years?

TOM GARDNER:

It's another example of why there's so much more information today, because of a service like Glassdoor, where you can go and read what anonymous past and present employees think of the organization that they're working for or worked for. And of course every company is going to have some negative reviews that are out there, but you're going to get a really good read on how that business is run. So almost if you get a little bit beyond the rating and just read what people are identifying as the problems, you get a well-rounded view of that business. What their external challenges are and how they're facing them as a team.

So I think it starts for us with the CEO and with the board, and the founders, and how much stock they own. Because if they own very little stock, maybe they're not as aligned with our long-term interests. If they have a lot of stock holdings in that business, they're like us. They're long-term shareholders and they want to see that business succeed.

So we start with looking at the insider ownership of the business. Study who the CEO is. Look at what the culture looks like. Those are the engines, often, of long-term growth. You can have a great product or a great competitive advantage for a two-year period, but you need to have a culture of innovation that's going to drive change over the next 20 years to win big.

DAVID GARDNER:

And we're speaking to people who today have tapped into Facebook Live. Hi there! And it's ironic, perhaps, that one of our best stocks has been... Tom, one of your best picks in the last 10 years has been Facebook, and so what you just said about finding great people that own a lot of stock, we happen to be using a service right now to reach people through one of your best stock picks, and one that really explains how we think about investing at The Motley Fool.

ANDY CROSS:

We are so focused on understanding the businesses that we're investing in. Investing in these for many years. Not trading [them around]. We talk a lot about this in the book — the power of buying and holding. David, you go from Amazon at a cost basis of $3.21...

TOM GARDNER:

Down to the penny.

ANDY CROSS:

...to where it is today. You only get that by holding. Just talk a little bit about that. That's been such a big part of our investing style. And Tom, [you], as well, too. Just the discipline of buying and holding these positions and why that's so important.

DAVID GARDNER:

I got to talk about a good example of this on Motley Fool Answers [this week], which is another one of our Motley Fool podcasts. And talked about NVIDIA (NVDA 1.40%), because I first recommended it in 2005 at $6.61 a share. It went from there to $40 two years later. And then in the following year it went from $40 to $5. So $6 to $40 to $5. Then it went up to $28 a couple of years later, and then for five years it didn't come back. And that brings us forward to 2016, the start of last year, when NVIDA then tripled...

TOM GARDNER:

A pretty good year.

DAVID GARDNER:

Yeah. It tripled. It was the number one stock on the S&P 500 and then a lot of people thought, "Well, it tripled last year so clearly it can't keep this up." And the stock is up another 60% on top of that this year. So from 2005 to 2017, we've held it 12 years so far. We continue to hold. It's been an absolutely outstanding company. Forget about investment. But the investment, itself, is up 25x in value, but you had to go from $6 to $40 to $5. Sit there at $28 for five years. That's a great example of what we're talking about.

TOM GARDNER:

Would you buy NVIDIA now?

DAVID GARDNER:

Of course.

ANDY CROSS:

Tom?

TOM GARDNER:

Absolutely. Artificial intelligence. I mean, here's the beauty of the great businesses and something that I've learned from David over the years, and that is that the way to really look at the market is oftentimes the great businesses are just going to get better as years pass. You get too obsessed with what's happening with the stock price, naturally, because that's the easy score to see. It's harder to see how the business is doing if you haven't learned how to read financial statements. But if we can train ourselves to look and say, "Gosh, I still believe in this company. The stock may go down 30% next year. Who cares? I'm looking five and 10 years forward."

Unfortunately you don't get 25-baggers as David did with NVIDIA in a year, or in two years. In fact, you get a 25-bagger over 12 years and you have multiple times where either you're down, or it's flat for long periods of time. And that patience across a diversified portfolio is going to give you enough of those huge winners that you're going to crush what it gets you to leave your money in the bank, or buying bonds, or buying real estate. You're going to crush those returns with the stock market over a 10, 20, or 30-year period.

ANDY CROSS:

Tom, you and I have talked about this before, but Starbucks (SBUX 0.10%) went public I think four years before we published the last The Motley Fool Investment Guide. It's been a monster stock and performer over that time period. Annualized returns probably north of 20%. But there have been times. Just the ups and downs of the markets — the business, the market shifts, headlines...

TOM GARDNER:

The stock was down 85% in 2008 and 2009.

ANDY CROSS:

And you only get the returns if...

DAVID GARDNER:

And I think the key to that is just that Starbucks as an actual business... If you were to look at its numbers year by year (the growth in sales, the growth in profits), it's been pretty steady. It's been remarkably strong...

TOM GARDNER:

Incredible.

DAVID GARDNER:

...but it's been nothing like... And the same is true of NVIDIA. The actual businesses, themselves, which is what we are buying and which we talk about in The Motley Fool Investment Guide are generally pretty stable. It's human perceptions of them that are going like this. We just don't play that game, and that's what we teach you in The Motley Fool Investment Guide, is to invest in businesses and think about what you're invested in and watch that far more often than you watch this.

Although, then looking back 10, 20 years you look back at this and you're like, "Wow. It kind of looked like that." Things smooth out over time and if you find great companies it does go like that. And when you're tied to that and making money with it, you have a better life.

TOM GARDNER:

Let's take us back to the beginning of The Motley Fool Investment Guide and when it was first published, and David identifying our investment approach as more mathematical. Not as much qualitative. Not as much product. Competitive advantage. Market plays. Who's the entrepreneur?

Let's do a little math now and let's put it in the context of what really happens in investing. Let's say you have 30-stock portfolio. You're going to have five, six, or seven of those investments that fail. You're going to [think], "I thought Fitbit was going to be successful and it's down 40% for me." So let's just take Fitbit and say it's down 40% from the beginning to the life of the investment. Now let's take a 25-bagger. What's the percentage gain of a 25-bagger versus a 40% loss? What is the percentage return of a 25-bagger?

DAVID GARDNER:

Twenty-four hundred percent.

TOM GARDNER:

Twenty-four hundred percent. So how much does that negative 40% really impact your overall accumulation of wealth? It's meaningless. Your losers become less relevant every year that they fail. That's the reward for you.

But we're not here — The Motley Fool's never going to say that you're going to put together a 20 to 35-stock portfolio and you're just going to have a collection of Starbucks, Facebook, Priceline, and NVIDIA, and it's going to be incredible. No. You're going to have losers in there, as well, but the losers are going to be so small relative to the winners if you have that long-term perspective and you're focused on finding great businesses.

Fools around the world have been benefiting together. David and I have learned more than anyone else in our community, or as much as anyone else, from being able to read the work of so many investors around the world. But you get into the community with us and your returns are so superior to the other alternatives.

ANDY CROSS:

Tom, you and I talked a little bit about David's Rule Breakers approach. You and I have recently spent a lot of time studying small companies. I know a few years ago when you started Hidden Gems, our small-cap service here at The Motley Fool...

TOM GARDNER:

I love it. A few years ago. I love it. Time just flies. I think it was 13 years ago.

ANDY CROSS:

Exactly. And we have a chapter in the book on small companies. Talk a little bit about the benefit of small companies versus large companies. We talked about wonderful businesses (Facebook, NVIDIA, and Starbucks). But small companies also give an investor an edge that [investors in] larger institutions can't necessarily get.

TOM GARDNER:

Sure, and David and I both love small companies. I'll just say that the failure rate when you're investing in small companies is higher. You're going to have more companies that don't succeed out of a group of 30.

DAVID GARDNER:

By the way, I want to just make sure that people know. You've said "failure" a couple of times. And from our standpoint we're like, "We failed. The stock went down." But I think some people might hear that as like, "These companies are completely going out of business. Or out of 30 you'll have five or six failures."

But the truth is I don't think we've ever picked a stock that's actually... Well, I've gotten close.

TOM GARDNER:

Yeah.

DAVID GARDNER:

I've gotten close. But when we say failures, we often mean that you've lost money.

TOM GARDNER:

It's rare.

DAVID GARDNER:

And that for us is a failure.

TOM GARDNER:

I totally agree. Thank you for clarifying that. But even in the mathematical context (and this will be very unusual to think and hear this), if a stock is down 40% or down 99% for you, if you've got a good, well-rounded portfolio, it's basically the same. It's just a meaningless small amount of money once it's down at that level and stays down.

But yes, failure is about losing money when you make an investment. None of us want to see that happen. But if we get way too cautious and don't take any risk in our lives, we stick our money under the bed or we put it in a bank, and that bank is returning us nothing relative to inflation. And we don't get any of the compounding power of investing in entrepreneurship.

So when you're thinking about making the best long-term investments you could, you should open some of your portfolio up to smaller companies. And these companies are usually not as well known. And you have to have a team, I think, to do that research. An investment club. Be online with us at The Motley Fool. Be a subscriber of some of our small-cap services.

When David mentions NVIDIA, or even when he mentions Priceline, in the very early days of these companies the average person had no idea what they were. They were not relevant businesses. But these are the acorns that can grow into giant oak trees. Starbucks has compounded north of 20% a year since it came public in 1992. It wasn't that well known in 1992 and now everyone knows it. So that's what we're out there looking for, is those great compounding machines that are well run businesses that are just under the radar.

I mean, here's one as an example that's a little bit above the radar, now, but I still think (and I think David does as well) it's something David recommended first, and it's a company called iRobot (IRBT +0.00%). Right now they're [focused on producing vacuum cleaners], but home automation is going to be such a major trend, and if you can get onboard with a great investment and hold it for 10, 15, or 20 years like that...

DAVID GARDNER:

Sometimes things are kind of quiet and people don't even realize that these companies are out there, but let me give a fun trivia question. Put it out there on Facebook Live. Of the top-grossing apps this week (that means the ones that make the most money), I'll give the top three. I'm going to leave the top one blank. That's the quiz. Number two is Netflix, because people are subscribing and they're paying through their phone and watching Netflix. Number three is Candy Crush Saga.

TOM GARDNER:

Still. Incredible.

DAVID GARDNER:

I'm springing this on you guys, so I wouldn't expect that you would know it, but part of the reason I'm asking this is because I think it's kind of cool to know. There's a public company that not that many people know about that has the No. 1 app that's a stock pick I made about a year ago. I like it just as much today. It's up about 40%. It's been a market beater. The company is Match Group (MTCH +0.00%). The ticker symbol is MTCH. And the No. 1 grossing app in America today is Tinder.

A lot of people don't know that. A lot of people don't know Match Group. I'm not necessarily talking about the stock, but you can be a part owner of it, and darn it (not me) but a lot of you are spending quite a bit of money on Tinder, so you might want to consider Match Group.

ANDY CROSS:

Thank you for your questions. We have a few coming in. We'll go right to the Facebook Live questions. [Karl] comments, "Howdy. I ordered it last night." [Karl], thank you very much. Talking about the book, by the way. Book.Fool.com. You can find more information on the book there. That's Book.Fool.com.

Michael asks, "What's your long-term outlook for big-box retailers like Home Depot (HD +0.57%), Lowe's (LOW +0.99%), Costco (COST +1.23%), Wal-Mart (WMT +0.41%), etc.?" There's a lot of disruption going on in the retail space. Tom, thoughts on the big-box retailers?

TOM GARDNER:

I have a pretty dim view of the opportunity for those businesses. Again, those locations (and I'll separate Home Depot, actually, out of them). But those businesses were located based on foot traffic, or driving and parking to buy. Now the momentum toward the vast majority of those purchases is to have them mailed directly to the home.

And Amazon has built its locations up around distribution. They've built the warehouses out there so that they can get things to residential areas as quickly as possible. It's very difficult for Wal-Mart or Target to effectively compete with Amazon at this point to get stuff into your home at anywhere near the prices that Amazon can. With anywhere near the number of ratings that Amazon customers are putting in. And Amazon Prime is such a powerful subscription feature for them. So that's difficult.

Home Depot is a little bit different. This is the way I would think about it if you're thinking about investing in these companies. What do I want to drive out for? And what do I think other people really want to drive out for? Like getting something from Home Depot ordered in? Maybe furniture. I don't know. Wayfair (W 2.73%) is a good competitor to furniture companies, but overall, they're in a very difficult position going forward. I would not be allocating much money there, at all. David G.?

ANDY CROSS:

David, do you have any response?

DAVID GARDNER:

I don't have a lot. I like what Tom said.

ANDY CROSS:

Thank you for that question, by the way, Michael.

DAVID GARDNER:

I mean, some are different. Not all are the same. Tom gave a good example. What would you drive out for? I would say that Tiffany (TIF +0.00%), which I guess you could say is a retailer. It's definitely a box. I don't know if it's a big box, but I think that's an example of a store that's pretty well defended against the internet. Or Best Buy, surprisingly, has been a very strong company in the last few years. I wouldn't have expected that. In fact, I recommended it some years ago and then sold it disconsolately, and I think it's probably above where I was.

So everything is different. It's sometimes good, as Tom said, to getting to know these different ones. I don't necessarily love the general category of things to comment on big-box retailers, per se, because I think every company is a unique situation. But I thought that was an excellent response. I don't think I have many recommendations in so-called big-box retailers.

TOM GARDNER:

Yeah.

DAVID GARDNER:

I think my wife owns some Lowe's. It's been a good stock over the years, but that's kind of like Home Depot, the store we'll go out for.

ANDY CROSS:

Well, the underlying technology behind the e-commerce explosion [brings] a lot of investment opportunities. B2B, business-to-business opportunities there that we're looking at. There's lots of ways in new retail to look at those investment opportunities.

TOM GARDNER:

The nice thing is that rarely in a case like a Wal-Mart or a Target (TGT 0.89%), in that zone, do things fall apart so quickly. So you do get a long time to look. Institutions own a lot of those businesses. So it's not like everyone's going to run away from them overnight. [And] this is another David point over the years, is you really want to invest in what you think is going to be relevant in the future. Like where is the tide going?

So when it comes to retail, I know both of us also love this company, Shopify (NYSE: SHOP), that's helping more than a half-million merchants around the world create their online store with a tremendous amount of data analytics. A lot of features that Shopify has put into that. And that feels much more like the future of retail to me than that I'm going to get in my car, drive out to Target, roll a cart around aisle-to-aisle, purchase certain items, stand in line, and then drive home.

ANDY CROSS:

We just touched a little on this. Doug asks, "What new technologies are you guys excited about?" Doug, thank you for the question.

DAVID GARDNER:

I would say that technology is what's driving business today. It's almost innovation that I'm looking for in every company and every industry. And it takes so many forms it's hard for me to say. I don't want to say something like, "Artificial intelligence!" I mean, it's true that artificial intelligence is going to be really important, and so are about 53 other technologies. [Doug, you asked a good question].

I guess if I were just to throw one thing out, it may be a lame answer so far. CAR-T biotechnology answers to cancer. I mean, that's a very profound thing that's happening right now, which is that we're starting to figure out that by taking some blood out of your body, tweaking what goes on there, and putting it back into your body, we can remit cancer. Huge potential there. So companies that are doing that. One was purchased for $11 billion last week by Gilead Sciences (NASDAQ: GILD). I have to be fascinated. I think we all are — should be — in the medical gains that are occurring right in front of our very eyes.

There's a great line from the sci-fi writer William Gibson. "The future is already here. It's just not evenly distributed." So a lot of times people don't realize what is happening in the world, and it's partly because it's not happening in some countries and it is in others, or in some groups of people but not others. But there's an amazing future happening right now as we're speaking, and one thing that Tom, Andy, and I are trying to do, and The Motley Fool Investment Guide can help you do, too, is to think about that and to ask yourself, "What do I want to be invested in? What should we be investing in?"

TOM GARDNER:

I'm going to throw one in which is automation. It's so profound. If you see how automobiles are built by Tesla (NASDAQ: TSLA) versus what we associate with seeing [in] a manufacturing facility for automobiles. Watching the nightly news 15 years ago and what it looked like when they would course through Detroit and show you.

What does an Amazon warehouse look like? How are those items picked up, packaged, and mailed out? The level of automation at the enterprise and the commercial side of business is incredible. The level of automation coming into the home for a tiny company like Control4 (NASDAQ: CTRL) that's helping higher-end residential areas to get automated and that's going to roll down. Prices are going to come down rapidly.

So I'm not going to be surprised if, I'll say, 10 to 15 years from now you are having meals of Michelin chef quality prepared in your house by a robotic arms that hang over your stove, cook the meal, take all the dishes down to the sink, clean all the dishes for you, and all the IP for that meal was provided by a Michelin star chef and all the food arrived in a box from Amazon Whole Foods or other providers, and it made it very simple to eat in a Michelin star restaurant at home every single night at much less expense than it takes to go out and much more convenient.

DAVID GARDNER:

Effectively free. Let's just go for it there. Man is only free...

TOM GARDNER:

You know that's Larry Page. This is Larry Page. Do you want to hear free? This is kind of an interesting one. I don't know to what extent this is actually happening...

DAVID GARDNER:

I had a different point I was going to make. OK, keep going.

TOM GARDNER:

No, no. Keep going.

DAVID GARDNER:

No, no. Keep going. No, no.

TOM GARDNER:

Sorry.

DAVID GARDNER:

No, go Larry Page.

TOM GARDNER:

I know that Google [Alphabet (GOOG 0.23%)(GOOGL 0.30%)] has said one of their aims is to make life free. As free and as inexpensive as possible. So think about this, and I don't know if this has advanced. I just read this like a year or two ago, so I haven't updated [it]. But the idea of a very high-end refrigerator that's free.

Because it's just able to read what products you have in your fridge, and need, and it auto-orders them for you. So it's basically that your home refrigerator becomes like an advertising play where they can pop in different products for you that you can try out and they send you the fridge for free. All of a sudden you're getting like a sub-zero fridge for free.

I think a lot of these innovations are coming to make our life less expensive, more convenient, and cooler. A lot cooler.

ANDY CROSS:

And it's also not just the one Michelin chef. Maybe they crowdsource a whole bunch of chefs and put that into the IP. You get a lot of different opinions...

TOM GARDNER:

All on one plate.

ANDY CROSS:

All on one plate you basically get your...

TOM GARDNER:

Yes, I agree.

DAVID GARDNER:

I just wanted to point out. I agree with Tom's point about automation, and for those who have stayed with us this long on Facebook Live... By the way, lunch hour is probably ending soon, but this is pretty awesome. I think this is about 15 minutes longer than I thought it was going to be but you're going to really appreciate automation because this is not actually Andy Cross.

TOM GARDNER:

Westworld.

ANDY CROSS:

He is the chief investment officer and always will be, but this is an automated version of him that we've been...

TOM GARDNER:

We actually don't know which version.

DAVID GARDNER:

And this has been awesome. It's the blue shirt version.

TOM GARDNER:

No, but it's doing so well, it's getting confusing to me.

DAVID GARDNER:

This is the power of automation.

TOM GARDNER:

This may be the first time the Turing test has been passed. Right here. And we're all witnessing it together.

ANDY CROSS:

Twenty years.

DAVID GARDNER:

Thank you, Andy bot.

ANDY CROSS:

I joined a few months after the publication of the book. It's been 20 years and this is what it comes to.

DAVID GARDNER:

Save us Andy bot. You're our only hope.

ANDY CROSS:

Right here. [Bryan] comments, "I still tell everyone afraid of the stock market to check out The Motley Fool. You guys are the best." [Bryan], awesome. Thank you so much for the vote of confidence and for the accolade.

TOM GARDNER:

One thing I'll say about [Bryan's] note there.

DAVID GARDNER:

It was positive.

TOM GARDNER:

Yeah, Uncle [Bryan]? Is that what Uncle [Bryan] had to say to us there?

DAVID GARDNER:

Our estranged Uncle [Bryan].

TOM GARDNER:

I mean, what...?

DAVID GARDNER:

It's a beautiful way to raise your hand.

TOM GARDNER:

Occasionally we have to remind ourselves of this, but if you've never been to our site or used our services or invested before, just think about our name. What we're attempting to communicate to you. In other ways. Other topics, as well. What we're attempting to communicate is nobody learned this in school. Nobody learned it at a university. There's a whole industry in the financial services category that historically has taken a little bit of advantage, or a lot of advantage of the fact that we didn't learn this subject.

So come hang out with Fools. There's no question that you shouldn't ask. We have a wide-open community. And come out and start learning this subject. Fantasy football. Rotisserie baseball. All these things — they're all awesome. They've very fun for people who love those games.

This is an incredible game that pays you, and it's not just like one-off. I won my season one year. This pays you year in, year out, compounded returns and it's a game that we're all getting to play.

ANDY CROSS:

I'll get to one final question and then we'll wrap it up. [Steven] asks, "Other than The Motley Fool (or maybe part of The Motley Fool that we may not know about), what are some of the sites that you all use for research?" Tom, you mentioned Glassdoor, which is a wonderful site that helps collect ratings from employees and past employees to catalog that into a score. Some insights that we didn't have 20 years ago and didn't even have five years ago. That's been wonderful. [What are some] other resources that we use, maybe internally and externally for The Motley Fool that we didn't have? I know there's one that we didn't have before. David?

DAVID GARDNER:

Well, two real quick. One is inside baseball, but it's just the Motley Fool discussion boards. We have free boards for people who are not members to our site. You can go to Fool.com and find some of those forums.

But then the ones I use are for our paid services like Motley Fool Stock Advisor, which is our lowest-priced biggest service. I know there are a lot of Stock Advisor members watching, so you know who you are. But the discussion boards are outstanding. Tom mentioned it earlier — just having a community to bounce ideas off of, or talk to the doctor that is using the machine, or designing the Roomba that you were about to think investing in is just tremendous. So the opportunity. It's like a great, big investment club of shared information. That's my number one resource.

The second one — this kind of reveals how old school I am. But when I want to look up and see how a stock has done, I use BigCharts. I think MarketWatch bought BigCharts. We met the BigCharts founder.

TOM GARDNER:

I didn't know you were still hanging out on BigCharts.

DAVID GARDNER:

Absolutely.

TOM GARDNER:

I didn't know that.

DAVID GARDNER:

I mean, it's a good, simple site to see how a stock's done over the last 15 years. And when people ask me, "What was your cost basis on NVIDIA," I'm like, "OK, there it is right there." And that's the graph. The reason I say it's old school is because I don't even think MarketWatch cares very much about BigCharts anymore. It's still kind of an older interface, but it does what I want it to do.

TOM GARDNER:

I love it. I'm just going to add one more. It's a site that some people have heard of, but everyone should hear it.

DAVID GARDNER:

TomGardner.com.

TOM GARDNER:

It's called Google. It's a real clean site.

ANDY CROSS:

I'm going to write that one down.

TOM GARDNER:

When you think about this, it is unbelievable. This is a company worth north of $500 billion. Like $650 billion maybe? Around there? $600 billion? Its main page is just a single entry field. It's unbelievable to think about all the effort that so many people are putting into design sites and I think Google has just that very simple approach.

And the reason I mention it is any company you invest in you should Google their CEO. Any mutual fund that you're invested in; you should Google and read about that firm. Any financial advisor you're talking to you should Google and read about that person's firm. You should Google and read what the problems are you could run into with a financial advisor.

Unfortunately we still live in a world today where financial advisors are charging fees that aren't transparent; and so anyone, any family member who's working with any financial advisor anywhere, you need to Google and read about that and ask those questions. That could be the biggest capital gain you could get from spending this time with us on Facebook Live right now.

So Google is allowing me to learn about every single company I invest in. And I watch on YouTube interviews of almost every CEO of every company that I've recommended and that's alive right now. [It's] something north of 80 companies [and] a video that I can watch and that was never available.

ANDY CROSS:

And we've also used that to decide on which companies we shouldn't invest in.

TOM GARDNER:

Absolutely.

ANDY CROSS:

David, I'll be remiss because we didn't mention CAPS. We didn't have CAPS.Fool.com 20 years ago.

TOM GARDNER:

That's not a site. You don't believe in those guys over at CAPS?

DAVID GARDNER:

I use it all the time.

TOM GARDNER:

Wait! BigCharts or CAPS?

DAVID GARDNER:

I didn't want to just [crosstalk].

TOM GARDNER:

[Crosstalk]

ANDY CROSS:

Quick. Thirty seconds.

TOM GARDNER:

I'm not knocking BigCharts.

ANDY CROSS:

We didn't have CAPS 20 years ago and I think it's a pretty powerful tool for investors.

DAVID GARDNER:

I appreciate that. CAPS.Fool.com is an opportunity for you to get started acting on your hunches and understanding what you think about companies. Did you like some of what Tom and Dave talked about? If you like that company you thumb it up. If you don't like the company, thumb it down. You're talking about the stock price. How you think it's doing going forward? You can then see other people. Did they thumb that up or thumb that down?

Oh, did the people who thumbed it up, are they consistently right? Kind of like baseball if you're a baseball fan. You get to see the statistics of all the players out there in the field and you can follow the ones that have very high batting averages.

TOM GARDNER:

It's true merit-based wisdom of the crowd.

DAVID GARDNER:

So it's an awesome community platform. It's a little bit old school in its design like I guess the other site, MarketWatch I mentioned. We'll be refreshing it, but yeah, I just didn't want to talk about our stuff too much, although Book.Fool.com. I think I need to say that because that's kind of what inspired this event.

ANDY CROSS:

Tom?

TOM GARDNER:

I think the books are flying off the shelf. I don't know. Maybe it's showed up as out of stock, even, right now, because there's so many buyers.

DAVID GARDNER:

Keep talking, Tom.

TOM GARDNER:

You know, that is a serious upgrade. Or even just this.

ANDY CROSS:

Exactly.

DAVID GARDNER:

No, not you. For the last 30 seconds, if you speak you get handed the book and you're talking behind the book.

TOM GARDNER:

Love it.

DAVID GARDNER:

So did you want to start closing us, Andy?

TOM GARDNER:

Full stop.

ANDY CROSS:

I just want to have one final question if anybody can hear this. It's in my microphone here.

TOM GARDNER:

This is good. This is good.

ANDY CROSS:

One final question. "You guys have been doing this for well more than 20 years. What drives...?"

DAVID GARDNER:

Don't make it sound like too big a deal.

ANDY CROSS:

Sorry, but it's, "What..."

TOM GARDNER:

Start over.

ANDY CROSS:

"What do you find the most rewarding about investing that you want to share and [impart] to our viewers?"

DAVID GARDNER:

I mean, there are a lot of benefits to investing, including most profoundly, I think, the benefit to your family and yourself. I think I'll just say making money. Making money. I mean, at the heart of it, that's why we're spending this time writing this book and talking about this over the last hour or so. It's because I think a lot of us are here to make some money. Maybe you can give a more inspired answer than I did.

TOM GARDNER:

No, I liked your answer.

ANDY CROSS:

Hey, making money...

DAVID GARDNER:

I want to make sure that people don't forget that that is what we're talking about.

ANDY CROSS:

That's the game.

TOM GARDNER:

The best thing about it, for me... Two things. Number one, the people that you meet along the way. We've hung with each other. So maybe that's been OK. But we've met all the people that work at The Motley Fool. So many of our members around the world. The Motley Fool is in so many different countries...

DAVID GARDNER:

This is such a better answer.

TOM GARDNER:

...where we're learning, "Gosh, I didn't know. In Singapore they don't have capital gains taxes or taxes on dividends." Wow, that's unbelievable. So the opportunity to meet amazing people and right alongside that the ability to learn about the world that we live in.

It's actually a little bit sad, to me, when I see some of the debate that goes on in the world that shows a lack of understanding about innovation. Entrepreneurship. I think there should be much more celebration, not just in the U.S. but around the world, for small business entrepreneurs. That's where most of the job creation is happening.

DAVID GARDNER:

This is one of the most emotional things I've ever heard a book say.

TOM GARDNER:

What if I listed...?

DAVID GARDNER:

I'm sorry.

TOM GARDNER:

What if I drop the book?

DAVID GARDNER:

I'm getting emotional myself right now.

TOM GARDNER:

What if I dropped the book right now below my chin and I was crying?

DAVID GARDNER:

[Laughs]

TOM GARDNER:

The reality is...

DAVID GARDNER:

You are!

TOM GARDNER:

...this is completely sincere. The people who are starting businesses. In college. Out of college. The people who are going after some passion that they have and they create jobs and create new solutions. It's an amazing thing that we get to experience in the world and that's what The Motley Fool as a business is about. As a service is about. And that's what we're trying to do in evaluating all the companies that we do around the world.

DAVID GARDNER:

I agree, and one of the things I've said to that point is there are no great stocks without great companies, so at the heart of any good company... You've heard us mention in the last hour there was somebody who started it.

TOM GARDNER:

Do you remember Broadcast News?

ANDY CROSS:

The movie?

TOM GARDNER:

Do you remember Broadcast News in that moment where all of a sudden they cut back and William Hurt is crying?

DAVID GARDNER:

The book is talking.

ANDY CROSS:

I'll pull out one of your little hairs. Well you can't pull out that hair.

DAVID GARDNER:

All right. All right. Enough.

ANDY CROSS:

Book.Fool.com. Thank you so much, Tom and David. For those of you who are still around watching this, it's been great. It's a third edition.

TOM GARDNER:

Don't talk us down like that! It's been a great book! Is it still around? Well, actually you're not talking us down. You're talking down yourself. You're talking to people that are still watching. Like those of us who are still here.

ANDY CROSS:

Thank you. It's brilliant, yeah.

TOM GARDNER:

Like lunch hour is over.

DAVID GARDNER:

We need to tweak Andy bot. We can do better.

TOM GARDNER:

Which style are you going to tweak?

DAVID GARDNER:

Just cut this off.

TOM GARDNER:

Belief in others. I want to modify his belief in other's style.