In the common parlance of Wall Street, a "story stock" is one for which the numbers may not have arrived yet, but the narrative has, and it's compelling enough to make investors buy essentially on spec. But from the perspective of Motley Fool co-founder David Gardner, every addition a Foolish investor makes to their portfolio has a story behind it, and on this episode of Rule Breaker Investing, he invites several of our analysts into the studio to share some of their favorites.

First up is a segment with longtime analyst Karl Thiel, who talks about his 2013 purchase of NVIDIA (NASDAQ:NVDA). His analysis as to why the graphics processor specialist would be a big winner was sharp, detailed -- and mostly wrong about everything except the direction of the stock price. So was he lucky, or is there a lesson here?

A full transcript follows the video.

This video was recorded on June 6, 2018.

David Gardner: Karl, what is the stock that you'll be sharing a story about this week?

Karl Thiel: The stock is Nvidia, ticker NVDA.

Gardner: Excellent! Karl, maybe start with once upon a time, and take it away.

Thiel: OK. Once upon a time -- and by once upon a time, I mean earlier this afternoon -- David told me that I could tell a stock story. I quickly gravitated toward Nvidia, because, for a very short moment, it makes me look really smart. So, I'm going to start with the smart part. If you take nothing else away from this, this is the part you should remember: I bought shares of Nvidia at $12.56 a piece in April 2013.

Gardner: Awesome!

Thiel: I can pause there for a little bit of applause in the audience.

Gardner: [laughs] Since the stock's somewhere around $250 these days, that's been a really, really good call over five years.

Thiel: Right! This is my stock story, this is the story as it's been for me, I think what follows next is a story of why you can be wrong on the details and still come out ahead. Unfortunately, the inverse can also be true. You can get all the facts basically right, successfully predict the future in broad terms, and still lose out. I have stories like that, too.

But, in this case, I would say that, when I decided to buy Nvidia, I had general beliefs and specific beliefs about the company. At that point, it had already been a Stock Advisor recommendation since April of 2005. It was, at that point, in 2013, outperforming the market, but not spectacularly so. I would say, my general belief could probably be summarized as something like, "Video processing, this is going to be big for more than just games." I had specific beliefs. My specific beliefs were that the company's Tegra processors, because of their high performance, would find an increasing role in tablets and smartphones, and maybe other areas like cars. I'd been out to CES and seen some really cool demos of their infotainment systems, really amazing tricked-out automobiles, and I was excited.

The general belief turned out to be, I think, pretty correct. The specific beliefs were really pretty wrong. [laughs] Tegra is still around. It's incorporated into SHIELD gaming devices, it's in the DRIVE system. It's no slouch. Tegra revenue was $442 million in the most recent quarter, which is about 14% of total revenue. But Tegra for the most part, and most certainly smartphones, are not what catapulted the company forward.

I think, what happened in the interim is that the tablet market, which is really the only mobile market where the Tegra ever found much traction, just kind of fell apart. Then, Tegra wasn't a good fit for most phones because it was too power-hungry and it wasn't well-integrated enough with other components. And Nvidia even bought a company called Icera in 2011 so that it could incorporate modems and radio frequency stuff. That's another part, I was thinking that this could finally position them to do better in the mobile market than they had, which also turned out to be wrong. Nvidia sold Icera in 2015 and essentially exited the mobile chip market at that point.

I guess, if you're looking right now at, what is it that really ended up driving Nvidia forward, I think it started in 2015 when they launched into some of their deep learning stuff and introduced the Pascal architecture. And then, more recently, the Volta architecture, which I still think is really not appreciated for what it's going to do.

But, I went back and I looked at the 2005 original recommendation, and that one really hit one very accurate idea. The idea was, video games are big and they're getting bigger. I think, if you had to update that for today, it would be, artificial intelligence is big and it's getting bigger.

Gardner: [laughs] It sure is. And it's still so early on for AI, isn't it?

Thiel: Absolutely. So, I think, to end this story, if there was a lesson that you wanted to draw from that, if you're trying to predict the future, aim for a broad portrait. Don't necessarily get too bogged down by expert details about what needs to happen in exactly what order. Make sure that the broader picture is still emerging, because that's really what's going to drive success or failure.

Gardner: That's a really great point, Karl. I think about how, sometimes, you'll talk to a friend who's very much into a given stock, and they've already choreographed what's going to happen with the next few corporate developments and the stock price. I mean, God bless that person if they're right, but so often, we're wrong. But the good news is for you and me, and you're describing one of those cases where we didn't quite get it right, yet the stock does even better than we probably thought.

Thiel: Absolutely. And in a way, maybe that's kind of a Peter Lynch observation. You can use your own experience, even if it's somewhat general, to make good choices.

Gardner: I really like that. I think, about Nvidia -- in fact, I told the story at FoolFest to some of our members last week. Just to think, we recommended it below $7 a share back in 2005, as you referenced, and it went to $30 within two years. So, it was a four-bagger for us by 2007. Then, you and I remember what happened -- well, we all remember what happened to the stock market in 2008 and 2009. It went from $30 down below our cost of $6.75 or so one year later. So, we watched it go from basically $7 to $30 down to $6, which hurt a lot. When you've made 4X your money, you don't like to watch all that go away and a little bit more. You had it in 2013, right, Karl? Your cost was $12, did you say?

Thiel: Yeah.

Gardner: It wasn't until 2016 that the stock finally actually got back to $30, which we'd seen in 2007. And you know this because you're on the team, we held it all the way through. In 2016, just to add a little bit to your story, the stock went from $30 to $90 that year. It tripled. It was the No. 1 performing stock for the S&P 500 that year.

And in 2017, we decided to rerecommend it right again, because we're not afraid of things already having gone up. Usually, that's a good sign. The good news is, we picked it there again in 2017 at $100, and it's somewhere around $250-260 today.

It has been spectacular. But, yeah, I don't think we were foreseeing, were we, back when we wrote that 2005 buy report, that artificial intelligence would come along, autonomous vehicles and all of these prospects for Nvidia and its graphics processing units.

Thiel: Yeah. We weren't, but, looking back at that, I think it really did get at what was important. It was about gaming, it was about the continued rise of gaming. And that continues to be a huge driver for the company. That is a very true observation 13 years later. And in broad terms, that original 2005 recommendation was absolutely accurate.

Gardner: And at a cost of about $6.75, we're sitting pretty on that one. Not every story has a happy ending. Today, for now, this one does. But for you, from that spectacular buy just five years ago at $12, or for some Stock Advisor members that had to wait for seven or eight years for the thing to do anything for us at all, it's sometimes that epic Odyssey story, Odysseus making the effort to get all the way back to fair Ithaca, and all of the things that he had to do to get through. That's how investing -- which, by definition is for the long-term -- feels a lot of the time.

Karl Thiel, thank you very much for joining us and sharing stock story No. 1!

Thiel: Thank you!

David Gardner has no position in any of the stocks mentioned. Karl Thiel owns shares of Nvidia. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.