Motley Fool co-founder David Gardner has a remarkably good track record in the market. Does he only pick winners? Heck no. But does his portfolio of stocks outperform the market fairly consistently, and over the long term? Oh yes, and by an appealing margin. (Feeling skeptical? Look deeper into our website and see for yourself -- the man keeps score of his performance with ritual consistency.)
Naturally, you might want to replicate such profitable results, but to do that, the answer isn't simply to copy his stock buys -- it's to emulate his investing style. So on this week's Rule Breaker Investing podcast, Gardner shares the six core traits of his investing philosophy.
In this segment, he considers the intersection of doing well and doing good, or what has come to be known as "conscious capitalism." It's a philosophy that has four central tenets. He'll review them, and explain why he follows them.
A full transcript follows the video.
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The author(s) may have a position in any stocks mentioned.
This video was recorded on Sept. 19, 2018.
David Gardner: Trait No. 1 -- Let your winners run. High.
Trait No. 2 -- Add up instead of double down.
Trait No. 3 -- Invest for at least three years.
And now Trait No. 4.
Trait No. 4: It reads very simply to "remember the four tenets of Conscious Capitalism." I know we've got some Conscious Capitalism fans who listen to this podcast and we might have made some new ones when I dedicated the entire month of May for this podcast this year to Conscious Capitalism. Now if that phrase is new for you, I would suggest you listen to our May 2nd podcast just some months back. It was entitled, Conscious Capitalism. You'll learn a lot more, right there.
Mine is not to summarize the whole approach, here, but it is with this Trait No. 4 to cement in your mind the four principles that form its foundation and to have you think about those as you go about the job of investing. The how of how you invest.
And so very simply, those four tenets summarized.
Tenet No. 1: Look for purpose-driven businesses.
Tenet No. 2: Look for businesses that value all their stakeholders. That are oriented to causing everybody to win. The customers, certainly. I think customers always come first for businesses. Their employees. Their partners and suppliers. Yes, their shareholders, too. Yup, little me and little you are the public market shareholders of those companies. We want them to do well, too, otherwise the system doesn't work too well. Also maybe the environment for some companies, or communities for others. Who are the stakeholders, and which are the businesses that are winning or trying hard to win for all of them. That's Tenet No. 2.
Tenet No. 3: Conscious or servant leadership. You should be able to detect that among the executive ranks of the company. You'd love to hear that backed up, maybe on a site like Glassdoor or on LinkedIn reviews.
Or if you have friends who work at that company, you'd love to hear that they love the culture of their company. That they love the leaders of their company. They admire them. And the people who are running the place probably may not have the best parking spot in the garage or the big corner office. In some businesses it's appropriate that they might. But are they servants? Are they conscious leaders?
Tenet No. 4: And then finally No. 4 is conscious culture. The culture of the companies that we're investing in. Those should be really good. Yes, employees should love working there.
And why is culture so important to me? Well, to me and you, since we are investors, acting therefore by definition for the long term, when you buy a new company, you're probably buying the culture as much as anything else because the CEO might change while we hold these stocks for five, 10, or 15 years. The products and services certainly will, and the world around those companies [their industries] they will change.
But what often doesn't change that much, whether we're talking about civilizations or just for-profit public companies, are the cultures. That's in large part the soil, the fertilizer that's going to cause everything to grow or to die. The cultures of your companies. So again, Tenet No. 4, here, for Rule Breaker investors [the how of what we do] we remember the four tenets of Conscious Capitalism.
And the quote that I want to bring into this one might be the favorite one that I've come up with so far. I use it all the time. It's to "make your portfolio reflect your best vision for our future." So you're thinking about the implications of investing in these companies. Are you picking things that are going to make our world better, or are you contemplating investments that might make the world worse, for some people or a lot of people?
In my experience, when you're finding things that are going to make the world better, that's one of the best reasons to keep holding something and expect that they'll do well over time, because the universe often conspires to make the things that should win, win to make things better for all of us, so be thinking and actively asking, "What is my best vision for our future and is my money lined up with that?" No. 4.