One of the great joys of teaching is watching a student really absorb the roots of a lesson -- not just a particular set of facts, but fundamentals and processes that they'll be able to apply again and again. And while Motley Fool co-founder David Gardner might not have a classroom, there's no doubt that he does view himself, in part, as a teacher. It's not for nothing that the company's original motto was "Educate. Amuse. Enrich." Today, that's been updated to "Making the world smarter, happier, and richer," which, obviously, hits the same themes.
Earlier in May, the Motley Fool asked our Twitter followers, "What investment principles and ideas have you learned from David Gardner?" The answers were so gratifying to Professor G. that he's dedicating an episode of his Rule Breaker Investing podcast to a quick refresher course on those lessons. In this segment, he gives an A to a fan who has internalized the ideas that winners keep winning, and that investors stay invested for periods measured in years and decades, not days and weeks.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.
This video was recorded on May 22, 2019.
David Gardner: From there, let's go next to @SpiritCat. What have you learned from me, @SpiritCat? Well, you're saying, "Add to your winners and hold for decades, not days." So yes, sure enough, there is that long-term focus and emphasis again, which is really at the heart of success for investors worldwide. It's always been true. It's true today; it will always be true going forward. But then you add, and indeed a number of you added, the importance of adding to your winners. And why? Well, as I was saying, the 2018 theme, the leitmotif for this podcast, why? Well, because winners win. And thank you, Ali Al-Lawati, @alirallawati on Twitter, for saying that's what you learned from me in this podcast. Winners win. What do winners do? Rick Engdahl, what do winners do?
Rick Engdahl: They win!
Gardner: That's right! It's very simple! We're having fun with that tongue in cheek about half the time. The other half of us, though, is serious. Usually, one of the best indicators of future results is past performance. Now, that runs in direct contrast to the often-used financial disclaimer that I'm sure all of us have heard any number of times -- past performance is no guarantee of future results, you'll very frequently hear disclaimed in various forms of financial advertising. Past performance is no guarantee of future results. And yet, as I've always taken pains to say, it's actually probably our single best indicator going forward of what to expect. The lawyers won't let financial advertisers say that, but you and I are looking for what works, what wins, and in my experience, winners win. That's why, with @SpiritCat, yep, we add to our winners.
Many people do the opposite. They keep adding to their losers. The old cliché is, they are trimming their flowers and watering their weeds. We're going to try to trim our weeds and water our flowers. Most of all, we're not going to think too much about our weeds. We're going to be watering our flowers. When you find great companies, they shouldn't be great for just a quarter or a year. That's not great. Great companies go five, 10, 15 years, sometimes longer runs have huge growth, by adding lots of value to all their stakeholders. And you and I are going to add to those stocks as they go up over time.
One of our contract writers and a friend of mine that I've gotten to know through Motley Fool over the years, Danny Vena, as a newer investor years ago, he made his own rule, which he shared through our discussion board community at the time. And it read a little crazy to me, and yet I admired it. He would only invest new money in a stock if it was already up 40%. And then he had some additional rule. I use the past tense, but he may still be doing this. Once it went up 40% again, then he would add to it even more. And as it turns out, what was he doing? Well, he was adding to his winners. Winners win. I'm pretty sure Danny's pretty happy with that approach. Now, of course, diversifying also has us not overloading into any one stock or stocks. But I hope you get the principle. In fact, I know you get the principle, because so many of you replied that way when we said, "What have you learned from David Gardner?"