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If You're Going to Pick Stocks, You Have to Keep Score

By Motley Fool Staff - Updated Mar 10, 2021 at 10:00PM

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A roundup of two five-stock samplers and their performance over the past few years.

In this episode of Rule Breaker Investing, we're adding up the score and closing the books on 5 More Stocks to Feed the Next Bear and 5 Stocks The World Needs Right Now. Is the bear still hungry? Does the world still need them? Tune in to find out, Fools!

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on March 3, 2021.

David Gardner: If you're going to pick stocks, particularly in public, but even in private, I highly suggest you keep score. It's a central tenet of this podcast and indeed of the company behind it, The Motley Fool, we pick stocks and we keep score, whether we liked the score or not. Because if we like the score, well, that's why we invest. There's nothing like the feeling of winning, consistent winning, sometimes spectacular winning, to bring a smile to your face and maybe some financial freedom to your life. That's why we win; but if you don't like the score, if you lost, what better wake-up call could you ask for? Because by keeping score, if you find you're not liking the score you're achieving, change things up. Maybe there's something as an investor you're not doing enough or maybe there's something sub-optimal that you're doing too often. In either case, you probably won't figure this out unless you're keeping score. Whether you won or whether you lost that game, that quarter, that year, that five-year period, you win by keeping score and learning. We need a score to learn. Without a score, the learning loop is broken. How many people out there, not just in the markets, but in society, are not learning all that they can because they're not holding themselves accountable? Dear Fools, let's not join their ranks -- and so we pick and we score. Then, one year later, two years later, three years later, even sometimes like this week's podcast, four years later, we check back in on the performance of the moves we made, the swings we took years ago to see how we did and what we can learn. Well, three Februaries ago, I picked Five Stocks to Feed the Next Bear. I couldn't have known how badly the market would do in the spring of last year, but were we ready? How did the stocks do? We're closing out that three-year sampler this week. Four Februaries ago in the midst of political dysfunction, "fake news," and indeed even real news headlines that were traveling to many, I picked Five Stocks The World Needs Right Now. I pick those for four more years, as they say in the world of politics. Now it's four years later, and we're going to close out that five-stock sampler as well. What were those stocks, how did they do and what will we learn together? Let's do it. Only on this week's Rule Breaker Investing.

Welcome back to Rule Breaker Investing. It's going to be a great March for us on this podcast. I'm already looking ahead next week. I'm going to introduce a new series. It's going to be called Telling Your Story. I'm going to have some of my favorite Motley Fool analysts on. They're going to talk about how they got started investing. They're going to give us their back story. The bio that led them from where they started to where they are now, here at The Fool. Really looking forward to three Fools telling their stories next week. The week after, that is going to be our 300th weekly podcast. Yeah, for 300 consecutive weeks, we brought you a new episode, at least one of Rule Breaker Investing. Here we are at 300 shows later. This is Sparta, that's going to be in the middle of this month, which happens to be St. Patrick's Day, I see. Then closing out the month, we'll have a Market Cap Game Show on the 24th, and of course, our March mailbag, a fifth Rule Breaker Investing podcast in the month of March. That's what will be then but this is what we're going to do now. Now, this is a review-a-palooza series podcast for Rule Breaker Investing. We're going to be closing out two five-stock samplers, that's right. We're not just reviewing them a year or two later. These are the final moments you'll ever hear from five stock samplers picked three and four years ago respectively. The first one up is Five Stocks to Feed the Next Bear. Those were from February 2018. Then we'll close this week with Five Stocks The World Needs Right Now. Those are from February 2017.

For both of these, well, we're going way back and I'm going to ask my friend Rick Engdahl, my longtime producer, who produced the very first episode and will be, I hope, producing the 300th episode of this podcast a bit later this month. I'm going to ask Rick to play the wayback music, because we're going back in time, thinking about where you were maybe in February of 2018 or where the world was in February of 2017. What were the stocks we picked and why and what can we learn. Well, the first five-stock sampler we're going to review, it's time to strap ourselves in the wayback machine, because we're going back to February of 2018. Specifically, the day was Feb. 7, 2018. You can ask yourself, dear listener, what was happening in your life Feb. 7, 2018. Off the top of my head I can't remember much other than I can assure you, I did this podcast and picked these five stocks. I definitely remember one thing that happened on Feb. 7, 2018, the theme, Five Stocks to Feed the Next Bear. Here to help me review those five stocks by long time compadre, Tim Beyers, welcome.

Tim Beyers: Thanks, David. Great to be here.

Gardner: Thank you for coming back and helping us look through and learn about these stocks, Tim. You and I have worked together on Rule Breakers pretty much since the service started. This podcast only started six years ago, but Rule Breaker started in October of 2004. Tim, did you come along in month three or five or something like that?

Beyers: I came in, in April. Yeah, I think it was month six.

Gardner: Outstanding. That's when our picks started to get really good. Thank you for all the value that you've contributed and created for our members, Tim. While you had no particular hand in these five stocks, you have spent some good time looking them over. I just bet you know them probably better than I do if you spent the better part of some portion of this morning looking them over. But five really cool companies, five more stocks to feed the next bear. I was looking over what was happening in the world at that time, Tim. Do you remember what was happening in February 2018?

Beyers: February 2018, what was happening in the world? It feels like the last year has been 10 years. My memory is not as good as it used to be. Let's also just confess that now that I am officially in my fifth decade, my memory just isn't what it used to be anymore. No, I'm not remembering the major event of February 2018.

Gardner: Well, and I have to admit I would not have remembered this if I didn't just go back and check. Here's what was happening that particular week. The stock market from Jan. 31 to Feb. 7, when we did the podcast, three years ago, my portfolio had dropped 8%. That was a really bad week. Thinking through what sampler theme we should work on. We had done a Five Stocks to Feed the Bear a few years before. I was checking this, Tim, it was February 2016. In fact, five years ago we did our very first Five Stocks to Feed the Bear and they've done wonderfully. I was inspired by that. In fact, the market had really done badly from August 2015 to February 2016. I realize this might sound like ancient history. It's only really about five years ago, but that six-month period, my portfolio had dropped 25%, and that never feels good. I remember saying at the time, everyone says the bull market is in its sixth or seventh year, when will stocks ever drop? I was saying at the time, wait, didn't you see what just happened, because that end to 2015 entry into 2016 was brutal.

That spawned the First Five Stocks to Feed the Bear. Then we were having such a good time with that, that three years ago we decided, let's do Five Stocks to Feed the Next Bear. The companies we settled on, Tim, and you are going to help us review them. I'll just do them alphabetically here; were Apple (AAPL 1.59%), Amazon (AMZN 1.35%), Alphabet (GOOG 1.09%) (GOOGL 1.01%), Novo Nordisk (NVO 3.12%), and Tencent (TCEHY 3.68%). Each of those companies had low-risk ratings but had market caps. I intentionally selected a minimum of $150 billion. All of them started with big market caps. The thinking was these are the unsinkable Molly Browns of our worldwide economy. If the next bear shows up, let's have these kinds of stock. That's the backdrop for what was happening in the world and what the theming was around those five stock sampler. Tim Beyers, as tradition holds it, let's start with the worst performer among these five.

Before we talk about Novo Nordisk, ticker symbol NVO, the worst performer, I should mention that from Feb. 7, 2018 to Feb. 5, 2021, the end of our full three-year cycle, the stock market rose 44.8%. For each of these stocks that is the bogey we're aiming at. We're trying to beat the market with each of these 44.8%. Not a bad three years, by the way. Tim, the worst performer, Novo Nordisk. Again, the ticker symbol NVO, the stock was at $49.96, just about $50 a share when we started on Feb. 7, 2018 and it went from there to $71.40. That's not bad. It's a 43% return, but Tim, we just talked about the market being up 45%. Novo Nordisk, a 2% underperformer. Tim, I know it's a lot to ask you to think back over a three-year period and ask you what was the single biggest reason any of these stocks did what they did, but that is in fact the question you're going to answer in each case. Looking at Novo Nordisk, Tim, perhaps you could just remind us, what is this business and what happened over those three years?

Beyers: Novo Nordisk is the world's largest provider of therapies for diabetes. I mean, that is such a huge business. I hesitate to use the word play, but it's certainly a scourge around the world. Particularly here in North America, we pay a lot for diabetes treatments. There is a reason that this is a big business and there is a reason that you put it on this list. I think the pervasiveness of therapeutic treatments for something like diabetes, I think that was a good thesis, David. I think the thing that happened here is that some of the newer treatments that we were hoping from Novo Nordisk did not come to pass nearly as soon as we'd like. There's something called, and I'm sure that I'm going to mispronounce this, but it's called an oral semaglutide, which is an oral treatment for all sorts of elements, but certainly diabetes. We're in Phase III trials now for Novo Nordisk, that this Denmark-based company, but I think we were hoping at least when you talked about it last time, that we were going to see some FDA approvals a little sooner than that, and it hasn't quite come. This is not a fast grower, but it does grow a little bit year to year. It's a relatively capital efficient business. But I think once we start to see those phase 3s turning to FDA approval on the shelf drugs, maybe this one starts to turn the corner a little bit here, David, but so far that's not happening.

Gardner: Well, thank you for that, Tim and yes, all five of these companies are mega-cap companies. I think, especially if the market had a bad 2021, 2022, these kinds of companies, well, I'm not picking these for the next five-stock sampler anytime soon. Again, we're reviewing something picked three years ago, but it's this kind of a company that usually you can rally around in a tough market. The sad truth of it is that diabetes isn't going away anytime soon. Type 2 diabetes especially, is a very significant problem worldwide as you're mentioning, Tim. I also like this company because they are a Danish company. I love to find companies outside the U.S. and recommend them. In this case, it's a Motley Fool Stock Advisor recommendation. I do regret to say that ever since I picked it in 2015, it has been an underperformer for Stock Advisor members, but at least for this three-year period and this stock, it is a slight, just a minor underperformer. Tim, again, up 43%, market up 45%. That means good news is coming, Tim Beyers, because if that was the worst performer in this Five Stock sampler and it was just 2%behind the market, I'm starting to rub my hands a little bit. All right, let's move on to the 4th best performer or the 2nd worst performer, if you will. This happens to be Tencent, ticker symbol T-C-E-H-Y, this Chinese company was at $53.40 back on February 7th of 2018, and it went on to rise to $94.55 as of February 5th of last month when we closed it out. That means that Tencent was up, Tim, 77%, against the markets 45%, plus 32%. All right, Tim, I'm asking you again to reflect on the passage of three years for this massive company, what happened to Tencent from 2018-2021?

Beyers: Well you might remember David, there was this little game that was popular, and I think it's still arguably very popular but in 2018, it was the thing we call it Fortnite. Fortnite was a worldwide phenomenon, but here's what's interesting about Fortnite. So that was created and distributed by Epic Games, which is a very interesting company, a maker of game engines, the Epic Game engine and Fortnite was a real phenomenon for them. But for distribution, they turned to Tencent. Tencent became the de facto distributor for Fortnite. It was firing on all cylinders, David. Then it stopped. There was a little bit of extra oversight by the Chinese government. I think it's fair to say right now without making any political statements here, that the Chinese government is cracking down on several of its native companies, and that includes Tencent. It was a period of dramatic growth. Then maybe a little bit of flatlining here that smooths that out but one thing that remains, I think, steadfast as it relates to Tencent; this is one of the world's great conglomerates when it comes to entertainment. It does have a music division that has been spun off. It is a massive investor in and holder of gaming properties. It is a large investor in other public companies. It has a big portfolio of holdings on its balance sheet. This is a wonderful company with a tremendous amount of assets. I think this would be a bigger outperformer, David. If the uncertainty about its relationship with the Chinese government, if the lid on that was removed, maybe we'd see a bit more of the stock rocketing up, but it's still been a sturdy outperformer, and I think deservedly so.

Gardner: Thank you, Tim. I'm really glad to be reminded of Fortnite, a game I've certainly played, and haven't played recently. I will just point out, still more than 20 million people worldwide on a daily basis play Fortnite. Of course, Tencent is never a one-trick pony. It is a massive diversified entertainment company. I hear you on the possibility that if China is a little bit more liberal, that is a little bit more free with its policies, allowing its companies to grow in the ways that they want to grow, that will outperform further. It is delightful to know that even during a tough stretch in some ways for Chinese big cap companies, that this company did turn in that outperformance over these last three years. We're going to chalk it up to the win column. That's the first winter among the five stocks here. The last are even better winners. Let's move on, Tim Beyers.

Now the 3rd best performer, while the ticker symbol is GOOG, Alphabet still rocks that old school ticker symbol. If you were just born in the last few years, you might wonder why does Alphabet have the ticker symbol GOOG? I think most of the old hands listening right now would understand. But the purveyor of Google, among other things, was that $1,048.58 on February 7th, 2018, and went from basically $1,050 to $2,098. That is a clean double 100.1%, again, against the market's +45%. That puts a +55% in the win column for Alphabet investors. Tim, I know a lot happened over that three year period from 2018 to 2021. Among many things that happened, Alphabet doubled. Tim, in your mind, why did Alphabet double?

Beyers: I think because we got to see for the first time how the components of Alphabet are doing individually, and specifically, there are two that got broken out during this period, the first is YouTube, the other is Google Cloud. If we look at the latest results, those two are growing at roughly the same pace, which is mind-blowing because Google Cloud, it's not new, let's not call it new, but it is the third player in public cloud computing, and in the latest quarter grew just about 46%, revenue up 46% year-over-year. But there is another piece of this business, the YouTube advertising business, that is not new and still growing at 45%, David, so I think there is this belief and probably, you could almost argue that we may even be underselling the earnings power of YouTube. How old is YouTube now? It's at least 15 years old, minimum, Google bought it back in the early odds for a very low amount of money, it is now producing tens of billions of dollars in revenue and up 45% year-over-year. This is a monster and that's a subsidiary of the business, so I think that's one of the key drivers here of what we're seeing in terms of return.

Gardner: Isn't that amazing? If Google is right and I used Google, Tim, to Google when YouTube was founded, I'm seeing February 14th, that would be Valentine's Day, 2005.

Beyers: There you go.

Gardner: So, 16 years or so. I'm also seeing that Google bought it in November 2006, so basically a 1.5 year later for $1.65 billion. One of the better acquisitions of all time. I'm really glad you're mentioning YouTube, often we forget what a huge property it is for Google. I just think about Google Sheets and Google Docs, and you mentioned Google Cloud, of course. In fact, all of my five stock samplers I keep on Google Sheets, the free resource, a wonderful way to just throw down a spreadsheet, especially for newbs like me who can't do that much with spreadsheets other than some basic formulas. But yeah, boy, am I grateful for Google every single day of my life since I first Googled something, and I bet I could even figure out what I did Google if I went back into the search history way back. One thing I do love, Tim, and speaking of Amazon, it's coming up in this five-stock sampler, but I love going back to see what was the very first thing I ever bought on Amazon and it's right there and maybe I'll reveal that. Tim, I don't know if you buy stuff on Amazon, but you could go in and we could compare notes.

Beyers: I know what my first thing ever bought on Amazon was, and I can reveal that too and I think you'll be delighted by it.

Gardner: Excellent. We're going to go ahead and review that very shortly, but we used Google to Google some of the facts that we just shared with our listener base. Indeed, Alphabet has been a stellar performer, doubling. A +55 in the win column. Let's move ahead to the fourth stock we're going to review but before we do that, we should mention the first stock was 2% behind the market. So that's a minus two, the second was 32 ahead, the third was 55 points ahead, so we're at a +85 right now as we get to the second-best performer in this Five Stock sampler.

Well, let's move on then to the second-best performer and the stock was at $1,416.78, 1,416.78, it's Amazon, ticker symbol AMZ. As this closed out a few weeks ago, on February 5th, Amazon had moved from $1,416 to $3,352. Yeah, that's a wonderful gain of 137%, that gives us a +92 to stack on top of our plus 85, things are getting rosier. Tim, it was an amazing three years for Amazon, I think we'll close our look at Amazon with what we each first purchased on Amazon. But let me first ask you, taking a broad-brush view of things, what happened for Amazon from 2018 to 2021?

Beyers: Well, a lot happened. We could hit a couple of high level themes, one of the big high level themes is that Amazon decided that it really was going to turn its shipping into a business, and so Amazon Logistics is a real business now and it is highly, highly disruptive to all of the major shippers around the world: FedEx, UPS in particular, and they are investing heavily in this business. If you didn't think that Amazon had enough great businesses, it added another massive world beater in Amazon Logistics. But I think the thing that really stands out for me here, David, is that if we go back to December of 2018, or let's actually go back even further because we're in February of 2018 when we started here. December of 2017, AWS, the signature public cloud computing product that is part of Amazon, was a $17.5 billion business in December of 2017. Today, in the most recent quarter, the most recent results for Amazon, do you have a guess as to what Amazon Web Services is today for the full-year 2020 revenue? Do you have any guess, David?

Gardner: I refuse to hazard a guess because it would embarrass me.

Beyers: A little over $45 billion.

Gardner: Wow.

Beyers: Not a triple, but more than a double. But here's the thing that's really interesting here, David; as AWS has grown massively, and it has grown massively, it has become more efficient, it is now generating close to 30% operating margins, where it was closer to 28% back in 2017. This is a business that's growing massively, but also growing more profitably. Clearly, this is a world-beating business, it's a mutant company, I don't recall ever seeing a company of this size growing this fast and this profitably over such a long period of time, it's amazing.

Gardner: Very well said, Tim. It is amazing. It's often been pointed out that Amazon doesn't necessarily make that much money on its e-commerce, for all of its e-commerce efforts, the profit center is in AWS, but you just mentioned logistics on its own, which is still an immature business and we'll see how those margins play out over time for competing with FedEx and UPS and DHL, etc. But what a true world-beater. I am not sure that there is a more Rule Breaker-y rule breaking company in this era of the last 25 years than Amazon. I'm delighted that we had it in this five stock sampler. Again, Five More Stocks to Feed the Next Bear, Amazon, the second-best performer.

Before we move on to the top performer, Tim, you and I promised that we would each share what is the first thing that we bought on Amazon. You just go into orders and you can sort back to any year that you ever ordered anything. Tim, I'll share mine first. This is a surprise to me. I see the date was September 17th, 1996, I have no recollection of this, and I actually have no interest in this, so I was probably buying this maybe for my wife. It says Furniture Treasury, two volumes in one by Wallace Nutting. I see it's a hardback, they cost around $99 today, not sure, I see it cost $78.95 back then, and yeah, I was having it shipped to my wife who must have been looking over some antique furniture considerations of one of her many interests. Hilarious, Tim, I would never have guessed or remembered Furniture Treasury, but yeah, the first 10 home team orders for me from Amazon were all books and that's because that's what Amazon was, earth's biggest bookstore back then. Tim, what was your first order?

Beyers: My first order back, I don't have the specific date here, I believe it was 1997, was The Motley Fool Investment Guide. I have ordered it multiple times.

Gardner: Thanks.

Beyers: I gave my original copy to a member of my family, never got it back, so I had to rebuy it.

Gardner: That helps the book business keep going, and we love that as authors who get royalties. Thank you for that, Tim, although we are long since past the time that we think much about book royalties at our company. But we did finally revise that just a couple of years ago because we thought the Motley Fool Investment Guide should read like 2020, not 1997. For years and years, we were operating off of older editions but thank you, Tim. I'm so glad to think that's what really brought us together, I mean, here you are and here I am now years and years later. That is a great first purchase.

Now, let's move to the best performing stock for Five Stocks to Feed the Next Bear. I have to admit, when I picked these five, I probably didn't think that this company, which is today the largest market cap, I think still of any public company in the world, I would not have expected this company probably to be the best performer. The ticker symbol is AAPL, I think most of us recognize that as Apple. Apple was at $39.89 February 7th, 2018. It closed February 5th, of this year at $136.76. That is more than a triple, ladies, gentlemen, and Fools everywhere, up 243%, 198 points ahead of the market. This stock, on its own, outperformed all of the other four in terms of its market beating alpha. What a spectacular run for a company that probably felt too big and a little bit boring for some investors, when we thought about it three years ago. Tim, [...] large, what has been going on at Apple?

Beyers: Oh, my gosh, so much. This, by the way, is by far the best performing stock in my portfolio. I haven't looked at it recently, David, but given the years that I have held it, the last I checked, it was a 40-bagger in the Beyers portfolio.

Gardner: That is amazing.

Beyers: That's bananas. Part of the reason for that is in August of 2020 the stock split four for one, but I think the bigger reason for this is that we have found that the Apple ecosystem, the Tim Cook strategy of getting people into an Apple product and then getting them to add another Apple product, and another Apple product, and it's funny that you mentioned this the last time we did the sampler, David. You talked about going into the Apple store and then waiting around to get your service. I think you were getting a phone replacement and you're like, "Well, I got to wait for a while. Let me buy some more stuff," and you did. You actually adopted the Tim Cook strategy, you were buying more stuff. It worked perfectly. You got ensnared, but I think that's what's happening here, and there have been a number of very successful Apple products. We've had the iPhone 12. We're certainly seeing more with health apps on Apple products. The Apple Watch is incredibly popular, and then during COVID, that became such a tailwind for the iPad. If we look at the latest results for the iPad, they are mind-blowingly good, just how much growth there was in that product line that originally was slowing. It was never bad, but growth in the iPad business was slowing, and then finally we have the M1 chipset. Apple decided to move to creating all of its own chipsets so that what the software you run on your iPhone, or even on your Apple Watch, may actually run on your Mac. This has been a wonderful product story that also happens to be a wonderful growth story.

Gardner: Love hearing you mention that, Tim, and I have to admit, I hadn't been keeping up with the iPad line and the great sales. I didn't buy a new iPad myself in the last year, but I'll tell you, I've always had an iPad and the use of my iPad during COVID well up over the previous year, probably. I'm not sure I'd have done much on my iPad from 2019 into '20. But wow, have I been using my iPad. Makes so much sense. What's so remarkable about Apple is that the relative number of its products, its SKUs, is actually tiny compared to most companies. Think about Amazon or Walmart, most of the mega-cap companies aren't just managing a rather tight portfolio of hardware, with admittedly some increasing amounts of software and services coming. Of course, underneath those big umbrellas of things like the iPad are the App Store with infinite choices, many of which have a cost of at least $0.99 on them. So of course, it's much more complex than just managing the iMac, the iPhone, and the iPad. The list goes on, but it is still a great lesson. I think too many entrepreneurs are just trying to be great at a few things, and look how big you can get.

Beyers: Yeah. There's no doubt, and in addition to that, we've seen a big services business that Apple has grown. They've bought back a lot of shares, and let's remember, this is one of the literally richest companies in the world with one of the sturdiest balance sheets any of us has ever seen. I'm just looking at the current balance sheet here. Just in cash, just in straight up cash, Apple has more than $76 billion. $76 billion, there are banks that don't have as much cash.

Gardner: Yeah. There are certainly countries; Apple, judged against the list of the world's economies, certainly outpaces many smaller nations.

Beyers: Absolutely.

Gardner: It is a remarkable testament to just doing business well and doing it right, and Apple is certainly not faultless. A lot of people have questions about some of the labor practices, and outsourcing, and rightfully so, but take it all in all, even with the warts that you're probably going to have at this kind of size, what a spectacular contribution that Steve Jobs and the company have made to the world. Certainly have added a lot of value to my life and I bet a lot of people hearing us as well. Well, let's close this one now, Tim. This is so much fun to do with you. Thank you for bringing the good luck here with your good thinking as well, because these five stocks taken together averaged a gain of 119.9%. Again, that was against the market's 44.8%, and so the average out-performance of these five stocks was 75.1%, which is a huge and spectacular win for big cap companies. Five more stocks to Feed the Next Bear over just a three year period. Let's pinch ourselves, Fools, and realize it's not going to be every three years that you can expect companies like these to gain more than a double, and yet we did that, and we really beat up on the stock market averages. Tim, this is the last we are ever going to talk about this group. This game is over. It was a three year game we were playing, so thank you for bringing it home for us.

Beyers: Thanks, David. I appreciate it.

Gardner: Great to hear the Beyers portfolio is well invested in ticker symbol AAPL. Fool on, Tim.

Beyers: Thanks, David. Fool on.

Gardner: All right. Well, that was three years ago February, but there's one other sampler that we're going to close out this podcast with, and helping me do that as my good friend, Toby Bordelon. Toby, great to have you on Rule Breaker Investing.

Toby Bordelon: Thank you, David. Great to be here.

Gardner: Toby, I believe this is the first time I've had you on the podcast. Now, we've been working together for some time. Motley Fool Stock Advisor, you come aboard to help do some of the analysis and the work of Motley Fool Stock Advisor. It's been a delight working together, but I definitely first met you, not as an employee, and not even as a Fool contractor, which you were for years, but I think as a member, am I right about that?

Bordelon: That's right. Yeah, we met, I don't even remember the exact moment, but it was some Motley Fool event years and years ago.

Gardner: Yeah, I'm going to say maybe 15 years ago or so, Toby.

Bordelon: Yeah.

Gardner: Do you remember when you joined The Fool? Or what inspired you to join the Fool way back when?

Bordelon: Well, I remember becoming a subscriber to The Fool. I think Hidden Gems was the first. That was when I was in law school, so that would've been 2000, 2001.

Gardner: Okay. Yeah.

Bordelon: I was aware of the Fool before that. I remember being home from college in the late 90s. My dad called me to the living room and said, "Hey, come look at these two guys with Fool hats on, on the tv on CNBC." Talking about this new thing on AOL on Motley Fool. I've definitely been following The Fool for quite a while and then became a subscriber in law school and slowly added various services. Then, when you guys started hosting live events, I started going to those and I was able to meet a bunch of the Fool employees, a bunch of members, and had a great time talking stocks and worrying about businesses.

Gardner: Toby, we will get to Five Stocks The World Needs Right Now in a minute, but can you share maybe your journey from the law to the markets? I'm not even sure I know that. How did you transition?

Bordelon: Sure. I've always been interested in business and companies and investing. My dad got me into that pretty early on. But as far as from law, I got to the point, I was working in a large law firm in New York, then I ended up moving down to Washington, DC, where I'd go into this college and still working for the same firm doing private equity, mergers, and acquisitions. That's worth taking. It started weighing on me. It got stressful. I'm a person who throws myself into my work and so I just went all in, and I could feel myself getting burned out. I could feel myself knowing I was not doing as good a job as I wanted to do and I needed to change. I talked to my wife about going back to school, got a master's in finance. I ended up never really doing anything specifically with that professionally, because that's about the time we had kids and I decided I wanted to stay home with them, while my wife continued to work.

Gardner: Wow.

Bordelon: That worked out really well. We ended up moving out here to Reno, Nevada. I gradually started contracting with The Motley Fool, picking up more and more tasks and roles along the way, and it has turned out to be wonderful. It's something I can do, something I'm interested in, and something that affords me the flexibility to still be involved with my kids.

Gardner: That is so wonderful, Toby. Thank you for sharing that. I'm not going to say you went from caterpillar to butterfly, because I think you were already a butterfly. But you went from one type of butterfly to a different colored butterfly, and I'm delighted that that has brought you closer to The Motley Fool. Again, thank you for sharing that. It's funny. One of my favorite investors of all time, for understandable reasons, is my father, Paul Gardner Jr., still living today, possibly hearing this podcast as we speak. The one thing he said to his [laughs] kids was, and I apologize in advance to my friends in the legal trade, he said, "The one thing I will not allow you kids do is be a lawyer." I myself, he told us, am a lawyer, and while it has been a good career, I require you not to be lawyers. Indeed, none of us ended up being so, but he always loved the markets himself. I actually see something of you in my dad and vice versa, Toby. So, please treat me in a loving way as we do this five-stock sampler together. If I get something wrong, you can coach me up a little bit.

Bordelon: All right, will do.

Gardner: Okay. Let's kick it off with a brief reflection, Toby, about the theming behind this one. The name of this five-stock sampler picked on February 15th, a day after Valentine's day, 2017 four years ago, was Five Stocks The World Needs Right Now. As I mentioned at the top of the show, I remember there is a lot of consternation, some political dysfunction in the world not just in the U.S., but globally. There was certainly a lot of talk about fake news and a few other forces that weren't so good for the world. So I thought about it and I thought, usually, there are four profit answers and solutions out there that are helping the world. Those are the stocks we usually look to recommend and buy and add to our portfolios. What are five companies, I thought, back the day after Valentine's Day 2017, that over the next four years, yeah, most of our samplers, they're just three, this one is a four year sampler along with my Olympics sampler, another one we'll talk about some other time, four years, what are companies that can make a real difference in the world and can help us out? So, we lighted upon these five stocks. Toby, anything to add?

Bordelon: Sure. Just one brief comment. As we're looking at these five stocks, I think it's important to remember the context of what the market in general has done over these past four years, and it's been great. Just the numbers here, since this five stock sampler in February of 2017, it looks like the S&P 500 has done about 67%.

Gardner: That's right.

Bordelon: You think about it, you always hear the average return over time is about 8% even if you want to go 8%-11% a year. Over four years, that would translate to about 36%-52%. Over this four year period, we have gotten a fairly substantial outperformance from the market itself relative to what we typically see. As we go into these five companies, they just want us to all remember that, this has been a great four years to be investing.

Gardner: Thank you for pointing that out. I also want to add one thing. This is a little bit of a political note. It's going to be a tiny, tiny little political note. I know we have strong feelings on both sides. But one thing that I'd like to say in favor of the administration that just exited is that it was typically more business friendly than many others. Well, I don't think much about the last four years will be admired by history. I think one thing I admired and was grateful for was an approach that said business is a good thing. We should allow businesses, in some cases, to have a little bit more freedom than they otherwise would have gotten in the past. I do reflect back on the four years and think about how, wow, as you just mentioned, Toby, yeah, I will take any four year period where the market rises 67%.

Again, that is the bogey as we say. That's what we're shooting for with these five stocks to see whether they exceeded that gain of 67% and in Foolish fashion, Toby Bordelon, let's start with the worst performer. I do regret this one. This was a very poor stock pick on my part and puts us in the hole right at the start. The ticker symbol is ALKS. The company is Alkermes. This is an Irish based drug developer, a company that focuses on a lot of bad things like addictions and depression. I love companies like this, that try to heal and try to make the world better. I don't love though, Toby, their performance. The stock was at $56.89 on February 15th, 2017, and when this closed-out on February 12th, last month, it had gone from about $57 to $20.22, down 64.5%, 132% behind the market over those four years. Toby, what happened or didn't happen at Alkermes?

Bordelon: Well, yeah. This is definitely the worst performer. It's done about 65%, so we said the market went up 67%. This went about the same amount in the other direction. It's not what you want to see. I think what happened is largely execution. I think when you first recommended the stock about a year before you're picking the sampler, you talked about its transitioning from what they have been focusing on, being a delivery system for drugs, into focusing more on its own pipeline. The drugs they had not pipelined just haven't taken hold the way they expected, the way we would have liked. They had some struggles with the FDA. There was an incident in April of 2018 when the FDA came back at one of their filings and said, "We don't see any evidence here. We don't see enough evidence to [...]." That's bad, right? You don't want that, but it was beyond just the FDA. In the following year, April of 2019, in one of their earnings reports, they said that sales of one of their schizophrenia drugs have been disappointing. Management noted later that year that they were struggling to launch a couple of drugs and they were having difficulty overcoming the existing treatment plans. I think that's pretty critical. Everyone loves innovation, everyone likes wonderful life-saving drugs. But as it turns out, the medical profession like, I think a lot of professions, a lot of us, is fairly conservative. If you've got something that's working, then why would you switch absent really convincing evidence that something is going to do better? That's what I think we lacked here. We lacked convincing evidence that the treatments Alkermes is trying to push was substantially better.

Gardner: Yeah, which we would all love to see. We would all love to see those yield, and we have our fingers crossed for Alkermes. Toby, as you're pointing out, you're right. I picked the stocks in February 2018, two months later, out comes the bad news from the FDA. I'm watching that stock slide down from where it has been, around $65 onset, and it's $45 just two months later. Then as you mentioned, again, April 2019, it dropped from $40 down about $25. The stock language is right just below $20 as we speak today. That largely tells the tale of Alkermes over these last few years. What more did you want to add?

Bordelon: One thing is the theme of this company is, what companies does the world need? I think it's been pretty clear that as it turns out, the world will not believe it really needed Alkermes; but I do think the world needs this industry. My big takeaway from what we've seen with this company is that if you're going to be an investor in biotech and drug manufacturers, you really need to spread your bets out, because you don't know what's going to happen with a specific company, with a specific drug. As great and fantastic as this industry is for the world and what it does for us, any individual company can flounder. Any individual company here can fail. So, you definitely don't want to have all your eggs in one basket.

Gardner: Well said. This one felt so good at the time because it was looking at opioid addiction, which has been such a huge problem, particularly in the United States. I love the potential here, but as you mentioned, I'd forgotten this. When we first recommended Alkermes, it was about that transition from being a drug delivery platform kind of a company, into its own drugs. That has not worked out well. Let's move on to the second worst performer, if you will, or the fourth best performer, depending on whether we want to see the glass half empty or half full. It sure does get a lot better as we move to this fourth performer, ticker symbol FDS. Toby, we know this company is FactSet Data Research (FDS 0.44%). It was just about $180 a share on February 15th 2017. Four years later, last month, it closed out at $316 a share, up 76%. Now again, as you mentioned, Toby, the market up 67% over those four years. Outperforming by 9% isn't great. It's kind of a market performer, but we'll still take the +9%, especially given that we started at -132%. Toby, a little bit about what FactSet Data Research does, and then your reflection, what happened over those four years?

Bordelon: This company is a company that is really an informational infrastructure company in a way. What they do is they provide financial data, financial statistics to other companies. They are critically important. If you are a financial services company, if you're a financial media, you probably use FactSet. It's become a standard thing to use, now a standard tool in that industry.

Gardner: Yeah, I will frequently see, for example, an earnings report comes out and it will say, "Analysts pulled by FactSet Data Research all had this consensus number." That's a great example. I think a lot of people hearing you right now can probably reflect that they've seen that now that they think about it. It's not really a brand that jumps out to you, FactSet Data Research. But that's a very steady, calm pace of, hey, they're helping determine consensus earnings estimates for so many companies out there.

Bordelon: Right. They're a subscription based business. So the revenue is fairly steady. It just keeps flowing in month after month.

Gardner: Love that.

Bordelon: It's just not a flashy company. I think the key here is consistency. Really, what we see here is a management team that has run its business well, continues to run the business well. They just keep plugging away and do what they're doing. That's translated into 8%-9% of outperformance in the market. I think there's something you would take, generally speaking, any day of the week if someone offered you a company that's going to outperform over four years by 9%, you'll say, "Sure, I'll take that. Why not?" The big thing I think that's driven some of their success over the past few years, again, at the beginning we talked about the market doing quite well. We've especially seen that in the past year. This is a company that gets a boost when Wall Street does well, when the stock market does well. When you have a lot of interest in investing, that's going to naturally spur demand for investing services, financial services, financial information. When that happens, FactSet is going to benefit, their services are going to be in demand. The people who are providing those services are going to want that underlying data.

Gardner: Absolutely. We love subscription business models as well. I particularly remember, Toby, that I picked this dock for the sampler because there were a lot of questions about what are the true facts; that's often in a tautology, but these days, we shouldn't take that for granted. I really like companies that put the facts out there and are accountable for that. That was why I included FactSet Research. I also want to mention this company. You mentioned, hey, over a four year period, who wouldn't take 9% outperformance? I agree. I'm also happy to say that we've helped the stock in Motley Fool Rule Breakers since I first picked in August of 2009. It's actually almost a 12 year story for us. Similarly, the market over that time, by the way, our last 12 years, is up 384%, not a bad 12 years. FactSet Data is up 532%. Again, for a market that has quadrupled, it has sextupled, it is not outrageously great performance. It's just really solid in the market beating over a long period of time. The microcosm over the last four years is kind of a fractal, kind of a representation of a macrocosm that has continued over many more years than that. Toby, I trust we'll continue forward from here.

Bordelon: Yes, I think so. There's really no reason to think that what we've seen over the past four years won't continue. As I said, this looks like a very strong management team, and I see no reason they can't continue with their success.

Gardner: Let's say FactSet Data Research, ticker symbol FDS, four more years. Except we will be ending this sampler with this podcast. Let's go on to best performer No. 3. Sure enough, the news gets better from here. Now, this particular company, we've already talked about this podcast, so I don't think we need to spend a long time talking about Alphabet, because I already did it with Tim. I definitely would like to hear your own angle and your view of Alphabet, but let me first give the numbers. Toby, this stock, I picked at $818.98, February 2017. It closed out February 12th of last month at $2,104. So from $819 to $2,104, that's a gain of 157%. Wonderful, +90% over the markets. Once you take out the Alkermes -132%, you give us back nine with FactSet Data Research, I can add back 90% with Alphabet, which means we're still underwater by about 24%. But maybe it will get better from here. But before we move forward from here, Toby, what is your take on Alphabet the last four years?

Bordelon: What would be my big take here is that Alphabet in many ways, it looks a lot like the other big tech giants over the last few years, especially the past year, and I think that's the key takeaway here, right? There has been talk about is a company too big to succeed? Does a company you get to a point where it's no longer going to be the winner and you might as well sell it. Well, I think what we've seen from Alphabet over the last few years is that's not true, or at least it's not true yet. I know you're fond, David, of saying winners win, that's what they do, and I think what the last few years, especially this last pandemic year has shown us that these tech giants, Alphabet among them, are winners, and not even a global pandemic is going to stop them from winning. One thing I will mention too, is in your original thesis back four years ago when you were talking about this, you talked about the moonshots from Alphabet as something that was inspiring, that was hopeful. I think that that's definitely true, but that's not really what we've seen in terms of what's been driving these returns. I think it's just basically been Alphabet being Alphabet.

Gardner: So, you're right. All of those side businesses, Waymo, the self-driving cars, for example. There's genomic plays. Google Ventures. This is basically a venture cap portfolio that is part of the investment thesis that we have for Alphabet, but as you're pointing out, it's been people Googling things. As I talked about with Tim, using YouTube, etc., Google Cloud, these are the real performers when you're looking at the big numbers this company racks up from one quarter to the next.

Bordelon: Exactly. I think what we've seen in this pandemic the past year, this has been an anchor, Alphabet has been a company that people have depended upon for search, for Chromebooks, for Google Classroom, for video chatting between Google Meet, Google Duo. If you need a service to help you connect with people when you're stuck at home in a pandemic, you can find that through Alphabet. That's one of the things that has certainly helped them. They're really everywhere: digital assistance, home automation, entertainment through YouTube, YouTube TV. It's hard to get away from them.

Gardner: You are right. That reminds me of my snap test. We've talked about this many times before on Rule Breaker Investing, but if you could snap your fingers and make a company disappear overnight, the next day, would anyone notice, would anyone care? If we snapped our fingers and Google and all of the properties and technologies that you just described, Toby, disappeared, everyone would notice and I think a lot of people would be pretty bummed out the next day. This often leads us to some of our best companies, the ones that are just integral to our society or our daily lives. Often, they're companies that, by the way, break out to consumers. They're not B2B plays in the end. They are companies that all of us would miss. These are often the most powerful stocks of our time and certainly, Alphabet has been one of them. Well, let's leave it there for Alphabet, ticker symbol, as we mentioned, GOOG.

Now, that leaves us though, as I mentioned, still, unfortunately, behind the eight ball. We're 24% behind the market as we move to the second best performer. That's a surprise for a lot of people. The ticker symbol is NYT, it is The New York Times Company (NYT 0.69%). Now, when I picked this stock four years ago, I was thinking about the importance of journalism, that whether you want to agree with the New York Times typical viewpoint or not, and I find myself sometimes loving and sometimes hating them. For example, I sure do wish The New York Times Company had more appreciation and respect for business and business done well. I feel as if there's an anti-business thread that runs through The Times. But regardless, I think we can all agree that it is an important and valued organization, not just in the United States but worldwide. One of the best examples of accountable journalism. The stock was at $15.95 when I picked it for the sampler on February 15th of 2017, and look at that stock going as things got more and more digital, Toby, and New York Times transitioned its model from selling papers to digital subscriber base. We know something about that here at The Motley Fool as well. The stock has gone from $15.95 to $48.91 as it closed out last February 12th, and the sampler, that is a clean triple, up 206.6%, way ahead of the market, with a plus 140 back in the win column. Toby, your thoughts on the New York Times Company?

Bordelon: This has truly been a great performer and it is the most surprising on this list to me, I would not have expected it to come in at No. 2, but like you said, they have been successful in transitioning from physical to digital. Out here in Reno, I'm actually a New York Times subscriber; 50 years ago, I probably would not have been. If that were even impossible, the delivery fees would've been exorbitant for a paper that was talking about things; I didn't care about there on the East Coast, but this is another example I think of winners winning. When you have the digitization of news in the modern world news going more national, more international, I think people are going to gravitate toward the top sources, and it allows a company like the New York Times to be a provider of news for the entire world, not just their local area, and that's what we've seen. They're selling more subscriptions, they are able to sell more subscriptions through the digital avenue than they could if they were just printing papers and delivering to people's houses in their local area. They also have an aura of dependability, of authenticity, of trust. I think that despite comments about fake news, I think people want that. You can get any kind of information you want online at any random person's blog. But The New York Times, definitely is an institution that you can say, all right, I may not agree 100% with them, but I can trust that they are probably fairly accurate.

Gardner: Obviously, some people are going to hate them, some people are going to love them. But I think what's important, and you spoke to this, Toby, is that it's a brand, and it is a globally known brand. In a world that shifted from your local paper and lots of other local things that you used to use, and went digital, especially during COVID as well. We think about all the things, Zoom, etc., that turned digital. Just think about how masterfully they have managed the transition from being a newspaper into being a subscription based, and one that has people subscribing worldwide. So, I think this is a great case of the power of our brand. Again, some people will love the brand, some people will hate the brand. Many of us might be somewhere in the middle, but I definitely felt that this was a company the world needed. Over the last four years, while sometimes that I'd tear my hair out at their articles, for example, once they talked about the New York Yankees beating my Minnesota Twins and knocking them out of the playoffs year-after-year it seems, some of my least favorite articles from the New York Times. Nevertheless, it is a valued resource and one that clearly, the market has sat up and taken notice of. I'm delighted this one was in this five stock sampler in no small part because it took us from negative numbers, Toby, up to positive numbers. But it's fair to say, as we move onto the best performer in this sampler, that the past is but prolonged. All four of these companies don't even hold a candle to the performance of the best performer in this five stocks sampler, Five Stocks the World Needs Right Now.

I'll just mention ahead of time, Toby, that this stock and its performance, on its own, have made this five stock sampler the single best performing five stock sampler in Rule Breaker Investing podcast history, and let's move onto the ticker symbol, TSLA. I'm darn glad I recognize Tesla (TSLA 2.99%) as the company the world needed right now, and over the last four years, boy, has this business grown, and boy, have a lot of other competitors, especially in the automobile business, said, we think we're going to go electric too, and that certainly has put Tesla in the pole position at the forefront of an important global industry. Let's look at the numbers. Tesla stock was at $55.95 on February 15th of 2017. Well, actually, it was more than that, but the stock has split five for one, so that's the split adjusted price. So from $55.95, it went four years later to $816.12 at market close February 12th, a few weeks ago. That is a gain of more than 14 times value. It's up 1,359%. If you're looking at a graph on paper, you can barely even see the S&P 500 graph line because it's only up 67%, out performance by 1,290%, we'll round it up, putting Tesla on its own. It carries this entire sampler and many other samplers besides with its performance. Well, all of that was enough numerical buildup, and maybe I overhyped it a little bit, Toby. But darn it, if we're going to have the best Five Stock sampler performed ever and we're going to review it, we definitely want to mention it. But Toby, what has happened? What are your reflections on Tesla over the last four years?

Bordelon: Well, my first thought, I'm looking at those numbers, is to ask myself, "Could this possibly be real?" This is mind-boggling to have a stock do what Tesla stock has done in the past four years. There's a lot we can say about whether it's sustainable, whether it's overvalued, whether it's a bubble, whether it's ready for a crash. But I think the first thing I always want to do is, as a Tesla shareholder myself, speaking to all of the other Tesla shareholders who are listening to this. I want to point out and to remind everyone that it is OK from time to time to just sit back and be in awe at the performance of one of your companies, and to appreciate that and to take great joy in that. I think everyone who owns Tesla stock and has owned it for years should do that right now. Just take a moment, congratulate yourself for buying it, and be grateful, be joyful at what this company has given us. This is fantastic. In terms of what has happened, one of the big things that happened is July 7th, 2017, the Model 3, the first Model 3 production vehicle rolled off the line. That's really been one or two companies that proved to the world that this could be a mass-market manufacturer, that they can make a car that was affordable. If not necessarily for the average person, for someone who was not necessarily looking to the luxury market. The prices have continued to come down since then. We've got the Model Y out now, and from that first car in 2017, we have had 450,000 Model 3 and Model Ys produced in 2020 alone. That's great, that's fantastic. For a start-up car company to get to that level is just wonderful. I think that's the biggest driver that I see. I think the other thing we've seen is, of course, you can't talk about Tesla and not mention Elon Musk's antics on Twitter and everywhere else. Let's remember another day here, August 7th, 2018. That was the infamous funding secured tweet.

Gardner: I'd forgotten, but you're absolutely right, funding secured.

Bordelon: Funding secured, that happened within this timeframe. Now, people are saying that was probably a joke, maybe he wasn't serious. But I think he was thinking about a little bit, given the frustrations of the short sellers.

Gardner: The idea is, he was going to take the company private, that was the thought at the time.

Bordelon: He was going to take the company private. If that had happened, if you assume that was real, if he had done that, that would have been going private at a split adjusted price of $105 a share.

Gardner: Wow.

Bordelon: That would have been a double from the February 2017 number, but look at all the upside we would have missed if that had happened. I'm firstly glad that that didn't happen, but he settled down a little bit. He's still on Twitter, but he's Elon Musk, and this is the market of someone who just thinks outside the box. It's that thinking outside the box that has gotten Tesla to where it is. The other thing I want [...] David is, you talked about other automakers transitioning to electric cars. Let's just think about how mind-boggling that is. What have we seen over the past year really? A Volkswagen, General Motors, Ford, and today I saw Volvo, these legacy automakers in an industry, Ford goes back over 100 years saying they're for the assembly line, have basically come out and said, "We are entirely or mostly going all electric." That whole internal combustion engine thing we've been doing for the past century, we're done with that. That's insane. That is so fundamentally transformative in a single industry. To have that happen so quickly is amazing, and that would not have happened without Elon Musk and without Tesla.

Gardner: I'm glad you're sharing that, Toby. I love what you said at first about just being in awe and being fine with that. Of course it's a lot easier if you're a shareholder in the company than if you're not. You might be full of envy if you're not, and we could understand that. You also might be wondering some about the price today and let's speak about that in a minute. But Toby, I really appreciate you took the time to just express admiration and enjoyment of that, and as a fellow shareholder, I can as well. I want to add one thing into the mixture for all investors, because we picked this as one of the stocks the world needed right now, and it was February of 2017, and you mentioned, the Model 3 rolled off just a few months after that. I really do feel like the world has needed this. We can see with the copycatting that the rest of its industry is saying, yes, we think electric is the right thing too. I think we have been proven right on thinking the world needed it right now, but one of my favorite things to point out about Tesla stock, the importance of being an owner over the long term, the only term that counts, from 2014 to 2019 the stock basically went sideways. You literally had it at a lower price in the summer of 2019 than some of the prices in the summer of 2014. Now, the S&P 500 over that five year period was great. Tesla shareholders, myself included, and we picked it for this sampler right in the middle of this incredible low, which would continue a couple of years more, you watched your stock get badly outpaced by the market averages for five whole years. Most of the gains for Tesla have occurred in just the last year or so, which is amazing again, to think that we're talking about a stock that's a 14-bagger for this five stock sampler over the last four years. But I really love all my investors and all my fellow Fools, whether a true Fool or an aspiring one today, to remember the importance of patience, and just being willing to sit there and look silly for years, as Musk himself did before this amazing transformation we've seen in the last year.

Bordelon: Right. This is just wonderful. It's hard for me to get past that transformation we've seen in the industry. I just can't think of another example that will come close, maybe to use an example from another stock in our five stock sampler. It would almost be as if the New York Times with the Washington Post, and the Wall Street Journal, and the LA Times all up and decided, "Hey, we're not doing print anymore. That whole thing where we used to print newspapers and delivered to your door, that's done, it's all digital." Maybe we are headed there, but that would still be a shock, wouldn't it? I don't know that we are making enough of the truly shocking nature of the announcements we've seen from all of these legacy automakers. Driven by Tesla, driven by Elon Musk vision of the future of transportation.

Gardner: Toby, as we shut this one down, let's just talk briefly about the Tesla share price today. I'm a shareholder, you're a shareholder, our cards on the table. I'm the first to say, maybe you would agree, that the stock could literally be half where it is a month from now. That's how volatile it is. In a lot of ways, it's being powered by some bitcoin announcements, I think, probably a little bit there in the Tesla share price. Elon, converting some of their cash and making a commitment to bitcoin and speaking positively about cryptocurrencies, which is certainly a valid statement on his part and his money is where his mouth is, but there's also a lot of speculation in that area right now. Is it fair to say that Tesla's share price is almost its own thing, untethered at various points to either the markets or the business itself? Maybe people have gotten caught up in the cult of Elon a little bit too much here and there, although I will also say that's been true. The downside as well when Elon's made mistakes, the stock has taken some probably unfair hits. Any thoughts for you, Toby, about Tesla's pricing as we look at it here in March of 2021?

Bordelon: I think that's definitely fair to say. There's a strong argument to make that the stock is disconnected from reality in some ways. As you said, disconnected in some ways from the underlying business of the company. I think you can't ignore that as an investor, even a long time investor. I think there's still some upside from here, I think there's a bright future for this company. I think it would be doing yourself a disservice as an investor not to realize the potential risk of the stock going down and perhaps quite dramatically from here. We obviously don't give personal investment advice on this show and everyone has a different situation, but if you're looking at your portfolio and you see, oh wow, look my Tesla shares are 75% of my whole portfolio. I don't think you'd be wrong to take this moment to do some risk analysis and decide whether now might be a good time to take a few profits and perhaps buy yourself a Tesla, or something with that. I don't think we should ignore the run up we've had. We are long term investors, but every once in a while you should do a sanity check. That may lead you to make some trimming decisions from your bound into decisions. I think that's totally fine. I think you can love a company, I think you can love a founder like Elon Musk, I think you can love business and a vision, and still say, "You know what? At some point, I invest so that I can enjoy the fruits of my investments." Maybe this is a time to enjoy some of those fruits.

Gardner: Let's leave it right there, because one thing is for sure, I'm going to remain invested in this company. It's been very volatile as a stock, not just over the last year, but over the almost 10 years that we've held in Motley Fool Rule Breakers as an active recommendation, Tesla stock. Toby, thank you for bringing great fortune to this five stock sampler. We're closing this out for all time. That's why we spend some extra time on both of these this week. Let's see the tail of the tape to close, this five stock Sampler, Five Stocks The World Needs Right Now, the average gain of these companies was 346.7%. The market, as we mentioned earlier, up 67.1%. These companies average basically a 280% gain each, over the market averages. Now, we all know that's pulled up by one company in particular, Tesla. Although it's awfully nice to know that two others here, one of them, Alphabet doubled, and one of them, the New York Times, tripled. I think it's fair to say that these really have been five companies that the world has needed over the last four years. I think for most of them, we're going to continue needing over the next four years and counting. Toby Bordelon, thanks a lot for joining me to review this five stock sampler.

Bordelon: Thank you for having me, David. It's been great fun discussing these companies.

Gardner: All right, that about wraps it up for Five More Stocks to Feed the Next Bear from 2018, and Five Stocks The World Needs Right Now from 2017. Pinch ourselves, I think that these samplers have performed as well as they have. I'm looking over the 13 that we've now officially closed out with these two, No. 12 and 13 were closed out today. We've done 28 all time five stock samplers, of the 13 we've closed out, six of the 13 have averaged more than 100% gains. I have to say, I never take any of that for granted, I sure hope you don't either. I will say, of the 15 that are still active, nine of those 15 have triple-digit or better gains. I don't really know what to say about the performance of these five stock samplers, other than to say, I care deeply about this. I've been doing this for a long time. I've always enjoyed the process, and maybe there's something about loving what you do that leads to better performance. It's just truly a joy to share these stock picks, this performance and of course, these analysts, my friends, to help teach us about what has happened.

What's going to happen next week? I mentioned at the top of the show, I will just preview it here at the end. I'm going to have some of my favorite analysts at The Motley Fool come on. In the same way you got to hear from Tim Beyers earlier this week, that he found the Motley Fool through his first Amazon purchase ever, The Motley Fool Investment Guide. That's a little bit of back story about Tim, or as Toby just mentioned, he was a lawyer burning out and decided to be a dad to his kids, and his dad said, "Hey, look at these funny guys with hats on CNBC" way back in the day. That's part of his back story. I love hearing the superhero origins stories of all my fellow Fools. I'm going to have three Fools hand-selected for next week to tell their stories. So much for the stories of these samplers, there's probably something instructive to be had as we think about asking ourselves now in the year 2021. What are five more companies the world might need right now? Usually, when we guide our investing toward companies of great consequence, doing important things, whether in bull markets or in bear markets, we will be rewarded overtime. Maybe that's a final thought for you this week. Before I simply say thanks for joining with me, and Tim, and Toby, and for my producer Rick Engdahl, we all say Fool on!

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$147.85 (1.59%) $2.31
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,312.12 (1.01%) $23.22
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,246.03 (1.35%) $29.82
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$133.68 (-9.80%) $-14.53
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$746.04 (2.99%) $21.67
Novo Nordisk A/S Stock Quote
Novo Nordisk A/S
NVO
$106.46 (3.12%) $3.22
Ford Motor Company Stock Quote
Ford Motor Company
F
$13.33 (2.15%) $0.28
The New York Times Company Stock Quote
The New York Times Company
NYT
$33.49 (0.69%) $0.23
United Parcel Service, Inc. Stock Quote
United Parcel Service, Inc.
UPS
$181.23 (0.81%) $1.46
FedEx Corporation Stock Quote
FedEx Corporation
FDX
$217.40 (3.66%) $7.68
General Motors Company Stock Quote
General Motors Company
GM
$37.70 (1.62%) $0.60
Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
VWAGY
$20.08 (0.95%) $0.19
FactSet Research Systems Inc. Stock Quote
FactSet Research Systems Inc.
FDS
$374.09 (0.44%) $1.64
Tencent Holdings Limited Stock Quote
Tencent Holdings Limited
TCEHY
$46.80 (3.68%) $1.66
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,320.83 (1.09%) $24.98
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$87.85 (-1.20%) $-1.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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