Buy and Hold: Taking the Bad with the Good

Co-founders Tom and David Gardner look back on The Motley Fool's journey with Amazon.com (NASDAQ:AMZN) since first purchasing it in September 1997. The brothers discuss the ups and downs they've seen with the stock, now a 100-bagger for the Fool.

Amazon rose, then fell, then rose again -- but some multibaggers plummet and never come back. In this video segment, David discusses the inevitable losses that come with the Foolish brand of long-term investing, and how the gains make it all worthwhile.

Tom Gardner: Now, there are some of these huge multibaggers you've had, that have not come back.

David Gardner: Sure.

Tom: How does that fit into your approach as an investor?

David: Well, I can think about Iomega, which back in the day at The Motley Fool -- as you remember, we were on the cover of Fortune magazine and it was partly a story about Iomega. Celera Genomics was a 9-bagger in six months, and we ended up selling not far above cost.

Obviously, I can always think back on times that I wish I'd sold something that I held.

Tom: But the holds end up mathematically massively outweighing ...

David: Yeah, when you take it all and all. Absolutely.

In fact, I gave this talk internally; you heard this two months ago at our monthly huddle at The Motley Fool. I said, "Rule Breakers has had 32 stocks that have lost 50% or more." That's the Rule Breakers service. I know I'm speaking to some members today. Thirty-two stocks have lost 50% or more. That sounds horrible, and it's not easy. In fact, it's painful, and every one of those I'm accountable for.

The good news, though, is that the 32^nd best pick in Rule Breakers is up 160%, so you've got to do the math. You've got to be mathematical here. It's not advanced math, but play that forward and you see the incredible benefits of being happy to occasionally give away a 10-bagger and end up at cost, or suffer a 50% loss because you're holding all these other great things as the world is reshaped by these companies and you're a part owner of them, measured in decades.