Yeah.

Now, to be clear, I have 50 plus stocks.

And the only way this ever happens is not because I loaded up on it in the first place.

It's purely through appreciation.

And as something like Amazon grows and I watch and learn it and I become... increasingly comfortable with it over time.

And it becomes safer than if I were a small business person with 80% of my wealth in my own company, because Amazon at this point is such a big, important company worldwide.

So I would just say that's my personal answer.

you're too rich.

So we're curious how you got to like, how did you get to be a rule breaker? How did you figure out rule breaker investing and land there to the point where it became your philosophy and something you could write a book about?

I think that, first of all, a critical element to that was that just being raised in a family where the idea of buying stocks directly was natural.

And in fact, when I came of age 18, I didn't even really know what mutual funds were or why you would even ever want one.

I had only been coached or taught by dad to buy stocks, buy companies we admire, buy great companies.

And I would say especially dad had a couple of key things that I've always valued.

One was he loved companies with high profit margins.

And so that's just generally good form anyway, when you can find very profitable companies.

And that's the power of a Rule Breaker portfolio.

[laughs]

And he, he was teaching us about the stock market and making it very understandable.

David, in the same way that you have made economics and other subjects that people find very complex, uh, understandable, intelligible, that's what we've been doing with the stock market.

Much smaller thing than economics, but an important thing as well.

So as we came of age, then we had our own portfolios, and the first thing that I did was I moved it from the old line bank where it had resided since he started, to something crazy at the time, a discount broker.

And, uh, at the time, these were upstarts, and they were charging, you know, a much smaller middleman fee for buying or selling a stock.

And so right away, I think my father wanted me to make it my own, and the first thing that I did as the eldest child of our, our family was to move the account and to start.

But are you saying that's the moment to strike, when The Economist, The New York Times, the Financial Times, all those reputable, JP Morgan, Goldman Sachs, when they say it's overvalued, go in and hunt?

But David, you know, why don't you start by just telling us a little bit more about yourself, you know, where you grew up, what influenced you and, and ultimately led you to be a Fool?

Sure.

Um, so I, I was born in Washington, D.C. to the, uh, to two parents, one of whom was a Harvard educated lawyer who was here in Washington, D.C. working in banking law.

Uh, although my father, Paul Gardner Jr.'s true passion was and is, happy to say he's still with us, uh, the markets.

Um, specifically for Dad, macroeconomics more than anything.

But, uh, and then my mother, from an Irish family, um, although a few generations hence, uh, a homemaker, an artist, a society woman.

And I would say in, in my own, um, youth, she was the rule breaker in our family.

How do you get to your, quote-unquote, "Rule Breaker portfolio"? Does picking those huge winners and figuring out how much of your money to allocate to them require a certain kind of process or discipline? How do you get there?

When it's, the darkness, uh, is surrounding us, you know, how do we get through that and how do we remain invested and remain true to our convictions?

Yeah.

So, um, in my experience, and again, you and I are, are around the same age and era.

We've worked in the same industry.

You've seen the same thing I have.

That is that when something new shows up, a lot of people are gonna talk it down.

And, you know, the internet, for example.

This is about measuring your gains and winners and losers, right?

Mm-hmm.

Um, and so as I analyzed looking back over my career, what I realized is the biggest opportunity cost I paid was when I sold a stock and then it went up 20 times in value.

Uh, if you do the math, I lost a lot more money that way than any of the bad picks that I ever made.

And so I just wanted to show that other side of the coin because if anyone's gonna spend a little time going back over their results and trying to learn, do see if you notice the same thing I do, which is what really cost you is that you didn't keep holding Apple or Amazon or, um, any number of other stocks that people come up to me at a book signing or a Motley Fool event and say, "I, I should have held on to Netflix.

I only, I only kept it... or Tesla.

I only kept it for a year or two." Those are really the most costly mistakes we make, not...

So it's errors of omission instead of errors of commission.

And I'm curious, maybe this is two questions in one, David, is how did you come across Tesla? Like, why was it so interesting to you to get the conviction to recommend it when everything was saying flashing red lights, this is probably not gonna work? Uh, and then secondly, like, what was your, the process beyond that? Like, how do you get conviction that this is the top dog and, you know, the first mover? Like, how do you actually determine that?

What I wonder, though, is do you at any point consider pull the cord and sell? Or is it that if you have a 20, 30-year perspective, a long-term perspective, you hold through the ups and downs no matter what?

So the answer is we do sell sometimes, and I'll give an example or two in a sec.

But let me just say that forget about individual stocks right now.

Let's just talk about the entire market, just the stock market and its performance.

What's the time that you should sell, if ever? And the answer to me is never.

You should get invested as early as possible.

If you have kids or grandkids, you should be getting them invested early.

What was your case in wanting to invest in Nvidia?

A- are we seeing something particularly different this time?

Yeah, that's a great question because, uh, there are a lot of familiar elements.

We definitely have been through cycles and, and the cycles used to be more defined by consoles, hardware, so there were major improvements in performance of the underlying chips.

And it took a long time for those to get put into the next wave of hardware, so you'd have kind of five to six-year cycles.

But the majority of the market, as we were talking about earlier, is actually mobile, and mobiles are continuously updated, so there really isn't the kind of platform cliff that, uh, you have on console.

There are gonna be some new consoles in the next couple of years.

Um, but, um, I think the challenges we've seen is that the, the industry still has a bit of indigestion from massive expansion during the COVID years where, you know, we sort of started th- believing that, uh, yeah, you know, all this, uh, all this revenue growth, uh, belongs to us and will, will stay.

Yeah

Mm-hmm

... shared out, and you could see why they're so successful, 'cause how they treat their employees and the standards that they hold, where doing good actually leads to doing well.

And again, many people think that's a trade-off or they don't actually think that's real.

So I, I specifically want you and I to make our portfolios reflect our best vision for our future, and so every company that...

I already, like, inveighed against an entire industry, the gaming industry, earlier.

[laughs] Sorry gamers, but by the way, I'm a gamer, but I play video games and board games, not, uh, 50/50 and the house takes 10%, uh, game.

But I, I would say that you, you're looking for the people who are doing good or within their industry, they're admired for how they treat their employees, how they win for their customers, and how their partners and suppliers are proud to be associated with them.

And our final question, what do you know about the world of investing today might've been useful back in 1993 when you were first getting started?