Here's How Motley Fool Co-Founder David Gardner Finds Multibagger Stocks | Summary and Q&A

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January 28, 2014
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The Motley Fool
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Here's How Motley Fool Co-Founder David Gardner Finds Multibagger Stocks

TL;DR

David Gardner, co-founder of The Motley Fool, discusses his approach to investing in transformative companies that are often undervalued by the market.

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Key Insights

  • 🥺 Investing in transformative companies with bright futures can lead to significant returns.
  • 👀 The stock market often looks ahead, which is why companies with exciting futures may initially appear overvalued.
  • ❓ Premium branding and pricing can contribute to the perceived overvaluation of stocks.
  • 👶 Companies that have the potential to disrupt industries and create new markets often have the opportunity for significant growth.
  • 💗 Investing in companies with optionality and the ability to morph and grow can be highly profitable.
  • ❓ The success of investors like Warren Buffett demonstrates the fallacy of the efficient markets hypothesis.
  • 🍉 Supercomputers and automated trading have a different focus from long-term investing and shouldn't deter individual investors.
  • ❓ Learning from successes can be just as valuable as learning from failures in investing.
  • 🤩 The key is to focus on the future potential of companies and not dwell on past mistakes.
  • 🧑‍🏭 Market opportunities and the ability to transform an industry are both important factors to consider when investing.
  • 👀 Zillow is an example of a company that challenges preconceived notions and exhibits characteristics Gardner looks for in stocks.

Questions & Answers

Q: Can you explain the concept of Supernova and how it combines the strategies of Stock Advisor and Rule Breakers?

Supernova is a service that combines the stock picks from Stock Advisor and Rule Breakers to create portfolios that invest in innovative companies with bright futures. It takes the stock picks and turns them into portfolios, similar to how NASA has missions for their projects.

Q: Why do you invest in stocks that may appear overvalued?

Gardner explains that he looks for stocks that may appear overvalued because often these are the companies with the most potential for growth and disruption. The stock market always looks ahead, so if a company has an exciting future, the stock will look overvalued in the present.

Q: How do you differentiate yourself from the efficient markets hypothesis?

Gardner believes that the idea that individual investors cannot beat the market is a foolish notion. He attributes his confidence in investing in stocks to his observations of successful investors like his father and Warren Buffett. Gardner emphasizes the importance of long-term thinking and rational investing.

Q: What is your stance on the impact of supercomputers and automated trading on individual investors?

Gardner acknowledges the influence of supercomputers and high-speed trading on the market but believes that long-term investing still provides the best opportunity for creating and growing wealth. He argues that the narrow focus of supercomputers on microsecond trading is different from the long-term focus of investing in great companies.

Q: How do you incorporate Warren Buffett's approach into your own investing philosophy?

Gardner admires Buffett and believes in investing rationally and for the long term. However, he diverges from Buffett's approach in terms of technology. Gardner is excited about the opportunities presented by the technological age and the potential for investing in companies early on that can morph and grow in unexpected ways.

Summary & Key Takeaways

  • David Gardner explains the concept behind Supernova, a service that combines the stock picks from Stock Advisor and Rule Breakers into portfolios to invest in innovative companies with bright futures.

  • He reveals his strategy of investing in companies that may look overvalued but have the potential for significant growth and disruption.

  • Gardner discusses the key factors that contribute to the success of these companies, including exciting futures, premium branding and pricing, and the ability to remake industries.

  • He reflects on the influence of Warren Buffett and the importance of long-term thinking in investing.

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