Rule Breaker Investor Trait No. 3: Invest for at Least 3 Years
Not to praise our Motley Fool co-founder too obsequiously, but David Gardner has a remarkably good track record in the market. Does he only pick winners? Heck, no. But does his portfolio of stocks outperform the market fairly consistently, and over the long term? Oh yes, and by an appealing margin. (Feeling skeptical? Look deeper into our website and see for yourself -- the man keeps score of his performance with ritual consistency.)
Naturally, you might want to replicate such profitable results, but to do that, the answer isn't simply to copy his stock buys -- it's to emulate his investing style. So on this week's Rule Breaker Investing podcast, Gardner shares the six core traits of his investing philosophy.
In this segment, he talks about trait No. 3, which he describes here as "invest for at least three years." That may be a somewhat arbitrary number, but it's setting a vital standard. As he explains, "invest" means something far deeper than "put some money into."
A full transcript follows the video.
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*Stock Advisor returns as of August 6, 2018The author(s) may have a position in any stocks mentioned.
This video was recorded on Sept. 19, 2018.
David Gardner: Trait No. 3: The No. 3 how for you -- here it is. "Invest for at least three years." You got that? The three in there with Rule No. 3? Invest for at least three years. Now, if I ever publish this material, invest will be italicized. It's invest.
And it reminds me to share with you, once again, if you're a longtime listener but if you're not, maybe you're hearing this for the first time. The Latin root for the word invest, a word that we toss around all the time, here, at The Motley Fool. Invest. The Latin root is investire. It's from the Latin which means "to put on the clothes of. To wear the garments of." And if you think of a phrase like "priestly vestment," that vestment word comes from that same Latin root.
And I think a great visual, especially if you're a sports fan, is to picture fans wearing the jerseys of their favorite team to their stadium to cheer their team on. And whether their team wins or loses that particular game, and whether their team, if they're a true fan and in my mind a true Fool, whether their team has a good season or a bad season [not just a game -- a season], they're going to stick with their team. And it's that mentality that has you investing. Putting on those clothes.
But it's not, in this case, clothes. It's wearing the garments of those companies that you love. And we do that for real, too. I see people walk around with an Apple logo on their shirt, or they love their Lululemon. Some of these garments are literally being worn by people who are big fans of some of their favorite companies. You might have some of those things in your drawers, as well, so that makes it even easier for you too understand, truly, what to invest, once meant, and for me, will always mean. And for you, too, if you embrace Trait No. 3 of the Rule Breaker investor -- invest for at least three years.
Now the No. 3 is a little bit arbitrary and we've used it for years at The Motley Fool. Sometimes we say, "Hey, have to hold for at least five years." I know one thing. It's more than one year. It's certainly more than a month or a day. But I like three, especially because this is Trait No. 3 and it makes it easier to remember. But this is often when I do my five-stock samplers. Also the length of time that I'm using for the game that we're playing, together, when we do five-stock samplers, is I'll say, "for the next three years." So it's a very consistently used number. It's a little arbitrary. Maybe four was a better number. We're going with three, but don't forget that that word invest is italicized for us as Rule Breaker investors.
And the classic quote I want to lay down for this one. I've already used it this podcast, but I'll say it again. The two keys to my investment approach, stock by stock, "In before the vast majority of others and out after the vast majority of others."
David Gardner owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Lululemon Athletica. The Motley Fool has a disclosure policy.