On this segment of theRule Breaker Investingpodcast,Motley Fool co-founder David Gardner reminisces about the time back in 1998 that he and brother Tom went on daytime talk show The View to help the newest co-host choose a stock. That part was easy. Their next visit to the show, six weeks later, wasn't nearly so much fun. But two points on a stock chart don't tell the whole story.
A transcript follows the video.
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This podcast was recorded on Aug. 10, 2016.
David Gardner: I'm going to start this week's podcast with a story, and it's a story of the last time that my brother Tom and I were on the television showThe View.So let me tell you about the first time and then the last time. So, July 2 of 1998, Tom and I made our first appearance on ABC'sThe View. Now, this is a daytime talk show primarily focused on the female audience. All of the hosts themselves are female. The staff has changed a little bit over these, wow, 18 years since our appearances onThe View, but Barbara Walters was on back then. I remember that. Maybe Whoopi Goldberg was as well.
But importantly, for our appearance, it was a new host, and her name was, and still is, Lisa Ling. Lisa's not still onThe View, but she's still out there doing the television thing today. But back in 1998, she was new to the show. She was the youngest member of the cast, and the idea the producer had was "Let's have Lisa pick a stock. Let's have Lisa invest. Let's have Lisa model good financial behavior for our viewers. Let's have her go ahead and pick a stock, but since Lisa's not so much of a stock picker herself, why don't we invite the Motley Fools on, and we'll have them pick a stock for Lisa. And let's have a stock that Lisa likes -- something, a company, that she would use or admire, maybe as a consumer."
So we got a call at Fool HQ from the producer saying, "Hey, would you guys like to come up and think about doing this? Let's do a pre-interview first," which is often what they do on television. So Tom and I did our pre-interview. We thought about our stock. Came up with our idea. Passed it to Lisa. She said she liked the company, she liked the product, so that was a good stock. I won't say yet what the stock is.
And so we went up July 2, 1998. It's a live studio audience. So Tom and I came out and started the show. "The Motley Fools are here." Raves from the studio audience, because that's, after all, if you've been to one of those -- I have, too -- that's your job. You're there to rave about whatever happens on the show. All enthusiasm for the Motley Fools. "And Lisa's going to pick a stock, and they're here to help her do it. David and Tom Gardner are joining us." We had our jester caps on. We had our stock ready. Had a nice exchange with the hosts.
And then it was time to talk stocks, which we did. We picked the stock. The studio audience seemed to like it. Lisa knew about it ahead of time. She had already been briefed, and so it seemed to go really well. That five- or six-minute short appearance, always, on television ended. We walked off the set. The producer was like, "Great job, guys. Really. Let's have you back. Let's update the story." So July 2 of 1998. As I mentioned, that was the day.
Now, over the next six weeks this stock lost 33% of its value. One full third of our stock pick for Lisa was gone when it came time to think about having us back on the show. And they were OK with that. We were OK with that, too. I like to talk about my losers, a lot, both on this podcast and on our website. I always have a lot of losers, so we're OK with talking about losers. They were, too. So, "Guys, let's have you back, and we'll just talk about it and update the story." Which we did exactly six weeks later, Aug. 16 of 1998.
So again, live studio audience. A lot of enthusiasm. "Here come the guys. They're back to talk about Lisa's stock." Lisa was smiling. Looked excited. She knew where we were headed with this. We started to look a little crestfallen as we started talking about what had happened the last six weeks. In fact, I think it kind of went something like this.
"Hey, everybody. The Motley Fools are back.Yay!" Cheers! Cheers! "And they've got an update on the stock for Lisa." More cheers. "And that stock is down!" And at that point, one of our few friends who actually watchesThe Viewon a regular basis told us, "You know, guys, I think you are the only ones I've ever seen actually booed on the showThe View." So, yes, we did get a kind of good-natured, loud boo from the audience as we revealed that we had lost 33% of Lisa's fantasy money.
And we talked a little bit on the show -- only, like, another three or four minutes --- about why and what had happened. It was the summer of the Asian Contagion, for anybody who remembers that, and if you don't, just look it up on Wikipedia, and it will kind of update you on the roiling events that rocked the summer of 1998 and our global markets. But this company had also made a serious misstep that summer as well.
So here we are. Let's fast-forward to -- well, why not -- right now, the second week of August. And I'm going to tell you what the stock was and reflect briefly on its performance. So the stock we picked for Lisa that day, July 2, 1998, was the ticker symbol, goes like this, SBUX. Now, I know some of us are dyed-in-the-wool investors. You right away know that'sStarbucks. Some others may not, but that is the ticker symbol for Starbucks. Starbucks was our pick for Lisa. Starbucks did have a really bad earnings report, and summer, and lost a third of its value.
However, since we're now looking backwards from this week in 2016, I can tell you that as of Aug. 2, when I had these numbers most recently updated, Starbucks, from the day that we first picked it -- this includes the 33% drop -- Starbucks is up 701.7%. Pretty awesome stock. Up 8 times in value. TheS&P 500, over the same period -- again, 18 years later -- the S&P 500 is up 88% from there. So Starbucks up 702%, S&P up 88%, so it's outperformed by hundreds of percentage points. Lisa, if you're listening, I hope you held.
We never did get invited back on the show, so we've still never updated the story ofThe View.I'm pretty sure the producers working on the show today probably weren't the ones back then. I doubt there's any institutional memory at ABC'sThe View.If you are a booker forThe Viewlistening every week toRule Breaker Investing, Tom and I would love to come back. I think it would be really fun to update the story, because I think the lesson of not worrying about short-term problems when you have great companies, great leaders, great consumer brands -- everything great about Starbucks -- has proved itself over the last 18 years. It is up more than 8 times in value.
These days, Starbucks is worth about $80 billion as a company. It's just been a remarkable success story. And all the credit does not go to any stock pickers but really to Howard Schultz, the founder of Starbucks. And that is really, Howard Schultz and Starbucks, that is my focus of this week's show. I've learned a few things from Howard and from Starbucks that I hope can help make you a better investor.
So I've got a few more stories to tell, and some insights, and that's what I want to do this week. I've got Starbucks on the brain and I thought, "Could there be any better way to introduce this topic than reflecting on our two appearances onThe View?" Still awaiting that third to really close the loop on the story.
David Gardner owns shares of Starbucks. The Motley Fool owns shares of and recommends Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.