Motley Fool Money: Interview with David Gardner – Rule Breaker Investing

Date: September 28, 2025
Host: The Motley Fool (Brian Richards with guest David Gardner)

Overview

This episode features a rich, wide-ranging interview with Motley Fool co-founder David Gardner, centered on his new—and purportedly final—book: Rule Breaker Investing: How to Pick the Best Stocks of the Future and Build Lasting Wealth. The conversation delves into Gardner’s distinctive philosophy of breaking conventional investment “rules,” his six traits for finding “Rule Breaker” stocks, the dangers of buying into so-called “faker breakers,” and the single most important habit for long-term investing success.

Key Discussion Points & Insights

1. The “Rule Breaker” Investing Mindset

(00:44-03:08)

• Challenging "Buy Low, Sell High":
  David Gardner shares how he scrutinized conventional wisdom—especially the oft-repeated “buy low, sell high”—and found it lacking.

  • Quote:

    “Buy low, sell high. That’s actually horrible advice. Better advice is: buy high and try not to sell.”
    (02:14, David Gardner)

  • Focus should be on owning great companies for the long haul, not trading in and out based on price targets.

• Overpaying for Quality:
  Gardner argues there’s nothing wrong with “overpaying” for exceptional companies early in their trajectories, as they tend to command premium valuations, just like great products or services.

  • He cites Starbucks, Tesla, Netflix, and Amazon as examples—stocks often labeled “overvalued” but which proved to be massive winners.

2. The Six Traits of Rule Breaker Stocks

(04:07-11:33)

• Trait 1: Top Dog and First Mover in an Important, Emerging Industry

  • “If you focus your stock market research and attention on those companies, that is a stocked pond where swim little fish that will get to be a lot bigger.” (05:26, David Gardner)

• Trait 6: Called “Overvalued” by Financial Media

  • Gardner embraces stocks called overvalued by consensus, provided the other traits are present.
  • Case Study: Intuitive Surgical
    • When Gardner recommended the minimally invasive surgery pioneer, it was at 71x earnings; the stock has since multiplied 90-fold.
    • Quote:

      “Most people...are taught not to buy stocks that are trading at 71 times earnings, but it’s now up more than 70... closer to 90 times in value from that point.” (06:25, David Gardner)

• Palantir Example (09:04)

  • Even as media called Palantir perhaps, “the most overvalued firm of all time,” the stock has delivered spectacular returns for early-buyers:
    • “My Palantir is up 685% in my own portfolio.” (09:33, David Gardner)

• Input vs. Output Thinking:

  • Many investors miss the boat by focusing on outputs (earnings, cash flows) rather than inputs (CEO quality, innovation, brand).
    • “When you start looking at the inputs...these things are not captured on the financial statements.” (10:26, David Gardner)

3. Lessons from Missing Out—The Yahoo Story

(11:33-15:18)

• Gardner recalls not buying Yahoo in the 1990s because he was too focused on its valuation; he calculated it warranted a price of $25.5, didn’t buy at $29, and missed its massive run to $1000.
  • Quote:

    “The opportunity cost of missing a 30-bagger is huge versus picking a stock that loses 50%...that’s almost irrelevant.” (13:34, David Gardner)

• The experience catalyzed his pivot toward “rule breaker” investing and away from traditional value investing.
• Gardner and Buffett both ignore market timing, macro forecasts, or index valuation metrics.
  • Quote (on market worries):

    “I spend no time thinking about where the market is... Warren Buffett has a great line... he spends no time thinking about the macro picture or asking other people about their macro viewpoints.” (14:18, David Gardner)

4. How to Spot “Faker Breakers”

(15:48-19:36)

• Definition: Companies that appear disruptive with hype and innovation, but fail to deliver as investments.
• Warning Signs:
  • CEO not a “five-tool athlete”—lacks vision, execution, or the ability to scale.
    • Quote:

      “When I don’t feel like my CEO is a five-tool athlete, maybe a great two-tool athlete...that is something worth paying attention to.” (17:33, David Gardner)

  • Hype doesn’t translate into widespread customer adoption.
    • Examples: Segway, Google Glass, GoPro.
    • “Faker breakers may look really cool, but I’m not sure people are really using the product or ever will.” (18:56, David Gardner)

5. The Ultimate Takeaway: “Let Your Winners Run High”

(19:36-21:29)

• When pressed for a single enduring lesson, Gardner emphasizes holding onto great companies for much longer than feels natural.

  • Quote:

    “Rule number one: let your winners run high... If I could wave my magic wand and everybody would take that away, we would be such better investors.” (20:19, David Gardner)

  • His brother Tom Gardner’s rule:

    “No matter how long you own any stock... double it and you’ll probably do better.” (20:40, David Gardner)

• The pitfalls of short-term thinking:

  • Too many investors cut winning stocks far too early, missing out on extraordinary multi-year runs.

Notable Quotes & Moments

| Timestamp | Speaker | Quote | |-----------|---------|-------| | 02:14 | David Gardner | “Buy low, sell high. That’s actually horrible advice. Better advice is buy high and try not to sell.” | | 05:26 | David Gardner | “If you focus your stock market research and attention on those companies, that is a stocked pond where swim little fish that will get to be a lot bigger.” | | 06:25 | David Gardner | “…it’s now up more than 70... actually it’s closer to 90 times in value from that point.” (on Intuitive Surgical) | | 09:33 | David Gardner | “My Palantir is up 685% in my own portfolio.” | | 10:26 | David Gardner | “When you start looking at the inputs…these things are not captured on the financial statements.” | | 13:34 | David Gardner | “The opportunity cost of missing a 30-bagger is huge versus picking a stock that loses 50%...that’s almost irrelevant.” | | 14:18 | David Gardner | “I spend no time thinking about where the market is...Warren Buffett has a great line...he spends no time thinking about the macro picture or asking other people about their macro viewpoints.” | | 17:33 | David Gardner | “When I don’t feel like my CEO is a five-tool athlete, maybe a great two-tool athlete...that is something worth paying attention to.” | | 18:56 | David Gardner | “Faker breakers may look really cool, but I’m not sure people are really using the product or ever will.” | | 20:19 | David Gardner | “Rule number one: let your winners run high... If I could wave my magic wand and everybody would take that away, we would be such better investors.” | | 20:40 | David Gardner (quoting Tom Gardner) | “No matter how long you own any stock... double it and you’ll probably do better.” |

Timestamps for Important Segments

• 00:44 – Opening thoughts on challenging investment wisdom
• 04:07 – Six traits of a rule breaker stock introduced
• 05:10 – Case study: Intuitive Surgical and “overvalued” stocks
• 09:04 – The Palantir story and the power of contrarian investing
• 11:33 – Learning from missing Yahoo and the cost of valuation obsession
• 15:48 – Identifying “faker breakers” vs. genuine disruptors
• 19:36 – Final takeaways: let your winners run high

Summary

David Gardner offers a passionate case for “breaking the rules” in investing, emphasizing the benefits of buying the highest quality, most innovative companies—even at seemingly inflated prices—and holding them for years, ignoring the siren calls of valuation anxiety and market timing. He cautions against companies that merely look disruptive and highlights the importance of visionary leadership and real customer adoption. Above all, Gardner’s message is clear: let your winners run high, and you’ll dramatically improve your returns.