Motley Fool Money
Special Episode: Motley Fool Co-Founder Tom Gardner: The Quarterly Call
Release Date: October 19, 2025
Host: Matt Greer
Guest: Tom Gardner (Co-Founder & CEO, The Motley Fool)

Episode Overview

In this special quarterly call episode, Motley Fool co-founder and CEO Tom Gardner provides an in-depth perspective on the current state of the stock market, offers practical advice for navigating this challenging and richly valued environment, and concludes with five specific stock recommendations for investors across the risk spectrum. The discussion focuses on valuation caution, the potential of artificial intelligence (AI), lessons from past bubbles, and comprehensive risk management strategies.

Key Discussion Points & Insights

1. Where the Market Stands: High Valuations and Heightened Caution ([00:54]–[05:22])

• Avoiding Speculation in a Hot Market

  • Tom urges investors to resist speculative behaviors—especially after an exceptionally strong market run (S&P 500 up 35% since mid-April).
  • "This is not the time to increase your risk, it's time to reduce your risk." [01:16]
  • Speculative strategies to avoid: options, leverage/margin, low-priced stocks, and even sports betting.
  • The current market's volatility is low (VIX is down), signaling calm seas—a potential precursor to future turbulence.

• Market Metrics Indicate Caution

  • S&P 500 is trading over 25 times earnings, which is historically high.
  • NASDAQ companies are at 6.5x sales; S&P at 3.3x sales—near unmatched highs in 25 years.
  • With less cash on the sidelines, there’s less dry powder to fuel future rallies and more vulnerability to downturns.

"Sometimes you can find the greatest investment possible. But if you don't have any money saved, what are you going to do? You can't buy it."
— Tom Gardner [04:39]

2. Practical Investor Advice: Reducing Risk, Not Exiting ([05:51]–[09:30])

• Tactical Rebalancing, But Not Panic Selling

  • The Motley Fool methodology recommends tilting away from excessive risk when the market is richly valued, not abandoning stocks altogether.
  • "Exposure to risk" should be moderated—avoid IPOs, SPACs if they return, obscure crypto, leverage, and penny stocks.

• Market Parallels & Differences: Dot-com Bubble vs. AI Boom

  • Notable progress: Today’s companies (e.g., Nvidia) are more profitable or break-even, unlike the loss-heavy .com cohort.
  • Unlike 2000, we aren’t seeing a wave of dubious new listings going public—yet. But enthusiasm around AI startups (and the inevitable IPOs for VCs to cash out) could change that.
  • Investors must be discerning as hype cycles mature: “We need to sit with all the new companies coming public and recognize that many of them don't deserve a very, very high valuation.” [07:08]

3. The Nature of the AI Opportunity and its (Inevitable) Hype ([09:30]–[13:20])

• AI: Different, Yet Not Immune to Overvaluation

  • "I think AI is going to create things we never thought possible...But there will also be so much competition. A lot of it will be commoditized." [09:41]
  • AI is a systemic technological shift with the potential for downstream effects not yet envisioned.
  • Private market enthusiasm (bubble-like) will eventually force unproven companies into public markets for liquidity—caution required.

• Not All “AI” Companies Will Win

  • 95% of organizations that have implemented AI have not seen any profit from it yet (citing recent MIT study).
  • Investors need to seek companies with real plans, financial discipline, and demonstrated AI leadership—not just hype.

"Even artificial intelligence, as with every other innovation in history, can become overvalued."
— Tom Gardner [00:05]; [09:41]

• Investment Approach in AI Era
  • Look for companies pairing strong financial management with high technology-based innovation.
  • Every sector will have its big winners, but picking them requires research and discipline.

4. The Psychology of Market Downturns: Are You Prepared? ([13:20]–[15:13])

• Investor Sentiment and Downturns
  • Surprisingly, many investors on The Motley Fool’s own Twitter admit a 20% market drop would devastate them. But this happens, on average, every five years.
  • The key is planning (e.g., having some cash or conservative holdings) so downturns don’t force emotional, poor decisions.

"If you're holding Deer and IBM and a bunch of ETFs and you have a cash position of 20%, well, then when the market goes down 15%, you're fine."
— Tom Gardner [13:36]

• Embracing Risk Management
  • Risk management may seem unglamorous, but in uncertain markets, it's essential.
  • Recommendation: No matter your risk level, move “one step to the left” to be more risk-managed today.

Notable Quotes & Memorable Moments

• On Current Valuations:
  "We're looking at peak valuations today or near peak valuations. Can they go higher? Of course they can. We know that is possible. But what are the probabilities?... How extended is the rubber band?"
  — Tom Gardner [03:47]

• On the AI Hype Cycle:
  "I think the bubble is fully formed for AI in the private markets. And what ends up happening downstream of that is that those companies need to go public."
  — Tom Gardner [07:59]

• On Avoiding Extremes:
  "There are people who have largely avoided the equity markets because they keep thinking it's going to collapse. And obviously, you can go too far on the risk continuum towards risk aversion and you can go too far towards speculative excess."
  — Tom Gardner [14:19]

Five Investment Ideas Across the Risk Spectrum ([15:13]–[19:01])

Tom presents five stock ideas, ranging from cautious to aggressive, suited to different investor risk profiles:

1. IBM (Cautious)

• Once considered past its prime, IBM has rebounded in the last five years.
• Well managed financially and a potential leader in quantum computing and advanced tech.

"IBM is a great cautious investment to make in a portfolio and I think you'll beat the market with it."
— Tom Gardner [15:29]

2. Progressive Insurance (Cautious)

• Leading innovator in auto insurance technology and telematics.
• Provides stability and a dividend.

3. Stride (Moderate) – Ticker: LRN

• Online education solutions for K-12 and adults.
• Addresses post-pandemic demand for remote and specialized learning.
• CEO James Rue praised for company performance.

4. Sterling Infrastructure (Moderate)

• Foundational work for data centers (laying cement, acquisition in Texas).
• CEO Joe Cotillo lauded for delivering “excellence for the last decade.”
• Major beneficiary from data center and AI-driven infrastructure growth.

5. Rocket Lab (Aggressive) – Ticker: RKLB

• Space technology company with ambitious projects.
• Founded by Peter Beck, known for vision and innovation.
• High valuation and risk, but “exciting company to follow.”

In addition to these, Tom reaffirms previous quarterly call picks for a five-year horizon:

• AbbVie
• Bitcoin
• Unity Software
• TJX Companies
• Kyndryl

"These are five year holding periods that I'm suggesting. ...I wouldn't be surprised if any of those stocks fell 15% in the next 12 months. That wouldn't surprise me at all. But as businesses for the long term, I think we've got a great collection of stocks there."
— Tom Gardner [18:38]

Actionable Takeaways & Final Thoughts

• Assess your portfolio’s risk and consider dialing it down one notch.
• Avoid chasing speculative opportunities in times of rich valuations.
• Focus on companies showing both financial discipline and technological adaptability—especially in the AI age.
• Prepare yourself mentally and strategically for market downturns; expect 20% corrections to happen regularly.

"No matter where you are—cautious, moderate or aggressive—I think you should move one step to the left and be more risk managing."
— Tom Gardner [14:41]

Timestamps of Important Segments

• [00:54] – Market context, speculation warnings, and risk factors
• [03:01] – Historical market multiples and current overvaluation analysis
• [05:51] – Investment strategy shifts in the current environment
• [07:31] – Dot-com bubble versus AI cycle comparisons
• [09:41] – AI transformative potential and risk of overvaluation
• [12:23] – MIT study on AI’s profit impact; lessons for investors
• [13:36] – Emotional risk and market declines
• [14:41] – Risk management advocacy
• [15:13] – Five actionable stock picks ranging cautious to aggressive
• [18:38] – Five-year view on investment picks and market expectations

This episode offers an in-depth, thoughtful take on navigating a richly valued market, with an emphasis on discipline and the necessity of risk management—plus concrete investment ideas for a variety of risk tolerances.