The Case for Investing in Individual Stocks, with Co-Founder of the Motley Fool, David Gardner
#642: Curious about how individual stock picking could sharpen your investing skills—even if you’re an avid index fund investor? In this episode, Paula Pant sits down with David Gardner, co-founder of The Motley Fool and author of Rule Breaker Investing, to delve into the world of contrarian stock strategies and the mindset behind picking standout companies.
You'll explore how evaluating individual stocks can uncover insights that benefit any investor, whether you ever buy a single share or not. Paula and David discuss the value of qualitative analysis—looking beyond spreadsheets to factors like leadership, innovation, and company culture—and reveal what makes a ‘Rule Breaker’ stock with Gardner’s signature six traits. Whether you’re curious about dabbling in stocks or simply want to become a more savvy business thinker, this conversation has lasting lessons.
Listeners will learn:
Why David Gardner seeks out companies that others consider overvalued, and how contrarian thinking can lead to unique opportunities
The six traits that define Rule Breaker stocks, focusing on the qualitative factors that set businesses apart
How skills gained from evaluating individual stocks can be applied broadly—to entrepreneurship, career growth, and a deeper understanding of business
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic
advertising run times. The provided timestamps are approximate and may
be several minutes off due to changing ad lengths.
(0:00) Sports team investing analogy
(4:20) Individual stocks vs index funds
(7:12) Values-based investing approach
(13:16) Starbucks pick criteria
(13:28) Six rule breaker traits
(20:41) Why overvalued works
(26:44) Market timing philosophy
(32:20) Traditional metrics miss key factors
(39:18) When to sell stocks
(45:26) Winners vs losers math
(48:32) Portfolio allocation rules
(55:10) Sleep number concept
(1:00:00) Adding to winners strategy
(1:05:16) Evaluating unfamiliar companies
(1:09:15) Dot-com bubble lessons
(1:16:24) AI investing parallels
(1:20:18) Sports betting critique
Resource:
David Gardner's book: Rule Breaker Investing: How to Pick the Best Stocks of the Future and Build Lasting Wealth
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Q&A: ChatGPT Built Her $1.2M Portfolio … But Should You Trust It?
#641: Cristina has a $1.2 million portfolio and hopes to make work optional within the next decade. Is she invested in the right way? Or should she change up her asset allocation?
Anonymous and her husband plan to retire in 5 years. They have 10 rental properties and a $2.75 million portfolio. They dream of slow travel, generosity, and family time. How should they structure their assets to support the lifestyle they want?
Paula (the caller) and her husband are planning for three kids, private school, and possibly college down the road. Should they front-load a 529 plan with a large lump sum, or take a different approach?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
Resources mentioned in the show:
Interview with Frank Vasquez
Risk Parity Cheat Sheet
Caller Christina's original call on https://affordanything.com/episode463
Afford Anything Episode 618 https://affordanything.com/episode618
Risk Parity Portfolio Blueprint https://affordanything.com/riskparity
Joe's episode SB 1698 https://www.stackingbenjamins.com/create-your-retirement-spending-plan-1698/
Run The Line half marathon with Joe: https://runsignup.com/Race/TX/Texarkana/RuntheLineHalfMarathonTXAR
SavingForCollege.com
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(01:42) Christina
(16:42) Anonymous
(33:40) Paula the Caller
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First Friday: Jerome Powell's Remarks at Jackson Hole
The jobs report came out this morning and it was a painful one.
The US added only 22,000 new jobs in August, according to the latest BLS report.
And unemployment ticked up to 4.3%.
What does this mean?
Find out in today's First Friday episode!
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(01:48) ADP vs BLS Jobs Data
(04:33) Mortgage Rates & Their Impact on Homebuyers and Sellers
(11:30) Fed Chair Jerome Powell’s Remarks
(12:54) The Fed’s Dual Mandate Explained
(15:58) The Fed’s Changing Approach to Unemployment
(18:13) Implications: Rate Cuts on the Table
For more information, visit the show notes at https://affordanything.com/episode640
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Q&A: How to Invest in Your Community (by Finding the Third Option)
#639: Aisha is excited to share how some life-changing advice has played out for her career. She wonders now: what limiting beliefs has Paula and Joe had to overcome in their businesses?
Lesley is attracted to community bonds as a way to build collective wealth for the underserved. But do the same risks exist as they do in the traditional bond market?
An anonymous caller is intrigued by the promise of Employee Stock Ownership Plans. Is this the answer to a smooth exit from her business that also leaves a legacy for her employees?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
Resources mentioned in the show:
Aisha's original call in Episode 473
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[GREATEST HITS] James Clear: How Small Daily Actions Compound Into Life-Changing Wealth [RERUN]
#638: Fifty dollars. That's how much this couple transferred to their "Trip to Europe" savings account each time they cooked dinner instead of going to a restaurant.
By year's end, they had funded their dream vacation — not through budgeting or willpower, but by hacking their habit loop.
This story illustrates how James Clear approaches habit change.
Clear joins us to explain the four-stage cycle that drives every behavior: cue, craving, response, and reward.
You see a restaurant (cue), predict it will be convenient and tasty (craving), eat out (response), and satisfy your hunger (reward).
Repeat this loop enough times and the behavior becomes automatic.
Clear translates these four stages into four laws for building good habits: make it obvious, make it attractive, make it easy, and make it satisfying.
Want to break a bad habit? Flip the script — make it invisible, unattractive, difficult, and unsatisfying.
We explore practical strategies like habit stacking, where you attach a new behavior to an existing routine.
Clear suggests saying "After I make my morning coffee, then I will review my budget for two minutes" rather than relying on motivation alone.
He explains temptation bundling — pairing something you need to do with something you want to do, like only listening to your favorite podcast while meal prepping.
The conversation covers why most people focus on outcomes when they should focus on identity. Instead of saying "I want to save 10,000 dollars," Clear suggests thinking "I want to become a saver" — then asking what actions a saver would take daily.
Clear addresses the challenge of delayed gratification with money habits. Saving feels unrewarding in the moment because the benefits come later.
He shares techniques for creating immediate satisfaction, like the couple's Europe fund or using habit tracking to mark small wins.
THIS EPISODE IS FROM OUR “GREATEST HITS” VAULT, AND ORIGINALLY AIRED IN 2018.
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Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(0:00) James explains four habit stages
(5:22) Cue and craving examples
(8:47) Four laws of behavior change
(11:05) Making habits obvious through environment design
(14:56) Habit stacking with existing routines
(16:12) Travel and changing contexts
(18:58) Temptation bundling strategies
(25:21) Motivation rituals and triggers
(29:52) First ad break ends
(33:11) Habits of avoidance challenges
(39:10) Social reinforcement and tribes
(41:09) Making habits easy through friction reduction
(44:03) Delayed gratification and immediate rewards
(54:16) Second ad break ends
(57:16) Making habits satisfying
(1:03:01) Commitment devices and accountability
(1:08:35) Identity-based versus outcome-based habits
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You can afford anything, but not everything. We make daily decisions about how to spend money, time, energy, focus and attention – and ultimately, our life.
How do we make smarter decisions? How do we think from first principles?
On the surface, Afford Anything seems like a podcast about money and investing.
But under the hood, this is a show about how to think critically, recognize our behavioral blind spots, and make smarter choices. We’re into the psychology of money, and we love metacognition: thinking about how to think.
In some episodes, we interview world-class experts: professors, researchers, scientists, authors. In other episodes, we answer your questions, talking through decision-making frameworks and mental models.
Want to learn more? Download our free book, Escape, at http://affordanything.com/escape. Hosted by Paula Pant.
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