How David Gardner’s Biggest Losers Demonstrate Why Long-Term Investing Wins

For David Gardner, the Rule Breaker Investing podcast isn’t so much a monologue as it is an extended chat with you, his listeners and readers, which is one reason he ends every month with a mailbag episode — so that he can bring your viewpoints and questions directly into the conversation.

In this segment, he shares an email — and a scorecard — from a listener who took a bit of a leap of faith. At the beginning of 2017, he opened positions in the five biggest losers in the Rule Breaker universe for 2016: Restoration Hardware (NYSE: RH), Juno Therapeutics, FireEye (NASDAQ: FEYE), GoPro (NASDAQ: GPRO), and Celldex Therapeutics (NASDAQ: CLDX). True, the Fool doesn’t usually suggest adding to your losers, but as Arlo points out, they were still active recommendations, and he didn’t own any shares of them. So how’d those stocks do from there? Well, without spoiling it, let’s say he didn’t bat 1000 — but Foolish investors don’t have to.

A full transcript follows the video.

10 stocks we like better than Walmart
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, the Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018
The author(s) may have a position in any stocks mentioned.

This video was recorded on June 27, 2018.

David Gardner: Rule Breaker mailbag item No. 2. This one came in from Arlo Randall by email. Our email address is Arlo, I’m truncating this a little bit, but you were talking about the benefit of having a scorecard. We have a lot of scorecards at You were talking about how interesting and fun it would be to look at some of those scorecards and opine about them and see some of the more popular scorecards on the site.

I can totally understand how that would be fun. In a way, when we look at scorecards, we’re giving you or me a peek into how other people are investing. Of course, anybody who has a scorecard stored on our site, we don’t take any peeks into that, and we wouldn’t give anybody else peeks into that.

One scorecard you called out, which I thought was a lot of fun, was David’s Biggest Losers. You’re sharing a scorecard that you made on our site. What you did, Arlo, is that you listened to our podcast on January 5th of 2017 — about a year and a half ago. At the start of every year, I lead off each year with a look at my biggest losers from the year before. Arlo, in his wisdom — or, in this case, I’ll go with his Foolishness — he decided, “Let me actually track those five biggest losers from 2016.”

You wrote, Arlo, the rationale would be, “I listened to the Biggest Losers podcast and then bought all five of the stocks after. I really like your philosophy of not adding to losers, but since I did not own any of them, I decided to buy them because of your comment that they were all still active recommendations, and you thought they could turn around.”

Those five were: Restoration Hardware, RH; Juno Therapeutics, JUNO; FireEye , FEYE; GoPro , GPRO; and Celldex Therapeutics , CLDX. Here’s how those five have done in the scorecard that you’ve created, Arlo, from worst to best. Let’s go in reverse order. Celldex, minus 85%. Yep, it got even worse for that tiny biotech company. GoPro, down 28% from that date. FireEye, up 51% from that date. It’s about to get even better. Juno Therapeutics, up 331% and bought out — which was not a bad 18-month return. Finally, RH, Restoration Hardware, up 429%.

Arlo goes on. “This may be a bad example to highlight, since buying losers is generally not good practice to encourage,” and not something we do on this podcast, “but,” Arlo goes on to conclude, “this was a fun scorecard to share.” Well, I’m glad that you took the time to share that.

You can create a scorecard on our site and many other sites. You could even just do it in Evernote or in an Excel spreadsheet. I think everybody who’s a Motley Fool Rule Breaker knows that I love scoring. I think we should all be scoring. I want people to score me. I’m going to score you. I love what you did, Arlo. Thanks a lot for sharing that.

What a bounce-back it was for those companies. It makes you want to look back at our list from this January. This is not a five-stock sampler. These are not stocks that I’m actively saying, “I think these are awesome.” I’m actually going over my worst picks from the years before. They do all still remain active recommendations, though, so perhaps there is something to these turnarounds. It only takes one 300% spike or so to wipe out a whole bunch of losers. Anyway, thank you, Arlo!

David Gardner owns shares of FireEye. The Motley Fool owns shares of and recommends GoPro. The Motley Fool recommends Celldex Therapeutics, FireEye, and RH. The Motley Fool has a disclosure policy.

You May Also Like

About the Author: Over 50 Finance