Tom Gardner, co-founder and CEO of The Motley Fool, says he thinks the next ten years will be a much different story for stocks than the past ten years, and says investors should be keying on companies that have the ability to raise prices in an inflationary environment.
In a wide-ranging interview with The Fool’s David Kuo, Gardner talks about both his broader approach to investing, and the current state of the market. While many are staying away from stocks because of the perception that we are in “uncharted waters”, Gardner has a different take. “The funny thing about the stock market is that, when you don’t think you’re in unchartered waters, and you don’t think that they’re shark-infested waters, that’s usually the time when you’re positioned to lose money, as an investor,” he says. “When everyone feels like things are pretty safe, pretty stable, pretty upbeat, optimistic, great returns — that’s when valuations get too high, and people haven’t taken the time to work through the risks in the marketplace.”
Gardner says that while there are concerns in the market right now, “the pessimism, worry and concern brings the valuation prices down across the market and creates opportunities for investors who are willing to go in for three to five years as a minimum per investment.”
Because of valuations, Gardner says he woudn’t be rushing into gold, which he thinks is moving into a speculative zone. He prefers stocks of firms that have the ability to raise prices and thrive in an inflationary environment. Companies that make consumer staples, as well as those involved in the oil and gas industries, are good examples of such firms, he says.
Gardner also talks a lot about his contrarian nature, and why a worry-filled time like this tends to be a good time to invest. “Historically, when you have a ten year period like we just had, the next ten years are ten good years to invest,” he says. “I don’t think, when things are down, it’s the time to pull all your money off the table. It’s so contrary, it’s really difficult for us to embrace that, but it’s when things are great that it’s time to start paring back and getting worried and it’s when things are like they are now, and everyone’s worried, that you should be a little more optimistic and excited. I know it’s painful to go through the period we went through, but there’s still great businesses out there and great opportunities for investors.”