Why Rule Breakers Buy a Stock That's Already "Won"

In 2009, a little-known chipmaker called Nvidia experienced a double in value, prompting Rule Breakers to cross it off their list after waiting for a pullback that never materialized. Recently, a similar signal has appeared once again, this time for a company 1/100th the size of Nvidia. William O Neil, founder of Investors Business Daily, taught Rule Breakers co-founder David Gardner that buying high only pays if you then refuse to sell.

The company Guardant Health, which went public in 2018, already had a strong run-up, gaining 96% within six weeks of its IPO. Despite falling 57% and 68% later, the stock rebounded and more than quadrupled in value, beating the market by 106 percentage points. The company's second pick, which also had a 93% run-up, also more than tripled, and UnitedHealth Group's decision to cover the test will make it accessible to around 100 million more people.

While Trait #3 of Rule Breaker Investing has led to some losers, it has also proven successful in the long run.