Motley Fool Hidden Gems Investing - 1 Hidden Tech Stock, 92 Birthday Candles for Warren Buffett

Episode Date: August 30, 2022

Day 2 and we're live (again) from FoolFest 2022! (0:21) Tim Beyers discusses: - Why Walmart is the un-tech tech stock - Interview highlights from investor Michael Mauboussin and author Annie Duke - How Warren Buffett can (or should) celebrate his 92nd birthday   Stocks mentioned: WMT, BRK-A, BRK-B Host: Chris Hill Guest: Tim Beyers Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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Washington, D.C., and I'm very happy to be joined by Motley Fool senior analyst Tim Byers. Thanks for being here, man. Thanks, man. Fully caffeinated, ready to go. And our lunch is just waiting for us, So we'll get to that right after we won't put the dozens of listeners through the pain of listening to us eat, which is which is never fun. So yesterday, Bill Mann and I talked about sort of some of the highlights from the first half of day one. I wanted to talk with you about the second half of day one and sort of what we've done on day two. But in terms of the conversation you and I and others had, we had a breakout session yesterday afternoon, which I which I thought was a fun topic. because there are so many, in the Motley Fool universe of services and recommended stocks, there are literally hundreds of stocks to get recognized. And there are some that kind of get

glossed over, overlooked. And you highlighted one, which I love because it's kind of an overlooked stock. And yet, I can't imagine there's a single person listening who does not know this company. Yeah. Yeah. Smaller story. Walmart, a little company out of Bentonville, Arkansas. It is truly astonishing that it isn't widely recommended inside the full universe. And actually, Chris, I don't know that it's really all that widely recommended amongst institutional investors on Wall Street. I think it's more widely ignored. And I think the reason for that is maybe a little bit of headline risk. And what I mean by that is Walmart sometimes gets dinged for labor relations, or it gets dinged for fines, or it runs afoul of something somewhere

federally. And that does happen from time to time. But let's remember that this company is a voracious user of data. It's kind of the original gangster of data warehousing in the retail space, meaning that they're a better user than data than most of their peers and have been for a very long time. That shows up in the margins. It shows up in the cash flow. Even in this period that we're in right now, which has been very tough on retailers, and we do know that, Walmart is still generating billions upon billions of dollars of cash flow. It's a very interesting company that I think gets better coming out of the crisis that we find ourselves in right now. You made the point in the session about how it's not a name that people think of

in terms of, oh, this is a tech company. But it's like, you can make the case that Walmart is a tech stop. And they hire a tremendous number of data engineers. They hire software developers. They actually have a blog. They have a tech blog, which is ostensibly meant, Chris, I mean, they do show off tech projects, but basically what they're doing, a friend of mine, and we do the show together this week in tech, Tim White and I, we were talking about this. Is it really what this is. It's kind of performance art to draw in people who may not think of Walmart as a career for a software engineer and trying to attract those people and say, hey, by the way, here's why there's an interesting software career for you at Walmart. They do a lot of really sophisticated

stuff. It's a smart move. So today we had four external interviews, people external to the Motley Fool Company on stage, I got the chance to interview Morgan Housel. Deidre Woolard interviewed Brian Fairbanks, the CEO of Trex. Bellman interviewed Michael Mobison, who, when I made the opening remarks this morning, I referred to him as, I think of Mobison as the investor's investor, but he's not as well-known as others. He's not on TV all the time. But a lot of people on the investing team here at The Motley Fool would love the chance to just sort of sit down and talk with moments. We're actually, as a heads up to the audience, we're actually going to be bringing these conversations to The Motley Fool Money feed

over the weekend. So, we're going to have Bill's conversation with Michael Mobison. You'll get to hear the full thing. But I'm curious if there was anything that stood out to you from that conversation that just sort of struck you? Well, I'll tell you the most important thing. He talked about how he started, and he started talking about how, as he got into analysis, as he got into equity research and his career at Credit Suisse, he started in a completely different role in which he described it. I think he used the term abject failure. I'm pretty sure he did. Yeah. People can check us when we run the episode, but I'm pretty sure abject failure is how he described his first job. Which is completely fascinating. So I think the

term of investor's investor is right. This is somebody who is accustomed to and understands what failure looks like and why you want to model in what expectations are and what success has to look like as you model out whether or not a company is worth investing in. I do think Baubeson's framework for expectations investing is an absolute must for anybody who is in my business of professional equity research. But also, I think it's just a good, solid reading and an understanding for any investor. I think understanding the expectations built into a company and its performance is critical. It'll make you better as an investor. Annie Duke, for those unfamiliar, was a professional poker player.

She was one of the best professional poker players in the world. Yeah. And walked away from that, wrote a great book called Thinking in Bets. Yes. And has a new book called Quit, which she and Morgan got into and some of the details. So, again, that'll be an episode we run over the weekend. Um, but I, one of my thoughts, um, listening to that conversation was, uh, you know, I, I'm not someone who follows professional poker, but she just, the way she talked, the way

she thinks, the way she was composed on stage, I thought, oh yeah, I could just instantly say, I was like, oh yeah, I could see how she would be devastating to play against. Um, what, what, if anything struck you in that conversation? Well, I had a follow-up conversation with her afterwards. And I think a lot of the things she's saying is something that ties into something I talked about yesterday. I always talk about mindset. We had a mindset session here yesterday. And so, when she was talking about various strategies for quitting, and she was talking about this specific to stocks, it made me think of like, is she talking about things like stop losses and that sort of thing?

And what was clarifying to me as I talked to her afterwards is she was recognizing and trying to get us to think about what is your weakness as an investor? What are the things that you have to account for? Your biases, your emotional fragility, let's say, in terms of your investing and accounting for that ahead of time. And that was very clarifying, hearing her think about that. And honestly, it's going to make me think a little bit about how I want to do this in my own investing. So I really appreciate that conversation that Morgan and she had. Yeah. And this is difficult to do. It's tough for us as investors, and it's obviously tough for people in employment situations. But how important it is to try and remove yourself from

the situation, just the mental exercise of, OK, do I think this way about this stock or the job I have right now, do I think this way because I'm in it? Yes. And, and if so, is there a way for me to sort of step outside myself and think, wait, what if I, if I can remove myself from this situation mentally, would I think about this differently? Right. Yes, exactly. Right. And she's, she was very clear about this. And I think it's such an important point. Like you just said, if you're in the moment, it's very difficult to make a dispassionate decision when passions are running high. And that happens to all of us as investors. We're supposed to think of emotions as information. Sometimes we take them as not just information, but like the signal,

it's the bat signal and we have to do something and then we end up doing something irrational. So having a framework around that is such a good idea. I highly recommend that conversation with Annie Duke. Think of that or listen to it maybe with a mindset lens. Think about your mindset and how what she's saying can help you i think it'll be really instructive today is warren buffett's birthday yes it is happy 92nd birthday warren buffett who i cannot imagine in a million years is actually listening to this but what do you what do you suppose that's like well like what do you get the billionaire who's turning 92 and has the wherewithal to get whatever he wants anyway you get that guy you get that guy a cheeseburger and a cherry coke because that's

the thing that i mean our our producer dan boyd is shaking his head and of course he is because that is what warren buffett does like that guy is winning at life because he has a diet that kills most 30 year olds and he can go in and get another 10 years out of that i mean god bless warren buffett it really is uh among other things uh a case for dna and just sort of like that i guess man hey look some people uh just you know they they they can eat whatever they want well or even more than that do if you can to the degree that it's possible spend time doing things that you genuinely actually really love, I think it probably plays a much bigger, uh, role in our overall physical health than we may in fact realize because that guy lives his best life

and the food that he, I mean, I'm not sure the food is doing him any favors except for maybe his taste buds, but you know what? I think he's happy and God bless him for it. Yeah. And you You know, the documentary about Buffett, I mean, there have been several, but the one that's on HBO, for anyone who has HBO Max, it was done, I believe, five years ago. If I'm recalling correctly, the documentary begins with Buffett speaking to a class of high school children. And then after the credits, the first scene is Buffett driving to work. And as he does every day driving to work, he goes to McDonald's to the drive-thru. and that's where he gets his breakfast. There you go. This is not a healthy eater. No, but you know what? The man knows how to live. So happy birthday, Warren. Keep living your best

life, man. Tim Byers, thanks so much for being here. Thanks, Chris. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow. Bye.