Motley Fool Hidden Gems Investing - China, Cybersecurity & Baseball’s Business

Episode Date: July 10, 2015

The NYSE halted trading and United Airlines grounded thousands of flights, both due to computer problems, so is it time to invest in cybersecurity stocks? China’s market is tanking, but should U.S. investors buy the dip? Plus, sportswriter Barry Svrluga analyzes baseball’s $9 billion industry and discusses his new book, “The Grind: Inside Baseball’s Endless Season”. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio this week for Million Dollar Portfolio, Jason Moser. From MDP and Motley Fool Rule Breaker, Simon Erickson. and for Motley Fool Deep Value, Mr. Ron Gross. Good to see you as always, gentlemen. Hey, Chris. We've got the start of the earnings season and the end of Microsoft's phone nightmare. We will dig into the business of baseball with Barry's Verluga from The Washington Post, and as always, we'll give you an inside look at the stocks on our radar.

But we begin this week with technical glitches. The week in technical glitches, really, guys, because on Wednesday, United Airlines grounded 3,500 flights worldwide due to a computer problem. And if that didn't get Wall Street's attention on Thursday, the New York Stock Exchange halted trading for four hours due to a technical glitch. Ron, I'll start with you. New York Stock Exchange, that's kind of a scary headline for investors, but worse than the actual effect. True, but for me too. I'm walking into the eye doctor, and I get a text from our chief investment officer, New York Stock Exchange halted. And I'm like, oh, great. Next, Ron grows, I go into the ... I get my eyes checked, I come back out, still halted. Hour later,

still halted. Hour later, still halted. But, as you say, the first thing is that it's great it wasn't a cyber attack, at least we hope, and we believe it's not a cyber attack. It was a technical glitch. You don't want to see those, but it was a software release, communication broke down, and it does happen. What's interesting is that things have evolved in the stock exchanges and the stock markets so much over the years that the New York Stock Exchange really represents only about 20% market share volume nowadays. There are 11 other exchanges, NASDAQ being the one that probably most people have heard of. There are dozens of electronic communication networks like ARCA and Instanet, maybe some folks have

heard of. So, New York Stock Exchange shutting down isn't the debacle it would have been maybe 10 or 20 years ago. But certainly, people get a little jittery. Yeah, Jason, I feel like this was probably worse for the professional investors, certainly for the people out there who continue to day trade, despite evidence that it doesn't actually work. Despite that little thing right there. I just sort of looked at this, and I thought, well, I don't have a trade going today. I'm fine. Yeah, it did not interrupt my day at all. I kept on digging into companies. And it was

interesting, you were the eye doctor. I was taking my daughters to the dentist that afternoon. O' We do work, I swear folks. This was late in the afternoon, after the market closed actually. But the receptionist at the dentist's office was mentioning the same thing, and I said, also, did you hear about the United situation? She's like, wow, we can't just rely on computers. You've got to know how to do it the old school way, right? And I think there's something to be said for that, because as technology continues to make our lives, in theory, easier, it's worth noting that we depend on this technology in many, many different ways. And if it fails, not

really if, but when it fails, we need to be able to understand how to deal without it, perhaps. Think about things like self-driving cars. What happens when the first malfunction occurs there? What happens when a self-driving car gets hacked? I think that's probably one of the big hang-ups with our generation. Perhaps our children will not really have to see it from that perspective. But I think it raises a host of questions as far as our dependence on technology goes. Simon, the Wall Street Journal wanted to report the story about the halted trading, but their website was down as well at the time, which has got me started to think about, maybe it's

time for me to invest in cybersecurity. I know you just did a research trip out in Silicon Valley. What'd you find? Well, I think that you hit the right question out of this entire story, is how do we make money off of this, right? Group of investors. I did. I just visited Silicon Valley last week. One of the companies that really impressed me was FireEye, who's a company that's going into cybersecurity, trying to figure out, how do you fix this big problem that is cybercrime and cyberterrorism? And I think that right now, we're kind of in the moment of the oh darn problem. Companies are calling up cybersecurity companies saying, hey, I got hacked. I'm Target, I'm Home

Depot, I'm Sony Pictures, whoever it is. And it's kind of a fix the problem that is here and now. But I think the next evolution of this is really more of a subscription model, where over time, you've got large cybersecurity companies monitoring the perimeter of what's going on out there and fixing these problems before they actually happen. Let's move over to China, guys, where it's getting pretty ugly. Over the past month, the Shanghai composite has dropped around 30%. The Shenzhen market, which is often compared to the NASDAQ since it has more tech companies, down nearly 40%.

Ron, this headline seems worse than the NICE one. But it's not surprising, because I think for weeks, if not months, we've been hearing people use that B word, the bubble, with regards to the stock market. The stock market was shooting up just as, really, the economy was slowing down. Those two things, really, that's quite a divergent thing that's going on there. So, it makes sense for a correction of some sort to happen. The steps that the Chinese government is taking to combat this, they're not taking it lying down. And some of the steps are pretty interesting. Some normal things that we see here in the U.S., like cutting interest rates to prop up the economy. But there, they

have brokerage houses buying billions of dollars worth of stocks. They're relaxing margin requirements in a move that can only be wonderful. They're allowing real estate to be an acceptable form of collateral to buy stocks on margin. What could possibly go wrong there? Tons of companies have halted trading in their shares, in the shares. So, they're doing their best to kind of stop this free fall here. And does it matter to U.S. investors? Most U.S. investors are not directly invested in the Chinese stock market. But the economy of China and the China stock market, it certainly affects other things like commodities, like consumer spending. Companies like Apple, you've seen in the headlines, sell a lot of product to China. So, it certainly

does have rippling effects across the world. And, Simon, auto sales as well, where the projections at the beginning of the year, China was going to increase auto sales by about 7%. That's now basically been cutting more in half, down to 3%. Yeah, very true, Chris. And just to add on something to what Ron was saying about the incentives the government of trying to get the middle-class Chinese citizen to invest in the stock market has been effective. Look at this a little bit last month.

The equivalent of the NASDAQ over in China through June was up 165% for this year. The average stock list on the exchange had a PE, wait for it, of 140. So, this is starting to sound like a dot-com kind of bubble that we went through in the year 2000. What's interesting is that they've already had kind of a debacle in the real estate and the housing business. And so, people say, we can't really make money in housing anymore, let's put money into the stock market. And that's where we saw a big run-up, which probably led to a bubble. I mean, over the years, I've developed a pretty strong opinion in regard to investing in China. In short, don't. I just don't think it's worth it. Now, I mean, there are exceptions to the rule,

okay? You find the market leaders like Baidu, like Alibaba, something like that, where they obviously have a stranglehold on the market there. That's one thing. But when you have a country where the government can just, I'm not saying that we are necessarily much better, but you have a country where a government can just make any call at once at any given time, it's not necessarily a free market. We have so many companies here that give us exposure to that growth opportunity. You hear all of this talk about Apple and cutting back on guidance there. Apple, in 2014, 15% of their sales came from China. It's going to be more or less the same for the coming years. Get your exposure to China via big companies like that, that we have

a lot more transparency in our markets here versus having to depend on something in a country we just are not as familiar. Shares of Zillow hit a 52-week low on Friday after the online real estate company announced chief financial officer Chad Cohen is leaving the company to, quote, pursue other business interests. You know me, Jason. Anytime the CEO or the CFO leaves abruptly, I find that, well, intriguing. It is. It can be intriguing. I mean, that, in theory, is one of the few people who should really know every financial lever in regard to that business. So, it could be any number

of things. I mean, there doesn't appear to be a scandal here. Who knows, really? I tend to think that this is a far different business than it was 10 years ago or so when he started with Zillow. I mean, they're just rolling up this acquisition of Trulia, and it is just a fundamentally different story now than it was a year ago. And maybe this isn't really his cup of tea. Maybe he's not suited for this job for the coming decade. Maybe he just feels like there are better opportunities. Who knows, really? But I do think there are plenty of names out there that would be right for the job. I mean, you look at the former CFO of Trulia, Sean Agarwal, I believe is how you pronounce his last name. I think he

would be more than qualified for this job, and I'm certain that they will at least be reaching out to him to see if it's something he might be interested in. If you check his LinkedIn profile. I mean, they've got a pretty good track record there. It was almost a year ago that the Trulia deal was announced, and since then, shares of Zillow have basically been cut in half. Was it a mistake? No, I don't think it was a mistake. I think it was the right thing to do. I think that whenever you have something as nebulous as that, you don't really know how it's going to affect the business in the short run when you combine two big entities like that. And

then when you have management say, well, this is a transition year. Well, transition year is code for dead money on Wall Street. Short-timers are going to bail and go elsewhere. So, that's not surprising to me at all. I think that we still have a business that's going to be very relevant here for the coming decade and beyond. And I think that the short-term perspective out there on Wall Street could be an opportunity for investors with a longer timeline. This week, Microsoft announced it plans to cut nearly 8,000 jobs and write down more than $7.5 billion on its Nokia phone handset division. Ron, the Windows phone is still around, they're still trying to make a run with that, but the Nokia nightmare appears

to be ending. A debacle from the beginning, from the bomber era. Satya Nadella obviously taking the company in a completely different direction, focusing on cloud and mobile software. 7% of the workforce, it's a significant number, and it was a bigger chunk even last year when they started this. Most of, not most, but A big chunk of those folks are in Finland, not surprisingly, from the Nokia acquisition. But it's an unfortunate circumstance, but it's the right move. It's mostly non-cash. The $8 billion, you won't see that show up.

It's not an actual dollar cash flow out the door. But let's move on, and Microsoft has a bright future ahead of it. Coming up, just because it's earnings season does not mean each business is actually making money. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Simon Erickson, and Ron Gross. Guys, the Container Store lost $5 million in the first quarter, and that was still better than Wall Street was expecting, so shares were on the rise this week. I know it wasn't good, Jason, but was it at least encouraging?

Jason Moser Wow, encouraging apparently is too strong Well, OK, so I'd much rather focus on businesses meeting their expectations versus Wall Street's expectations. So, I will say, they met their expectations, and I think that's great. Now, the first quarter of the year is notoriously a slow one for them, and it's only 20% or so of the business overall on an annualized basis. But, I mean, I do think, again, you have to really look at this and say, man, what kind of market opportunity really exists here. In the face of a recovering consumer, in the face of really great market conditions, in the face of an improving housing market, they are still not growing sales.

It's not to say they don't make good products, I'm sure they do. I think I've been to a container store once in my life, and that was about a decade ago. But again, I think that you really have to question the market opportunity for all of the things that they do well, culture-wise and whatever. At the end of the day, we're in this to make money, and I don't know if container store is the best way to do it. Shares of Pepsi up this week after second quarter sales came in around $16 billion. Profits were higher than expected. It was a pretty good quarter, Simon. Maybe.

Wow! It was good. Sensing a theme for the back half of the show. I'm a little bit pessimistic on this one, though, Chris, because I think you can only cut your way to growth so far. We've seen just a systematic drop in soda sales. beverage consumption in the United States and even abroad for several years now. Pepsi's top line has been stuck either flat or decreasing for four years now, basically. I think for this quarter, it was actually the snack food side of the business that rescued things.

We saw 2% revenue growth from the Frito-Lay side of the business. But even that, I'm not sure that I would be pinning my future fortunes on the junk food market, either. So I think that if you've got a couple levers, you can pull in food. You can either raise is you can raise volumes, you can change the product mix. And I think that's that third one that Pepsi's trying to do, get higher dollar items that are being sold out there to fix this. In the meantime, they're doing cost-cutting and giving the shareholders dividends and buybacks in the meantime. But I'm kind of a little pessimistic on the long-term. So, you've got Pepsi that essentially diversifies away from what we consider to

be just sort of basic soda with snacks. You have Coca-Cola diversifying away from its basic soda with other non-soda beverages, honest tea and that sort of thing. Is either one of these going to be a long-term winner, or are they both doomed? I'll tell you what, I look at both of them at this point and really don't see an attractive investment thesis. For the distribution model and the brand power that Coca-Cola has built to date, and really Pepsi to a lesser degree, I like that Pepsi has the salty snacks to fall back on, whereas Coca-Cola doesn't really. I think the growth has more or less been had with these guys. Maybe good from an income perspective, but they're not at

the top of my list. Yeah, I agree. Income is pretty decent. The growth will come, but it'll be internationally, if at all, and it might be a little bit less than people are hoping for. Guys, before we get to our final story, a couple of housekeeping notes. If you're listening, you may know about our other podcasts, Foolery, Industry Focus, Motley Fool Answers. Happy to announce a brand-new weekly podcast from The Motley Fool, Rule Breaker Investing. You can find it every Wednesday on iTunes on Stitcher. It is David Gardner, one of the co-founders of The Motley Fool, best-selling author, successful stock picker. That's putting it mildly, frankly.

David Gardner, best track record of The Motley Fool. Yeah, phenomenal track record. Yeah, that guy. Check it out, Rule Breaker Investing. It's basically David Gardner's insights and observations about some of the most innovative and disruptive companies out there, really getting at the core of what Rule Breaker Investing is all about. So, check it out every Wednesday, iTunes, Stitcher, anywhere you find podcasts. And secondly, we've got a little Motley Fool Money swag giveaway, guys. Wow! You listen to Motley Fool Money, now you can show people with our Motley Fool

Money stickers for your car, your truck, motorcycle, any mode of transportation, Ron. I know what you're thinking, how do I get one? Really? My son has an electric scooter. All he has to do, drop an email to radio at fool.com, send us your address, we'll send you a little Motley Fool money sticker. While supplies last. While supplies last. We'll make more. If the demand is there, we will keep up, we will meet demand. This is not going to be like a Tesla Motors thing, where it's like

you order one and you get it six months from now. We'll get you the sticker. Alright guys, final story this week. Mondelez International introduced the newest version of the Oreo cookie. Oreo Thins, they are four millimeters thinner, they have 18 fewer calories, and you know what? I'm not betting against them. What do you think here? I just want to see Nutter Butter Thins. I'm not really the biggest Oreo guy, but this opens up a world of possibilities, and Nutter Butter Thins, I think that's the next big thing. I need to see Nutter Butter Thins, please. I find typically that the thin version of any cookie doesn't actually taste like

the cookie. It tastes a little bit off, so I want to have a taste test here. Maybe we can do that on air one day. I'm sure that'd make for great radio. Listen, they have dozens and dozens of different flavors of Oreos. They pretty much all seem to do well. I wouldn't count them out on that. That's what I was going to say. You're not a fan of Oreos. You are in the minority on this planet. I was looking at some stats that the Washington Post put up in a story on this. It was unbelievable. In the United States, basically, one out of five dollars spent on

cookies in this country are spent on Oreos. Have you heard of our weight problem in this country? Have you had the Rice Krispies flavored Oreos? The Rice Krispies treat flavored Oreos? Not too shabby. Really? So, hashtag, you're welcome, Oreo. Hashtag, dozens of flavors. Dozens of flavors. That's kind of like our MarketFoolery tagline there, Oreos got one. millimeters thinner? Is that all it takes to be marketed this way? I mean, are we fooling

ourselves here? Is this of interest to you at all? I just can't believe they're marketing this as a thinner Oreo. It's four millimeters thinner. I bet it's impossible to take apart. You know how some people like to take their Oreos apart and you need to fill in first? I think you're right about that. This could be a construction issue. We need to call in the engineers. It's got to affect the texture, right? It's going to be far crispier, I would imagine.

I would imagine. Drop us an email, radio at fool.com. Not just on the sticker, because we'll send you the sticker, but we'd also like your thoughts on this. But as you were saying, Simon, we're in this to make money. Mondelez International stock up 37% the last two years. So, say what you want about Oreos, but they are moving that stock higher. Eating twice as many out of the thin. There you go. It's a ploy. Alright, guys, we'll see you a little bit later in the show. Up next, we will

dig into the business of baseball with Barry Sferluga from The Washington Post. Stay right This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. We are halfway through the baseball season, and at 162 games, it is the longest season in the sports world. And while exciting at times, baseball is in many ways a grueling sport for those involved. A behind-the-scenes look at America's pastime is provided in the brand-new book, The Grind, Inside Baseball's Endless Season.

It's written by Barry Zerluga of The Washington Post, and he joins me now from across the Potomac River in Washington, D.C. Barry, thanks for being here. Thanks, Chris, for having me. I appreciate it. You've written about what the season, the endless season, is like for everyday players, starting pitchers, scouts, team executives, family members. And while you follow the Washington Nationals, this really could be about any of the 30 teams in Major League Baseball, couldn't it? Yeah, these characters are represented in every single franchise.

And I kind of got the idea for the book really not through covering baseball as much, but by stepping away and covering the NFL for a few years. You know, the NFL just has this reputation as being a physically relentless and violent sport. which it certainly is, but what strikes you when you've covered both of them is that for all the violence and the toll on the players' bodies in football, there's a six-day recovery period, and there are many, many players who don't practice during the week or take a day or two of practice off so that they can let their bodies recover as they should, and there's just, there is not that room to breathe in a baseball season. It can be suffocating because every single day

there is a performance, and every single day there are failures, and those failures are public. So yes, this is a book with characters that come from the Nationals, but I think people can read it and think about those players on the team, or those people on the team that they root for and really relate it to every single franchise. I want to get into a couple of the people in a minute. But first, you've covered sports for 20 years. You're not some wide-eyed kid just coming out of the wilderness. Did anything surprise you, though, when you were working on this? Yeah, definitely. And I think that was part of the reason to pursue the stories. It was not to show how a player goes two for five with a homer and a stolen base it was really to show

what gets them to that point so i think that the more surprising um elements were in chapters on on like the wife uh i chose ian desmond's wife he's the shortstop of the nationals he's a guy who plays every day who had kind of a typical baseball upbringing and that he was drafted out high school and spent several years in the minors when his then-girlfriend was kind of tagging along behind the bus and driving from Lynchburg, Virginia, to Myrtle Beach, South Carolina, and staying in an adjacent hotel room. And now they have three kids, and she is really, Chelsea Desmond, is kind of a jack-of-all-trades. while Ian is grinding through his season, she's got to change the kids' sleeping habits and get

them to the ballpark and figure out where to live in Washington when their home is actually in Florida. The responsibilities, and I don't know that I want to say burdens, because obviously there are benefits to being married to a professional athlete, but it is a much different life than i think people would would guess that wives of a baseball player has uh would have and i also say would say the scout uh in this case chris klein these guys they live lives that no one can imagine with with night after night in hotels and flights and um and drives long drives to see to obscure places to see out of the way players in the hopes that they're going to stumble upon a major leaguer in the 15th round of the draft. Those two characters kind of brought the

most surprises to me, but I would say there were surprises in reporting every chapter. I love the focus on scouting, and it's scouting, as you indicate, sort of the way we think about traditional scouting in baseball. But with the advent of Moneyball, I'm curious, where do advanced metrics fit in and how much tension is there, whether it's for the nationals or any organization, between the analytics, the data, and just sort of the traditional sort of gut feeling? I think it really depends on the organization. An organization like, I mean, if you bring up Moneyball, we're always going to think

about the A's. You know, they were at the forefront of incorporating some of that advanced data. but I think each organization kind of uses that stuff differently. Some push it to the side more than others. The general manager of the Nationals is Mike Rizzo. He came up as a scout. He was an area scout. He believes in his eye over the numbers every single time,

but he also understands that it would be irresponsible to have information available and not pay attention to it at all. So even in a very scout-based organization like the Nationals, there is an analytics department. Those folks are used in every transaction, particularly when preparing to make trades or pursue free agents. Mike Rizzo is going to turn to his scouts and consider his own opinion, what his eye sees first, but he's going to look to see whether the numbers back that up or not. But again, it's different in each organization depending kind of on where the GM stands, what his background is, and all that kind of stuff. You mentioned Mike Rizzo, the general manager.

That was one of the parts of the book that got me thinking about sort of what we do here at The Motley Fool in looking at public companies because public companies have to balance short-term results and long-term planning. and the general manager of a baseball team. I mean, that's one of the things that's so wonderfully illustrated in your book is just how he's trying to balance a team that is trying to win this year right now while at the same time he's thinking about what is the roster going to be in 2016, who are going to be the free agents in 2017. I really don't know how he pulls something like that off.

Yeah, that was an interesting part, too. You ask about surprises, and I don't know. I guess it makes sense when you think about a general manager having to make sure that he's taking care of the franchise for the long term and balancing those two goals against each other with short-term success and long-term viability. but the depth that he thinks about those things and the amount of time he spends thinking about a one-year plan, a three-year plan, and a five-year plan. And that is not just within your own organization. It's also understanding who's going to come to the marketplace three years down the road, what free agents you might pursue at that time. If you have people going out the door, what are the possibilities both within your own organization and from the outside that might come in to replace them. It's described in the book by Stan Kasten, who was the former president of the Nationals and now runs the Dodgers as three-dimensional chess. And I think

that's a good way of thinking about it, because the fan sits in his or her seat at the ballpark that night and thinks, you know, Jordan Zimmerman is having a very good season. I think that we should be able to keep him with the Washington Nationals and sign him to a very long contract. that is not the snapshot that a general manager is thinking of. It's a much more complex equation. I also like the fact that in the age of Moneyball, when so much is driven by data, there are still baseball players who have their routines, they have their superstitions, and they clearly matter a great deal. And all you have to do is read about Drew Storen, the relief pitcher who did i read this correctly he basically has the exact same meal every day at

chipotle yeah he did last year he did he's changed it up this year i can't remember what he told me uh where he goes now but he he would go when the team was home um to chipotle at not at uh he called his breakfast but his breakfast was at like 12 30 or 1 p.m before he went to the ballpark And he'd get a barbacoa quesarito, which is like a burrito wrapped, but not a normal wrapper. The wrapper was actually a quesadilla. It was like a mini Cooper. And so he, but part of, particularly for a closer, but for any baseball player, it was very important for him to stay in the same routine, regardless of whether he had success or he had failed the night before

because he needs to recreate that almost monotony so that he's not approaching things differently the day after he blew a save. He's not walking into the clubhouse with his chest puffed out if he saved 10 in a row or crestfallen if he had blown a couple saves in a row. And this is a guy who knows failure, knows failure in the biggest times in the playoffs. But they do not want to get out of, I mean, you're right, they're humans. And for all the talk of numbers and that, you know, we can know, we can predict the future because we know what the numbers are from the past.

These guys have emotions, their emotions matter, how they handle themselves matter. It all plays into performance, probably more than the numbers could possibly tell us. You're listening to Motley Fool Money, talking with Barry Sverluga of the Washington Post, His new book is The Grind, Inside Baseball's Endless Season. Major League Baseball is a $9 billion industry, so let's talk a little bit about the business of baseball. One of the big challenges that Major League Baseball had recently was the game was just slow. They've made some efforts to try and speed the game up. Are those working?

You know, they are, and I think to the surprise and delight of even the people that instituted them, I talked earlier in the year to John Scherholtz, the former Atlanta Braves general manager and current team president there, who was chair of the committee that was formed by the former commissioner, Bud Selig, on how to speed up the game. And really, when you ask baseball people to fix baseball, that's a very difficult thing because they're in the game because they love the game and they don't easily recognize the problems. But because it was baseball people that were tasked with this over the winter, they went to snip away at the non-baseball parts. They wanted to get away from some of the dead time. So they asked batters to keep one foot in the batter's box in between pitchers if they hadn't fouled off a ball. They asked pitchers to be ready immediately when the TV timeout ended between innings. So they decreased the wait time in between innings.

And what we found is these little snips here and there that affect the action not at all have average game times down about nine minutes at this point in the season, which is really a significant development. Games are lasting less than three hours where they've spilled into like 302 at the end of last year. So some small things have made a pretty significant change. When it comes to television ratings for sports programming, and there is an ever-increasing amount of money being thrown at sports programming, the Super Bowl is basically a lock. If you're a network getting the rights to the Super Bowl, you know you're going to get a big number in terms of the audience, because it almost doesn't matter who's playing in the game.

The NBA Finals recently were a big hit for the ratings, but you had LeBron James, the best player in the world, playing against the team with the best record during the regular season. it seems like baseball has the highest level of risk, because if it ends up that small market teams like the Kansas City Royals and the Pittsburgh Pirates end up in the World Series, then Fox, who has the rights to the World Series, stands to lose a lot of money. Yeah, and it's an interesting kind of dynamic, because there's more money in the game than ever before, as you said, it's a $9 billion industry. But what really is driving that, it's almost

against the NFL model, which is these big national television contracts that have pumped more money into that sport than we've ever known before. Baseball's local television contracts are really the most important financial aspect of any franchise. A team that is not deriving a lot money from um their local media uh deals is not going to have as much to spend um on payroll um the national you know world series ratings are are kind of infamously down um you know as a as an overall trend over the past quarter of a century um and i'm not sure that that ever will turn back that there will be a time when the tampa bay rays could could play the colorado rockies in a world series and it wouldn't matter um the franchises uh are going to matter in in

that case the market sizes are going to matter for those national ratings and i will say that i think one thing that baseball has struggled with um that the nba has excelled at is is really marketing their own stars their biggest stars lebron james um you know a lot of people thought of him playing in the finals that he was the most important character it was lebron james and steph curry and the teams that they were on were secondary. Baseball doesn't have that kind of dynamic, in part because, you know, even if everybody wants to see Bryce Harper play, well, he's only going to have four at-bats a night.

You have to kind of, the appointment TV element of it is every third inning or every second or third inning. It's not a guy playing 45 out of 48 minutes. So it's an inherently different structure to have your stars participating in, And I think that's hurt baseball and its ability to kind of market the foremost players that they have to offer. All right, we've got about a minute left. So before I let you go, this is a national radio show, but I work with a lot of Washington national fans. So I've got to ask you, what do you think happens for this team this year?

Do you think they get to the World Series? And if so, is that enough? I'm curious what success looks like if they fall short of winning the whole thing. So I think, I mean, I'll take a half cop-out on that. I think that they will win the National League East running away. I think they're clearly the best team in the division, which is probably now the worst division in the sport. They're in first place in July with half, you know, very, very significant members of

their team hurt and having been hurt. So that part, I think, is easy to predict. I think what we know about the baseball playoffs is that they are the least predictable playoffs if you consider the NBA and the NFL. Home field advantage doesn't matter as much. No one expected the San Francisco Giants to win in any of the years that they've won, and they have three World Series titles in the last five years. So it's a cop-out to say that the baseball playoffs are a crapshoot,

but that's also exactly what they are. And in terms of success, they have to win a playoff series. I don't think that the goal should be much beyond that because they've gotten in twice in the last three years and failed to even advance to the National League Championship Series. So there's your Nationals minute for you to cop out on you. The book is The Grind, Inside Baseball's Endless Season. It is the perfect summer read for any baseball fan, and it's available everywhere books are sold. Barry Zerlugo, thanks so much for being here. Appreciate it, Chris. Thanks for having me.

Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. 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. Welcome back to Motley Fool Money, I'm Chris Hill. Joining me in studio once again, Jason Moser, Simon Erickson, and Ron Gross. Guys, just a couple of minutes to get to the stocks on our radar this week. Ron Gross, you're up first. What are you looking at? Ron Gross I got Stage Stores, SSI. It's just

a new deep value radar stock for me. It's not a recommendation. 850 specialty department stores in 40 states, mostly in the southern U.S., names like Goodies, People's, Stage department stores. First quarter was weak, stock got slammed. It's trading like a deep value stock, but I really have some work to do. Retail is a tough, tough business, so cautions warranted here, but I'm digging in. Alright, we'll wrap up the show so you can get to work. Simon, what are you looking at? Well, Chris, Jason says don't invest in China, and Ron says China might be in a bubble, so I'm going to give you a Chinese tech company.

Nice! My company, stock of my radar this week is Baidu, ticker B-I-D-U. This is throwing the baby out with the bathwater from all of the carnage that's happened in the Chinese stock market. Baidu is a solid company. They're the country's leading search engine, similar to Google here in the States. They've got half a million advertisers and an average of $16,000 U.S. per advertiser that they spend on Baidu. I expect both of those to increase in the coming years. It's going to be very good for business. That's one to watch. Jason Moser, we've got a minute left. What are you looking at this week? Sure thing. I think Simon threw this

out there a couple of weeks ago, maybe, but Veeva Systems. Ticker is V-E-E-V. Let the Elvis jokes roll. They provide cloud-based software services for the life sciences industry. This is just a really neat business, because they're bringing up a fragmented industry that has not really made a great move to the cloud. A lot of regulation involved there with all these big pharma companies and whatnot. Veeva, very similar to Ellie Mae in the regard but I think they allow the customers to sort of build a relationship. And over time, as that relationship grows, the switching costs grow, I think they'll be able to exercise a little pricing power down the road. Founder-led business here, and it's one that Simon just

brought over to our watch list in MDP. Alright. Jason Moser, Ron Gross, Simon Erickson. Guys, thanks for being here. Thank you. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Steve Broido is under the weather this week, so fortunately we've got Rick Engdahl helping us out behind the glass. Our producer, Mac Greer, is on vacation, so if the show is terrible, we were flying blind. I'm Chris Hill. Thanks for listening. We'll see you next week.