Motley Fool Hidden Gems Investing - Motley Fool Money: 01.03.2014

Episode Date: January 3, 2014

What does the market's stellar performance in 2013 mean for investors this year?  On this week's show, we preview 2014.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, joining me in studio this week from Motley Fool One, Jason Moser, from Million Dollar Portfolio, Ron Gross, and from Motley Fool Hidden Gems, Chief Investment Officer here at The Motley Fool, Andy Cross. Good to be with you guys. Hey, you too. Happy New Year! Happy New Year, everybody. And speaking of the New Year, this is our big 2014 preview. We're going to share our take on a wide range of companies and industries as we kick off the New Year, and we'll share a few stocks that you can put on your watch list. But, Ron, let me start with you. We

have just wrapped up one of the greatest years ever. It was wonderful. 29.6% the market was up, and now as we- Without dividends. Without dividends, and now as we kick off 2014, what are you looking at? Because you're a value guy. I know there aren't a ton of values out there, so what are you watching as we start this year? You know, I really don't want to go macro, but I got to go macro. It's the thing

that I would say is going to drive everything else. So, where does unemployment go? How does GDP turn out? Are interest rates going to go up anytime soon? How does the tapering work out with the Fed. These are all things that are going to be really important. They're going to inform what happens with the economy that will trickle down into what happens with our companies and will affect stock prices. So, that will be my focus. Andy Cross, it can be a single company, it can be an industry. What are you watching as we start the year? Well, I think capital spending has been on my radar for the past year or so, and it really hasn't picked up. So, companies

are just sitting on the cash, on the balance sheet. They haven't really put it to use in investing back in their business. It's in the very low single digits. They're buying back shares, and they're paying out dividends. And that can be great for shareholders. But at some point, you have to reinvest. I think that's also been because CFOs, chief financial officers, and CEOs haven't had the faith yet to really put that money to work to make a good return on their investment. So I think we'll see 2014 pick up. If you look at the recession coming out of 2003, the average annual growth in capital spending for a few years after the recession in 2003 was about 10%. So, we're way below that now.

So, we need to see that pick up. If we do, I think that will be good for a lot of companies that invest in that space and also good for the stock market. Jason Moser? Yeah, I mean, it seemed like we talked a lot about Bitcoin last year. To me, really, looking at Bitcoin going into 2014, this is going to be, I guess, the year that really makes or breaks the whole virtual currency cycle. I was pretty astounded, actually, to see some of these numbers. There was an article written at the beginning of December where Coinometrics, which is an

actual research company that keeps track of these things, it was measuring the number of transactions, the number of daily transactions with Bitcoin reached 80,000, with a total dollar volume of around $257 million at one point, which was just, I mean, it was leaving Western Union behind the dust. So, I can't help but wonder if there is not maybe a little Bitcoin bubble flowing here. But then I was reading this morning where there's actually another virtual currency getting ready to drop here this month. Well, I'm talking about the one that's named after Kanye West. And this is called Coinye West. And I'm kidding you not, it is a virtual currency that will launch later this month

called CoinYay West. So now right here at this very point is where I'm calling the decline of modern civilization. It took that to make you make that call. That was the point. That was the point where it turned. You go back in time one year, Ron, and Best Buy was a company that was certainly troubled. and it went on to have one of the best years of any stock in 2013. And using that as context, as we kick off this year, what is a company that you think has the potential for that kind of rebound, or maybe even just one that desperately needs a rebound?

I am hopeful, and I think this will pan out, that Coach will see a turn at least beginning in 2014. It might take more than a full year. It's a company we own a million dollar portfolio. We think it's an iconic brand, but they are struggling, specifically in North America. They have a significant management transition that's going on. Stock was up in 2013, but a little less than 3%, compared to, as we said, 30% for the market. So, significantly underperformed, but we think it will firm up as that brand once again gains prominence. Yeah, it takes a while for those. They're shifting away from just the leather good purses really into this more lifestyle brand. Those shifts take a year or two to kind of go through, and with Lou Frankfurt leaving the helm, I'm bullish on Coach. I like their new line. I think it's good. They just have to see some progress in it. Andy, is there another company out there that you think has the potential for a rebound?

Certainly in the world of bricks and mortar retail, Sears, off the top of my head, is maybe No. 1 on that list. But who needs a rebound, and who do you think might have one? If you ask me for the next best buy, the stock that will double, more than double this year, that's an easy guess. I'm like, hey, I have those sitting in my pocket. Would you tell people if you knew? Yeah, exactly. Big tech has really been struggling. From Microsoft, our data, a company we follow in Stock Advisor, which is a recommendation of ours, has really struggled, one of the worst performers last year. A lot of concerns around, will these

companies start to see their client base go elsewhere to more scalable, more online solutions, possibly through Amazon's web service and some of the solutions they're offering? So, I think we'll see that turn this year. I think these companies, especially because so many of them are tied to international growth, like in Europe and in Asia, where Teradata has struggled a little bit. I think as those markets rebound, these companies will be in a position to do better in 2014 than 2013. Jason? Yeah, I think Clean Energy Fuels had a relatively flat 2013. I think it's understandable the market's short-term uncertainty or even pessimism with this stock. The company's not

profitable yet. They're building out this America's Natural Gas Highway and really taking over the trucking industry and fleet vehicles and offering them the technology to switch their vehicles over to natural gas and supplying them with that natural gas in those stations. But I think that the closer this company gets towards completion of that natural gas highway, the more the market is going to recognize the competitive advantage they've developed there. I think when you have leadership here with co-founders Andrew Littlefair and T. Boone Pickens, and not to mention just their dedication to this whole idea of natural gas as really a transportation fuel for the next decade and beyond. I think that you have great

leadership behind this company. I think the market will start to recognize it a little bit more this year. Andy, I want to go back to something you said, because you talked about big tech really struggling in some ways, certainly relative to the performance of the overall market. It also seems like big restaurants didn't have a great 2013 as well. I'm thinking Yum! Brands, McDonald's. I'm wondering if that's something that can be turned around in 2014, or if in some ways, as we've seen in the U.S. over the last decade with soda consumption methodically getting lower and lower, if this is a headwind that's just going to grow, particularly in the case of McDonald's.

Well, Chipotle is one stock which is at $16 billion or $15 billion. It's not jump change. It's not the size of McDonald's, but it's not chump change. And that's a stock I still like and a company that I think is the premier of that industry. So backing a horse like that, I think, is smart. And the way that they are operating versus the way that maybe you'll see in someone from like Yum! Brands, which is so dependent on China, or McDonald's, which really, frankly, doesn't have the cachet, the menu items, the way they do business, the management team, the founder focus like Chipotle does. So I think if you're looking at that space, as it is with most industries,

you can find the premier company and premier opportunity there, and backing that horse tends to be a very good thing. And I still like Chipotle here. I own it, and I would buy it here too. Jason, you've talked about this before, the whole idea of value versus sort of what you're actually buying. So, whereas McDonald's and Wendy's, they're going more the value route. Yeah, and I mean, they've always been recognized as such. But I mean, I think for the longest time, you've had casual dining and then fast food. And then what we've seen over the past, really, 10 years or so is sort of the introduction of this fast-casual segment,

kind of in the middle there, which is, it's fun to watch this kind of take some share from the casual dining and a lot of share from fast food. I mean, fast food has just become a real headline risk there because of just the quality of the food and, you know, the fact that it's not the best out there for you. So I think that the fast casual concepts like Chipotle, Panera, even noodles and company and potbelly places like that have a chance to really capitalize on that. Well, and you also have grocery stores getting into the restaurant kind of area.

Whole Foods opening, like you can buy like an entire meal there to eat. So that's actually competing with some of those concepts. You can buy very good healthy food at a lot of these grocery stores. As my youngest daughter so astutely noticed, She mentioned that on our last video when they made that purchase of Whole Foods stock, that you could go in there and buy pizza and stuff to make dinner. Does she need a job we can hire as an analyst? If a seven-year-old can get it, then you can too.

And for disclosure purposes, I should say that new in 2014 on our board of directors, Whole Foods co-founder John Mackie. Coming up, Microsoft is picking a new CEO this year, and we are here to help. 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 The Motley Fool Money, Chris Hill here in studio with Jason Moser, Andy Cross, and Ron Gross. As I said before the break,

Ron, Steve Ballmer, longtime CEO at Microsoft, will be stepping down this year. Who's going to get the job? Who should get the job? What do you think? I think it's not easy, and I think they're having some trouble finding the right guy that will execute on Bomber's vision and Gates' vision, who, let's not forget, is still an important part of Microsoft's board. And there have been rumors, internal, external. I think Alan Mulally has been very coy when asked what he's going to be doing. He won't exactly say. I think he's often thought of as the frontrunner, but in the same sentence they say, well, perhaps not, though. So, I don't want to be boring, but I do think it will probably go to him.

O' You agree with that, Jason? I'm not entirely convinced. I don't feel like ... Mulally is very much a culture guy. He went in there, really shook things up at Ford, and changed the culture and the whole way of thinking in that company. I think Microsoft certainly needs some of that, but They also need a keen eye on technology and product design. So, you know, in all honesty, they need the entire package there, which is, you know, a lot easier said than done. But it's going to need to go to someone younger, I think, that they can give a lot of leeway to, kind of like Yahoo did with Marissa Meyer. I mean, it's going to need to be someone who can go on their run for a little bit.

I think Jason makes a good point about that he's a cult. Not a great one. No, no, it is a very good one. It's okay. Some articles that I've read have said, in a sense, he would be almost a caretaker CEO that would execute on Ballmer and Gates' vision, and in fact then groom his eventual replacement a couple years down the road when he comes in and he kind of revamps the Microsoft culture, which is in need of direction. But this is also based on the assumption that Gates' and Ballmer's vision is actually a good one. And, I mean, it could be argued that Ballmer is leaving because his vision was not so good.

We've talked about legacy and secession before with founders who hand over to operators, in this case handing to a lawyer, who can't dance as we saw on that crazy video. So I think Ron is probably right. It'll probably be someone who's more of an operator, maybe as a holdover until they find someone younger with more vision, who really has a vision of what Microsoft can be, besides just a big cash cow that is stuck in this legacy business that it has. If they're going to go internal, I think the frontrunner is probably their head of enterprise, which is Satya Nadella, if I'm pronouncing that right. But I think in the end, that's not the way they're going to go.

O' All right, before we get to some stocks to put on the watch list, give me a reckless prediction for 2014. It can be about the market, it can be about anything. Ron, you're up first. Okay, follow me here. You with me? O' Yeah. Okay. O' No, I'm not. This might make Andy happy. I think Amazon is going to acquire RadioShack.

O' Wow. And they're going to use the sites as showrooms. They're going to use them as places for their lockers, so you can go pick up stuff, Amazon stuff. They're going to use it as a place for returns and service, and they're going to get a nice, cheap asset there. Wow, that is not nearly as horrible an idea as I first thought it was when it came out of your mouth. That's why I wanted to make sure you were listening. Andy Cross.

I think these munchkins here on our desk are from today, and they are the Halloween box. So my reckless prediction is that Dunkin' Donuts will run through all of its Halloween munchkin boxes by St. Patrick's Day. They really need to work on their inventory control. They really do. In all seriousness, that's one of the reasons I have not yet bought shares of Dunkin' Brands, because I just look at how they manage their inventory on things like boxes. I hope the donuts are much fresher than the actual boxes are.

The munchkins are fresh and delicious and wonderful, but the boxes, just not so much. Jason? I mean, we're going reckless here. I think, what, 2013 was not such a good year for men's warehouse founder and chairman George Zimmer. Yeah. So I predict that 2014, the ousted chairman and disgruntled George Zimmer will make a reappearance here, running for political office in some capacity with the legalization of marijuana as his big platform selling point. Wow. I guarantee it. You guarantee it.

I didn't say that, but he does have a history here. I mean, in 2010, he donated $50,000 to a California ballot initiative, and he's still known. And he's got time on his hands now. How many more states legalized marijuana in 2014? And a little money. And a little money. It costs money to run for office. Pretty soon, we might have to start looking at publicly traded marijuana companies.

We have a new special free report. It's The Motley Fool's top stock for 2014. It's a free research report from our Chief Investment Officer, Andy Cross, and you can get it just by dropping an email to topstockatfool.com. That's topstock, all one word, topstockatfool.com. We've got just a few minutes left. Ron Gross, what can I put on my watch list? We'll bring in our man, Steve Broido, from the other side of the glass. Well, getting back to something Andy said earlier about companies with these great balance sheets that are going to finally lighten up on the purse strings and start capital

spending, I'm looking at industrial companies, and I'm looking at Lincoln Electric, LECO, maker of arc welding equipment and disposables that go along with them. The stock isn't necessarily cheap here at 11 times EBITDA, but it's a fantastically run company with an amazing culture, and it's definitely one to watch. Steve, question about Lincoln Electric? How does a stock like that go up? How much more are ... I'm not trying to be ... Well, it's very tied to oil and gas pipelines, for example, shipbuilding, any kind of infrastructure. So as infrastructure here and around the world increases, infrastructure

spending, they'll sell more products. Is there like an explosion in arc welding that has to happen? Is there more, like 50% more arc welding that happened this year than last? Hopefully there will be once the economy picks up and companies start investing. 50% may be a little bit up. They don't go in and do the welding. They sell the equipment. Oh.

Andy Cross? Bed Bath & Beyond, BBBY, continues to thrive, really, in the face of Amazon, all the concerns. Their e-commerce business is peanuts. It's small. It's less than 3%. So I want to see their report early in January. I want to see what they talk about the holiday season, their comp sales, and also their e-commerce business. Steve, question about Bed Bath & Beyond?

So they give out those 20% off coupons like candy canes. Will people eventually get angry? I mean, just say enough. Stop the insanity. Just drop your prices by 20%. No, just like JCPenney, man. People love those coupons, and they use them to great effect. Their price is actually X, not even including the 20% coupons, are actually very competitive

with Amazon's. Add that in there, and that's a very big customer loyalty effect with them. Jason, we've got about a minute left. Yeah, one we talked a little bit about yesterday, Chris. Cognizant Technology Solutions, ticker is CTSH. This is global consulting and outsourcing. There's a reason why the stock's up almost 400% in the last five years. They just generated about a billion dollars in free cash flow last year, and this is just a tremendous market, as you can imagine, in consulting and outsourcing. but a tremendous leadership culture there. I think Frank D'Souza, who's been with the company almost 20 years, CEO since 2007,

and he's really established a culture where I think a lot of its employees really appreciate it, and it gives them a chance to really succeed. So I think it'll continue to do well. Steve, question about Cognizant Technologies? One example of what they would consult me on. I want to hire a consultant and get back to you on that, Steve. All right, perfect. No, I'm just kidding, actually.

It's anywhere from healthcare to IT to entertainment to energy and infrastructure. It's the gamut. Lincoln Electric, Bed Bath & Beyond, Cognizant Technologies. You got one you like there, Steve? I don't like any of these, I've got to be honest. But I'd probably go with the Cognizant Technologies. Sounds kind of cool. And here, I thought you were going to go with Arc Welding.

Never. All right. Ron Gross, Andy Cross, Jason Moser. Guys, thanks for being here. Thanks for having me. Up next, our 2014 preview rolls on. Stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill. Joining me in studio now, a brand new batch of analysts to lend their perspective on 2014. From Fool.com, Matt Kopenheffer, and from Motley Fool Funds, Tim Hanson and Bill Barker. Thanks for being here, guys. A pleasure, Chris. Happy to be here. I'll start with you, Tim, the way we kicked off the show, which is, we have just just wrapped up one of the greatest single years for investors over the past 50 years, market up 29.6%. And so now, as we attempt to recalibrate our expectations, maybe ratchet them down, how are you viewing 2014? Whether it's a company or an industry or a region

of the world, what is the big question that you have as we kick off this year? Well, it was a great year for U.S. investors, Chris. But if you were a Peruvian investor, God help you. I think Peru was down almost 30%. Yeah, I mean, the world did some interesting things last year. In terms of themes that I'm looking at next year, I'll mention two. The first I alluded to with mentioning Peru's underperformance would be emerging markets. They got beat up really hard this year.

In 2013. In 2013, yes. And to the extent that developed market economies in Europe, the United States are recovering, you know, one would expect that that growth would would ultimately also buoy emerging markets. And those stocks do look relatively cheap if you're looking at something like Peru or Indonesia and a handful of others. The other trend to watch domestically, and I've been watching this one, I think I've said the same thing the last two years on programs similar to this one, same time of year. is housing starts, household formation. You know, it's been a very profitable time to hold things like home builders and cabinet makers and anybody who sort of contributes to the construction industry.

And the fact is that that industry has been growing the last two years, but the number of household starts still remain below what would be reasonably expected at a time when household formation was normal. What I mean by household formation is, you know, two people getting married, moving into their own house together, and having a family. And what you're seeing is that people are delaying marriage and having kids longer and longer for whatever reason, whether it's the economy or they want to get more education, what have you. And so more people are living at home with their parents than in the past. But to the extent that they get out there and go get their own homes, that's going to be a significant catalyst for people in the home building space.

And so I think that's important to watch for two reasons. One, I think that those stocks have room to go still. And secondly, as unemployment remains sort of stubbornly high, recovery in construction is the next sort of thing that gets that number down and gets the American economy, which has been slowly getting better, to start getting more rapidly back up to speed. Matt, what about you? What are you watching? Well, Tim just gave us some nice research and some data

and some good points for us to think about. I'm not going to give you any of that. Gut feelings? Instead, it's all about gut feelings. Bitcoin. For me. Exactly. Bitcoin.

No, in 2014, I'm going to be watching the market's uncanny ability to defy expectations. So you started off by saying, as we go into 2014, ratcheting down expectations. Starting off 2013, we were ratcheting down expectations. If you go back to what people were saying at the beginning of last year, it was, well, things aren't really looking that good. The economy is really not hitting on all cylinders. And so, it's going to be kind of a sluggish year for the market. 30% gains on the market. Going into 2014, does it make sense that the market would continue going up strongly? No. But the talk is still, the economy is not really recovering. The stock market has gone up too far.

The stock market is potentially overpriced. The housing market still is sort of in this flux type of area. The stock market just, I don't know, it does what it wants to do. And it has a tendency to defy everybody's expectations. And going into 2014, I hear a lot of, don't expect more of the same. Well, how much of this, because at least part of what fueled the market in 2013 was choices for investors around the world. To your point, Tim, if you're looking at, well, should I invest in Europe? Should I invest in an ETF here or there? So many economies around the world looked inferior to the U.S., so at least a portion of that 30% had to be, well,

this is the best place to have my money. Well, there was a good piece in the Wall Street Journal not too long ago, which made the point that the dumber you were as an investor this year, the better you did. Diversification was not your friend. Hedging was not your friend. I mean, If you just plowed money into U.S. large caps or U.S. small caps in index, you did great. Why was that the case when fundamentals, as Matt pointed out, I don't think fundamentals this year defied expectations. Oh, I'm not saying any of it makes sense. No, no, right. I think when people said it at the beginning of the year, housing's slow, unemployment's high, the economy's eh, I think the economy was sort of eh.

So why did we get a 30% gain in an eh year? I think it just has to do with the fact that, you know, the government continues to throw cheap money at people. And when interest rates are really low and, you know, there's some political instability around the world and people aren't that impressed with Europe. And I think people just said, well, what do I do with this cheap money? I'm going to plow it into I'm going to plow it into stocks. I guess I maybe I'm reading some different articles or swayed by some things I've read within the last couple of days. but my big question is, when are we going to hear the first time we're going to hear overheating referred to in terms of the economy? Because the last couple of GDP numbers were good. I mean, we're talking north of 3%, and on a trajectory to go higher. We've got low

interest rates. They're higher than the super, super, super low interest rates that there were. Unemployment is going down. It's back in our day, Chris, and we're the old guys here, but when I was in college, full employment was defined as 6% unemployment. That was as many people as could be employed without the economy superheating. And we're not that far from that. I think in 2014, you're going to hear concerns that the economy may be going too far too fast. So let's take this to the next step, which is what you guys do every day, looking at stocks. Does it make it harder for you guys to do your job?

I mean, Tim, you had put out a tweet recently that almost everything you'd looked at recently in terms of investment ideas, the closer you looked at it, the worse it got. Does it make it harder for investors to find good investments? Yeah, well, because I think, I mean, Bill's point is an interesting one. And I think what I've been seeing in some of the data is there's sort of like a, you know, we've talked about it before, this two-speed economy phenomenon, which is, you know, the stock market was up 30 percent this year. But, you know, who does that disproportionately benefit? People who are invested heavily in stocks, you know, which generally that's generally a population that correlates with people who are employed, higher wage earners, college educated. And, you know, there's a significant portion of America that I don't think is benefiting or seeing those, you know, rising GDP numbers. So that's sort of the weird dynamic at play in this market right now.

I mean, in terms of looking at stuff, what it is, I think there's just a big disconnect in things that I've looked at that look interesting to me between what I think the business is going to achieve and then what the valuation currently of the equity is. You can look at something like Walmart would be an interesting example. Walmart is an expensive, and the stock is priced for pretty heady growth, and yet most of those stores are serving people who aren't increasing the size of their basket. They go in and they're trying to save costs, not expand how much they're spending. And so that's the disconnect I'm seeing, and that's what I think is making it difficult to be an investor right now. Bill?

Yeah, you had asked whether it was, you know, whether our jobs were any harder. And Tim and I work in the asset management division. And it's, yeah, you know, we've seen very strong flows into our funds as the rest of the industry also has in 2013 compared to the previous years. And everything's up. And nobody's going to shed a tear when you say that your job got harder because people keep giving you money and everything you've been investing in has worked, right? I didn't mean to imply I had a shred of sympathy for either one of them. No, nobody out there should have any sympathy for anybody who's saying, God, my job has gotten really hard now that everything's gone up and people keep wanting to invest in this market. But there are 8,000 stocks out there, and if you can't find one or two that are worth investing in, then maybe you're not earning your paycheck. As much as things have gone up. The Dow Jones, reasonably respected, well-known, not chosen to prove a point average, is trading at a P of slightly below 16. That's not some crazy valuation. If you look at Apple

and Microsoft and Cisco and Intel and Exxon, the big, big, big companies, they're not trading at insane valuations. That basket of companies is probably trading, I don't know, 12%, 13% on average, multiple. There are things out there, and they've got a ton of cash. Not everything is overvalued right now. Now, small caps is getting pretty heady over there, but even up 29%, I think there are a number of things in the large cap space that people can be quite interested in finding now for long-term. Before we go to break, I want to zero in on one industry, and Matt, that's banking, financial services. That's what you focus on. And Tim, I know you also are a fan of little banks.

I'm curious, and I'll start with you, Matt, what's going to be the story in 2014? It seemed like so many of the headlines in 2013, and maybe this is rightly so because of their size. So many of the headlines were about the big Wall Street banks, but I'm curious if there's a theme you see building in 2014 in banking and financial services. I don't know that it's going to be drastically different in 2014. I think, if anything, it'll be continuing to move past what we've seen over the past few years. Maybe some of the overhang starts to dissipate and you get a little bit better valuations, and so you get these stocks moving up, particularly the bigger banks.

What Bill was actually talking about too just now is a really interesting point that small caps in general have had phenomenal, it's going on a decade or more now. And I don't know if people are starting to forget that that dynamic tends to change, that large caps tend to lead the market for a while and then small caps will lead the market for a while. And right now you're seeing much better valuations

among larger caps, and that includes the big cap banks. And that's for more reason than just the large caps in general are trading cheaply. It's also because of all of the 2008-2009 overhang, the settlement overhang, the regulatory overhang, all of that. Tim, in terms of smaller banks, regional banks, should we expect more consolidation? And if so, is that the main reason to buy shares of one of those? I think there's certainly consolidation coming just because the cost of being audited and complying with all the federal regulations for small banks now has gotten so onerous that it doesn't make sense to really go your own way if you've got less than a billion dollars in assets. you know having said that what i've heard from banking industry folks is that no one can agree on prices right now because book value multiples have compressed and are sitting around you know

1.4 1.5 but if you go back before the housing crisis smaller banks tended to trade for 2 2.5 and so as people look at a recovering economy they say oh i want to get my 2x book again and then say oh no no no no this is a new this is a new world we're going to give you 1.5 so So they sort of can't negotiate a price. So that's been the holdup there. There was an interesting paper out recently that asked what smaller banks made it through the banking crisis successfully and what traits did they share. And the number one thing that came through was they had stable, low-cost deposits that they used to do their loans with

and that they kept very conservative, more conservative than average loan-to-deposit ratios. And the banks that didn't do well were ones that had fluctuating deposit bases and took on leverage to make loans, so ended up with loan-to-deposit ratios over 100%. And so when you talk about themes in banking, I don't really think there are themes in banking because the way to run a bank is to collect deposits and not loan them all out, right? The way to blow up a bank is to take on leverage and make crazy loans. So it's like there is no – banking is always the same. And the system breaks down when people stop running their banks like they're banks.

So, you know, I think as long as you continue, you know, if the housing market gets better and interest rates start to go up, anybody who's got a low cost of funds is going to do really well over the next year to three years. And I think there are a bunch of community banks out there that fit that bill. Coming up, we'll dip into the Fool mailbag. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Matt Kopenhafer, Tim Hanson, and Bill Barker. Motley Fool Money is heard each week on radio stations across America and around the world on the American Forces Radio Network. You can check out the podcast version on iTunes, Stitcher, TuneIn, all your various spoken word platforms. Here's what else you can check out. Our latest podcast from The Motley Fool, Where the Money Is, which is co-hosted by

Matt Kopenheffer. You want to learn more, not just about the big banks on Wall Street, but about financial services companies like Visa, MasterCard, and more, then tune in to where the money is. Here's another thing to check out, which is Declarations, the monthly commentary and analysis newsletter from the guys at Fool Funds. It's easy to get. Just go to foolfunds.com, type in your email address, and sign up for Declarations. Our mission here at The Motley Fool is to help the world invest better, and those are just two of the ways that we try to do that, so check them out. Before we get to some reckless predictions for 2014, Bill, I know you're chomping at the bit to make your reckless prediction,

you can always email us, radio at fool.com. We've got a question from Colin McIntosh in Ohio, who asks, what are some details on Alibaba going public in 2014? Since much of Yahoo's stake in that company, how do you think Yahoo's stock will react if Alibaba's IPO is either good or bad? Tim, we were talking earlier in the week, it seemed at least a month ago the big names IPO of 2014 was going to be Chrysler. That's now off the table now that Fiat has assumed complete control of Chrysler. Alibaba is a company you watch. What do you make of the IPO and what it means for Yahoo's stock? Yeah, Alibaba, I think they will come public in 2014. For people who don't know, this is a China-based business-to-business and business-to-consumer

sort of online commerce platform, think eBay, Amazon, that sort of thing. They've been negotiating with both the New York Stock Exchange and the Hong Kong Exchange about where to list. I think their preference is to list in Hong Kong for valuation reasons, but Hong Kong doesn't want to let them do that or doesn't want to let them list with a shareholder structure that has preferred shares that would give the founder of that company super voting stake.

Having said that, it looks like the Hong Kong Exchange is sort of backtracking, and they've recently, I think, started taking comments on whether or not they should allow that type of shareholder structure. So it's looking like Hong Kong is going to get the listing. What it means for Yahoo, I think a successful Alibaba IPO is already priced into Yahoo's stock and has been really the reason why it's gone up and Marissa Meyer has gotten so much praise.

It's not really anything she's done at Yahoo, I don't think. She's done some things, but not double the stock things for Yahoo. So if there are any stumbles on the way to Alibaba being public, I think it's going to be negative for Yahoo's stock. And if it goes off without a hitch, I think Yahoo! stock probably stays about where it is. All right. We've got a few minutes left. Give me a reckless prediction for 2014. It doesn't have to be about the stock market.

Anything you want. Bill Barker, you're up first. Oh, it can be reckless about anything. It can be reckless about anything. I'll come back. I was going to go with something, which is not technically about the stock market, but is related. I think Bitcoin will crash. That'll be my reckless prediction, that you will lose a lot of money if you're into Bitcoin right now.

Let me turn now to Matt Koppenhofer, who probably knows, certainly knows more about Bitcoin than I do. Bitcoin will triple in 2014. That would be a legitimately reckless prediction. No, you know what? I'm going to go with, I had something else prepared,

but given our discussion prior to the show, my reckless prediction for 2014 is that there will be a mainstream movie with more nudity than The Wolf of Wall Street. Really? Reckless prediction. Because you've seen The Wolf of Wall Street. I have seen The Wolf of Wall Street.

Do you think it's a reckless prediction to predict more nudity over time in the media? Sounds like the most conservative prediction I can imagine. I'm putting it out there so that some director somewhere will accept that challenge. So for all you listeners out there in Hollywood, take note of Matt Kopenheper's prediction. He's also putting a time frame on it because it is in 2014. One year. One year. Tim Hanson, reckless prediction for 2014?

I think that, let's see, I think that there will be a coup in Thailand, but I don't think that stocks in Thailand will drop that far. Wow, you went to a much darker place than I would have guessed. A coup in Thailand? It's on the table right now. Have you not been reading your Thai news? I have not been reading my Thai news. There's an election that's supposed to happen on February 2nd, but the protesters in Thailand have basically blocked candidates from going to the local officers to register for said election. And the military hasn't overseen a coup there in, I think, eight years. So they're getting restless.

It's like a bull bear market thing, right? Every seven, eight years. Got to have a coup in Thailand. I was going to say it was more like in The Godfather where they say, well, you know, every 10 years or so, we've got to get the bad blood out. these sort of wars between the families will happen. Yeah. All right, we'll wrap up there. But wait for the coup to happen before you book your...

Then take advantage of the low airfare. Oh, yeah. Because Thailand is beautiful. And they'll get their stuff back in order and the coup, airfares will drop. That's when you pounce. Great food. Yeah, great food.

Unbelievable food, nice beaches, beautiful country. That's a reckless prediction and an opportunity. Jim Hansen, Bill Barker, Matt Copenheffer. Guys, thanks for being here. That is going to do it for this edition to Motley Fool Money. The show is mixed by Rick Engdahl. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.