Motley Fool Hidden Gems Investing - Motley Fool Money: 01.06.2012

Episode Date: January 6, 2012

Unemployment drops to 8.5%, holiday retail sales are a mixed bag and Yahoo! has a new CEO.  We analyze the latest with Pepsi, Kodak, Barnes & Noble and talk with Motley Fool columnist Morgan Housel about the economic outlook for 2012. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, and joining me in studio this week from Motley Fool Hidden Gems, Seth Jason, for Motley Fool income investor James Early, and for Million Dollar Portfolio, Ron Gross. Gentlemen, a belated Happy New Year. Happy New Year to you, Chris. All right, we will take a look at Yahoo's new CEO. We've got the latest on Pepsi, Kodak, Barnes & Noble, and more. And as always, we've got a few stocks on our radar, but we will begin with the big macro. Latest jobs numbers out Friday morning says we added 200,000 jobs in December.

Unemployment fell to 8.5%. Ron Gross, that is the lowest it's been in nearly three years. What do you think? Do we pretend to have a trend, Chris? It seems like we have a trend. I like what I'm seeing. One point means a trend. Six consecutive months of adding at least 100,000 jobs.

That's not enough to get us where we need to be, but it's not bad. Unemployment keeps coming down. That's nice. Hooray. I think we're going to actually see a little tick up because of the way the math works as people reenter the workforce in the coming months. The ones who've given up are going to say, oh, I'm going to look for a job now, and that'll make more employment.

Right. And if we keep our eye on that new job number, like 200,000, this one, that'll give us more indication on the actual unemployment percentage. And we can also look at that one that I talk about all the time, which is that full employment number, which has actually come down recently as well. It's at like 15.2%. I feel really bad about this. I think there's some very grumpy old men in New Hampshire right now. Like they weren't grumpy before. James, what do you think? November is a volatile month in general for this. But I think I read in the Wall Street Journal that the economy has added jobs for 15 months in a row,

presumably net jobs, which is pretty positive. And manufacturing, I noticed, was especially strong in this report. I think 23,000 jobs versus 6,000 that were expected. So that could be a pretty good harbinger. The holiday retail sales results are in and kind of a mixed bag. Macy's, Limited, and Zoomy's all had strong results on the first. Do our listeners know who Zoomy's is? They have no idea.

I'm looking at Steve. Unless they have like a teenage kid and they have to go to the mall and get him a skateboard or something. You're not a big Zoomies guy? No, no. On the flip side, Target, Kohl's, JCPenney all cut their earnings outlook. Obviously, a lot of companies with results in Seth. What's there left to talk about now? You're handing me off the dead fish here.

This is usually, usually, not usually. Sometimes you can look at this report, this monthly report, and say, ooh, things look bad. Or you get some semblance of what's going on. I don't think you can get much of a sense of anything from this report. Probably the takeaway headline is a lot of discounting at a lot of stores. Companies like American Eagle, same store sales up. I own that one myself, but fourth quarter guidance down because obviously they were just kind of giving stuff away to people to get them in the store. And a lot of companies, sometimes we see that bifurcation.

We see the lower end stores doing worse and the higher end stores doing better. It was a really mixed bag this month. I think with the holiday season, it was sort of confounded. It was a little bit confusing. And apparently a lot of sales came in really late, and sales were pretty good, according to a report that came across my email earlier this month. They were pretty good the week after. So I'm looking forward to seeing a more normal January.

I think a lot of the deals were pre-holiday, obviously. But the heavier discounting was I went after Christmas thinking, oh, I'm going to kick a dead man when he's down or whatever, and just by buying merchandise, right, and just buy like a whole wardrobe. And the deals just weren't good enough for me, actually. I was like, eh, they must have gotten it all out earlier. I know. Well, there's only so many stores selling those five-finger shoe things that you wear.

Some of the companies' stores were using the discounting as a way to blow out inventory that just wasn't getting it done. For example, Aeropostale was poorly merchandised, and they used the holiday season to blow it out. Yeah, and so their same store sales down 10%. stock is up. Because they reiterated fourth quarter guidance, which the street liked. Yeah. So just remember that the sales number alone doesn't tell you which way the stock is going to head. I was just going to say, it seems like the guidance that companies are giving

is as important, if not more so, for investors, or at least in the way that Wall Street reacts, than that same store sales number. Yeah. Well, like I said, it's going to be complex. A normalized January, I think, will help. Because some of this, they're trying to leverage their store costs, and so maybe they could drop their per-item margin but still leverage the stores, but it all depends on which company you're talking about. So we won't really know how things shook out until we see these annual reports come out. One thing we can say definitively is that regardless of the economy, GAAP seems to be doing worse and worse.

Yeah, GAAP is just on that slow bleed. They got 6%. They are falling into the GAAP. But let me guess, I haven't seen, is the stock about $18? I was going to say, that's your standard line on GAAP. I'm going to look it up while we move on. We will move on. Yahoo has its fourth CEO in five years. Earlier this week, Scott Thompson was introduced as Yahoo's-

I'm sorry, $18.16 for Gap. God bless the Gap for its predictable stock price. All right, back to Yahoo. Scott Thompson introduced as Yahoo's latest CEO. He comes from eBay's PayPal unit. James, he has got a huge task in front of him. He sure does. And the question is, do they need a new guy or do they need a new business model. It's like a bad football team replacing a coach. It's still a bad football team. Yahoo is sort of the Kodak of the internet, and they're just losing share as time goes on. And this guy, I'm sure he's a great guy. He doesn't really seem to have any actual content or media experience, and that's sort of the kind of company Yahoo is. You can have a lot of big

decisions ahead of him. One of them will be unloading the assets of Yahoo's China and Japan stuff. How are they going to do that? Much of other things, too, but that's the initial one. Seth? This was the right story to interrupt, I think, with the Gapstock. Who is this? Fred McFredson? Scott Thompson. Nobody heard of him. He was a CTO,

if I understand it correctly, at PayPal. And then the president. And then the president. PayPal is a company that hasn't changed in how long? They do the same thing they've done for a long time. They do it well. He did grow it, but he didn't have to turn it around.

Yeah. And so, they're completely different animals. I think this is one of those examples of you're sort of in the tech executive club and then you draw the lucky straw and you're over at Yahoo. The problem is Yahoo needs a new business. Ron? Yeah, we own a million-dollar portfolio. And unfortunately, I think for us, putting a new CEO in place means this company is not going to get sold in its entirety, which would have been a nice exit for us. So, I think now we're going to turn our attention, as James said, to shedding the Asian assets, which could bring in $10 billion-plus.

$17 billion. $17 billion. Better go update your model. I think that's the total value of the transaction, potentially. So, that'll be what we're looking for next. Not sure where we'll go from there, but they do have 700 million visitors that go to a Yahoo site each month, and they do have valuable franchises in the news, the sports, the finance. And they're profitable, by the way, quite profitable. So, it's not time for doomsday yet. The previous CEO, Carol Bartz, I had great affection for her for many reasons, not the least of which was her propensity for using profanity during conference calls. So, what

I'm interested in is, is Scott Thompson the kind of guy who's going to drop the F-bomb on a conference call? I read a Business Insider article and some guy said that Scott Thompson reminded him of Carole Bartz without the F-word. So I don't know if you're still attracted to that. Every news story I've read uses the word affable for him. So there you go. Boring. Coming up, it is only the first week of January and already 2012 has been a bad year for Barnes & Noble. Details after this. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James

early, and Ron Gross. Guys, shares of Barnes & Noble fell this week when it was reported the company is considering spinning off its Nook e-reader division. Seth, I'm confused. We've talked about the Nook as being sort of Barnes & Noble's best chance at really having a hit. Why spin it off? Well, it's also its best chance at spending way too much money in order to have a hit and then maybe have that hit fizzle out a couple of years later. I think the analysts out they're wrestling with what this means. When we were discussing it a little bit this morning, I was saying, well, does this mean that they figured now's the time to get out of this, that the direction is down? And if you want to maximize the value for shareholders,

you get rid of it now? I don't know. I don't know the answer. All the analysts seem to think that it's going to take a ton more money to try and make this a success. You've got to spend a lot on marketing to compete with Amazon, to compete with tablet computers. And so I actually think that it might be, can it be a little bit of both? I'm not sure it's a great idea, but it's probably one I would consider if I were running a company and wanted to separate the cash burn segment from the shrinking, but cash positive segment. Liberty Media still owns a big chunk, right? 15% of what they're pushing for some sort of business. Yeah, that sounds like a cash flow kind of outfit that's not interesting.

I think it's practical. I mean, the Nook is doing a $1.5 billion in sales out of $7 billion total for Barnes & Noble, which is big, but it's not everything. But realistically, who thinks that Barnes & Noble can compete with Apple and Amazon and the tablet business over the long haul? I just don't think, I think they should sell now while it's hot. And if you think that gets some help. If you're Google and you see this news that they're considering spinning this off, are you maybe thinking about spending some of the cash on your balance sheet? Because one thing, I mean, Google has cash. And the other thing is, Barnes & Noble is really making a big push with the physical presence that the Nook gives them,

where it's like, hey, if you have trouble with your Nook, come into one of our 700 stores. If you're Google, all of a sudden you have a massive physical footprint. Ron? It's interesting. I did read a couple articles that suggested Google, or even potentially Microsoft, could be interested in it. It's Android-based, the Nook, is it not?

Yeah. It could be an interesting thing for them to pick up. They certainly have the money for it. They wouldn't even have to really blink that hard. Yeah, it depends on what you think about why they bought that chunk of Motorola. Was it the patent thing that everyone said, or was it that they suddenly wanted to be in the hardware business? I tend to think the patent thing made more sense, and I doubt that the Nook reader comes with a whole lot of intellectual property. The New York Post reporting this week that Pepsi is considering cutting 4,000 jobs and reducing benefits to boost its earnings.

James, this is one of your stocks. Is this a good idea? Yeah, Pepsi has needed a kick recently, and this would be 4,000 out of 300,000 workers, so maybe a little bit more than 1%. It's not massive. This is the least pure way to get a kick, job cutting, and there are concerns. Kellogg recently talked about, I think on the show, cut a bunch of jobs to save money, but apparently these were sanitation or health-oriented jobs, and they got cited by the FDA for increased bacteria levels that were unacceptable.

They tried to fix it. They got cited again, so then they had to add back these jobs. So, it depends on what the jobs are, is what it comes down to. And they're looking at their 401k, too, the match and some other things, right? Yeah, they're apparently known for having extremely generous policies with their workers. Of course, the 4,000 people would disagree, I think, but everyone else who's left is like, hey, yeah. Pepsi's stock is basically flat over the last five years. You look at competitors like Coke and even Dr. Pepper, Snapple, doing much better.

Do you still like the stock going forward? I do. It has a lot of potential. One thing Pepsi missed that Coke and, frankly, even like a Procter & Gamble, some of the other companies have done is exploit emerging markets well. They're late to the party there. They're trying to get into it now. And that's where the growth has been for these other companies. It's not been North America. It's not been developed markets. The U.S. soda market is basically flat. I don't mean that as a pun. It's just not growing. And so Pepsi has to go overseas. Shares of Kodak down 40% this week after The Wall Street Journal reported the company has started preparing for a possible bankruptcy. Ron, we have seen companies file Chapter 11 and bounce back. Is Kodak one that can do that?

Unfortunately, I think no. It's the end of an era. What, it's a 131-year-old company invented the digital camera and then didn't capitalize on it. It's basically a printer company now, which is a bad one. The fifth at best, perhaps. So if they can get finance, bankruptcy financing. Specific knowledge of printer companies. Number five just right off the top of your head? Yeah, you know, I got some skills. Ron does research. I just don't see it, unfortunately. And it's really the end of an era. We're even too young to remember how big Kodak actually was at the time. Oh, not this guy. No, I was big into photography.

I actually have 1953 Kodak film canisters sitting on my shelf at home. They're very cool. They're steel with a green top and a yellow body. But Kodak not only missed the boat on inventing the digital camera and then screwing up and not marketing it properly, but the other sources of a lot of their money were things like medical imaging, the chemicals that went along with that. My dad's a dentist, and I don't think he's had to run a chemical for an X-ray in his practice for years. And he's got a pretty small practice. Larger practices moved to digital solutions a long time before. So that's actually good news. It's less resource intensive.

It's better for all of us as people, but for Kodak, the company, not so good. They do have 1,100 patents that they've been trying to monetize. They haven't really been getting it done. The bankruptcy filing would probably be a way to get it done because the court would then get involved. The problem is the deaf holders are the ones who are going to get their mitts on that, right? If you hold the equity, forget it. I want to go back to something you said, Seth, because I think long-time listeners know that you're one of those insane runners who's running a marathon every other week. But you've been a photographer for a very long time.

I'm curious if there was a point in the past where you sort of spotted this before. I could see photographers like you seeing this train coming a lot sooner than someone like me who's not a photographer at all. Yeah, but I think photographers were later to switch for the most part because they were waiting for quality to improve. So I, for instance, I had snapshot cameras, digital snapshot cameras, pretty early, about as early as everybody else. but I held out for a 35-millimeter SLR-type body for years and years until Canon came out with an inexpensive full-frame version. Photographers and high-end photography, unfortunately, even though those cameras can still cost $10,000, $8,000, $10,000, $15,000,

that's still not a very big center of revenue or profit for these companies. Rough week for American Airlines. The stock was delisted by the New York Stock Exchange. An American finished dead last in the Wall Street Journal's annual scorecard of customer service for the major U.S. airlines. The airlines were ranked in a number of categories, including on-time arrivals, baggage handling,

customer complaints. Number one on the list, guys, Alaska Airlines. Yay. A little tiny. I was going to say, I like it. Who cares? You can't go anywhere. I've gone somewhere on Alaska. I've gone to Alaska, and I've gone to Point DeBaro, which is the northernmost town in the

U.S. But do they go anywhere good is the question. It's good. What was the snack? Eskimo pie? Oh, wow. Really? I just came up with that. I didn't know it was pretty good. There's a chart that went along with this in the Wall Street Journal story. It shows the overall rankings, but it also shows where each airline ranks in individual categories. I've got to say, the one thing that surprised me on this chart was the fact that Southwest Airlines finished next to last in baggage handling.

And the reason I'm surprised by that is that's been their whole ad campaign. The whole bags fly free. And for them to finish dead next to the charts for money. They fly free just somewhere else. So only James has flown Alaska Airlines, but we're all flyers here. Any advice for an airline that you frequent or even a request that you have, whether it's like a new snack or something like that? Ron? The new trend of the airlines that I really like is the better entertainment, especially for the longer flights.

So whether it's JetBlue or Virgin Atlantic or what have you. So if somehow they could gather the money together to improve the entertainment on some of the other areas. You want that guy, the dancing guy from the Virgin commercial next year? The little TV that everyone has in front of them. Oh, okay. You know, digital TV. Those things go bad so quickly, though. They're all washed out.

They seem to look like they buy really, really cheap ones. James? I've got two pieces of advice. First, do the baggage by total weight, whether it's carry-on or check, because now everybody's bringing these massive carry-ons that take forever to shove into those bins, and they're hazards, and it just slows everybody down. Yeah, that's a good one. Second, if you want to be treated like a king, go fly one of the Asian airlines.

I flew a Japanese airline. The food is fantastic. Everything is great. We could model off those airlines very well. Are people willing to pay decent prices for those seats? It wasn't drastically more expensive. No, I've often said, like, you know what? Not American airlines, but airlines based in America,

please just charge me $50 or $60 more. I'll pay it. I don't want, like, the world's crummiest service in order to save a few bucks. And the other thing is charge people for carry-ons, not for checking their bags. The carry-ons are the problem. You've got all these idiots competing to shove those roller bags above your head. Forget it. Yeah, they fall out.

Steve Brutto, our man on the other side of the glass, what do you got for us? I just love more fees. I just, I don't feel like there's enough incremental just isolated bizarre fees for booking on the phone or bringing this or going in this line or, hey, if you want a seat here, oh, that's more. Okay, just more fees, please. Or how about more weird categories of people that get to board before you do? We flew, I think it was, U.S. Airways, and they had like eight categories of people who were allowed to board before everybody else.

It was crazy. Marathoners who dabble in photography go to the back of the plane. All right, Seth, James, Ron, we'll see you later in the show. Coming up, what else does the big macro have in store for 2012? We'll get some thoughts from Motley Fool columnist Morgan Housel. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Now, on last week's show, we focused on the outlook for stocks in 2012, but what about the broader economic outlook for 2012?

Motley Fool columnist Morgan Housel just spent some time on the road talking with noted experts like Jeremy Siegel and Robert Shiller. He's put together a video series of his interviews available on fool.com. And Morgan joins me now from his home in Seattle. Morgan, good to talk to you. Chris, thanks for having me here. So we'll talk about your interviews in a moment, but you write about macroeconomics a lot on the Motley Fool's website, fool.com. What is your outlook?

What's your take on the economy as we start this year? Yeah, so I think when we talk about where the economy is going, the first thing we need to get out of the way is how completely awful our forecasting record is for this. And that spans all experts. You know, you go back to the Great Depression, the economic crises of the 1980s, the 1990s, the dot-com stock bubble, and the recent housing bubble. The number of people that saw what was coming next is basically what you would ascribe to random chance. We're really bad at forecasting these things.

So that's sort of the first thing that we need to get out of the way. But I think there are some things happening in the economy right now that are really important that are probably dictating what's happening next. And one is, you know, U.S. consumers pretty much spent really 30, even maybe 50 years leveraging up with debt, mortgage debt, credit card debt, auto loans and whatnot. And that really hit a peak in 2007. And since then, we've been paying back debt. And that really has a big impact on slowing the economy down.

I think there's a simple way to explain that. And that's for every dollar that we lived above our means during the credit bubble, We now have to live below our means to sort of get back to normal. So as we were supercharging the economy with debt for the previous 30 years, now we're living below our means trying to pay that debt back, and that's really holding back our potential. So consumers are spending less, businesses are investing less, and we just have this general sense that things are bad and gloomy and worn,

so we really want to take the risk to move the economy forward. So if you look at sort of like the history of recessions, Most recessions, once they're over, they snap back real quickly. You have this big jolt back up. You have jobs come back really quickly. The economy bounces back quickly, and then things move along. You get over it pretty quickly. After you've had a financial crisis like we did in 2007, where the recession is caused by too much debt,

those recessions tend to last a long time. When you look at the economy, whether it's here in America or around the world, Is there sort of a big question that you think looms large, whether it's for you or for investors in general? I think right now the biggest question is what's going to happen in Europe. Europe, their financial system, their banking system, and really their sovereign debt, the debt held by their countries, is looking pretty similar right now to what the U.S. looked like in 2008, where the banking system is just really strained, a lot of fear, a lot of panic. And there's a big question of what's going to happen next there, and no one really knows.

It could sort of blow up, or it could blow off. It could blow up, and we could be back to sort of what it was in 2008, where you have banks, big, big global banks going bankrupt, and you start having runs on the credit system. Or, you know, if the European Central Bank and the European leaders did the right thing, this could blow off and sort of not turn into something as bad as people are anticipating. And if that happens, you know, there are a lot of things that are going right in the economy right now. And if the cloud of Europe moves away, there are a lot of good things that I think people are not appreciating right now.

So, you know, so that's one big question. No one really knows what's going to happen in Europe. You're listening to Motley Fool Money, talking with Motley Fool columnist Morgan Housel. Morgan, I mentioned you recently hit the road with Matt Greer, our producer, and Steve Broido, our engineer. And you interviewed a number of really high-profile economists, business thinkers. I want to ask about a couple of them. Have you sort of hit the highlights of the interviews? And one is Jeremy Siegel, the professor at the Wharton School of Business,

really one of the champions of investing in stocks. When you sat down with Jeremy Siegel, what were two or three things that really highlighted that interview? Yeah, so maybe not surprising. Jeremy Siegel, for those who aren't familiar with him, wrote a book back in 1994 called Stocks for the Long Run, where he looked at 200 years of financial data and really showed conclusively that stocks are the best asset to own, hands down, end of story. And that book sort of served as a Bible of sorts in the 1990s when people were so gung-ho on stocks. And then, of course, the last decade, stocks have not done that well, and Siegel has his fair amount of people who criticize his work now.

But sort of going with the trend that Siegel found in his book, he's very bullish on stocks. He thinks stocks are probably 25% undervalued right now, and he thinks the coming decade we'll see returns of 9% to 10% a year, so certainly above their average historically. He's always sort of bullish, no matter when you talk to him. It's fun to talk to him because he's so optimistic. Once you sit down and talk with him, you start feeling better about the world. So his view is that going forward, stocks will do very well.

Bonds will do very poorly. Gold will probably do fairly poorly. Where he is concerned is with Europe, as I was saying before. That's one thing that could derail his forecast. But he is as gung-ho on stocks as ever. He thinks people should own a lot of stocks. He thinks they should own dividend stocks, and he thinks now is the right time to own them. Another guy you sat down with, Robert Shiller, a professor at Yale, author of the book Irrational Exuberance.

Shiller, probably best known for the housing index, which bears his name. When you sat down with Shiller, what stood out for you? So, really interesting about Shiller, he has one of the best track records for calling bubbles. He wrote a book in 2000 detailing the stock market bubble. He got a lot of criticism at the time, but ended up being right on that. And then in 2005, he updated the book detailing the housing bubble, got a tremendous amount of criticism for that. People said, this guy's crazy and doesn't know what he's talking about.

Of course, he was exactly right on that as well. So he has a very good record for calling bubbles. But when you sit down and talk with him, he's extremely hesitant about forecasting the future today. And that really says a lot about his philosophy about forecasting. He only makes forecasts when the stars are perfectly aligned and it is clear as day that he's going to be right. And even then, he doesn't make any forecasts in terms of timing, when stuff is going to turn.

He's well aware that most forecasters are wrong, and that applies to him as well. So he's extremely hesitant about that. So when we asked him about where things are heading next, We asked him where the economy's heading next, where the stock market's heading next, housing's heading next. Each question he gave some version of, I don't know, or maybe, or that's possible, but you need to consider this. So it's hard to get forecasts out of him, but he's fascinating to speak with. So as you were saying, one of his big areas of study is on the housing market.

And we asked him sort of about long-term housing prices. And his theory, and it's not just a theory, this is what history shows, is that home prices nationwide in real terms, so when you adjust for inflation in real terms, actually decline over time. So most Americans have an idea that housing is going to be a good investment and they can buy a house and it will go up in value over time and they can maybe sell and have a good retirement investment. Shiller went all the way back to the 1890s

and showed that that's actually a very recent phenomenon that homes increase in value. That's really only been the past 20 or 30 years. Before that, home prices consistently declined in real terms. Now, why is that, he asked. And his explanation makes a lot of sense. He says homes are just manufactured goods. And 100 years ago, homes were basically hand-built.

You took dozens of people to build them by hand, and you had hand saws and cutting down trees. It was a big production, and that cost a lot of money. And then over time, we sort of got better at building homes, and you had power tools and manufactured homes and prefab and whatnot. And that lowered the cost of building homes, and therefore the price consequently fell with them too. So when we asked, is that sort of how people should think about their homes, is that it's just a manufactured good just like a computer is, and the price of computers goes down over time.

He said, yeah, that might be the right way to think about it, that home prices might actually fall over time. One other reason for that is because people's tastes change. So in the 1950s, an average home had a single car garage, had one bathroom, and it was about 1,200 square feet. that home today would be discounted by people who are in the market for a new home because they want a home with a three-car garage and a big mansion and a wine cellar. So as tastes change over time, old homes sort of lose their value,

and that's what history has shown over time. It's not just some weird theory that he put together. That's what's happened. And that might be a little daunting in the sense that most people are not prepared for that outcome and they might get some rude awakening over the coming decades. One quasi-forecast that Schiller put forward is he said it's entirely possible that home prices nationwide could not increase in value at all over the next 30 years. We will wrap up with a round of buy, sell, or hold. I believe these are some of the buy, sell, or hold questions that you asked Jeremy Siegel and Robert Schiller and others when you were doing this series of interviews.

Let's start with buy, sell, or hold Ben Bernanke. Ben Bernanke, I think, is definitely a buy. I think people criticizing him don't have the imagination to think about what the economy would look like today if he had not done some of the moves that he made in 2008. And those moves took a lot of guts. He got a lot of criticism for it. Maybe you're right. I'm willing to bet if you interviewed Ben Bernanke,

he would say that there are some things he did that he might actually regret. But facing the circumstances that he did, I think he's owed a lot of credit, and I think the world would look a lot different and not in a good way if we didn't have Ben Bernanke as a Fed chairman. Buy, sell, or hold the future of the euro? I think it's probably a sell. I think the euro was conceived under an idea that is sort of a fairy tale. And whether it's going to explode and collapse and go down in flames, I don't know about that.

But there are plenty of other good currencies out there that you can own besides the euro. It's the most highly anticipated IPO of 2012. Buy, sell, or hold the business of Facebook. I've been thinking about this one quite a bit lately. I'm actually going to say sell. My generation has been on Facebook for five, six, maybe even seven years now, and a lot of my peers are, I think, sort of getting a little sick of it. I think after a while you sort of can get saturated with the Facebook effect.

And, you know, it's still growing mightily, and I think it has an incredible moat, and the networking effects when you're that big are huge. But I don't know if it's going to be a big, rapid grower for as long as some people anticipate. And finally, buy, sell, or hold Lady Gaga. That's absolutely hands down a buy, and I'll tell you why. I think she has the right amount of crazy. She has just enough crazy that we find her fascinating, but not so much that we're scared of her. And that's the same thing that you saw with Michael Jackson, with Madonna.

You saw it with Share. They have just the right amount of crazy to keep you hooked but not chase you away. I think we need to figure out a crazy index for business and for stocks. This now needs to be something that we filter stocks through. Don't you think? There are plenty of companies that I think could fit that criteria, fit the Lady Gaga criteria. All right. To read more from Morgan Housel and to watch those video interviews, you can go to fool.com.

Morgan, thanks for being here. Chris, thanks for having me. Appreciate it. Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. You're listening to Motley Fool Money. Ask the rich man, he'll confess. Money can't buy happiness. Ask the poor man, he don't doubt. But he'd rather be miserable with than without. 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, and back in the studio with me, Seth Jason, James Early, and Ron Gross. Guys, before we get to the stocks on our radar, it is the beginning of the year. It is the traditional time for New Year's resolutions. Ron, have you made any? You know, Chris, I think I've decided once and for all that I love eating just too much for that to be this year's New Year's resolution.

So I'm going to go the other way and say the exercise has to be ramped up, and then I'll be able to just enjoy the food that I love so much. Nice. And hopefully they'll balance themselves out. It's kind of broad, though. I can get you on a program that will let you eat the equivalent of two extra meals, two days worth of food a week. James, what about you? Chris, 78% of people who make New Year's resolutions don't keep them.

So I don't want to be a failure and make a very specific resolution, but I am getting into tracking myself more. There's a great website, if you're really weird, called quantifiedself.com with all these people that track themselves in all types of things, like their sneezes, their sleep, their productivity. So I'm just tracking myself to see, do I work best in certain lengths of time? What kind of sleep am I getting? How effective am I at reaching my goals? Am I as effective as I think I am? All those things.

I'm trying to track myself. It sounds interesting, but has quantifiedself.com paid you some sort of promotional fee? It has not. Along with Reggie Middleton. Is this one of those things that we're hearing? Seth, what about you? I feel so lame now. I just want to run a couple hundred more miles than I did last year

and drop that marathon PR down to about the 303 mark or so. Wow, 3.03. I'm pretty sure I could drive a marathon in 3.03. And you, Chris? What do you got? I have a much more modest running goal. It's a 10-mile race that's done here in the greater D.C. area. The GW Parkway Classic. The best one around. It's great. It starts at George Washington's home in Mount Vernon

and just comes right into Old Town Alexandria. What is the time for you that you're shooting for for 10 miles? I'm shooting to get it under 85 minutes. Pretty good. And let's be clear, if I do it in 85 minutes, at that point, if Seth is running this race, he's finished like 20 minutes earlier. He's having a latte and probably a beer after that. Is 85 miles an hour a real ratchet?

Steve, what about you? We were one of those people that bought a treadmill, and I'm terrified that I'm becoming one of those people that bought a treadmill and does not use the treadmill, so that is definitely the goal. It's a very expensive thing to throw your clothes on. It's the best clothes hanger around. All right, let's get to the stocks that are on our radar. Ron, Steve will have a question for you about your stock.

I hope you're prepared. Go ahead. Well, I've just started looking at this one, Steve, so be gentle. It's a company called Johnson Controls, which is well-known by investors, but I'm not sure by your average person out there. Tegersible JCI, 126-year-old industrial company. They make auto parts, batteries, interiors of cars, commercial heating and air conditioning systems. And they're really getting into kind of these green types of climate control systems.

and that's one area of growth for them, as well as a new type of battery for these micro-hybrid cars that we're seeing more and more of, so they've got some nice growth engines there. They've got a lot of debt, seems manageable, great return on equity. I've got to do work on the valuation, though. I'm just not sure yet. Steve? How would folks find out about Johnson Controls? If I was in the manufacturing, do they own a specific type of machine or something like that? Not that I'm aware of.

I think it's probably like their climate control, for example, is probably branded Johnson, as are their batteries. It's pretty famous in its industry. Right. If you're in those circles. James Early? Chris, I'm looking at a company called ABM Industries. The ticker is ABM. It does building maintenance and janitorial services, as well as engineering services for buildings, for commercial companies, for the military.

It's kind of a weird mix, but services. It just raised its dividend 4%, 2.8% yield. That's what got it on my radar. But I'm interested in it because it seems like maybe a good company, but in a lousy industry. Return on equity is just 9%, 1.6% net income margin. So this is the kind of stock that could be like barely an S&P 500 beater, but it's never going to really take off. It's just sad because it's a good company, but in a tough business. Steve?

Sure. In terms of that particular industry, how much outsourcing gets done in the janitorial world? Well, I mean, very few building owners tend to outsource the maintenance and management of the building, so a lot. A lot of it is sort of ma and pa. There are not a lot of big players, but I think that might change over time. Seth? Did I already do the buckle on the show? Off and on you do the buckle, but let's do it again.

Let's just do the buckle. The buckle is a recent portfolio candidate at Hidden Gems. They were one of those companies recently this week issuing that same store sales number that was significantly ahead of estimates, 8.9% versus estimates of 5%. They run sort of a smallish chain of jeans and clothing in malls, and they're known a little bit more in the Midwest. But they've had some kind of good growth, sort of nothing spectacular, at least to the growth investors, but very solid, very profitable. have always gotten good cash flows. And I think the valuation still looks reasonable here. Would I look appropriate in a buckle outfit or is it a different demographic? Well, here's the thing with the buckle. I know that they have cool clothes because when you read

the list of the brands that they carry, I've never heard of any of them, which must make them pretty awesome. Steve, quick question for Seth. Sure. In terms of the economy slowing down, perhaps, how does that affect people spending money on things like apparel? These guys have consistently outgrown their peers all throughout this economic downturn. So I think they're doing something right. And that's why we're on board with it as a portfolio candidate for now and why it's on my radar and continues to be on the radar. All right. Seth Jason, James Early, Ron Gross, guys, thanks for being here.

Thank you, Chris. That's it for this edition of Motley Fool Money. Our engineer is Steve Broino. Our producer, Matt Greer, is off this week taking a well-deserved vacation in Hawaii, but he will be back. Wasn't he advanced on the Gulf Coast? Wasn't that a vacation too? He will be back next week. I'm Chris Hill.

Thanks for listening. We'll see you next week.