Motley Fool Hidden Gems Investing - Motley Fool Money: 04.29.2011

Episode Date: April 29, 2011

Fed Chairman Bernanke meets the press. Amazon, Caterpillar, Ford, and Under Armour report big earnings. And Johnson & Johnson makes a big buy.  Our analysts tackle those stories, share some stocks on their radar, and offer up some advice for the royal couple.  Plus, best-selling author and radio host Dave Ramsey talks money, marriage, and magic beans. Learn more about your ad choices. Visit megaphone.fm/adchoices

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BetMGM operates pursuant to an operating agreement with iGamingOntario. Early, and Ron Gross. Guys, good to see you, as always. Hey, Chris. How are you doing? We have got earnings from Ford, Microsoft, Caterpillar, and more. We will look at the economics of the royal wedding and have some advice for the happy couple. Our guest this week is Dave Ramsey, bestselling author, personal finance expert, and radio show host with a show that's on, I don't know, 450 stations, way more than us. He's hogging all the stations. That's why we're not more popular.

No, no. There's room for both. There's room for both shows. Plus, as always, a look at the stocks on our radar. But we will begin today with the week's big event. Yes, the first formal press conference by a Federal Reserve chairman. In his press conference, Fed Chief Ben Bernanke talked about the need to keep inflation low and stable. He talked gas prices and covered a number of other issues as well. Ron Gross, I will start with you. He's gotten generally good reviews for his performance. Is this meaningful for investors or is this more of a dog and pony show? I tell you, I popped my popcorn, I got comfortable.

This is a geek's dream. I applaud the transparency. When Bernanke came out years ago, he said, we're going to increase transparency, and I applaud that. As you know, with any of these political press conferences, you don't learn that much. They stick to the script pretty closely. But at least you get to hear him speak.

You get to hear him speak off the cuff that's not scripted. And we learned a bit. They brought GDP growth estimates down, inflation estimates up. They said they'll complete the quantitative easing that they're going through right now. So there were some things, but nothing really new. Seth? Well, first, I thought his gown was really remarkable. But aside from that, this is a dog and pony show. I think you're thinking of the royal wedding.

Wait, what? Who is the guy with the beard? No. This is a dog and pony show, but I think it is important. We've still got a lot of uncertainty. People are afraid. And I think that this, obviously he stuck to the script, but I think he needed to, and I believe he needed to get out there and sort of change the topic. Right now, the debate over the economy in this country has been hijacked by a group of people who are concerned about inflation or purport to be concerned about inflation and are pretending like we've got runaway inflation on the way, and we have no indication that that is on the way whatsoever. So I think it was important for Bernanke to say that he takes that risk seriously, but to refocus us on the more likely risk,

which for the near term is deflationary pressure, which means, of course, a more depressed economy. That's more important. And I think he turned the topic back to that. And I think that was important to do. James? I'm just surprised it's taken these yo-yos this long to figure out that they can actually talk to the people. Years ago, Greenspan was asked by somebody, well, sir, if I understood you correctly, and he's like, well, let me stop you there. If I spoke right, you shouldn't have understood me. And it's true. And it's been this cryptic thing where the Fed sort of communicates through its actions and people are supposed to infer what it means, but finally they figure out they can actually just say what they mean. It's sort of an obvious idea,

but I'm glad they're finally doing it. And I think the reason is that if they said something wrong before, markets might freak out, but that's because they never said anything. The more you speak, the more room you have to actually speak your mind without sending everybody into a frenzy every time you utter a syllable. Yeah, and my favorite quote, because it's actually the most honest, is when he said, high unemployment, high gas prices, and high foreclosure rates is a terrible combination. That's refreshing. Well, and to the point you were making, James, I mean, historically, the Fed has been very secretive. It wasn't even until the 1990s that the Fed would even put out a press release. So now, here we are, it's 2011, we have our first

press conference. Where does Bernanke go from here? What's next in terms of- Facebook. Facebook? YouTube channel. YouTube channel. Tweet. Tweet? Webcam. Tweets from the Fed. That would be awesome. Like a grainy black and white webcam, like whatever he's doing. Awesome. That sounds vaguely creepy. All right, let's move on to earnings. We'll start with Amazon.

Amazon's first quarter net income fell 33% compared to a year ago, as the company's investing more money into its online retailing and cloud computing businesses. But Seth, the company also raised guidance, and the stock hit a new 52-week high this week. I'm a shareholder. This is a Motley Fool recommendation. Good for you. Everybody loves Amazon. I'm certainly loving it this week. What's your take? This is normally the kind of quarter I would look at and be a little bit wary of. There was a lot more spending, so they didn't leverage those big sales increases into higher profits. The strange, when I look at this press release,

I look at what I usually think of as the BS portion of the press release, where at the top they highlight stuff that's not really business results. But I think this does tell the story for Amazon about their new Kindle. They have a Kindle that has special offers on it, and you get it cheap, and they advertise directly to you. They launched a, they have more books. They launched a cloud player, a cloud service. And there's all these initiatives,

and I think that is the important thing to concentrate on at Amazon, Because unlike other tech companies out there, Google, for instance, Amazon starts, they're a little like Microsoft. They start these small projects and they actually figure out ways to make money doing these things and then they move them forward. So that is why Amazon is so consistently outperformed. It's because they really are very good at innovating, not just products, but money-making products. Ron? Yeah, I think I agree with Seth. If I showed you a discount retailer, which is basically what Amazon basically is, with

a P-E ratio of 80, you would throw me out of the room. But Amazon is actually so much more than just a discount retailer, and whether they're moving to cloud computing or streaming video is going to give the company the growth they need to support that valuation. I think they've got a number of avenues they can go down, which is why a P-E of 80 doesn't actually scare me that much in the case of Amazon. So, what do you think is the threat to Amazon? Well, first of all, they don't collect sales tax, and that gives them a competitive advantage.

And a number of state legislatures are actually considering these. Do you declare your own tax, Ron? You're supposed to. Okay. And moving along, we have- You know what? I hear about that as a threat all the time, and Amazon always fights against that, obviously. I actually don't think that matters that much. Sure, it would add a small percentage, but I don't shop at Amazon, and I don't think I know anyone who does, to go, oh, yeah, I'm not paying the sales tax. And if it happened, it would affect everybody evenly. Exactly. Usually you get the best prices, you get the best information, and if you're on Prime like we are, it's just hassle-free.

That's why Amazon is selling so much stuff. There's people in this room who buy their groceries from Amazon, for crying out loud. People outside this room, too. You're listening to Motley Fool Money. Chris Hill, Seth Jason, James Early, and Ron Gross as we go through some of the companies making headlines this week. Ford's first quarter profit was a better-than-expected $2.6 billion. in. It was Ford's best first quarter since 1998. Ron, Ford's doing higher sales volume at higher prices. This is a Motley Fool wreck. What do you think?

Absolutely. And I own it personally, actually. I've owned it for over a decade, and I'm almost back to breakeven. I'm within $1 of breakeven. But they're doing a great job. First of all, they didn't take the government bailout money. They did this on their own. They revamped their product line. They moved into smaller subcompact cars. They revamped the Explorer. They're paying down debt. They actually have almost $5 billion more cash than they have debt right now. They're doing a really nice job, and I think that continues. I'm just happy, and to paraphrase Ron from earlier this week, that after basically two decades, an American automaker has finally figured out the secret of business is actually making

something people want to buy. With no bailout, Ford is just doing good, so good for them. Shares of Caterpillar were up on Friday after the company reported earnings that were much better than Wall Street was expecting. James Early, a lot of people loading up on heavy equipment. What's going on? It is true. Caterpillar stock is up over 400 percent in the past couple of years. This quarter, their machinery sales were up 63 percent. Some of that was inventory restocking at dealers, but that's still a lot. I would say, Chris, longer term, though, Caterpillar has a tough row to backhoe. So, high expectations, especially in China.

The Chinese can only build so many fake cities and empty malls. And that demand is going to go down at some point. So, watch out. Does anyone want to take more issue with James' horrible pun? Fake cities and empty malls, did you just say? I did. Is the backhoe your favorite piece of heavy equipment, or do you have another? I'll go with the backhoe, yeah.

Ron, what about you? What's the name for the large machine that crushes rocks? Would it be called a rock crusher? I don't know. That seems like a pretty straightforward name. I seemed like it would be pretty cool. Seth? I'd like one of them.

Is it called the front hoe? I want one of those. Seriously, I've wanted one for a long time. Wait a minute. What? There's a front hoe? Not as big as the ones Caterpillar makes, but I got a lot of yard work to do. I got a creek that I need to dredge.

I could really use one of those. If anyone has a used one you want to send our way, what is it? Radio at Fool.com? Drop us an email. Radio at Fool.com. Coming up, we'll dig into earnings from Microsoft and give some marital advice to the royal couple. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason,

James Early, and Ron Gross as we continue to hit some of the companies making headlines this week. Microsoft's earnings grew 31%, but also growing are concerns that Microsoft can't keep up in the tablet and smartphone markets. For the second straight quarter, revenue declined in Microsoft's operating system division. Ron Gross, I'll start with you. I own this stock. It's a Motley Fool recommendation, and shares are falling. This is one I own, too, by the way. Can you tell me something good? People are just not loving the Mr. Softee lately.

People are having trouble deciding what it is. Is it a growth stock? Is it a value stock? It's certainly not the growth stock of a decade or two ago. Let's just get it out there. It isn't. The stock is priced for very little, if no growth, right now. And certainly, Windows sales were weak. But PC sales have been weak, so they go together. go together, and people are concerned that things like the iPad and tablets are going

to come in and crush that business. That business is not going away. Office, as you said, is very strong. The Kinect, the Xbox business was strong. The company is actually growing pretty nicely, and it's priced as if it is not. And I think that's the disconnect. O' Seth, what do you think? Well, it's not a great showing when Windows doesn't sell more. And I think that the tablet market, actually I don't even think it's a tablet market, I think it's an iPad market will take away some of that business and i think i predicted the death of the netbook on our radio show a while ago and it looks like it's it's coming along quick more quickly than i even

thought but i think platforms like the xbox platform which has been jump-started with the connect those are really important platforms and they're actually stickier than than the computer platform in many ways and so and this is an example of an area where people said microsoft is idiotic to get into this playstation sony has it all wrapped up and and microsoft stuck with it and produces a better product over the years, and it's paying off. You have a Kinect, right, Seth? I do.

Do you still use it? We just have to move the furniture in the room so I don't use it as much. A little too much information. No, I'm actually seriously considering getting a different TV to stick on the wall so I can use it more. It's that much fun.

So is that the next big opportunity for Microsoft? Is that the next thing that they can dominate in the way that they did with software? Well, it is, and it's an ecosystem. The Kinect ties in. The Xbox Live stuff ties in with Netflix, ties in with the Windows Phone 7 operating system, and all of those services are pretty sticky. Microsoft is the underdog here, and they're kind of picking at things from the edges.

In the past, they've been very successful with that kind of strategy. Ron? I think they have some good opportunities in cloud computing, and while I'm not confident in this, if their deal with Nokia works in the smartphone area, it could be a very big deal, but there's a lot of competition, obviously, in that space. James, you get the final word. Sure. What I think Microsoft needs to do is take out a Super Bowl ad advertising a clever device that competes with the iPod. They could call it the Dune, something like that. Nice. Under Armour, the sports apparel company, reported better than

expected earnings for its latest quarter. Seth, revenue up 36%. This is one of your recommendations. You've got to be liking this. Yeah, and then the stock slid and kept going. Revenues were up. they lifted guidance what spooked the street seems to have been guidance on margins and also some inventory build but i think that under armor is growing so quickly that they have to build inventory they're building inventory to send out to to new stores and they're also launching a couple new product lines which means you need to build more inventory in the past they've had some trouble managing their inventory so this spooks mr market i think this is a buying opportunity when the stock drops on this because inventory is rising right now for a good reason and when i look

around, I see everybody wearing Under Armour polo shirts, just walking around. And they've recently released or started a new platform called Charged Cotton. And this is a cotton product that wicks sweat better than regular cotton. And that, if it's successful, and it looks like it very well has begun to be successful, that increases their market opportunity by three or four times in apparel. It moves it from $3 to $4 billion to $12, $13, $14 billion. And that could be huge. Charged cotton? Is that like cotton on steroids? It's a cotton that wicks better. And I'm not sure exactly how it's made. But if people buy it, I'll be a happy shareholder. Big week for Johnson & Johnson. The

company announced the acquisition of Synthes. Am I pronouncing that right, James? Synthes? All right. Synthes, a medical device company for $21.3 billion. Johnson & Johnson also announced It is raising the dividend, and the stock hit a 52-week high. James, I think it's my lucky week. Once again, I'm a shareholder. I know it's one of your recommendations. Seems like a really good week. Yeah, and I'm a shareholder too, Chris.

On the earnings piece, metal shavings and pieces of shipping crates in medicines were so last week, and we finally got some good earnings. It doesn't take much to get J&J stock up because it's really been hammered down. And the physicians never really stopped prescribing the drugs, and that was really the thing. They weren't as swayed by the recalls. With Synthes, yes, certainly it's good to get the recalls out of the news. It does make some sense. You can remember how well J&J's own hip replacements, orthopedic implants, they had to be recalled.

So this is a good company. This is a very profitable segment for J&J. The margins of this company are about 10 percentage points higher than J&J's overall. and they do business in a lot of developing markets and these rough neighborhoods can often have a lot of trauma and war injuries and these guys make implants that go into those. So, you know, it's maybe not a cheap deal, so it had better work out, but it's probably a good deal.

If you had to have one of your body parts replaced, what would you go with and please keep it clean? I need a new left leg. A new one? Just the whole thing. The whole thing? You're going wholesale, James? I've had five knee surgeries, so I would get some new knees. It's not really a body part, but I'm going with hairline.

It's creeping back. Is it really? A little bit. I think it's fine. He didn't know me a decade ago. He looked like Fonzie. And finally, the Royal Wedding, obviously the big story across the pond this week. When you look at the economics of it, the Royal Wedding cost an estimated $70 million.

A couple of the highlights, the cake, $78,000, the floral display, $800,000, security, $33 million. We were talking earlier in the week on Market Foolery, our daily podcast, with James and with Bill Mann, our colleague in Motley Fool Asset Management, about marital advice for William and Kate. And we asked people to vote on which advice was better. Drop us an email, radio at fool.com. I'm going to play the clip. It's about a minute long, and you'll hear Bill Mann's advice first. The piece of advice that I would give is that you should always give your spouse the benefit of the doubt. I mean, these guys, he has grown up in the public eye.

And so he's going to hear things. I mean, people will gossip about them forever. So you should always give your spouse the benefit of the doubt. Okay. Good advice, Bill Mann. James? Well, first of all, I'm probably not one to talk if you ask my wife. But I would say, in general, don't try to squeeze water out of a rock.

And that's not as jaded as it sounds. I think that marriage is one piece of a healthy life. And we've gotten this notion in modern society that marriage is supposed to be the be-all, end-all. But for most of humanity, it was more of a practical thing to raise kids and kind of stick together. And I'm not saying peel it back to that, but you have to have other things going on, too. And if you try to squeeze too much fulfillment out of just your marriage, it's going to actually hurt. And it's probably not the healthiest thing. So there you go.

So there's James' advice. There's Bill Mann's advice. Drop us an email, radioatfull.com. Which advice do you think is better, Bill's or James? James is clutching an ice pack to a body part. It sounded worse than I thought it. I get where James is coming from. You need to keep having outside interests, et cetera.

I mean, can I give him advice? Absolutely. You're married, right? Here's my advice. Stop being prince of that country. Just forget about it. It doesn't matter. You've got all this money.

You've got this beautiful wife. Forget all of that and go enjoy the money and to heck with the rest of it. You're only going to be here another 40 years or something like that. Forget about it. So for all our U.K. listeners, that's Seth Jason. Abdicate and enjoy life. Ron? I think I'm closer to Bill than I am to James.

No offense, James. No problem. However, if I could tweak the benefit of the doubt thing, because it's not really benefit of the doubt. If I can be serious for a moment, you have to listen to your spouse and that your spouse has to listen to you. Otherwise, you're just two ships that pass in the night, living in the same house, and that's a recipe for disaster.

I'm sorry. I dozed off there at the end. What were you saying? Ron Gross, James Early, Seth Jason. Guys, we'll see you later in the show. Coming up, Dave Ramsey was a millionaire in his mid-20s and soon had to declare bankruptcy after that. We'll talk about how he made it back and how he is helping millions with their personal finances. Dave Ramsey next. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. My guest this week is the author of three New York Times bestselling books and the host of The Dave Ramsey Show, which is heard every week on more than 450 radio stations by more than four and a half million listeners.

Dave Ramsey, welcome to Motley Fool Money. Well, thanks, Chris. It's an honor to be on here, man. This is cool. It is an honor to have you on because our show, like yours, is on a lot of radio stations if you back out like 420 or so. so it's just if you use some creative wall street accounting and you just sort of back it out we're on roughly the same number of radio stations we still securitize and sell it to a hedge fund

though exactly now um i want to talk about your radio show but first i want to go back to earlier in your career um by your mid-20s you had a net worth of more than a million dollars how did you do it and what happened well stupidity it was a house of cards i uh i started from nothing and i started buying and selling real estate and this was back in the early 80s you know before there was people on cable tv telling you how to buy real estate and i grew up in the real estate business so i was flipping houses before they even called it that and um we we had started from nothing and ended up with about four million dollars worth of real estate a little over three million dollars in debt in translation a million dollar net worth but it was all in real

estate and it was go go go buy buy buy buy leverage to the eyeballs and so it sounds very impressive but it was pretty stupid the way i did it truthfully and you ended up having to declare bankruptcy didn't you yeah that's the stupid part you know we uh that's where we had borrowed so much money and then the bank got sold to another bank and some guy in another city freaks out because a kid 26 years old owes them a million and a half and they call our loans and we spent the next two and a half years of our life losing everything we own trying to pay our bills and so we had a you know a meteoric rise and a and a meteoric crash and learned a lot in that process when you do something with that kind of intensity and that kind of result even if it's of size of

scale like that there's always some very valuable lessons that are literally seared into your soul so what was the turning point for you in terms of turning your finances around Well, I've got all these letters and licenses and degrees after my name that says I'm supposed to know something about money. And there I sat broke and bankrupt and couldn't feed my kids. And so I kind of had this revelation that maybe some of the things I had learned were wrong. Maybe. And possibly this plan isn't going to work. I know that Dr. Phil moment.

How's it working for you? And so I really went on a quest, spiritually, emotionally, academically, intellectually, to determine how money, personal finance, really works. And I started talking to old rich people. I'd been young and rich. I didn't want his opinion. People that had made money and kept it. And I found a completely different spirit on them, a completely different mindset. And I found this disturbing thing called common sense.

which which uh as the old saying goes is is actually not all that common exactly you're listening to motley fool money we're talking with dave ramsey host of the dave ramsey show heard coast to coast on 450 radio stations dave what is in your opinion the single biggest mistake that people make when it comes to their personal finances not paying attention they're not as Stephen Covey says in the old book, Seven Habits of Highly Effective People, the number one habit is to be proactive, to happen two things. If you will listen to Ramsey, listen to Orman, listen to the fools, you know, and not concentrate on the nuances of little tiny things where we might bump heads or something, but instead just be learning and growing and thinking about money, you'll win.

The average millionaire can't tell you who got thrown off the island, but a bunch of broke people can. Now, do you think the whole notion of paying attention to your money, because it seems like money, for all of the information we have at our fingertips, money is still kind of a taboo subject. It's kind of right up there with sex in terms of taboos. We're not really supposed to talk about it all that much. I know in my house growing up, we didn't really talk about money. Is that one of the challenges that people have to overcome? It is. And it's kind of like when you're growing up your parents didn't talk about sex or money you didn't think they had either and it turns out they had both you know and so uh i i think it is and i think the other thing that

happens is so many of us i always tell audiences if you've made mistakes with money that makes you over 12 and so so many people made mistakes with money and they seem to think everyone else doesn't and so there's a tremendous amount of shame and guilt around the subject of money and then there's these twerps who run around ripping people off and so there's cynicism so you've got these three big negative barriers cynicism shame guilt and and you don't want to talk about it because you don't want to look foolish or you don't want to get sucked into something where somebody rips you off and so it just causes people to really draw back into their own self and they don't have enough information then to win so how do you how do you break the ice with someone how do you

talk about it in a way because you know there are some people um some of our listeners some of your listeners who probably have a pretty good handle on their personal finances, but maybe there's someone in their life, in their family, a good friend or something like that, that they think might be struggling. What's a way to break the ice and actually talk about it? Well, remember that they feel guilty or ashamed about having made mistakes. And so a real good place to meet them is right there. Instead of coming in and saying how smart you are and wagging your finger and how dumb they are uh why don't you talk about all the times that you made mistakes and then they look at you and go but yeah you've got money yeah i know but i'm i overcome the mistakes i i overcame the

mistakes i used to never do a budget i used to never have an emergency fund i didn't even couldn't even spell roth you know and and but i here's what i did and and but i've done all kinds of dumb things too and so don't be don't let the dumb things freeze you and paralyze you and gosh if i could ever help you in any way i would and if you'll just go in there and be comfortable enough in your own skin that you don't have to impress the people in your life, and instead just love them where they are. They'll start asking you questions about money, and you can start answering them then. You're listening to Motley Fool Money, talking with best-selling author and radio show host Dave Ramsey. Dave, looking at America over the last couple of years in the wake of the

financial crisis, do you think that we're becoming more responsible in terms of managing our money, or is it sort of back to business and credit card debt as usual? Well, this last crash was the emotional Great Depression for some people, meaning that I remember my grandfather from the Great Depression. When we would go to his house, when we were taking something apart, we had to pull the nails out of a board, straighten them out, and throw them into a coffee can. he learned his lessons and he was emotionally changed by the great depression this was obviously not the great depression it was a deep recession which is a lot of difference

so it was 82 and i was around then too so i'm not impressed but but but this is the first time a whole bunch of 36 year olds have ever stubbed their toe they've ever been in this kind of environment and so it's changed the way they view things and for some of them they learn their lessons and have become more fiscally conservative in terms of, you know, now I'm going to have an emergency fund. Yeah, I'm getting rid of the stupid credit card debt. And then there are some people that will never learn their lesson, and they're just going to go right back to it. Now, we talked about how you managed and mismanaged your money earlier in your life. What about now? How do you invest your money now? Do you still invest in real estate at all?

I do. I love real estate. Particularly right now, I think it's on sale. I think we're at Kmart and the blue light's on. And I'm buying it. I bought more real estate in the last year than I bought in 10 years because I just think it's a great – this is awesome. And I'm going to look like a genius in a decade. And, of course, but I pay cash. I don't borrow money. So I just – you know, that limits me on how much I can buy and what I can buy.

I was looking at a deal the other day that was outside my realm, and I just – I still wanted it, but I'm not doing it. So – and then I buy mutual funds. You know, I'm just a boring guy. what has been the biggest shift in the way that you think about money from earlier i i quit looking for the magic beans i quit looking for that one thing you know that that that deal and as i've met with wealthy people for two decades now doing this and literally thousands of millionaires and you guys have to i'm amazed at how simple their lives are I always thought it was going to be so sophisticated and so multi-layered

with some kind of weirded out estate planning tools or something that I wouldn't be able to grasp. And, you know, there is some of that that you need to do and understand. But most of the people that I know that have $10 million or more are very simplistic in their lives and in their investing. They don't have a whole bunch of things they do. They don't have some kind of weird corner on something that no one else knows about. They're just the tortoise.

They're not the hare. And every time I read the book, the tortoise beats the hare. Coming up, more with Dave Ramsey. Plus, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. You're listening to Motley Fool Money. Our guest is Dave Ramsey, bestselling author and host of The Dave Ramsey Show, heard on radio stations all across America. Yeah. All right, Dave, it's time to tap some of that personal finance expertise of yours.

I want to spot you up with a few different areas of personal finance and just sort of get one or two tips on what we should be doing. Let's start with a tip for buying a house. Make sure you're out of debt, have an emergency fund in place, and have a good strong down payment. I love a 20% down at least because it avoids PMI. And never buy a house where your payment is more than a fourth of your take-home pay on a 15-year fixed. Where do you come down on leasing a car versus buying a car? Tom Stanley, in his book, The Stop Acting Rich, has discovered that 87% of millionaires have never leased a car. So why would you?

Works for me. One tip for creating a will. do it 78 percent of americans die without a will that is so rude 78 percent is that bizarre that's that's a lot of people left behind with a mess a bunch of hillbillies fighting over mama's china one tip for and this is obviously a huge problem for many americans one tip for paying off your credit card debt the first step to getting out of debt is quit borrowing more plastic surgery get the scissors out chop the puppies up draw a line in the sand and say that's it we're grandmother we don't buy anything unless we can pay for it if you'll start there then the

other stuff for getting out of debt will work and where do you come down on term life insurance versus whole life insurance? Term life insurance, completely. I don't do any investing inside of a life insurance policy. Never seen one where the numbers work. One question that we get here, Robert Brokamp, who's our retirement expert here at The Motley Fool, the question he gets a lot is about people who are

trying to decide between saving for their kids' college education and saving for retirement. where do you come down uh on that challenge for people what's your advice for people on in that situation having done literally hundreds of thousands of budgets if you get rid of all your debt except your home you can do both people that ask that question are people that still have a 500 car payment and they're choosing between their kids college and a car payment they don't want to they don't want to frame the question that way but mathematically that's where it'll come down if you actually could put me in a corner and and and create this bizarre circumstance where

you really did have to choose between the two i'll choose retirement over college because a hundred percent of the time you're going to retire and not everyone goes to college and how by the way while kids are in college they can work that's not child abuse what a novel idea working while you're in college yes see i see why i'm not popular right there that just throws it You're listening to Motley Fool Money. My guest is Dave Ramsey, bestselling author and radio show host. Let's talk about your radio show for a couple of minutes. What is the most common question that you get? I get a lot of relationship and money questions. And I guess that's just because that's what we've

become known for and so husbands and wives that are not you know able to get on the same page I don't get a lot of the technical questions about investing and those kinds of things if I do I generally get behind that question and go into their life somewhere and and find out what's going on that's causing that question before I answer it now you've been doing this show for years you're on hundreds of stations across America what is the strangest question you've ever gotten and you don't have to choose just one you can pick a couple if you want oh man one of the ones that i just i absolutely we had to go to commercial break because i lost it was this guy who wanted to put a pay phone in his house because he could then make he could make

his calls for free he saw that episode of the brady bunch too i guess i'm like dude who's putting the money in dude who's taking the money out who's paying for the phone line and he's just he still couldn't get it and i said if you don't pay for the phone line there's gonna be an air gap i just started laughing so hard I lost it. I had to go to commercial. I couldn't breathe. Now, the big news over in England this week is obviously the royal wedding of William and Kate. Personally, I'm not too worried about the prince's financials. But what advice do you have for couples who are just starting out in terms of how they can manage money together for the first time well money's the number one cause of divorce money fights money problems

money stress it's the number one thing and if it's the number one thing you got to really concentrate on it and the dreaded b word the written budget when you can agree on your spending monthly that means you've agreed on your savings goals it means you've agreed on your dreams even in some cases identified common fears you create a level of communication cooperation unity through working together, the preacher says, and now you are one, that nothing else will do. A lot of marriage counselors use a household budget as a technique to push couples together and to make them learn to compromise and to give and take together. And so that dreaded B word, as a part of your pre-marriage counseling,

you should learn to do a budget together. This daughter of mine that's getting ready to get married, One of the ways he got his blessing from us was they agreed to go through our class. And it's not just because it's our class. They need to learn how to handle money, you know, and they need to be on the same page. Even if they're going to disagree with Dave, that's fine, but they need to do it together. You're listening to Motley Fool Money. My guest is bestselling author and radio show host Dave Ramsey.

All right, Dave, time to wrap up with a round of buy, sell, or hold. Let's start with buy, sell, or hold credit cards that give you frequent flyer miles. Oh, so. Come on, they're frequent flyer miles. 78% of them aren't redeemed according to consumer reports. And Delta last year published that only 14% of their requested uses of them were fulfilled. You have skills that at least some of your listeners may not know about. Buy, sell, or hold Dave Ramsey's water skiing.

Buy, I'm 50 years old and I'm still barefoot. You barefoot water ski? Yeah. Is that just how you learned and you never stopped? No, no. It's an X game, man. It's brutal. Let me ask, just because, you know, again, you've been married for a long time.

Is that one of those activities that you do that your wife just sort of shakes your head at? Or if she could wave a magic wand, maybe you wouldn't be doing it? Well, it is 40 miles an hour, and you do feel like you hit concrete when you fall. so yeah she probably does shake her head however uh she would have to admit that i did get her up last year on barefoot so uh you know she can't shake her head too much she's not addicted to it like my son and i are though that's impressive and finally it's coming out in september but uh it's never too early for me to shamelessly promote something buy sell or hold dave ramsey's next book oh we i am so thrilled with this entree leadership material how we've grown our business from a card

table in my living room over the last 20 years and all the mistakes we've made it's really funny so i obviously i'm a i'm just really loving this it's going to be a fun book and this is i mean this is a different i mean your other books have really been very sort of practical guides to dealing with money this is this is a little bit of a departure for you yeah a practical guide on how to run a business how to grow a business how to start a business he is a best-selling author He is one of the most popular radio shows in America. He is the one and only Dave Ramsey. Dave, thanks so much for being here.

Well, Chris, it's an honor to be with you. Thank you. This was very fun. As always, people on the program may have interest in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. Joining me in the studio once again are a trio of senior analysts, Seth Jason, James Early, and Ron Gross. Guys, we've just got about a minute left, so it'll be our lightning round of stocks on our radar.

Ron Gross, go. I'm going to bring us back around to Microsoft. $5.7 billion in operating income in this quarter alone, $50 billion in cash and investments, a PE ratio of only 10. Stock is cheap. And the ticker symbol? MSFT. Thank you. James Early.

Speaking of Caterpillar, a lot of infrastructure stocks are in a rally that's getting a little long in the tooth. These are typically slow or moderate growth companies if you look at their average growth over 10, 15 years. But they're priced for higher growth expectations, so I would be careful there. So just being careful. Just avoid being careful is my stock in the radar. All right. A little broad. I like it.

Seth? Going to have to go to Under Armour. It still doesn't look cheap. It's cheaper than it was, you know, beginning of the week. But this is one of those companies that I think is a world beater, and I think you have to buy it now. And the ticker symbol? UA. UA.

All right. Seth Jason, James Early, Ron Gross. Guys, thanks for being here. Thank you, Chris. Thanks to our special guest this week, best-selling author and radio show host, Dave Ramsey. If you haven't already, check out MarketFoolery, our daily podcast every Monday through Thursday, online at marketfoolery.com and on iTunes. Our engineer is Steve Broido.

Our producer is Mac Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.