Motley Fool Hidden Gems Investing - Motley Fool Money: 05.06.2011

Episode Date: May 4, 2011

What does the death of Osama bin Laden mean for investors? What was the most surprising thing about this year's Berkshire Hathaway meeting? Will thinking like an economist really improve your marriage? We tackle those questions and talk about the business of Buffett with Lou Ann Lofton, author of Warren Buffett Invests Like a Girl: And Why You Should, Too.  Plus, Spousonomics author Jenny Anderson explains how using economics can help you improve your marriage. Learn more about your ad choices. Visit megaphone.fm/adchoices

Everybody needs money. That's why they call it money. The best things in life are free. But you can give them to the birds and bees. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill. And I'm joined by Motley Fool Senior Analysts Seth Jason, James Early, and Ron Gross. Guys, good to see you. Good to see you, Chris. We're going to take a bit of a step back this week and talk about investing strategies,

but guys, we have to start with the week's big news, and that is, of course, the death of Osama bin Laden. Ron Gross, I will start with you. Obviously, this is a business show, so what does news like this mean for the markets? What does it mean for investors? Okay, I don't think I'll go down to a company-specific type of thesis. I think in general, we should focus on the fact that the thing the markets hate most is uncertainty, and terrorism being perhaps the biggest uncertainty out there. So when things like this happen, it serves to dampen down some of the uncertainty, although it could increase in the short term even more than it was yesterday. But in the longer term, the safer the world is, the better that is

for our economy and for the stock market in general. James? The timing is great, though, because the Arab world is really getting frustrated with these long-ruling radical despots, and I think this is really sort of the perfect time for him to go. So I see this as a long-term stabilizing effect. Yeah, I agree with James on the tail end of that is that one of the dangers of the civil strife we see going on in some of the Middle East countries right now is that you get a power vacuum and that a group like Al-Qaeda gets some kind of influence as a result of that. Now, Al-Qaeda is sort of already really decentralized, but it's going to be without its figurehead at this point. So that can only be a positive sort of for everybody in the world.

So, long-term, it sounds like there's general agreement this is a net positive, but in terms of individual companies or sectors, not really having any sort of material effect? No. Yeah, unless any company had the contract for the commemorative t-shirt, I don't think it's going to be a big impact. All right. As I said, with the exception of that, we're sort of stepping back from the week's big news. I guess I'll start with you, Ron. When you're looking at an individual company, because at The Motley Fool, that's what we do. We focus on individual companies.

What are one or two things that you have to see in a company before you invest in it? Well, it always depends on the circumstance, obviously. There's many different ways you can go. But in general, if we're going to look at the broad strokes here, the first thing I always want to see is some strong free cash flow generation, the ability of the company under normal circumstances to really be able to generate good cash flow. And the other thing, as I'm a value guy, I make no bones about it, is an attractive valuation. A company could produce cash flow all day long, but if it's selling at a rich price, it's something that I wouldn't be interested in putting my capital at risk.

O'Reilly. Do you have sort of a red flag number when it comes to valuation, where you just go, if it's over this, then that's it, I won't even consider it? O'Reilly. $10. O'Reilly. $10.23. No, when I do my analysis, I try to determine to the best of my ability what I think a company is worth. If the stock's trading for meaningfully higher than that, then there'd be no reason to own it. James, what about you? What do you need to see in a company before you invest? Chris, I like a cushion. This is something I like to see, I guess, in my own analysis,

either a valuation cushion or an operational cushion, because we're always making mistakes. We're always imprecise with how we look at things. So if it's a crappy company that I think is trading at an even crappier price, then I want to see a good valuation cushion. Otherwise, I want to see a strong operating company that at least gives me an operational cushion. The other thing I look for, Chris, is I tend to not like thesis-based investments. In other words, I like a company that can just keep on doing the same thing it's been doing and still be successful. Nothing has to happen. No string of events, no stars have to be aligned for this thing to work out as an investment. So I, in general, lean towards that.

That sounds a little bit like you're, in some ways, shying away from companies that, on some level, depend on innovation. They need some type of innovation. Yeah. Well, my newsletter is more of a boring, steady stock type of newsletter. So this is probably reflective of my thinking here. But in general, I think those investments where chain reaction has to happen, yes, and they tend to be growth stocks, tend to not pay out as well, I think, overall. I mean, some of them make it really big, but for every winner, there are thousands of hundreds of losers. James, what are a couple of examples of the types of companies that you're talking about? Walmart and McDonald's are examples of, in the news companies, that can

just sort of keep on doing what they're doing. The format is obvious. They just do it in more places. A power company like Dominion Resources, for instance, that serves us here in Virginia, would be a more clear example of a no-thesis stock, Chris, that really just does the same thing it's doing year after year. Seth, what about you? Well, at Hidden Gems, I concentrate mostly on small caps, but we have quite a variety. So I will go for some value stocks like Ron does. For instance, Super Value is a grocer that was doing very poorly, and the market absolutely hated it. But the price got so low that all they had to do was move from horrible to mediocre to make for a very good investment thesis. And over time,

if you look back at the history of companies, generally the worst ones do drag themselves up towards the mean. And this has started to happen at SuperValue, and it's worked out fairly well so far. The other kinds of companies we like at Hidden Gems are small growth stocks. And one of the things I like to see in those is, it's hard to explain, it's an open playing field, as I like to put it, or a lot of room in front of them to go. So a company like Under Armour, for instance, which I talked about last week, this is a company that had a fairly finite, we thought, market. They were working pretty much with wicking apparel to start with. Well, then they moved into shoes. The shoes start to do well. They start to do a few other products. Now they move into wicking

cotton products. They basically quadrupled their market potential very quickly. And that's the kind of thing I look for in a growth company, and you cannot measure that by price. I particularly like your first example there, because I think a lot of people are looking for, or maybe even trained to look for, the next great stock or a great company. I just like the idea that sometimes you can find value in just looking at horrible companies and just thinking, wow, if this just gets to mediocre, if they just get to mediocre, it's going to do well for me. Yeah, the research shows that that's a very good way to invest, but it doesn't always

work out. You have to wait. In that case, you really have to wait until everyone really hates the stock. Ron, give me a couple of examples of the types of stocks that you were talking about before. Sure. Strong for cash flow generation, attractive valuation, a company like Costco would be a perfect example. Nice, steady cash flow stream from the membership renewals year after year. Strong value proposition, they keep prices low to keep people coming back and make sure they renew those subscriptions, those memberships. And an attractive valuation, stocks trading $75 to $80, I think that's

actually undervalued. The stock has room to grow in the future, and it has great management team to boot. So, perfect example. Seth, what's a stock that you've sold, and why did you sell it? Well, again, that depends on the stock. So, some of these value stocks that I spoke about earlier, we generally believe that they have more of a finite trajectory in front of them. So, a company like SuperValue, for instance, is not going to increase its revenues at 20% a year for 10 years or something like that. So if super value reaches a certain valuation, I'm going to be pretty likely to sell that. Whereas a company like Chipotle, which we did not sell, and is now five, six, eight, or whatever, however many times. It's done well for you. It's done very well and

better for me personally, because I've gotten lucky. That is a company which I didn't sell. Part of it was just luck. But it continued to just get so much better operationally, and the margins got so much better, and now they're opening a new concept which could conceivably enable them to double their market potential. That's the kind of company I don't like to sell ever, even when it looks expensive, because we tend to model conservatively and you never know how well these very good companies can do. So those, sometimes we'll sell half of one of those, sort of have our cake and eat it too. But again, a growth company like that, I think you always need to hang on to some of your shares. And James, as you said earlier, we all make

mistakes. So with that in mind, what's been the dumbest investment decision you've made? Early on, Income Investor recommended a company called Tuesday Morning, which is this closeout sort of B-grade strip mall retailer for home goods aimed at the sort of upper income or middle upper income housewives. And I recommended it just as the real estate bubble was crashing. The concept is just not as sexy as I anticipated. I like to go to the stores. You know, I go to Victoria's Secret, and I check out the panties if I'm potentially investing. I've done that. I talk to people. It's just how we used to do it

at my old hedge fund. I ask people outside of Brookstone, what are you buying? What do you like? So I went there. I didn't really like the stores. Well, he's got a handful of panties he's sticking in front of Brookstone. That's a two-panty show we just did. So this Tuesday morning, though, I should have known.

It's just a bad call. The name of the store is Tuesday Morning. So the idea used to only open on Tuesday morning I told you right there. To create this frenzy environment of, like, you've got to pounce while they're open, and they're going to be closed the rest of the week. Is that what that's supposed to do? What a terrible name.

Yeah, it's a bad name. It works for a while. Ron Gross, your dumbest investment decision? Oh, no, there have been a few. We're not going to spend the whole hour. We've got time. Back in my hedge fund days, I think this was probably around 2004, I invested in a company called Concord Camera.

And in this particular case, I fell in love with a balance sheet. And, yes, America, it is possible, if you're nerdy enough, to fall in love with a balance sheet. My problem was I didn't really focus on the fact that they were making single-use cameras and 35-millimeter film. And I don't know if you've noticed recently, but those really aren't what people are buying nowadays.

So the company really went completely the way of the dodo bird. That balance sheet did not hold up over time, and I got my hat handed to me. How long, so you fell in love with the balance sheet. How long did it take you to break up? Several years. I held on. By that, you mean like seven? A few, a few.

Seth Jason? As always, there are a lot. Probably the one that bothers me the most is Ford at the bottom of the market, or when everybody was very afraid. I had Ford common shares, and I had some traded debt. And I really thought that Ford was going to turn it around to be better than the rest of the car companies out there. I really thought they'd continue to be able to make the debt payments. But the economy and everything just sort of scared me,

and I was just kind of de-risking my own personal portfolio. Can I say that, de-risking? And so I sold it because the uncertainties seemed too great, and it was just a gutless bad maneuver, and I would have doubled my money on one of those positions, tripled it on another, and I didn't. All right, Seth Jason, James Shirley, Ron Gross, guys, we'll see you later in the show.

Coming up, Warren Buffett invests like a girl, and you should too. We'll explain in a moment. Stay right here. This is Motley Fool Money. If you've got the money, honey, I got the time. Welcome back to Motley Fool Money. I'm Chris Hill. It's our Mother's Day weekend special. This weekend is all about the moms. But last weekend was all about Berkshire Hathaway. 30,000 investors descended upon Omaha, Nebraska for Berkshire Hathaway's annual meeting.

One of those investors is Luanne Lofton, former managing editor of the Motley Fool's website, Fool.com, and author of the new book, Warren Buffett Invests Like a Girl and Why You Should Too. It's available in stores in June. Luanne Lofton, welcome. Thanks, Chris. Happy to be here. So what was your headline from the Berkshire Hathaway meeting? Well, my headline would be putting the Sokol issue to rest. You know, for your listeners who may not remember, Sokol recently got into trouble. He was seen as really the next successor to Warren Buffett. He'd been with Berkshire for a long time. And unfortunately, he bought shares of a company

that he went on to recommend that Berkshire buy, and as a result, made about $3 million off the deal. So it just looked a little shady, shall we say. And people really wanted to hear Buffett talk about this. And he did. He addressed it right away at the very beginning of the meeting, which I thought was incredibly smart for him to not try to hide behind that, but to just get out in front of it. And, you know, he said some good things about David Sokol. I mean, he certainly had done a lot of good work for Berkshire. And I think Buffett really showed that he was just, he couldn't believe that this had happened, that he kept saying it was inexplicable to him that something like this would have happened. So Buffett did everything he could to kind of

distance himself from that and say, you know, it's not me, it's him. You know, I'm only human, And all I could do was listen to what this guy told me, and it turns out he lied to me, which Buffett actually used the word sad. He said, to me, this whole thing is just very sad. You're listening to Motley Fool Money. Our guest is Luanne Lofton, author of the forthcoming book, Warren Buffett, Invest Like a Girl and Why You Should Too. What surprised you the most about the Berkshire Hathaway annual meeting? I would say three things, the scale, scope, and stamina. I mean, the scale of the meeting, you hear about it before you go.

Like you mentioned, there are 30,000 people attending, but it is hard to fathom it until you're there and you're in the Quest Center and it's filled with all these people and the lights go down and it's like being at a rock concert. It is absolutely incredible and so entertaining. And then the stamina that Buffett and Munger have, they sit on stage for hours and answer just question after question after question with their trademark humility and humor and quick wit, and they never get tired. I was exhausted by the end of the day, and I was just sitting there listening and taking it all in. I can't imagine how they felt. I mean, they're truly

just remarkable, remarkable people. One of the big questions surrounding Berkshire Hathaway continues to be who is going to succeed Warren Buffett in running the company. Based on what you heard and observed at Berkshire Hathaway's annual meeting, do you have a sense of who the likely successor is? I still think, as I did going into the meeting, that it's going to be Ajit Jain of Berkshire Hathaway Reinsurance. And his name came up at the meeting, obviously. Someone asked that question. And both Buffett and Munger just proceeded to heap so much praise on him. I mean, they just went on and on and on about how unbelievably honest he is and ethical and hardworking and all the things you would want. And earlier in the day, Buffett had said something

like, whoever takes over for me running Berkshire has to put Berkshire first ahead of his own interests. And he basically said that when he was talking about a GJ, and he alluded to that. So I think we all left the meeting still thinking, all right, that's the guy. And investments aside, give me a little bit of the local color of just sort of being there at the annual meeting. Because obviously, you've got a lot of people in town, you've got some interesting companies in the portfolio. See's Candy always gets mentioned. Give me a little bit of what the scene is like. Well, it is just, it is a hoot. I mean, everyone should go. I honestly, if you ever get the chance, there's, in addition to the Quest Center, so there's the big

auditorium part where everyone's sitting and watching them answer questions. The other side of it is there's this big exhibition hall, and that's where all the Berkshire Hathaway companies set up their booths. You know, Buffett always says in his annual reports, the best reason to come to the annual meeting is to shop and he means that he gives you every opportunity to do that there's um you know like you said sees candy and you know walking around i saw there's a dairy queen you can get dilly bar you can get blizzards um there's a big coca-cola booth granimals i forgot that they own granimals there's a granimals booth you can outfit your children nice you can get justin cowboy boots um you know it it's it is just hilarious there's an acme brick thing there's

Benjamin Moore paint. And just to see everyone walking around, it's a lot of fun. You're listening to Motley Fool Money. Our guest is Luanne Loftin, former managing editor of the Motley Fool's website, fool.com, and author of the new book coming out next month, Warren Buffett Invests Like a Girl and Why You Should Too. You had the chance to meet Warren Buffett last weekend. What was that like? I did. That was such an honor. I had just a couple of minutes to talk with him, and he was just exactly what you would hope he would be. he was funny and he was very warm and he was welcoming. And I can't say enough about how great that was. And how does he feel about the prospect of you saying that he invests like a

girl? I think that he, I think he likes it. I think Buffett has a sense of humor and I think he knows that this is a compliment and that we mean it in a good way. So my sense is that he's on board. As I said, your book, Warren Buffett Invests Like a Girl, comes out next month. Give me just a Cliff Notes preview of what readers can expect. Sure. Well, the book really hinges on temperament. I mean, Buffett has always said that temperament rather than intellect is what's most important in investing. That's what will make you a successful long-term investor.

And studies show that women tend to be set up with a better temperament for long-term investing than men. I mean, they trade less. They take less risk. They do more research. Obviously, they're not driven by testosterone to take tons of risk and trade, trade, trade, trade. So the book, in essence, talks about temperament. We're using Buffett as a model of the ideal temperament for an investor. And the hope with the book is that women can read it and be inspired and encouraged to become investors if they're not already,

and men can read it and learn to improve their temperaments, make their temperaments a little more Buffett-like, which should help improve their long-term investing returns and maybe, you know, we'll produce another Buffett. The book is Warren Buffett Invests Like a Girl and Why You Should Too. It is available next month. But for more information, including video interviews with Luann, you can check out fool.com slash girl. That's fool.com slash girl. Luann Lofton, thanks for being here. Thanks, Chris. every time it rains it rains pennies from heaven coming up why cheap sex is good for your marriage a conversation with spouseonomics author jenny anderson stay right here this is motley fool money

money is honey where can my honey be welcome back to motley fool money i'm chris hill forget love and romance. My guest this week says the key to a happy marriage is economics. Jenny Anderson is an award-winning business reporter for the New York Times and the co-author of Spousonomics, Using Economics to Master Love, Marriage, and Dirty Dishes. Jenny, thanks for being here. Thanks for having me. So I've been married for 15 years. And you've never learned as much as you've learned from my book, right? I got to say, there is some amazing stuff in this book, and amazing in a number of ways,

not the least of which is the amount of economic research that is grounded in it. This is definitely not one of those squishy books about marriage and how to get in touch with your inner feelings. This is very grounded stuff here. In a nutshell, how can economics help someone like me who's in year 15 of his marriage? well the book takes a very simple premise that you know economics is the study of the allocation of scarce resources and what is a marriage but a daily waking up and deciding who's going to do what and how are your resources your very limited resources i might add your time your energy your

libido your love how are those going to be allocated every day and as far as i can tell like the source of 99 of marriage tension is over that allocation who's going to do what and who's doing what well, and who's not doing what well, and who needs to be nagged, and who needs to be encouraged, and what incentives are going to work. So the book comes up with, we take 10 principles, both from classical economics, but mostly from behavioral economics, and say, here are some things that are influencing the way you approach things in marriage. So the way you approach the division of labor.

Are you doing a 50-50, or is there maybe a better system, like comparative advantage? How you fight. Do you fight like crazy because you're afraid of losing? That's loss aversion. kicking in, you know, how can you do that better? So you name the subject, I think we have a solution for it, including sex, which of course is a very common topic among married couples. I was going to say, I mean, one of the basic economic principles that I think even someone who is in school in economics knows about is the concept of supply and demand. And for those

thinking about picking up a copy of Spousonomics, I will just spot you up with the title of chapter three, supply and demand, or how to have more sex. Right. So we all know the more something costs, the less demand there is for it, right? So we did a randomized survey of people across the country and asked them, do you want to be having more sex? Most of them said yes. Then we said, why aren't you having more sex? And most of them said, because we're too tired, followed not long afterwards by too busy. So you start from the premise that you would like to be having more sex with your spouse, but you're too tired to do it. So what is the best way to sort of up demand, you need to make it cheaper for yourself, and not money, but you know, in terms of expending your

time and energy. And it's amazing how often couples can either talk about how much sex they're not having, or complain about how their schedules won't permit it, or there's a lot of sort of ways we make it expensive for ourselves. And our, again, you pointed out this doesn't sound very romantic, and this will not sound like a romantic advice, but you've got to make it easy for yourself, especially if you're in the rush hour of life. You're managing jobs, you're managing children, you're managing a lot of things. For that moment in your life, you need to make it easy. Maybe you need to schedule it. Maybe you need to set a goal. Maybe it needs to be put in the Blackberry. Maybe you need to stop hoping that he's going to sense the right moment and be really

romantic, and you need to just sort of seize the seven minutes in the shower and go with what you've got. But make it cheaper and easier for yourselves, and more demand will materialize. We have the book, every concept we have, we have three case studies. So this is not sort of, you know, made up in the abstract. There are couples who do this stuff, and it actually works for them. And I think this is probably the first book about economics that deals with cheaper, easier sex. So I mean, I think that alone is going to help you sell a lot of books. I hope so. You're listening to Motley Fool Money. My guest is Jenny Anderson, the co-author of Spousonomics, Using Economics to Master Love, Marriage, and Dirty Dishes.

One of the things that you write about goes against one of the sort of classic pieces of advice for couples that are about to get married. And the classic advice is, never go to bed angry. And you and your co-author are saying, actually, sometimes you should go to bed angry. Why? Yeah, I think that's pretty bad advice. That's like the most common sort of bridal party, you know, advice that you're going to get her. The reason is because, and I alluded to this before, loss aversion. When we feel like we're losing, we act irrationally. And we, for stock traders, that means, you know, think Jerome Kevier at Societe Generale, right?

He actually said, like, I knew I was down. I had to bet the house. Like, I had to do everything in my power, including risking $7 billion of my bank's capital, to win. You act, you can't see clearly. And that happens when you're fighting with your spouse, right? You think, in the same survey, 37% of people admitted to us that they continue a fight when they know they're wrong. And another 34% admitted to us that they continue to fight when they can't even remember what it was they were fighting about. So sometimes you're just fighting because you feel like you're losing, right? And so you sort of go into crazy mode. At that moment,

it really is much better to go to bed angry and catch your breath and stop hyperventilating for whichever party happens to be hyperventilating and maybe it's both of you and see how you feel in the morning and we're not suggesting sort of suppressing your feelings and never talking about it again but you're not going to get resolution if your goal is you know a happy fruitful marriage for many many years and the goal of that fight is to resolve the issue then you need to sort of wait until you can breathe to resolve the issue. And again, that is our way of recognizing that it's our loss aversion kicking in. We can sort of force ourselves to take that time out and then reassess when you're thinking a little clearer. And it's amazing. I can tell you from firsthand

experience, I'm a very emotional person. A lot of times in the morning, the issue does not seem nearly as monumental as it did at sort of 2 a.m. And you're a little bit better at it. That's one of the things that keeps coming up in the book over and over is this whole notion of cost-benefit analysis and looking at things in your marriage through the lens of, well, what is the cost here? What is the benefit going to be? And it's like, well, I don't necessarily want to take out the garbage right now, but the cost of it is pretty minimal compared to the benefit of my wife is going to be a whole lot happier. She's going to be exponentially happier than the cost will be for me. Exactly. And again, it sounds very unromantic, and yet there is some

real logic to this if you think about it like marriage can be romantic but dishes are not romantic trash is not romantic you know deciding who does the carpool these are not romantic issues and do not require romantic solutions they require practical solutions and it i think we sometimes just hope that because we're married and because we're in love all of these things should be easy like you would never run a business that way being like well i hope my business partner just knows what i need you know you would assume that like you would sit down and say all right here's how we're going to divide up the tasks. Here's what you're going to do. Here's what I'm going to do. And when it doesn't get done, you would be upset about it. So we're really trying to

address the business of marriage because there is a business of marriage. And that's very sad, probably for those, you know, perspective to be married. But it's true. And it doesn't have to be a bad thing. But the less bickering you do about that business, like that, the more time there is for romance and sex and love and hanging out with your kids and doing all the great things you want to do if you're not sort of, you know, at wit's end arguing about school lunches. You're listening to Motley Fool Money. My guest is Jenny Anderson, the co-author of Spousonomics, Using Economics to Master Love, Marriage, and Dirty Dishes. You and your co-author, Paula, you did a ton of research here on economics. You did interview surveys. You went to seminars. How did you get the idea in the first place?

So the idea was my co-author, Paula Schumann. She's a page one editor at the Wall Street Journal. and she and her husband were having, they had been married for, they were in their first year of marriage and they were having a horrible fight. They found the first year of marriage to be pretty tough. And her husband's a web designer, a very visual guy, and he sort of whipped out a piece of paper and did a graph of their mood over time. And it sort of opened the pathway for them to have a much more rational discussion than they had been having about like, wait, you were really happy then? Like, that's crazy. I was really unhappy then. What was going on and it it diffused a little bit of the emotion and really kind of led to a conversation and it

sort of made him laugh just gave him another framework and she started thinking like maybe there's a you know maybe there's a bigger idea here and uh she wanted a co-author who had more of a grounding in economics and finance and so we were set up on a blind date you're set up on a blind date but what by your publisher uh no no no no not at all we have a mutual friend so i was thinking about writing some books related to the financial crisis. And I was complaining to a colleague, actually, that none of them were sort of jazzing me enough to really want to take the plunge and spend the, you know, the other 15 hours that I'm not working on these issues at home doing them. And he said, Oh, I have a friend who had this crazy idea about, you know, sort of marriage

and economics. And it really immediately made sense to me, like, I could see the idea, and I had written about behavioral economics, and it seemed like a clever idea, and I could imagine spending all of my free time doing it, whereas I was having trouble imagining spending all of my free time on some of the other subjects I was contemplating. Now, as you mentioned, both you and Paula are married. How did your husbands feel through this entire process? Like guinea pigs. Unwitting at times. Well, you know, the irony here is that we, in the process of deciding to write a book about marriage while producing three children and having full-time jobs. We definitely put a huge amount of stress on our marriages.

But at the same time, we actually, I think, learned a lot of very useful things. It's very hard to sort of talk about the research and talk about all these great tools and then not take any of your own advice. My husband is actually an editor at the Wall Street Journal as well, and he read the whole book. I can promise you he would never in a million years read any relationship book. So it was very useful to both of us because he read the book and he actually, I think, found a lot of it very useful, could understand the more analytical framework, but he could also use the book on me. So when I use a horrible tone of voice, I'll say, that's not very spousonomical, you know, and say, well, it seems to me that your loss aversion is kicking in or, you know, is this really comparative advantage at its best? And, you know, and he's right. There are moments where, I mean, I don't particularly like it being used against me, but there is, you know, there are sort of tools that we can both use now. And I sort of feel like as married people, we just, I'll take any tool I can get, like I think marriage, you know, for 40 or 50 years is hard. And so you should look for as many tools as can help you get through it.

You're listening to Motley Fool Money. My guest is Jenny Anderson, the co-author of Spousonomics, Using Economics to Master Love, Marriage, and Dirty Dishes. Jenny, before we move on to buy, sell, or hold, what is one thing right now that every listener can do to improve their marriage? Commitment devices. I'm going to say this, and I would probably not say this to a lot of audiences, but you have a smart one, a really smart one, so I'm going to go out there with this one.

Better intertemporal decision-making. Whoa, whoa, whoa, whoa. I know. Decisions we make today that have consequences in the future. We are procrastinators as human beings. We say we're going to save for our retirement. We don't. We say we're going to exercise.

We don't. We say we're going to eat well. We don't. We say we're going to be a better husband or wife. We don't. We need to put in place commitment devices to be the husband or wife that we want to be. So, you know, if you've been talking for the past eight weeks about, you know, eight years about how you want to do more new things together

or you want to go on more date nights together or, you know, you really do want to find a babysitter that you love so that you can get out of the house every once in a while, do it. Find a way to commit to it. Force yourselves to do it. You know, prepay a babysitter. You know, find the best babysitter in the town, book them every other Saturday night.

So you have to go out. You are forced to plan. Do something to make yourself do some of the things you say you're going to do and you never do. So, you know, as a couple, I've heard a lot of couples say, you know, we there's scary research that says that married couples exercise much less than single people say okay let's say you as a couple have said you want to get into shape commit to doing a race where you have to raise money for a good cause like are you really going to screw over all those people who

are giving you money to cure cancer no so go do that if that's what a court requires to get your lazy butt out of bed every saturday morning to go running you know i feel like these commitment devices are a very powerful tool um to get us to do things that we want to do but we just never really get around to doing. I love the idea of prepaying a babysitter. That is brilliant. Especially if it's a babysitter your friends know, because you don't want her ratting you out to your friends as like the couple who come Saturday night really just wants to sit on the couch at home. Exactly. All right, let's wrap up with a round of buy, sell, or hold, and we'll start with buy, sell, or hold, the idea that honesty is the best policy. Sell. That was fast.

Well, but with a caveat, which is, obviously, honesty is the basis of a good marriage, but there is such a thing as too much information, right? You don't want to overload your partner. High information processing costs, you know, it's hard to process a lot of information. It can paralyze us. You need to be honest. You do not need to tell your partner everything you're thinking about them, especially if those are very negative thoughts.

Buy, sell, or hold separate bank accounts for spouses? I'm going to say hold on that one. And again, there's a caveat. yet. If you have separate bank accounts because you've chosen to have separate bank accounts, totally fine. If you have separate bank accounts because you've never gotten around to having the conversation about whether you should merge them, major sell, because that is active versus passive decision-making. Passive decision-making, it means you didn't make a decision, and so you're just kind of going with that which you had because it's the easiest thing to do. Not a good idea for

anything in your marriage, but certainly not with your money. You need to make an active decision as to what you're going to do with it and how you're going to manage it. And finally, buy, sell, or hold Spousonomics the movie. Buy Spousonomics the TV series. Really? I'm just saying. I'm not saying anything's happening.

I'm just saying if I were going to buy the film or the TV show, I would buy the TV show. TV is hotter than film right now. Okay, because the Freakonomics guys, they got a movie out of it, but Spousonomics the TV show. All right. Spousonomics the TV show. All right. We are going to stay tuned for that. And as I mentioned, there's a whole lot more online at Spousonomics.com. The book is Spousonomics, Using Economics to Master Love, Marriage, and Dirty Dishes. It is a fascinating read. It is a relationship book that guys will actually enjoy and find interesting. And, oh, yeah, it might actually help you with your marriage. Jenny Anderson, thanks so much for being here.

Thanks for having me. Coming up, in honor of Mother's Day, a few stocks for mom. This is Motley Fool Money. 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, our trio of senior analysts, Seth Jason, James Early, and Ron Gross. All right, guys, it is Mother's Day weekend. Before we get to, well, it's not going to be stocks on our radar, It's going to be stocks for mom, because you know what? Mom deserves it. But before that, Ron, I will start with you. Best advice mom ever gave you?

Okay, so many things my mother has taught me. Certainly, always go out with clean underwear. It's high on the list. Overrated. She knew I was going to be entering the business world and the investing world, and she said, make sure you conduct yourself in the most ethical and honest manner at all times. Best advice. It doesn't matter if he heeds it or not, I suppose. Yeah, it's just the advice part. James, what about you?

My mom never said it directly, but in her actions, she taught me not to be petty, I guess, best way to say it. I mean, we were never big on rules, which has benefits and cons, I guess. But, you know, we just sort of did what we thought was good, and I think it's helped me in life. Yeah. You know, that's interesting to learn that your family wasn't really big on rules, because I think that explains a little bit for some of us who work with you. That's good to know. Seth? Well, one time she said, oh, my God, you stay away from that Jenny Rizzuto.

but um hi jenny other other than that i think uh similar to james my both my parents taught uh me and us i think not to take ourselves too seriously because you only go around once and if you think too much of yourself you're probably going to uh have a worse time of it now recently we had your dad on the show that's right are we going to get your mom here and get her on if we could get her to open up, she would be just as funny. Alright, one stock for mom. Ron Gross? Not just my wife, but our entire family really enjoys Nordstrom's as a shopping experience. We think they do a really good job, both in terms of selection and service.

And the ticker symbol there is JWN, and they certainly get enough of our business to make it worthwhile. JWN, is that the initials of someone in the Nordstrom family? I think so, yeah. JW Nordstrom. Donald Trump, he did the same thing, DJT. That was when Trump was publicly traded. That's not a red flag? Yeah, but he's a bad businessman. Oh, okay. All right. James Early, one stock for mom? Chris, mom's getting older like the rest of us. So I like Johnson & Johnson, which has very good healthcare demographics, obviously. It's basically a healthcare mutual fund in a

stock without the fees. And right now it's trading at a very cheap price. One of the cheapest prices it's been for a while. So I mean, still, it's actually gone up because of good results but but on a valuation basis it's inexpensive so that's my stock seth you know nordstrom's a legendary customer service extent i was there one time and i was walking around in awe at the prices on the ball gowns like four or five thousand dollar dresses why were you buying i was just a whole other show chris no i wandered in there and that's the point of the story is somebody came up to me with a straight face and asked me if i wanted to try one on and he was dead serious and when i said no i'm not and he said i i'm sorry i hope i haven't offended you

but there's a large contingent of drag queens in this city, and they do come in here shopping for ball gowns, and I need to provide service to everybody, even six-foot-three men standing in the ball gown section. Wow. Yeah. So he pegged you for it. That's service.

That's been awesome. That is service, yeah. But I'm going to go with Victoria's Secret for a couple of reasons. For mom, one, to do dad a favor, and the other is that I guess that's limited brands. Limited brands, yeah. Victoria's Secret has just been knocking it out of the park for limited brands, so let's do that. And the ticker symbol for Limited Brands?

Is it LTD? It is. I believe it is. So when I think of cross-dressing, I'll think of Nordstrom's now. Yeah, and when you think of Victoria's Secret, you can think of my mom. All righty. Seth Jason, James Early, Ron Gross. Guys, thanks for being here.

Thank you, Chris. You guys aren't even laughing. What the hell? We are laughing. My mom is fine with that joke. Thanks to our special guest this week, Jenny Anderson from the New York Times, co-author of the book Spousonomics, and Lou Anne Loftin, author of the forthcoming book, Warren Buffett, Invest Like a Girl and You

Should Too. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.