Motley Fool Hidden Gems Investing - Motley Fool Money: 06.04.2010

Episode Date: June 4, 2010

BP deals with a spreading spill and sinking stock.  The market reacts to the latest jobs numbers.  And Michael Dell talks publicly about the possibility of taking his company private.   In this week's Motley Fool Money Radio Show, we tackle those stories, share some stocks on our radar, and talk with Matt Ridley about his new book,  The Rational Optimist: How Prosperity Evolves. Learn more about your ad choices. Visit megaphone.fm/adchoices

Don't you wish you could just hit skip on the worst parts of your life? You know, the same way you can skip an ad? I get it. I'm Siaya and I live in Ice Cove. I've made some questionable decisions that didn't end up the way I planned. And today I'm still figuring it out. Somehow things usually get worse before they get better. Apparently, that's how I roll.

So bundle up and come along for the bumpy ride. Stream a new episode of North of North Tuesdays on CBC Gem. everybody needs money that's why they call it money 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 analyst seth jason James Early and Shannon Zimmerman. Guys, good to see you. Good to see you, Chris. On this week's show, BP tries to reassure the public, Dell talks about going private, and best-selling author Matt Ridley makes the case for rational optimism. But we begin with BP. On Friday, the company said oil

was successfully being siphoned from the well. But guys, there's still a lot of frustration and anger out there, and the Justice Department has opened a criminal investigation into BP's oil spell. Shannon Zimmerman, let me start with you. What are your basic thoughts on the week that BP has had? Well, maybe next week will be just like this one. We ended last week with some optimism about the technique that they were trying to use to cap the well, and that turned out not to work. And so I guess hope springs eternal, but the track record here isn't that good. Last week, we talked about whether or not BP, the stock, was a buy or a hold or a sell. And I said buy. I still think that on valuation grounds, it is a buy. This company's not going away. They will

weather this and be back strong probably eventually. But it's just, it's unseemly, it's way too small a word to convey what's going on. I would steer clear of the stock for now and think that the track record as more and more emerges from the internal documents that are now in circulation about what BP knew. They had engineers on their own staff who had concerns about this as early as 2009. If this information was suppressed and if they had warning and didn't to act on the morning. Maybe that's industry standard. I certainly hope not. But even if it is, that doesn't absolve them of the responsibility for this. And what scares me is that the Gulf Stream could pick up this oil and actually wash it up the eastern seaboard. So, I mean, I have a

beach trip and I want to wear those Speedos, but it is a very, you know, populous coast and that could just mean a lot more damages. Yeah, I'm the resident now BP apologist. You're also a shareholder. I bought more shares just this morning, actually. The way I look at this right now, the reason I bought shares is because there is so much anger built into the share price right now and a lot of outrage sort of masquerading as reason. And so, no, this is not a great situation. Just for the record, I'm the guy who rode a bike or took mass transit to work exclusively

for six years. I'm the guy who picks up snakes and turtles on the running trail and moves them to the side so they don't get run over by the next bicycle. Which we all find hard to believe. I pick up bugs and put them outside the window. I love animals. What's going on here is horrible. But on the other hand, what we're seeing now is a lot of information taken out of context.

And I'm willing to admit what a lot of pundits, I think, are not willing to admit, which is that I'm not an expert on any of this. So when people are having disagreements about how to do drilling, I absolutely believe that that probably happens all over the place. And so if you look at this stuff out of context and assume that every decision BP made that resulted in something bad happening was made out of negligence, I think you're missing the point here. You're missing the point. I don't think that's right. I mean, so if the contention is, oh, well, nobody could have predicted, well, not only could they have predicted, they were warned by their own internal engineers and didn't take action.

We don't know that they were warned specifically that specific things would happen. And certainly they didn't do things because they expected them to go bad. There's billions of dollars and millions of dollars at stake. All of these decisions at any of these drillers are always a balance of what does it cost versus what are the risks. Did they go the wrong way on this one? Yeah, probably. The point I have or a takeaway, and this relates to BP's stock price as well as the price of oil everywhere, is that if you believe that companies like this should have infinite liability,

And I believe there was a bill in Congress to try and put that onto BP. Well, to raise it from a ridiculously low level. Well, then they said $10 billion, and they said, no, make it infinite. What will happen, what would happen effectively is that at that point, there's no way for anyone to drill under those kinds of circumstances. So I don't think that's going to happen. And I believe that's the kind of outrage that's baked into BP's stock price, which is why I'm willing to be a buyer at a point like this.

I'm not saying BP did nothing wrong. But I am saying this is far more difficult and far more complex than anybody in the mainstream media wants to admit. Well, in the here and now, what we're looking at, I mean, if you guys saw the Wall Street Journal series of articles, it's very good. And clearly there was a fight on the oil rig about how to do things. And BP had apparently sent somebody to supervise who was out there to, quote, unquote, learn about deep water drilling. And he was overriding decisions made by the more experienced rig staff. So, you know, maybe they screwed up on that point. the thing we don't know is, is BP as a company responsible? Because there is a criminal

investigation now. And if they are found criminally liable, they could face double damages for the cleanup costs, which could be anywhere from a couple billion up to 40 billion. So if you take that and then you add double those damages, that's significant. BP has already lost about 70 billion in market cap, which is probably an estimate of what they might have to pay if if they were criminally liable, but, you know, it's a very risky stock in my view, and maybe it goes up in 10 years, but I say it goes down before it comes back up. Yeah, and before the show, Seth, we were talking about, you know, the outrage that people have, and people are outraged because this is an outrageous occurrence,

but if it's ill-informed, just anger, then I agree with you, and I think you also made the point that if people really want to protest and show their anger at BP, walk to work would be a good way to do it. That's something I said. I mean, if you really want to stick it to BP, there's a far better way than sort of screaming about it on Twitter. Don't drive that giant SUV. Satisfying to know that it is.

Don't drive that giant SUV. Walk to work. Ride your bike to work. If you can cut your use of gasoline by 20% or something, you'll hurt every one of those evil major oil companies out there more than you ever could calling a congressman or screaming online. It's a good point because in some respects, we're all complicit to the extent that we want cheap oil

so that we have cheap gas for our big gas-guzzling cars. And yet we expect that nothing ever go wrong on the way of getting that to us. But coming out of this, though, the government has to, has to, has to get more strict about prevention of this kind of thing. Now that we know that it is such a risk, now that we know that the Minerals Management Service was lax in its oversight, we do need that sort of insurance. And, yes, it will be a cost baked into oil drilling, but that's a necessary cost. I think more important than that is to come up with contingencies to fix such problems because they're going to occur anyway. No matter how careful you are, problems are going to happen. And what needs to happen is, I think, an FDIC-type situation where you've got a flotilla or whatever it takes of equipment that can clean the seawater of ROVs.

And, again, as we said before, 19 out of 20 years, this stuff's going to be sitting in port rusting. But you need to have it, make the oil companies put some money aside, keep it there, and then at least you're ready for something. You're listening to Motley Fool Money. There was actually other news this week, too, guys. On Friday, the government announced that the economy had added 431,000 new jobs in May. But most of those were government jobs, and Mr. Market didn't seem to like the report. Seth Jason, what did you think of the jobs news? It was pretty horrible all the way around.

When most of those jobs are temporary census worker jobs, that's not great. They also revised down last month's number of jobs. But there is a small light of hope. Let me get to the rest of the bad news first. Construction employment, they said, basically erased the gains from the last couple of months, which flies in the face of some news about record construction spending, or not record, but improved construction spending in April. But I'm looking at the manufacturing numbers, and I think that the 126,000 jobs added there over the past five months is a bit of a good sign for the economy. Temporary, I never really know how to think about temporary help. Typically, people seem to think that that is an indication that the economy is starting an upswing. Temp work isn't great.

I've done it myself, but I suppose it's better than nothing. Strange that healthcare employment was flat. That has been one of the sources of growth in the job market for quite some time, and a little odd to see it essentially flat this time. Coming up, we'll talk about Zipcar going public and whether Dell should go private. Stick around. 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 Shannon Zimmerman as we dig into some of the companies making headlines this week. But guys, once again, we've got to welcome a few new radio stations to our growing list of affiliates. WLAD AM 800 in Danbury, Connecticut, KSBN 1230 in Spokane, Washington, and KBNP 1410 in Portland, Oregon. We love our new stations.

Spread the word, people. Spread the word. All right. The euro hit a four-year low this week. Hungary said the talk of default is, quote, not an exaggeration. And Greece announced it was selling off some of its assets. James, you've been worried about the EU for a while. What was your take on the latest? Yeah, Chris, I have been worried about the EU, you know, and Greece is doing basically a great big yard sale. They're selling off 49 percent of their railroad, 39 percent of their post office, some water utilities, stuff like that. I like it. The issue is magnitude. They've taken in about 750 billion euros in aid from the EU and from the IMF, and we'll get a couple of billion, three or four billion from these sales. So it's kind of a drop in the bucket. But for Greece, it's a move in the right direction. I have to disagree with James, whose analogies are usually much more apt if, you know, sometimes a little dirtier.

This isn't so much a yard sale as it is burning the furniture to heat the house, I think, is the thing we're looking for here. It's probably the right move, but it's a little bit desperate, too. Yeah, well, and also just the notion of public utilities being privatized, that runs some risk. I like it so much because it erases the very problem that got Greece into this mess, which was this over-encompassing, you know, 40% of Greeks or 30-40% of Greeks work for the Greek government. And that's ridiculously unsustainable because it had just gotten too big. So they're undoing that. That's why I like it. On Thursday, Dell CEO and founder Michael Dell told an investor conference that he has considered taking his company private.

Dell is currently the No. 3 PC maker, and shares were up as much as 6% on the news. Shannon, would Dell do better as a private company? Maybe. I mean, there's an element of this where Michael Dell wants to take his football and go home. It hasn't worked out for him, and so he's come back and been CEO for the last three years. It could make sense to not focus so much on quarterly results for Wall Street. But at the end of the day, they've not gotten any traction in any element of the tech market where the margins are high. It's a commodity business.

They were a fantastic company when that was on the rise, not so fantastic now. And this is a story that makes a great headline, but there's less to it than meets the eye. Basically, somebody asked him a question, and in response said, yeah, I have in the past considered taking Dell private. And maybe he would in the future, but it's sort of making some news out of it. Although it is worth noting that the immediate follow-up question was, well, essentially, what would it take? How much? How much would you give us?

And he wouldn't answer. The company, the IR people, they weren't talking about it at all. Well, that's why the stock price popped as well, the buyout premium. It would take a ton of private equity money, and Dell would just be holding to a different set of investors, obviously. Now, granted, they wouldn't have yo-yos talking about them every week like us, but I think that's the point. Oh, we could find something to say. Let's go back in the Wayback Machine for just a second here. Back in the fall of 1997, Michael Dell was at a conference and was asked what he would do if he owned Apple Computer, which at the time was a company in trouble.

And he said, direct quote here, I'd shut it down and give the money back to the shareholders. So my question is, who's in worse shape, Apple in 1997 or Dell right now? I'm going to say Dell right now because Apple has obviously a great legacy of innovation. A lot of innovation didn't pan out for them, but it was sort of necessary to get to where they are now. I mean, the Newton, you know, I had a buddy who was all into the Newton. Everyone's got a Newton now. They all love them. Yeah, I guess, I guess.

It's just way ahead of its time, guys. But I would say that Dell is in more shape now. James? It's easy to look back with Apple's success, but I would agree with Shannon that Dell isn't. What's computer construction going to now? I just look at my laptop. I don't have my laptop here. But, yeah, I still think you guys are looking back with a little too much of the current success in there.

Because back then, all Apple was doing is had a 3% share history of innovation that had failed. They had a lot of cash on the balance sheet, which is why he said that. But nobody knew there was going to be a bazillion iPods or any of that. Dell, at least right now, is a company that does not have a 3% market share and does produce cash. I think that it's a dwindling cash stream, but at the right price, maybe for private equity types, it could pay off pretty well. Earlier this week, AT&T carried out some major changes to its pricing plan. Among the changes, a new entry-level plan for $15 a month. AT&T says two-thirds of its users could get by with that plan and cut their costs in half.

Seth, who are the winners and losers when it comes to this? First of all, we predicted this many times. Bandwidth is not free. I think this is great. The winners include two-thirds or so of current iPhone users who use less than that. The losers are the data pigs who want as much data as they can get for free. I think Google could conceivably be a loser. They want everybody to use as much Internet as they can so that they can kind of do their usual lamprey act.

But I think this is good for Apple because it brings in lower data plan prices. So people like me who are on the fence about these phones might come in. I think it's actually also good. I think Microsoft and others, even Google in a way, owe Apple for an assist on this because this will make it easier for all the other players out there to smell, to smell, to sell smartphones that use data because the hurdle for getting people into those smartphones has now been lowered. You're listening to Motley Fool Money. We're going through some of the companies making headlines this week. Car-sharing company Zipcar is going public. We don't yet know the exact date, the price range of the stock, or the number of available shares.

But we do know the ticker symbol. Let's comment on it anyway. The ticker symbol will be Zip. James, you're our resident gearhead. Are you buying Zipcar? Chris, I am not because I am a more conservative guy. And I know the company is not profitable yet. That's one thing I do know.

But you're right. There's not much information. Zipcar, though, I've got to say, I'm buying the idea of the service because in America we are very wasteful. We have way too many cars, and I love the idea of this sort of communal property. I think we should do it more. Hippie. I almost moved into, you know, I vote Republican a lot,

but I almost moved into this eco-villages commune because you only have to cook one meal out of every 30 days. The rest of the time you just get to eat. So I think that's a more sensible method of food preparation. Yeah, but what if some of those people are really lousy cooks? Yeah. I could eat, not paste, but I could eat some sort of, you know, glop. I have no taste buds.

Do they really want to have the ticker be zip? It seems like the stock price plummets. That's not really going to be very attractive in the headlines. Definitely not. It's like selling the Nova in Mexico, which actually I hear actually sold well. McDonald's is recalling 12 million Shrek glasses, which were found to contain the toxic metal cadmium. McDonald's has been selling the glasses for $2 a piece

and is instead now offering a full refund. How much is this going to hurt their brand? To be fair, they offered the non-cadmium option. This is another one of those situations you don't have a lot of information. So cadmium is found in certain paint colors sometimes. In certain children's jewelry. In certain children's jewelry. And according to what they said,

they didn't give out the amount of cadmium in the paint on some of these glasses. They said it was a lot less than was in that jewelry. Nobody out there is in imminent danger. You don't want to lick the outside of these glasses. I don't think it hurts the brand much. You take care of it, and maybe in the future you scrape the paint off these things and test it for toxic chemicals before you sell it. They're recalling the glasses, so let's just go around the table real quick.

If you could recall one item from McDonald's menu, what would you recall? Shannon Zimrin? Well, so I was born in Memphis. I'm a barbecue snob. I would definitely recall the McRib, which they only bring out of the permanent collection every once in a while and put it on display, but it's just gross. It looks weird. It doesn't taste anything like barbecue, and the texture is

not meat-like. James? Guys, you know me. I would recall the whole McDonald's. You know, if I had to, maybe the chocolate chip cookie, just because it's kind of a non-sequitur. It's like, McDonald's is about fatty, greasy food, and then there's this baked good cookie. It just seems too different. Seems odd, doesn't it? Yeah.

What was the thing that kept the hot side hot and the cool side cold? The McDLT. Yes! I always thought that was the biggest, again, here I'm, I thought that was the biggest waste of styrofoam that you had this like double sized container for this stupid thing just to keep part of it hot and part of it cold you know what if you made my sandwich on the spot i wouldn't have to worry about it yeah it was like the spinal tap extra long box for their cd yeah steve anything shamrock shake what's going on there horrible i see i'm going the other way

i want the shamrock shake year round dude looks like antifreeze tastes like it too all right the Guys, I'll be back later in the show to share the stocks that are on their radar. But we want to hear from you. Which McDonald's item would you be recalling? And what would your advice be for Mr. Michael Dell? Drop us an email at motleyfoolmoneyatfool.com. I'm going to San Bernardino, ring-a-ding-ding. Milkshake mixes, that's my thing now.

These guys bought a heap of my stuff. And I've got to see a good thing shooting up now Oh, my name's not Croc, it's Croc with a K Like Crocodile, but not spelled that way It's Doggy Dog, Ratty Rat Croc style, boom, like that Coming up, best-selling author Matt Ridley talks rational optimism, investing, and the potential for a cure for Alzheimer's. Stay with us. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill. Are things really getting better? Should we be borrowing from our future? And when will we see a cure for Alzheimer's disease? Here to help with those questions and more is Matt Ridley, a best-selling author whose books include Genome, the Autobiography of a Species, in 23 chapters. His new book is The Rational Optimist, How Prosperity Evolves, and he joins me in studio now. Matt, welcome. Nice to be here. So, there's a lot of pessimism out there, but you say the world is getting better.

I don't want to be Johnny Raincloud, but why do you say that? Well, I take the big view, the long view, and if you look in my lifetime, we've trebled income around the world. Per capita income is up threefold. We've cut infant mortality by two-thirds. We've halved poverty. We've increased per capita food availability. We've changed lifespan. We're living five hours longer every day.

These are the sort of big trends that are happening as a result of the spread of prosperity to Asia and other countries. and they're continuing whatever events happen along the way that kind of knock it off course in individual countries. And I don't see any reason why that won't continue. In fact, because of the internet, which is a forum for people to exchange ideas on second to none, I think it's going to accelerate. I see no reason why it can't.

I have to focus on the title of your book, The Rational Optimist. Has it been your experience that optimism is seen as being inherently irrational? that's part of the purpose of the title yes the other purpose is to point out that i'm a rational optimist who's arrived at it by reason rather than a sort of instinctive um uh you know i feel good kind of optimist i'm not telling people to be personally optimistic about their lives necessarily i'm just saying look you know look at the planet look at the situation of the human race and don't tell me it's all going to go wrong um immediately because if you look at what people say they intellectuals have been saying for 200 years well it's been okay so far

but it's about to go horribly wrong every generation says it stands at a turning point in history and that uh you know they fall like the man who fell falls out of the skyscraper and as he goes past the 10th floor he says so far so good and you talk to a lot of people in the intelligentsia particularly and that's the way they feel about the current generation they say well, we've had it good, but our children are about to have it bad. I've looked at the data, and I don't conclude that. You're right that to say things are about to get worse sounds wise. And John Stuart Mill said, the man who despairs when others hope is regarded as a sage. I don't know why that is, but it's true. Well, and we also see that in the stock market,

just in the basic lexicon where every once in a while there will be a market correction. It's only referred to a correction when the market goes down. The market never corrects upward. I don't know if that's something that you ever noticed as well. That's a very nice euphemism. I hadn't thought about that. What does the rational optimist make of the recent financial crisis? Well, I think what generally happened across the Western world in the last five or six

years was that we overborrowed. I mean, it's as simple as that, isn't it? You can then go into why and who and where. But in the end, I mean, human beings can borrow against the future because the future is richer and it can afford to pay it off. And if you borrow against the future and invest in the things that are going to make the future richer, then fine. So, you know, in that sense, the Ponzi scheme can work for humanity indefinitely. But it's clear that a lot of us overdid that in the 2000s for, you know, all sorts of reasons that, you know, there's plenty of blame to spread around. And, you know, I take I'm not especially optimistic about the immediate prospects for my country, the UK or yours, the United States, because there is, you know, there's a lot of debt around our neck that we have to work out how to pay off.

There's a lot of commitments to retired people from future working populations, et cetera, that are not necessarily sustainable. So all of these are issues. But the things that make people richer is the progress of technology and innovation, which enables each of us to serve each other with some goods or services. And that's continuing. You know, those processes of innovation haven't stopped just because the recession and the debt crisis has happened. You're listening to Motley Fool Money. We're talking with Matt Ridley, the author of the new book, The Rational Optimist, How Prosperity Evolves. One of the things that you write about and some of your optimism is rooted in the ultimatum game. For those who don't know it, could you explain the ultimatum game for us? It's a wonderful game in which two players are playing with real money. And essentially what one has to do is offer the other a share of what he's been given.

And the other player can say, thank you very much, I'll accept the share. Or he can say, I'm going to reject that share. And in that case, neither of them get anything. The money is taken off the table if that happens. So the question is, how much should the first guy offer? Well, rationally, you should offer, if you're given $10, you should offer less than one. because the guy can't he's still going to be a dollar better off he's not going to make himself better off by refusing but of course most people if they're in the second player's shoes find that

pretty insulting and so what what this game does is it enables you to to see the degree to which people um uh have sort of rational enlightened self-interest that enable them to realize that that uh generosity pays dividends here and that people are going to punish selfishness and and so on. And they've taken this game out. People like Joe Henrich and colleagues have taken this game out to small-scale societies all around the world, hunter-gatherers and early agriculturalists who are not embedded in market economies, to try and work out whether they play by the same rules. And the interesting conclusion is that the more exposed to commercial markets people are, the more generous they are in this game. Exposure to the ordinary process of commerce

tends to lead you to realize that actually you have to put something on the table for other guys if they're going to come back and do deals with you. One of the things you also write about is that on balance, people are good at deciding who to trust. That was surprising for me to learn, again, in the wake of the financial crisis that we had. And mentioned the Ponzi scheme earlier, obviously with the Bernie Madoff Ponzi scheme, it seems like there's certainly anecdotal evidence that people aren't that good at deciding who to trust. Yeah, that's a very good point. And, you know, maybe the difference is whether you get face to face with people, because the experiments I'm talking about are ones in which people

go into a room and mingle for 30 minutes, not really knowing why they're doing and talk to each other and then they are asked if you're going to play a prisoner's dilemma game with these guys do you think they will be cooperative or defecting will they be nice or nasty as it were and their scores are noted and then they play the game and they find out whether they were right or not and people are remarkably good you know after 20 minutes conversation you know whether this guy is likely to be a cooperator in the prisoner's dilemma game not perfectly but but to some extent Now, you know, maybe when you're investing, that's what the face-to-face thing is all about. If you don't get to see the fund manager who's going to be investing your money, then it's hard to make those kind of judgments.

Coming up, more with Matt Ridley, plus a look at the stocks that are on our radar. Stick around. You're listening to Motley Fool Money. You're listening to Motley Fool Money. We're talking with Matt Ridley, author of the new book, The Rational Optimist, How Prosperity Evolves. What surprised you the most when you were researching and writing this book? The thing that surprised me the most was these macro trends about how the world is improving. I mean, one of the subjects that people kept saying to me you can't be optimistic about was Africa. And they would say, well, yeah, you know, China's had a boom, but that can't happen in Africa, can it?

I mean, Africa sunk into poverty. There was no way of getting it out. The population explosion, the weather, the climate, the diseases, the wars, blah, blah, blah. But when you drill down beneath the surface and you look at Africa and you look at some countries and others, you find extraordinary things going on. You find Rwanda turning around after that appalling genocide and becoming a high-end coffee exporter. You find Botswana having the fastest economic growth of any country over the last 20 years. You find mobile phones transforming ordinary farmers' lives in Africa because they can call ahead and work out which market to take their produce to.

You find mobile phone banking, all these kind of things happening. And you find the poverty rate in Africa is actually falling pretty fast now, all across the continent. The AIDS epidemic was terrible, but it's now in retreat in most countries in Africa. And so life expectancy, which had been falling in the 90s because of AIDS, is now going up again. So I was amazed to find that not even Africa, in the end, challenged my optimism. I think in 20 years' time, with its demographic dividend, i.e. falling birth rates, but a large working population, not a very large old population, Africa's going to have the same sort of boom conditions that China did 20, 30 years ago.

Parts of it, anyway. Now, at The Motley Fool, we're all about investing and investors. Do you put some of your research to work for your own investments? Do you look at a country like Africa and decide to invest some of your money there? How do you invest your money? Well, I'm a completely hopeless investor of what money I have, and I always get it wrong. But, yes, I am a bull about emerging markets, you would say, and to the extent that it's possible and easy to do without getting taken for a ride,

I say to my broker, you know, can you get me exposed to India or other countries that are, you know, emerging and forging ahead? And I think, you know, that's where the exciting process of exchange and specialization that increases human prosperity is happening at the moment at its fastest is Asia and to some extent in the future Africa. But I'm not yet in a position – I mean, I have actually – I am trying to put my money where my mouth is in the sense of making more donations in Africa because I do think that there is huge – for example, African agriculture could be fantastic. And it's a terrible shame that we Europeans have tariff barriers against a lot of African agricultural products. So I'm making donations when I can to charities that help develop new technologies for African agriculture, things like water-efficient maize and things like crops that need less nitrogen so that farmers who haven't got access to fertilizer can grow higher produce and so on. You're listening to Motley Fool Money. We're talking with Matt Ridley, author of The Rational Optimist, How Prosperity Evolves. All right.

Before we let you go, we've got to do a quick round of buy, sell, or hold. So let's start with buy, sell, or hold a manned trip to Mars in the next 10 years. Sell. I don't think that's going to happen. Too expensive. Too difficult. We've got a recession on, in case you hadn't noticed. I heard a little something about that.

Buy, sell, or hold a cure for Alzheimer's in the next 10 years. Buy. Really? I've seen some very interesting research in Cambridge. and other places about getting to grips with what these diseases like Alzheimer's are. And, you know, it's all about the solubility of proteins inside the cell and so on. And there are some quite low-tech things that people are going to be able to do in terms of diet, I suspect. But I suspect there will also be drugs.

You know, a total cure for all Alzheimer's, maybe not. But the beginnings of cures for some forms of it, yes. The Jetsons had one Most people want one Buy, sell or hold Robot maids Sell They've been predicted forever

It's a kind of 1950s fantasy And I just Well, okay No, maybe it's a hold Because I don't think they're going to sort of walk around And have two legs and things like that But I think there are going to be all sorts of sort of self-cleaning devices. There's that vacuum cleaner, the Roomba.

Isn't that what it's called, the Roomba? I'm getting a thumbs up from our producer, Matt Greer. Yeah, I mean, you just sort of set that thing loose in your living room, and that just goes. Yeah, I have a robot in my swimming pool at home, don't I? I guess so. You know, it trundles around all day. So, yeah, okay. All right.

buy, sell, or hold people living to be 150 years old 50 years from now. So by 2060, are people going to be 150 years old? Buy, sell, or hold that. This is a tricky one. I mean, on the whole, I still believe that we're all going to get to the max, but the max isn't going to increase much. And the max seems to be around 120. So I would certainly buy most of us getting to 120 in 50 years' time, but I don't think I would buy many people getting to 150. On the other hand, everybody who's predicted where the limit on human longevity is has been wrong so far. It just keeps exceeding expectations. So let's say hold.

The book is The Rational Optimist, How Prosperity Evolves. it is available everywhere Matt Ridley thanks so much for being here thank you very much for having me on the show always look on the bright side of life

always look on the light side of life if life seems jolly rotten there's something you've forgotten and that's to laugh and smile and dance and sing When you're feeling in the dumps Don't be silly chumps

Just purse your lips and whistle That's the thing Hey Always look on the bright side 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. Chris Hill and back in the studio with me, our trio of senior analysts,

Seth Jason, James Early, and Shannon Zerman. Guys, I'm very happy to say we've got to welcome a few more stations to our affiliate list. No way. Kino 940 in Fresno, California, KBCT 94.5 FM in Waco, Texas, and KDOW AM 1220 in San Francisco. We're now in the 20s. If you're scoring at home, we are now officially in the 20s in terms of affiliate stations. If you're not scoring at home, try Flowers.

And all of you can tell everyone, you listened to them before they were cool. Exactly. All right, time to talk about the stocks that are on our radar. Shannon Zimmerman, let's start with you. Well, a small, obscure company, Chris, that you may not have heard of called Johnson & Johnson. Wait, what? Yes, ticker is J&J. It's near and dear to James' heart as well.

It's a fantastic company, the leader in most every category that it plays in. People haven't noticed, but it's sold off pretty precipitously over the last month or so, and it's having a massive recall of- Callous disregard for human suffering, right? Oh, I'm sorry. Metal shavings and liquid Tylenol. Yeah, for kids. And so not a happy story, obviously.

they are doing a responsible job of fixing that mess. Maybe not so effective on the PR front, which is somewhat surprising because they were way back when, when they had the Tylenol recall. But if you're looking to buy shares of a fantastic company that's going to be around forever and continue to dominate the markets that it plays in, now's a great time to look at Johnson & Johnson. Ticker is J&J. James Early?

Yeah, to Shannon's point about J&J, I think the key thing about the recall is that nobody so far, to my knowledge, has been really injured from this. It's not like Vioxx and Merck. In fact, what I've heard is that the medicines work better because one of the problems is they get too much active ingredient. You're a fantastic father, Shannon. I can just tell. I can feel it. Have you seen that New Yorker cartoon where the little kid has a swirl of horses going around his head,

and he says, Mom, I don't think that's children's Tylenol. James, your stock this week. Chris, my stock is Aqua America. The ticker is WTR, and the name might sound like some sort of apocalyptic post-global warming children's cartoon. We're all under water thanks to the melting ice, but it is simply a water and sewer company, sewage company that I really like. They generally just say water company, as I think we talked about before, which sounds bad, but that's a big part of their business. It has a great quarter. It just turned in a 7.4% dividend raise, which I like.

And cheapskates will like that if you go through the drip, this is the dividend reinvestment program of the company, you can buy the new shares at a 5% discount. Wow. That's pretty good. Pretty good deal. Wow. I mean, Seth, you're a big cheapskate. You must love that. I like that.

I also own Johnson & Johnson. All right. What's your radar stock this week? We're all on the same page on this kind of thing this week. Mine is Brookfield Infrastructure Partners, which I find difficult to say. The ticker is BIP. That's a lot easier to say. This is related to Brookfield Asset Management.

And it is an infrastructure partnership that I think may, well, it's cheap already, and they have some very good assets, infrastructure, things like electrical lines, port facilities. And if we are in an environment where countries like Greece are being forced to sell off these kind of assets, and maybe they won't be the only one, then that probably can only benefit a company like Brookfield, which is sort of always on the prowl for more assets of this kind. Yield right now about 7%. That's really nothing to sneeze at, especially when, what do you get on a savings account these days? Less than a percent. So Brookfield Infrastructure Partners, BIP, we hold that at Hidden Gems. And I think James would like it too.

Where do they do a lot of their business? Are they looking specifically for situations like what's going on in Greece? They have, you know, electrical lines in Chile. They're in Canada with timber there, in Australia with some facilities. So anywhere in the world. So, yeah, if they can get a chance, they will, you know, take a shot at infrastructure assets anywhere in the world. So between BIP and its sibling BAM, which do you prefer? Well, BAM is sort of the Uber sibling.

So I prefer Brookfield because it's smaller and a little more focused. Seth Jason, James Early, Shannon Zimmerman. Guys, thanks for being here. Thanks to our special guest this week, Matt Ridley. His new book is The Rational Optimist. If you missed any part of the show, you can find it at our website, MotleyFoolMoney.com. You can also get a copy of our free report, The Motley Fool's Top Stock for 2010. All that and more at MotleyFoolMoney.com.

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