Motley Fool Hidden Gems Investing - Motley Fool Money: 06.11.2010

Episode Date: June 11, 2010

BP debates paying a dividend.  Google takes issue with Apple.  And Bernie Madoff has some choice words for his investors.  On this week's Motley Fool Money Radio Show, we discuss those stories, share some stocks on our radar, and talk irrationality and investing with best-selling author Dan Ariely. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because whether it's a road trip or a business trip, where your flight's delayed, your phone's at 2%, and your dinner is... whatever's open? Yep, here for that too. surprise. We're here for it. 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 Analysts Seth Jason, James Early, and Shannon Zirin. Guys, good to see you. Good to see you, Chris. On this week's show, BP debates its dividend, Apple and Google square off, and Microsoft gets into the business of free. Behavioral economist and bestselling author Dan Ariely stops by to talk irrationality and investing. Plus, we'll give you an inside look at the stocks that are on our radar. But we begin once again with BP. Although some of the oil is now being captured, researchers have doubled their estimates on how much oil is leaking. The White House will be meeting with BP leadership next week, and BP's CEO will be testifying before Congress. So that'll

be some must-see TV next week. But Seth Jason, you're a BP shareholder. I am. You said on last week's show that you bought some more shares. And at one point this week, the stock hit a 14-year low. And there are a lot of scenarios being mentioned, including the possibility of bankruptcy, the possibility of other companies acquiring BP. As a shareholder, how are you viewing all of this? Well, as I look at it right now, I'm still looking for more buying opportunities. So this is such a busy week, it's really hard to reflect on everything. I think the biggest news for BP this week, if we want to set aside the whole notion that there's actually some good news, which is they're collecting an awful lot of that oil, is that the government really ratcheted

it up. It's pressure on BP at one point sort of threatening to try to charge BP for all of the unemployment, all the economic impact that was going on in the Gulf because of the moratorium declared by the government. Also saying, we think it's wrong of you to pay a dividend while you're still doing this cleanup, even though BP's cash flow can easily handle it for now. And so right now, this is really a political nightmare as well as an environmental nightmare. And so As a shareholder who's there partially for the dividend, I actually think BP would do well to cave slightly to all this political pressure just to make it a little easier for them to show that they are feeling everyone's pain, sort of, and hopefully maybe push away some of the more egregious legislation that could otherwise be coming their way. Well, James Hurley, you're a dividend guy. What do you think BP should do?

Well, you know, I love dividends, but I think in BP's case, I mean, they have so many big worries. And the main thing is they don't know what they're facing. Political risk is what they're facing, and that's the hardest risk to predict. So I think they're prudent to not pay a dividend. And the word on the street is that they're going to suspend the dividend for now, possibly putting the money into, like, an escrow account for later or maybe do an IOU. But, Shannon, a lot of pension funds hold BP. You've got, you know, the Texas Teachers Retirement System,

the California Public Employees Retirement System. Over in the UK, shares of BP are held even more widely held than they are here. I mean, not paying the dividend, that's going to be hurting retired librarians. Exactly right. And a lot of retail mutual funds here in the US own BP shares too, of course. About 520 mutual funds own the company. And these are funds that have particular mandates. They are mandated to own dividend-paying stocks. So if that gets suspended, Do they liquidate their position in BP? And what will that do in terms of a ripple effect? You know, in some respects, it could be a self-fulfilling prophecy.

Or, you know, maybe bankruptcy is a possibility. Maybe it's not. Maybe the share price gets cut down to, you know, $10 or less. Funds have mandates around the market cap that they are to invest in as well. So there can be some things that on the fundamentals could erode BP's position. But then I guess I'll characterize it as technical. These things that don't really bear on the fundamentals of the company, but because funds are mandated to do certain things, they have to get out of the positions

because BP no longer fits the profile of the kind of companies they invest in. Seth? Yeah, this is one of those cases where everybody, including the blowhards, the Nancy Pelosi's and Chuck Schumer's, who have to be careful what they're asking for. Because if you kill BP, right, then there's nobody left to pay for all of this cleanup. And you're not going to be able to sell the assets to anyone with the condition that they then fund the cleanup. In other words, they're not going to buy these things with attached liabilities, so they're worth a lot less money.

And so this is one of those things where if you want to hammer on them, yes, it's politically expedient. You definitely want BP to pay as much as they can to fix this mess. But BP is worth a lot more alive than it is dead. I do agree that there is political theater going on here in the run-up to November, and I think that in some ways politicians are fighting the last year's battle over the financial reform and the bailout. They didn't get angry enough, and they didn't bring that populist fury to bear on the banks in the way that they are seeming to do on BP.

But that's the way it works in a democracy. The politicians, the elected officials get up and say what they think ought to be done, and then there's pushback. It's a conversation. No legislation has been proposed yet, and we'll see how – Well, the rough outlines of legislation have been proposed. The rough outlines of legislation aren't legislation, though, and we'll see what actually comes out of this. I think a lot of people are learning as they go what the unintended consequences are. As you think about pension funds that own BP shares, do the Chuck Schumers of the world

really want to push back on that? Probably not. But that is part of the conversation that will lead to actual legislation. But what's most important, I think, is that BP CEO Tony Hayward still wants to get his life back. I was just going to say, speaking of political theater, we got CEO Tony Hayward going to Capitol Hill. Poor guy.

Poor guy. He's going to be testifying. What's the over-under on this guy remaining as CEO? No, because a couple weeks back, he talked about how he had extraordinary support from the board of directors. I'm starting to think that by Independence Day, this guy is gone. Yeah, he should wear a flak jacket and take Dick Cheney with him, I think. Obama has said if he were Tony's boss, he would have fired him already. So, yeah, I think he's a sacrificial lamb in the coming months.

Seth, there are more important people who want their lives back than Tony Haywood, and that is sort of the entire golf economy. And that's one of the things that I think the Obama administration is going to have to walk back on. And there was this sort of knee-jerk moratorium on drilling. And so you have the fishing tourist industry killed by the BP spill. But now you have a huge portion of the rest of the oil and gas industry also being killed. And the people in those communities and the legislators and representatives down there are screaming, please let people drill, let them explore, because our economy is not going to survive this. So no one should be held accountable on the BP side?

This has nothing to do with accountability. This has to do with an administration that did not fully think through what looks good, which is saying we're going to have absolute safety for six months. There won't be any more deep water drilling, even though the experts that they had look at this plan said you should not have this kind of moratorium. You will absolutely kill the economy down there. Well, and I do think that there are two things going on here. You have the shrimp industry, just to pick one by example, which is affected by the spill. But we were talking earlier this week, Seth and I, about a company called Hornbeck, which has 1,000 employees, and they're a supply company.

They weren't affected by the spill. They were affected by the government moratorium on drilling because they're the ones who do the supply work for all the rigs. And there are a lot of companies down there, and the trickle effect to the rest of the economy down there is huge. And that's what I'm talking about, that as bad as this is, you shouldn't make it worse by trying to look tough. Speaking of the oil industry, as we were, let me throw out a few other oil companies.

Exxon Mobil, Chevron, Petrobras. A year from now, what is the likelihood that one of these, or another, has acquired BP? Or, a year from now, is BP still a standalone company? James Early, I'll pick on you first. That's a tough question. I'm going to say there's a 65% chance BP is still a standalone company, which is not that great. Yeah, That's all I'll say. I don't think anyone acquires all of BP at once. I think that it gets chopped up into bits, but only through some kind of government action that may or may not be legal.

Shannon, what are the odds? I think it'll be a standalone company a year from now. 100% chance? Yes. You're listening to Motley. See, there's Shannon, I agree. You're listening to Motley Fool Money. Guys, it's time for the big macro.

On Friday, the government reported that retail sales fell 1.2% in May. Economists had been expecting a rise of 0.4%. Seth, that's not even close. That is a big miss. What did you think of these numbers? Well, it's the whole expectations game. And of course, remember, they'll revise these next month. So they may end up being better than we thought or worse than we thought.

To me, the most worrisome thing here is that you had a pretty big drop, I believe, in fuel prices, which kind of leads to a drop in the sales at gasoline stations, which makes up a pretty big chunk of this number. So even after you back out cars and gasoline, people just don't seem to be buying stuff. Maybe the only good news here is people seem to be buying gadgets. James, what was your big macro headline of the week? You know, Seth and I were talking about all this cash that U.S. companies have on hand, as I think the Wall Street Journal has reported.

The most cash since, I read 52, I think you read 1963. Yeah, it was record. A long time. The most cash in a long time. And not banks, non-banks, yeah. This is just regular companies. Yeah, which is bad and potentially good. Bad because, obviously, it could portend deflation.

These companies are really slowing down the velocity of this money. The good part is this is potential energy. It's like a pulled-back bowstring ready to be released if the managers want to. And to have a piece with the bank reserve levels as well, which are historic highs. For me, it's related, but it's almost an investment story, which is that PIMCO has reversed course on its position relative to U.S. Treasuries. Just four months ago, it was saying that that's not an area that they wanted to play in, that the government's balance sheet was in such bad shape that they would overweight corporate debt and look elsewhere abroad to invest in sovereign debt. You look at the U.S. economy, which relative to many of the economies in the world, is pretty resilient.

And we all have doubts about how strong this recovery is going to be or even how long it's going to last. But at this moment, I think that the U.S. economy is probably the world's most resilient. And remember all the expert opinion, only months ago probably still, about how the U.S. dollar was just doomed and everybody would be moving into the Euro. All the smart money was on that, and we've gone completely the other direction. Coming up, we'll get into Apple's insecurity and the economic impact of the World Cup. 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. Seth Jason, time to dig into this week in Apple. We've got a lot to chew on. We had the unveiling of the 4G iPhone. Wow. There was a security problem with the iPad, and a shot across the bow from Google over Apple's iPhone ad rules. What was your Apple headline of the week?

Well, we didn't really have an unveiling of the 4G iPhone. We found out from those guys who bought that stolen one weeks ago. The most interesting thing to me, I think Steve Jobs might need to get ready for a close-up with the feds. The shot from Google, I don't normally love to defend Google, but I think it was a fair point because apparently the way the developer agreement with iAd and the iPhone applications will work now is it's a little bit technical, but it would exclude developers from working pretty much with a Google or another market force, another force in the cell phone operating hardware or software system, kind of relegating developers to either choose between Apple's advertising platform or some small third party.

And, of course, nobody's going to work with a smaller third party because you have less chance of making money that way. It's a little anti-competitive. If you're an Apple shareholder and it works out, that's going to be great. I don't know if the Feds will let that go on forever. Yeah, well, meet the new boss, same as the old boss. Microsoft used to face all these challenges as well. Now it's Apple's turn. You can only play the game as long as we win, basically.

But Apple's playing it well. I mean, this is sort of antitrust bait, but they're pushing it as far as they can because they're the dominant force. They're writing the rules and they're enforcing the rules, and at some point, somebody's going to blow the whistle. Yeah, and their market share isn't so much yet that people have to be very, very worried. But the more successful they are, the more they're going to have to watch out.

Yeah, I think that's right. Microsoft introduced its free web-based version of Office. Seth, as a Microsoft shareholder, I care very deeply about this question. How does free... How does that make you think? How does that work with Microsoft with their business model? Well, remember, they've given away some other free product in the past in order to kind of bring people into the operating system,

or in this case, it would be the Office ecosystem. system. And I think this is a smart move. The reality is that Microsoft Office is actually a very, very good office suite, probably by far the best, but it costs a lot of money. Everybody doesn't need it. So to provide some basic functionality online with a series of applications that work online, but better yet, give you, I think it's 25 gigabytes worth of storage and allow easy sharing and then easy migration should you want to use the desktop applications. That just makes a lot of sense for them. It helps them fend off a challenge from Google and others who are providing these because unlike Google or somebody else who only has this online

stuff, they've got a much more robust PC client version that people can go to when they need it. Yeah, lots of sharing tools across the software as well. So if you own the institutional version of Office, you can share in the cloud and edit in real time. I played around with it when it first was available, was fairly unstable and fairly limited, more limited even than Google Docs. But I think in some ways, Google kind of forced Microsoft into this. They can't let their market share be eroded.

This is their sweet spot. And remember how Google innovated that by buying another company's product. Growth through acquisition, that's right. Bernie Madoff back in the news. He told his fellow inmates this week that his investors got what they deserved because they were, quote, rich and greedy. I carried them for 20 years, and now I'm doing 150 years. Takes one to know one.

James, yeah. James Early? What a nice guy. Does he have a point? You know, to a degree, but it's kind of ironic. I was researching self-directed IRAs recently, and I found this letter from the Department of Labor allowing these IRAs to invest in family partnerships, basically.

And the seminal case was these group of guys who couldn't afford to invest with Bernie Madoff individually, but if they pooled together, they could. So basically the government let them do this, which is kind of ironic. I mean, I don't know if that was the majority of his investor base, but at least some people were. Well, the majority of his investor base, as I understand it, was people being fed by other hedge funds to him. Bernie actually, I think, has a point on this. From reports that I've read, a large number, I won't say everybody deserved what they got.

Some certainly didn't. But some number of people figured that Bernie was crooked all along. They didn't figure he was running a Ponzi scheme. They figured he was front-running based on his trading business. And indeed, they may have invested with him specifically because he was their crook. If you're somebody who thought Bernie was cheating everybody else and you were going to benefit, then I don't have a whole lot of sympathy for you. I think you did deserve to lose your dough.

Yeah, exactly right. If you thought he was crooked for you, then you got what you deserved. When this story first broke on this show, we talked about some of the celebrities who were involved in it. And, of course, the one we focused on was Kevin Bacon. Where do we think Kevin Bacon falls? We just had to guess. We have no proof. My guess is Kevin didn't deserve it.

Really? You think so? You don't think Kevin was? Yeah, he doesn't seem like the kind of guy. You know, flashback to his character in Footloose. So much integrity and, you know, an idealist. I can't believe that that would be true of him. And finally, the World Cup has officially started.

So, guys, here are some numbers to consider. 106 million people worldwide watch the Super Bowl. Estimated TV audience for the World Cup? $715 million. According to a survey by a British market research firm, nearly 40% of Brits are planning to take a sick day to watch the World Cup. And here at full global headquarters... So, why is everyone buying U.S. Treasury? Why is that? Here at our office, TVs that are normally tuned to CNBC are tuned into the World Cup. Or TVs we don't normally have around.

Yeah, exactly. So, let's just go around the table. I don't think any of you are big soccer fan. So let me just ask, what event would most undermine your workplace productivity? Shannon Zimmerman. Well, you know, if that Google Pac-Man thing hadn't been Pac-Man, but had been Defender, that was my game of choice back in my high school days. I think I would lose a lot of productivity. Really? Yes. I'm a big fan of Defender. You didn't strike me as a Defender guy. No, I love it. I love it. Steve Broido, do you have anything that would just crush your productivity at work here? Yes, and I'm going through it right now. It's called moving. Oh, I thought you meant it was called listening to us.

No, no, moving. It's been a total nightmare, and it's sucking my life away from me. Well, you're holding up well. You seem to be holding up well. I appreciate that. All right, the guys will be back later in the show to talk about the stocks that are on their radar, but we want to hear from you. Is your productivity sinking because of the World Cup?

Should BP pay a dividend? And is it time to break up Apple? Drop us an email at motleyfoolmoneyatfool.com, especially if you have any moving tips for Steve. That's motleyfoolmoneyatfool.com. When I get older, I will be stronger They'll call me freedom, just like a waving flag And then it goes back, and then it goes back

And then it goes back, oh So many wars, settling scores Bringing us promises, leaving us poor I heard them say, love is the way Love is the answer, that's what they say But look how they cheat us, make us believers Coming up, best-selling author Dan Ariely talks about irrationality and investing. Stick around. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill. Joining me on the line now is Dan Ariely. He's a professor of psychology and behavioral economics at Duke University and the author of the bestseller, Predictably Irrational. His new book is The Upside of Irrationality, The Unexpected Benefits of Defying Logic at Work and at Home. Dan, welcome to Motley Fool Money. Hey, nice to be back. So in the wake of the financial crisis, I think a lot of us understand the downside of irrationality. What's the upside of irrationality? For me, there are kind of two ways to think about the upside of irrationality.

The first one is that if we understand where things go wrong, we can also think about how to fix them. So, for example, you know, in my view, one of the biggest problems in the financial sector has been conflict of interest, right? Imagine that I paid you $5 million a year to view mortgage-backed security as a good product. And now the question is, wouldn't you be able to see it this way? I would find a way to do that. You would find a way to do it.

And on top of that, it turns out that if it was hard to evaluate, if you had a big Excel spreadsheet with lots of parameters and formulation, and you had to choose which parameters you think actually reflect reality, and some of them were also better for your own pocket, you would probably pick those ones. And on top of that, if you saw lots of people around you believing the same thing, it would be even easier for you to believe those things. So this is a case where the upside of irrationality is that if we understand conflict of interest, if we understand it when we put good people in situations of conflict of interest, they are doomed to fail. There's just no, it's not about being good, right? It's about human nature. We just can't have conflict of interest. Then you think very differently about what kind of financial system do you want to create. So that's the first meaning.

The second part of the upside of irrationality is that sometimes irrationalities are actually useful, are actually something we don't want to eliminate. So think about something like trust or how people behave in society. And I describe in the book this game we call the trust game. And here's how the game works. Imagine you have two players, player A and player B. And you happen to be player A, and you don't know who player B is. But I tell you, look, Chris, you can do one of two things.

You can either, I'm giving you $20, and you can either keep the money and go home, or you can send the money to player B. And if you send the money to player B, the money quadruples. So by the time player B gets it, it's going to be $80. And now player B can decide one of two things. They can decide to take the money and go home, in which case you, my friend, get zero, or they can decide to split it with you and send you $40 back. Now, if you thought that player B was perfectly rational,

if they were just worrying about their own benefit... Oh, they'd take it and they'd split. They'd take the money and go, right? So a rational kind of economic agent who is perfectly selfish and maximizing will take the money and go home. And if you knew that that's what they were going to do, you would never send them the money. So the economic theory prediction is that nobody will reciprocate

and therefore nobody will send the money to start with. And it turns out people are nice in economic theory. It turns out people often send money, and they often get reciprocated. So that's an example of something that's a nice economic theory. You're listening to Motley Fool Money. We're talking with Dan Ariely. His new book is The Upside of Irrationality. Dan, the market is up from its lows in 2009.

A lot of investors have seen their stocks regain some of that lost ground. How do you invest your own money, and how do you find yourself reacting when your investments go up? Yeah, so I try not to react. And I mean it seriously. So people do lots of mistakes when they invest. And one of the mistakes, of course, is to let emotion rule us. So here's kind of a way to invest badly. You start in the morning, and you get to the office, and you open your portfolio.

And if you're up, you're a little happy, and if you're down, you're really miserable. and now you make your decision based on this particular emotion that was evoked by the randomness of the stock market. And I try to think about this strategy without looking at my portfolio. So I don't look at specific things that I gained or lost because, you know, that's kind of water under the bridge. It's not very helpful and I don't want to be emotional, but I can look at it and say, what do I think about the future?

Where do I think things are going up? Where do I think things are going down? and let me take an action of those independent of how much money I've lost in the past. It's kind of irrelevant. That's the first thing. And the second thing

is that I try to avoid the status quo bias. So what happens is that you create a portfolio and you open it and now the question is what do you change? What do you sell? What do you buy? How do you change your portfolio

to a slightly different portfolio? And that means that whatever decisions you made in the past rational, irrational, thoughtful, not so thoughtful, is going to keep on escorting you through life. And what I try to do is try to imagine once in a while that somebody went at night and somehow sold everything I have. So I'm at just cash. And now I sit and I say, okay, assuming I just have cash, what would I get now? And that basically helps you alleviate some of the problems. Imagine you bought a stock for $100 and it's now $80. It's very painful to sell it, even if you think

is going to go down, right? So people often hold on to losing stock for too long. So from time to time, it's good kind of to start from scratch and imagine you just have cash, say what would you do now, and then move on on this strategy. The subtitle of your book is The Unexpected Benefits of Defying Logic at Work and at Home. I want to ask you, in general, how do we act irrationally at work so so big bonuses is one example where we pay people a tremendous bonuses we think they will work better and in fact big bonuses really work very well for physical tasks so if i wanted to jump many times you will jump more if i gave you high bonuses but they don't think they backfire for cognitive tasks and other ways in which in which these things work is that people fall in

love with their own ideas they fall in love with the things that they make they don't see the downside of anything that is connected to us. You know, we are wonderful people. We're exceptional, and therefore everything we touch, all the ideas we come up with are exceptional as well. And I talk a little bit about revenge as well. And there's actually one chapter that I think is particularly interesting and kind of starts, I start in the book from a story about the financial industry, which is a chapter about

the meaning of work. And the story is that one of my students, ex-students, came back to visit me and he told me that he worked for three weeks on a PowerPoint presentation for some big merger. And he sent it to a boss the day before the merger and the boss said, nice work, but the merger is canceled. And that guy was completely devastated. He was completely unmotivated in the next task he was going to do. And he said everything functioned just perfectly fine. Everything functioned. His boss appreciated it.

He worked hard on it. He enjoyed it while he was doing it. He was sure he would get the raise. Everything seems perfectly functional. But at the same time, he was completely demotivated. So we created the following experiment to kind of capture this. In one condition, you build robots from Lego. And you get paid for them less and less and less the more you build.

So you get $3 for the first one. And when you finish, I say, Chris, do you want to build another one? You'll get $270 for that one. You say, yes, I'll give you the next one. I say, hey, do you want another one? You'll get $240 for the next one and so on until you decide, at this price, I don't want to build them. This is one condition. And I tell you that when you finish building all of them, when you finish the experiment, I'll unassemble them, put them back in the boxes for the next participant.

For the second group of participants, you build the first one. I said you want the second one. As you build the second one, I already take the first one to pieces. I break it up to pieces already and put the pieces back in the box. And if you want to build a third one, I give you the first one back, the one that you built and I unassembled and you can assemble it again. So what happened? Two things happened. The first thing is that in this condition, which we call the specific condition,

people stopped working much, much faster. And the second thing is for everybody, we measured how much they liked Legos and how long they persisted in the task. And what we found was in the first condition, when we didn't kind of crush the meaning of labor, there was a high correlation between how long people persisted in a task and how much, in general, they liked Legos. But in the specific task, the correlation was basically zero,

which tells me that we were able, with this very simple manipulation, to squish the joy that people were having from this task. People are capable of creating lots of intrinsic value and motivation from tasks, Even tasks that are not so meaningful, like building robots from Lego for a few minutes. But we as job places can easily squish the joy out of those things. And I think the challenge for the workplace is to say, how do we, one, help people get more value out of their work? How do we explain to them the value of what they're doing, the connection to other things, the meaning in their work? And, of course, how do we not make it worse?

How do we not kind of crush the feeling of meaning that people can naturally create in their labor? Coming up, a round of buy, sell, or hold with Dan Ariely, plus stocks on our radar. This is Motley Fool Money. You're listening to Motley Fool Money. We're talking with Dan Ariely, author of the new book, The Upside of Irrationality. Dan, time to close things out with a round of buy, sell, or hold. Let's start with something that a lot of businesses use, buy, sell, or hold focus groups. Sell, sell, sell.

Why? Because it turns out that focus groups give people lots of confidence that they'll learn something and they know what they're doing. But the actual value in terms of information is really, really low. So it's kind of the same value as you get from listening to people who analyze at the end of the day what happened in the stock market and tell you exactly a story about why they can predict what happened in the past. You write about the biological imperative for variety. So buy, sell, or hold monogamy. Are you trying to put me into a tough spot here?

If I had to bet, I would sell. Tell me why. So monogamy is an incredibly, incredibly hard thing to maintain. And it turns out that one of the interesting things that controls monogamy is a drug called oxytocin. And so if you give people oxytocin, they become more trusting and more monogamous. But we don't have that much oxytocin. Some animals have more, some animals have less. We are not, we don't have a lot of it.

And, you know, I think that despite the fact that we get upset with Tiger Woods and, you know, other politicians when we discover that they've not been monogamous, the reality is that most people are not. So we have kind of this double standard. When this thing happens in society all the time, we just don't seem to admit it to ourselves that this is incredibly much more common than it is. And, you know, the reality is that, you know, people do other things from time to time. That's just how things are.

His team is in the NBA Finals, and he is thought of as one of the best closers in the NBA. Buy, sell, or hold the idea that Kobe Bryant is clutch? So, sell. As a Celtics fan, I greatly appreciate that. So it turns out that Kobe Bryant is, first of all, not the most clutch player in the league. He's maybe number 10 or 11. But even more than that, it turns out that clutch players in general are not as clutch as we think they are. When we look at how clutch players play in the last five minutes of the game compared to the last five minutes of the first half, it turns out that they do shoot more points, but it's not because they get better.

It's because they try more frequently. And the same thing goes for the foul line. When they get to the foul line more frequently, they try more often, they get more points, but their percentage average doesn't increase. So it turns out that clutchness is one of those illusions that people believe in. but it's a self-fulfilling illusion because if you and I play together and I believe that you're the clutch player I give you the ball more

you believe you're the clutch player you try more you're not succeeding more in percentage-wise but you try more and you get more points so it's a self-fulfilling prophecy and finally you're a married man I'm a married man

buy, sell, or hold telling your spouse they're not being rational oh that's definitely You never, never, never want to do that. Never, never, never. So you've never gone there with your lovely bride, Sumi?

With my lovely wife. Let me say it again. My lovely, lovely wife, who's incredibly generous and forgiving on a daily basis. No. Telling her it's irrational is not the right thing. First of all, she's always rational. Always make the right decision. But no.

This is not the right standard to have a discussion with your significant other. The book is The Upside of Irrationality, The Unexpected Benefits of Defying Logic at Work and at Home. It's available everywhere. It is a fascinating read, so pick it up. Dan Ariely, thanks so much for being here. My pleasure as always. Love is irrational

I don't need a reason to believe 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. I'm Chris Hill, and back in the studio with me are a trio of senior analysts, Seth Jason and James Early and Shannon Zimmerman. Guys, we haven't done it in a while. We're going to dip into the Fool mailbag. Steve Broido, what do you got?

Well, on last week's show, we talked about the BP oil spill and the need for an FDIC-type entity funded by oil companies so that there would be cleanup technologies at the ready. Well, it's such a good idea that it already exists. Motley Fool moneylister William Holt writes, Rig owners and ship owners pay to have oil spill equipment standing by, and the oil industry funds the Oil Spill Liability Trust Fund. These have been in existence since well before the Exxon Valdez,

but it was that singular incident that enhanced the systems that had been in place since the mid-70s. It may be debated whether there's enough equipment or if it's situated in the right place, whether the liability limits are high enough or whether the trust fund needs to be funded at a greater level. But don't doubt that these capabilities are there and they've been in existence since well before the deep water horizon. That's sort of my bad. I was the guy who didn't know enough about that. I was vague, more vaguely aware that there are a variety and it seems like a pretty big variety of industry funded programs to help with this. But I think our point here, and I believe he has the same point, is that this needs to be bigger. We need to have something that can actually handle a worst-case scenario.

And we're looking at a really bad case scenario right now, and what we have is completely inadequate. And just to put a little more color on this, our producer Matt Greer treated emails with William Holt. It turns out he has some experience with oil spills. He's the former director of the Coast Guard's response program. He was involved with the development of the Oil Pollution Act of 1990, which serves as the basis for our oil spill response in the U.S. So the bottom line, guys, and most importantly, is we've got some really smart and experienced listeners. We better get our facts together before we open our mouths. Steve Broido, what else you got?

Joe from Frankfurt, Illinois, weighed in on our recent discussions about Kevin Costner and KFC. He writes, I think Kevin Costner is secretly angling to get a new movie where he uses his oil and grease separator to save the world from the KFC double down. Let's call it Field of Cholesterol or Waddle World. It can debut on Google TV. I used to work in Frankfurt, Illinois. I was going to say, we still got to do our field trip and get a double down. All right, one more, Steve.

And on last week's show, we asked which McDonald's menu item would you recall? Bud emailed us with his nominee, the McLobster sandwich. He writes, saw it at a McDonald's many years ago when I lived in Maine. Nastiest food ever. I never tried it, but just the fact that you could get lobster at McDonald's was yucky. And as a Maine native, just horribly offended by the very notion of the McLobster sandwich. What about the McOyster bar? Hey, if you've got thoughts on anything we've talked about, whether it's the BP oil spill

or the scariest fast food you've ever seen in your life, drop us an email. Motley Fool money. at fool.com. All right, guys, just a couple minutes left, so let's quickly go around the table. Give me the stock that's on your radar this week. Shannon Zimmerman, I'll start with you. All right, so it's not a stock, it's an ETF. If PIMCO is making a move into treasuries, it might be a good time to look at treasuries. I'm looking at the yield on 10-year treasury bond now. It's 3.24, remarkably low. Hard to believe it could go lower, but that's what happens if prices rise. PIMCO is betting that prices are going to rise. If you want to make

a similar move, I would have a look at iShares, Barclays, 7 to 10-year treasury bond fund, trades under the ticker IEF, 15 basis points is the expense ratio. James Erling? Chris, you know what I think about refined carbohydrates. Oh, all the time. For people with issues. No, they're not. They're okay, but not for me. Bakery company Flowers Foods just raised its dividend 14.3%. This is an income investor Double recommendation, actually. 12-point-something percent insider ownership, 3.2% yield.

I really like this company. FLO is the ticker. It's a bakery company? It is a bakery company, yeah. It's really hard for me to recommend a bakery company, but sometimes I just have to do what's best for my subscribers. You had me at bakery. Seth Jason. I have been all over the Gulf, right? Well, in terms of stocks this week. I bought a lot of companies that were beaten down, not just BP.

There are a lot of drilling equipment and service companies down there that I think stand to benefit when the moratorium is lifted, which I believe they will have to do sooner rather than later. Some of them are so great that it won't even matter if that six-month moratorium stands. They're such good companies. Companies to look at, I believe, include companies like Helix Energy, HLX, but also Transocean, who had the Deepwater Horizon, is now selling for a market cap of about $13 billion, and that is about what it would cost to replace just a portion of their deepwater drilling fleet, and I think that's just far too cheap.

These are the experts. I know it doesn't seem like it now, but they are the experts in deepwater drilling, and they should not be going anywhere. And what's the ticker? That is RIG, R-I-G. Seth Jason, James Early, Shannon Zimmerman. Guys, thanks for being here. Good to be with you guys.

Thanks also to our special guest this week, bestselling author Dan Ariely. His brand new book is The Upside of Irrationality. If you missed any part of the show, you can find it at our website, motleyfoolmoneyatfool.com. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.