Motley Fool Hidden Gems Investing - Motley Fool Money: 09.07.2012

Episode Date: September 7, 2012

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Chris Hill. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill, and joining me in studio this week, for Motley Fool income investor, James Early, and for Million Dollar Portfolio, Charlie Travers and Ron Gross. Gentlemen, good to see you as always. Good to see you, Chris. We've got the latest on FedEx, Intel, Apple, and more. We'll give you our take on the big technology events this week. And as always, we've got a few stocks on our radar, but we begin with the big macro.

And Ron, this week, it's really two main stories. Unemployment fell to 8.1%, down from 8.3%. And we had the European Central Bank announce a bond-buying program, market up about 2% across the board on Thursday as a result of that. But let's start with the unemployment numbers. What do you make? Where do you want to go? So, we created jobs, right?

96,000. Not bad. Problem is less than expected, and not where we need to be to combat the unemployment problem. Okay, second problem. 368,000 people left the workforce. When you do the math, that's what brought the unemployment rate down. It's very misleading. Things are not going well, but at least we're not losing jobs.

We're slowly on the right track. We're just losing people. Okay, fine. Are you angry that it's misleading? You seem agitated. I'm just being honest. I don't like to see the headlines where you don't get the explanation, but news is a tricky business.

We have headlines. But this is not new in the sense of unemployment numbers, right? Don't we always have this issue of people leaving the workforce when times are a little bit rough like this? Or do you think it's more pronounced now? Yes, but what's interesting is when things start to get a little better, people will start to re-enter the workforce, and the math will work in the opposite direction. A short squeeze. And you'll actually see the unemployment rate go up, even though things are getting better.

And if that's not confusing enough for listeners, I don't know what is. Just to add on, something additionally troubling is that we had June and July numbers revised downward. Never a good thing to see, obviously. So, come on, we've got to get people to work. I was going to say, that's the thing about this unemployment number. Keep in mind, it will be revised a couple of times. It's written in pencil. Yeah, it's written in pencil.

You know, when we say people leaving the workforce, the labor participation right now is only at 63.5%. That's the worst since 1981. Wow. So, you know, let's put it in perspective. Unemployment rate's down, but it's not really going the right direction. Charlie, what did you think? Can I talk about the ECB real quick, Chris? Yeah.

But it's polite of you to ask, though. I am. I'm a polite person. I was raised properly. I don't see why the market was up so strongly on Thursday, Chris. And the reason is that, you know, everybody's excited that the ECB is juicing some of these countries with some free money. I mean, it's not technically free, but it may as well be. And they're making this contingent upon budgetary discipline, which is the buzzword we've heard all over the past three years. The problem is that this tends to cause economic contraction, and what these countries like Spain and Italy really need is pro-growth policies. So while the ECB can, you know, relieve some of the financing pressures these countries were under, where they had to pay very high borrowing costs,

it doesn't really fix the economic situation and the structure of their economies. Yeah, yesterday, Thursday, we actually had a perfect storm, I think, in the market, where we saw good ADP numbers, the employment numbers coming out of ADP, We had a good manufacturing report that showed growth in the U.S. service sector. And we had the news from the ECB to say perhaps Europe will not fall off a cliff anytime soon. Not never, but anytime soon. And the market really took hold of those three things and sent stocks upward. It's all only rhetoric at this point, and I think it's helping in the way that only rhetoric can. The analogy that I use is in mountaineering, sometimes if you're on a knife-edge ridge, you can decide.

Do you want to rope your team together or not? And if you do, the risk is that if one guy falls, he pulls everybody off. And Europe is now more on that path. The stock market, I think, reflects that. I don't think this is a hugely positive development. I agree with these guys. I'm more interested, frankly, in China. The market there is at like a three-and-a-half-year low.

But how about this? Stock market up 16% this year. As the U.S. continues to have an anemic economy and Europe is on the cliff, what goes on there? I mean, that's interesting. I was going to say, just to wrap up with the stock market, S&P hit a four-year high, NASDAQ hit a 12-year high this week, to sort of wrap together the U.S. economy and the bond buying program. QE3, how likely is that now? Are we going to see a third round of sort of our own quantitative easing here in the U.S. in the next month or so? What do you think, Ron?

If I was a betting man, I would say it's pretty highly likely. It's pretty highly? Is that even, can I quantify that enough? I think highly likely. I was going to say 57% chance. On Thursday, Amazon CEO Jeff Bezos unveiled new versions of the Kindle e-reader and the Kindle Fire tablet. And James' company also lowered prices on the devices. Seemed like a good day for Amazon. It was. I'll cut to the bottom line first.

The storyline, I think, is really going to be in terms of Amazon versus Apple here. What's the size of the service market versus what's the size of the device market? You know, you've got all the media now saying, oh, it's all about Amazon and the service market. I don't think it is. I think it's a bit of a boat. I don't think it's a price war per se like some of the headlines are billing it as because there is room for both of these in the ecosystem. Apple can innovate. Amazon can be kind of like the slower, cheaper copier, which is what they're doing now.

They're not really innovating. They're just saying, hey, we give you everything the iPad has, maybe a little bit less for a lot cheaper, right? Right. But I got to say, Bezos, I thought, did a great job of setting the stage and saying right at the top, look, you look over the last couple of years, there have been tablets that have failed because they were just gadgets and people don't want gadgets. They want services. Now, obviously, he has a self-interest in saying that because of the Amazon Prime service and that kind of thing. But it seems like, Charlie, he's doing a good job of essentially setting the conversation and forcing others to react to that. You're exactly right, Chris.

And I would say people don't want gadgets that aren't an iPad, which is basically a gadget itself. But, you know, can I say Jeff Bezos is an American hero? I mean, his ability to just drop prices for consumers year in and year out on a variety of different products. This is amazing how little they are charging for these Kindles. And they're willing to lose money if they need to. But he knows he's going to make it up on people using these devices to buy services from him and to sign up for Amazon Prime, which is a huge moneymaker for Amazon. So it's like the old joke that they'll lose money on a per-unit basis, but they'll make it up on volume?

That's right. I still don't see why Prime is so great. I mean, $80 a year for faster shipping? Faster shipping. Plus unlimited streaming. Unlimited streaming. For like six movies, right? I mean, it's nothing big now.

It started that way, but the catalog's growing pretty quick. Okay, okay, okay. I judge quickly. Just to wrap up on Amazon stock, shares are at an all-time high. What do you guys think when you look at the stock? Is it now sort of in that price-to-perfection range, James? I'm actually long-term bullish. Amazon is a well-run company.

I knock it, but I have more faith in it secretly or not so secretly now. I use it religiously because I am just too lazy to get my butt in the car and drive to a store. I just don't want to do it, so I order everything from there. Ron? I don't know how to model it, quite frankly. If I model it as a kick-butt discount retailer, it doesn't look cheap at all. And if I try to go into what it will be 10 years from now, I'm just not bright enough to figure that out. So I have to stay away because I don't know what it's worth.

On Wednesday, Nokia unveiled its new Lumia smartphone. Charlie, the reviews were good. Some of the reviews were glowing. Why did shares of Nokia drop more than 15%? Right, Chris. The reviews were glowing because these were beautiful devices that really stand out from the crowd, which is just a field of black, glossy phones from everybody else like Samsung. But the problem was that Nokia did not release key information,

such as which carriers like AT&T and Verizon would even stock these devices, when they would be available on the market, and what they would cost. So you basically get these shiny-looking phones and have no idea as a consumer when you can even get your hands on them. This is like the gang that couldn't shoot straight. Why would you have an event like this if you didn't have that kind of information at your disposal? Well, what I think they were trying to do is get some buzz around their products, which they badly need, ahead of Apple's iPhone revelation on September 12th. And the holdup is not actually on Nokia's part.

It's on Microsoft's part, their operating system partner, because Windows 8 isn't even going to be available until the end of October. And I think if they waited that long to even mention what their phones looked like and what they could do, it would have been game over for them. At least this way, they can try and get some people to hang around. They did get some buzz around their camera, the functionality. They showed the side-by-side pictures or videos of a film shot with a camera without this image stabilization and a Nokia camera with the stabilization.

But come to find out, it actually wasn't shot on the Nokia camera with the stabilization. They were doctoring it. What is the next thing, Charlie, when you look at Nokia? What is the next thing investors should be watching? They really need to beef up their relationships with the carriers. One of the reasons that Android has done so well here in the U.S. is that they have a great relationship with Verizon. Motorola, which is now part of Google and Verizon,

had a joint announcement on the same day that Nokia did its presentation. And they really need to get in tight and get some promotion for their devices. Apple, as Charlie mentioned, will have its own event on September 12th to unveil the iPhone 5. but the Wall Street Journal reported that Apple is in talks to license music for a custom radio service similar to Pandora's. Ron, this story broke Thursday night, and by Friday morning, shares of Pandora were down more than 18%. Yikes. How scared should they be over that? I would think very scared.

This is, you know, Apple's very early stage here. We don't really know exactly what this is going to be, but assuming it's a similar service, Apple's got this huge install base, obviously, 400 million iTunes accounts. To put it into perspective, Pandora has 55 million users. Spotify, another competitor, has only 16 million users. One would think Apple figured they had to go down this road. It would probably cannibalize iTunes a bit, but they didn't want to cede this part of the music market to the competitors. They're losing money, though, aren't they? Pandora?

Yeah. So content is obviously key in this situation, and the high royalty costs for music is a real challenge for folks like Pandora that are ramping and trying to get this moving. Apple can probably take a time, get it done right, negotiate well, and would be a real formidable competitor. Charlie, you use Spotify, right? Yes. So if you go back to the days of Apple when they first started to make their rebound, it was on the back of the iPod-iTunes combination, which made it really easy for people to get digital music at a very affordable price. And we used it for many years, but we've recently stopped using iTunes because Spotify is an awesome service. You just pay a small monthly subscription. You can listen to pretty much anything you could ever want to, and it really negates the need to buy songs through a service like iTunes, which is what I think has Apple a little concerned. You know, I was in the Mac store. I bought a laptop the other day, and the genius guy was helping me.

He said, well, do you need a lot of storage? Do you have a lot of iTunes songs? I was like, well, I have about 30. He's like, well, you don't have a lot of iTunes songs. It was like gigabytes? No, songs. Coming up, one small cap stock blew away earnings this week. Details in a moment.

You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with James Early, Charlie Travers, and Ron Gross. Guys, this week, both FedEx and Intel lowered quarterly guidance, citing the global economic slowdown. And Charlie, these are two bellwethers, but they are bellwethers in very different businesses. How worried should I be about this? Chris, I was a little bit more concerned about the FedEx report because as a company that moves goods from retailers into the hands of consumers, they have the largest all-cargo airplane fleet in the world.

When they say that there's a global economic slowdown, I think they've got as good a finger on the pulse of that as anybody else. And they guided their earnings down about 8% from their prior guidance. So that has me a little nervous. Intel also guided their revenue down about 8%. They tried to blame slow emerging market demand, but I think they've got some competitive dynamics going on. The PC market is soft and some of the inventory was reduced in the supply chain. But they're also trying to fend off arm holdings in the mobile space. And so, we'll see what happens there. But I think FedEx is a better indicator. Guys, here's a small cap stock that I don't think we've ever talked about,

and that's Smith & Wesson. Shares were up big this week after earnings came in much higher than expected, and the company raised guns. James Early, this is a company you've looked at in the past. Yeah, it is. I grew up as a young market man, actually, myself. So, I've got a lot of familiarity with the products. A young James R. Lee Marksman. of a weird thing to model, but it might not be so exuberant. I was going to say, it's not a particularly big company. If you just look at the market cap, it's somewhere in the neighborhood

of about $650, $700 million. So it's not necessarily the biggest company around. Stock trading near a five-year high, is this one of those things when you look at it from a valuation standpoint, maybe time to take a profit? I think that's right. I think Smith & Wesson and Ruger are actually both well-run companies. It's just they can't control the stock price, and it's just a little rich right now. And finally, guys, Google and Facebook are trying to make money off mobile advertising,

but one private company appears to have a monopoly on another ad platform, and that's toilet paper. Star Toilet Paper has started selling ads and coupons printed on the sheets of toilet paper. They're giving it away to businesses for free, so that's how they're making their money off of the ads. It was started by two brothers, Jordan and Brian Silverman, ages 22 and 19. I love this story.

This is just a great story. What do you think of this, Juan? I don't mean to crap all over your story, Chris, but are people really going? I would be nervous. The ink makes me nervous. Are the ads on the top? It's two-ply. Or on the moment of truth, like when you roll it up before use, right?

When do you see the ads? It's two-ply toilet paper. I think it's on both sides. I actually talked to Jonathan Silverman. I gave him a call just because, you know what, this is one of those stories. We do some research. We do our homework here. Especially for stuff like this.

And Motley Fool money for stories like this. And he said that's the number one question he gets from businesses that they're talking to is about the ink. He said it's all natural. It's soybean. They've tested it. Although our producer, Matt Greer, wanted me to say that he is on record as saying he wants a long-term study. I'm in the Matt Greer camp. You're in that.

you want a long-term study on the viability. It's a genius idea. It's a captive audience. You give toilet paper to people for free because you're making money on the ads. But by the way, don't we have enough companies in this world that make money on the ads and give stuff away for free? It's like the social media bubble all over again in the bathroom. They start in Ann Arbor. They've already expanded to North Carolina and New York State. He says they are talking to some big box retailers. So, what do you think, James Early? How big can this get? Would you invest? Let me put it this way. Would you be an angel investor in this company? I would have to use the toilet paper first to see it, because obviously functionality

comes first. But yeah, I love this idea. Charlie, what do you think? I'd love to have this be like a Cracker Jack type experience where you never know what you're going to get as you unfurl the roll. It's like a new experience every time. Like a cayenne pepper ink roll or something? Right. Let's bring in our man Steve Broida from the other side of the glass. Steve, you have to have an opinion on this story. I do. I think as long as they can get those blue dancing Charmin bears involved in some fashion, then I'm sold. You're looking for a partnership with Charmin?

Absolutely. Those little dancing blue bears that are always dancing around in the woods. Do we know where this stands on kind of like the softness scale? Well, I think that's the next hurdle for them, because I totally get why, if you're a local business in Ann Arbor, Michigan, or North Carolina, or New York, and someone comes to you and says, you own a restaurant, what do you pay for toilet paper every year? okay, now it's going to be zero because we're going to give you this stuff for free. I get that appeal. What I don't quite get is sort of how do they make the leap to the consumer market?

Because yeah, I think for most people, toilet paper is one of those personal choices that you make that there's a softness factor. Price will only get you so far with something like that. And how do you test the ad response rate? I mean, do you survey? Like, why are you coming into the store? Where do you see the ad? There was a USA Today story where there was one businessman who said, yeah, There are people coming in. They've responded to the ads. There's a barcode on the ad that you can either scan with your smartphone or you can just type into your computer. So, it's not necessarily people tearing off a sheet of toilet paper and carrying it into

the … Because that would be creepy. That would be a barrier to entry. Steve, one last question. I'll ask you the same question I asked James. Are you investing in this company? I think so. I think there's something there. I think the novelty factor is humongous, and I think it could catch on. All right, Ron Gross, James Early, Charlie Travers, guys, we'll see you a little later in the show. Some market commentators say that buy-and-hold investing is dead. Motley

Fool columnist Morgan Housel says those commentators are wrong. He's up next. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. The final stage of the U.S. presidential campaign is just one of the reasons investors are focusing more on the broader economy. Here to talk about the big macro and more is Motley Fool columnist Morgan Housel. Morgan, good to see you. Thanks for having me, Chris. Good to be here.

The last time we spoke on the show, you were across the country. You're in Seattle. I was in Seattle. We were doing it over by phone. It's good to be here in person. Nice to have you here in studio. I want to get to the presidential campaign in a second, but let's start with something that happened earlier this week, and that's the ECB. Because on Thursday, we saw Mario Draghi, the president of the European Central Bank, unveil a program to buy government bonds of countries in the Eurozone as a way to sort of control interest rates. Good day for the markets on Thursday. You know, we saw a rally there sort of across the board. But what do you think when you look at something like this? Because it seems

like, well, this is a great short-term thing, but this doesn't really fix the underlying problem. Right. Rather than buying bonds, I think it's more accurate to say they're buying time, is what they're doing here. The problem with Europe is that they have a currency scheme that was ill-conceived from the start, and it's really not going to work when you have a dozen or so different countries with different tax policies, different spending policies,

different cultures, different economies, all under one currency. It just really doesn't work, and as long as that's in place, the reason that the ECB is buying bonds is because investors don't want to, and they don't want to because it's broken. It's not going to work. So this is buying time,

but Europe is going to face significant problems, And it's just a question of do you want to take it all in one lump and have a deep, deep recession right now? Or do you want to spread it out and drag it on? And they're taking the second option. And I think that's probably the smart choice to drag these things on rather than just take a massive hit all at once where you get really deep structural problems. But there are no easy solutions here. And the announcement yesterday from the ECB is a short-term jolt, but it's not solving any problems here. Where do you think we sit, and this is a question that's come up from time to time

on the show, in terms of the euro itself? Where are we now in terms of the euro as a currency lasting? Five years from now, is the euro still here? Does something like this, when you say they're buying time, is one of the things that it buys time for is a serious examination of whether they need to just unwind the whole thing? Well, all financial systems, especially ones that are heavily levered, are based on confidence, the confidence of investors and the confidence of banks and the confidence of policymakers. And that's something that you just can't forecast. You can't predict when confidence is going to change. It's really about psychology more than it is economics. And that was true in

the United States in 2008. You could kind of tell something bad was happening. You could tell there were big problems, but you really don't know when something is going to break, when that tide is going to break. So what's the timeline for Europe? I mean, it's really hard to say. As long as the central bank is willing to print and keep buying bonds, as I said earlier, this is sort of buying time, pushing it down the road. But when you hit that day of reckoning, when people just really give up and realize that there's no hope, and then you have big problems in financial markets, it's really hard to say. If I had to predict, I would say within the next two years, there's going to be a major event, which will likely be Greece leaving the euro in some form.

And bringing it back to America, we've got a presidential election in two months. And it seems like we go through this every four years, this whole notion of which stocks, which industries are going to do well depending on who gets elected. And if Governor Romney gets elected, there are people saying, well, oil is going to do well. Just look at the energy plan he put out. other people saying, you know, President Obama gets reelected. A whole other set of industries and stocks are going to do well. First and foremost, what do you say to someone who says, I'm just going to wait it out. I'm just going to see who gets elected. And then I'm going to make

my moves with my portfolio. Well, it's something I've written before. And I really think this is true. Politicians get too much credit when things are good and too much blame when things are bad. It's really the private economy that is driving these things. And if you are making changes to your portfolio based on who was going to win an election, you're probably doing something that you're eventually going to regret. And I actually wrote about this a couple of weeks ago. You can look back at history and say, what did market analysts say before previous elections? And you look back in hindsight at how those predictions and those strategies work, and it's invariably bad. So I'm trying to remember here, in 1996, a lot of market

strategists were saying if bill clinton wins by small caps if bob dole wins by large caps and they had all this history of you know under republicans is what happens under democrats and it made a lot of sense and over the following four years clinton won the election and and large caps completely demolished small caps just the opposite of what was going to happen of what they assumed was going to happen and then george bush wins in 2000 and then by that strategy small caps should have done should have done poorly but it was it was the other way around again. Small caps did well. And then you look at 2008, and everyone said back then, and I really mean almost everyone, it was almost a universal thought that when Obama won the election,

green energy was going to do very well. Alternative energy, it's going to be huge. And stay away from big oil because he's not a fan of big oil. And that really made a lot of sense. I could see the logic in that. But you look back with hindsight now, and green energy has been absolutely demolished. A lot of the solar stocks are down 90, 95, 98%. And big oil has done very well. So I think it's important to recognize that not only do we not know what policies either administration might implement, but we have no idea what the market reaction will be to that either. Another example from 2008 when Obama was elected is that a lot of people said, look at infrastructure stocks because he's going to have a big stimulus. There are going to be all

these public infrastructure projects. Look at those. And that makes a lot of sense too. You can say, I can see the logic in that, but you look back in hindsight and infrastructure stocks haven't really done that well in the last four years. You're listening to Motley Fool Money, talking with Morgan Housel, columnist here at The Motley Fool. You recently wrote a column entitled, Buy and Hold, Still Alive and Well. Why do you think we see, with pretty fair frequency, market commentators coming out and saying, buy and hold is dead? As a strategy, you don't want to be buying and holding. It seems like we hear that drumbeat more often than we should.

It's just become axiomatic. People just say it and it's just assumed that that's correct. And I think the big issue, I think what I wrote in the article, and I think this sums it up, is that the people who think buy and hold is dead are the people who are frustrated with their inability to follow it. The basis with buy and hold. People just lacking patience? I think that's exactly it. The basis of buy and hold is that you're going to buy and hold for a long time, 10, 15, maybe even 20 years, a big period. but then people cite volatility measured in months or weeks or even days as proof to show that it doesn't work and that's just you know those two just don't mesh together so yes in

the past decade we have had periods of extreme volatility 2008 and 2009 you had a you know the crash after the dot-com bubble and you've had the flash crash back in 2010 but those are short-term events if you look at the market in the past decade it's actually done pretty well the past 12 years from the peak of the dot-com bubble. It has not done well, but there's still a positive return once you add in dividends. And you look at the past 15 years, the market is basically right at its historic average. So I think people confuse buy and hold, which is a long-term strategy, with following day-to-day market movements, which is just getting carried away in the hype. You were talking earlier about confidence and the role that it plays in

financial structures. You mentioned the flash crash, and it got me to thinking about, we've seen over the last really year and a half, a few incidents where computers either got the blame, whether they deserved it or not, got the blame for problems within the market, whether it's the flash crash, whether it's the Facebook IPO and orders being held up and that sort of thing. how concerned are you personally by stuff like that? And how concerned do you think the average investor should be? Because I have to say just for myself, that is one of those things that I look at. And it doesn't keep me from investing. It doesn't make me have less confidence in the system. And I'm not looking to go out and sell all my stocks. And yet,

I could see where that absolutely would hurt someone's confidence in the market. And it really does seem like this is the kind of thing that's happened more than it should over the last year and a half or so. Yeah, I think that's a good follow-up question to the one about buy and hold, because it's really the same thing as far as, if you're a long-term investor, you care what's going to happen over the course of 10 years. The flash crash was over in 17 minutes. And if you're a long-term buy and hold investor, the flash crash that happened in May of 2010, that had absolutely no impact on you. You didn't lose a single dollar from its stocks,

rebounded right afterwards. It was a technical glitch that was divorced from the actual business of investing, which is investing in American companies where you can have a share of their profits versus the structure of the stock market, which is just the pipes of what's going on. When you had the flash crash, you had a lot of stocks that plummeted sometimes 99%, but the value of the business was not affected whatsoever. So I think one example I use when I've written about the flash crash before is that it's the equivalent of if you misplace your birth certificate, do you feel less alive? And that's really the same thing. You have this structure of the stock and the stocks fall, but the value of the business has not changed whatsoever.

And the flashcards being over in 17 minutes, that really didn't affect anyone. Matt Kopenheffer, who's another writer for The Motley Fool, is writing a piece on Knight Capital right now, which was one of the other snafus a couple of weeks ago. He had a big trading blunder and they lost a lot of money and some stocks went crazy. And Matt wrote, I think it was a really smart point, Matt and another team of writers tried to find individual investors that were harmed by Knight Capital, and they couldn't do it. They couldn't find a single one. So we have these events that make big headlines, and they sound really crazy, but there's really no impact on individual investors to the extent that you allow them to. Some people had stop-loss

orders, where if the stocks fell a certain amount, they automatically sold, and they got stopped out when you have these flash crashes. But that's pain that you've brought upon yourself. so so you the question you asked was how worried am i about these zero and how worried should other people be around them zero these are headline risk but they really don't pose any of this rest of the companies last time you were on the show it was january of this year and you had just worked on a essentially a small film for the motley fool where you were going around interviewing the likes of jeremy siegel and robert schiller and others and and back then we talked about sort of the state of the U.S. economy. When you look back over the last nine,

10 months, what has surprised you the most about the U.S. economy? Right now, I think the biggest story in the U.S. economy that isn't getting enough attention is this incredible and ongoing boom we have in oil and gas production. The increase in oil and gas discovery over the past five, six years, which has been a function of fracking, has just been astounding. The amount of oil that we've found, the amount of gas that we've found, and that we're going to keep producing for years and years to come is just mind-blowing. The rise of that industry, I don't think, is very appreciated. A lot of people talk about they don't see how the U.S. economy is going to grow over the next decade. They don't see what's

going to drive it. In the 90s, we had the internet and whatnot. In the 50s, we had this big manufacturing. People say, what's going to drive in the future? Well, you really don't know, but when I look at it, I think energy could be that candidate. I don't think that's being appreciated enough. And it's kind of the thing where for the past couple of years and this year, you kind of think maybe this is a temporary thing. It's going to level off. It's going to plateau. We're going to realize that these fields aren't as big. And it's just not the case. It keeps growing and growing and growing and growing. That surprised me. The other thing that's ongoing that's really important right now, the single biggest reason the economy is slow is because households have

a tremendous amount of debt that they accumulated last decade and they're paying it off, defaulting on it, getting rid of it any way they can. That process is called deleveraging. That's ongoing, and that's really important. And it's getting to a point where household debt levels are at a point where they're starting to look fairly normal, to the point where maybe this process of deleveraging is not going to continue much longer. And when that happens, that adds significant momentum behind the U.S. economy. Just to wrap up, one thing that's changed since the last time we talked you're married now that's right that's right you went out and got married thank you thank you for stimulating the economy because i'm assuming there was you know there was a party and

all that sort of thing right uh any advice for for newlyweds out there you've been married like a month or so i have i've been married for five weeks i don't know if i'm qualified to give marriage advice you're more qualified than me i'm not a newlywed but we actually had our wedding for our guest book we had people leave a piece of advice on a card rather than just signing a book so that was kind of cool. What was like the best advice you got? Well, they all did it anonymously too so we got some good ones.

We got some colorful ones to put it lightly. The advice for me was Morgan, realize that you will never win an argument. And the advice for Gretchen was Gretchen, you need to realize that you need to let Morgan win

just enough arguments to make him feel good about himself. That's good advice. That wasn't bad, yeah. All right. To read more from Morgan Housel you can go to fool.com. His columns appear

every Tuesday and Friday. Morgan, thanks for being here. Thanks for having me. Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. You're listening to Motley Fool Money. Here comes the money. Here we go.

Money talks. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, So, don't buy or sell stocks based solely on what you hear. I'm Chris Hill, and joining me in the studio once again, Ron Gross, James Early, and Charlie Travers. Guys, that time once again, time to get to the stocks that are on our radar. We'll bring in our man Steve Broido again from the other side of the glass to ask you a question. But in fairness, and because, frankly, we have the time, we've got to kill a little time, you can ask Steve

a question back. Ron, you're up first. Steve, I've got Alamo Group for you. ALG is the ticker symbol. They are a small cap maker of agricultural and maintenance equipment, stuff like tractors, mowers, street sweepers. It does a third of its business in Europe, so you've got to be a little bit careful there with what's going on over there. But the stock is $30. We think it's worth more than $40, so really nice upside here. Steve? How does the upcoming presidential election, how might that affect this company?

I don't think it would in any significant ways. I think things like the drought, for example, has affected it in the short term. The European weakness, as I said, experience is hurting it i don't think the presidential uh either way it goes it should be fine but i do have a question for you steve yes sir uh i want the world actually wants to know if you mow your own lawn or if you have someone do that for you well but we live in a townhome so there is no no uh yard to mow it's brilliant so you deny that you well your own yes so so it's accurate to say steve broida does not mow his own lawn it is totally accurate okay Yeah, fair enough.

James Hurley, your stock? Chris, I'm going with Cato Fashions, a retailer that I've mentioned before, I believe. The ticker is C-A-T-O. This is a North Carolina-based company. $870 million market cap. It's fairly small, 3.4% yield. And this sells kind of lower-priced women's fashions in strip malls that are often anchored by a Walmart. So we're talking like $25 for a top or for a pair of pants.

Affordable clothing that tends to do well in a recession. It's a well-run business, too. Steve? How important is the brand, Kato, to this business? It is not important. It is for people for whom the brand is not important as much, yeah. You got a question for Steve? I do. Steve, I think you love the 80s as much as I do. It's true.

What would be your price for a day to wear just one of those, like a leather vest with no, or a denim vest maybe, with no undershirt? Wow, that is a hefty price. I'm going $998. That's a lot. So if we pass the hat here at Fool Global Headquarters and we get $1,000, you're showing up to work in a denim vest or a leather vest and no shirt underneath. For $1,000, I'll do it. I'm in for $10. Drop us an email, radio at fool.com, just on the off chance that you're willing to contribute. But please don't send money.

Don't send us money. Just send us an email what you'd be willing to contribute in theory. Charlie Travers, what's your stock this week? Boston Beer. The ticker is SAM. M. They are the maker of Samuel Adams. This stock is down 20% from its peak in July. I thought it was looking a little pricey back then. It's a little bit more reasonable now. This is a company that's created a lot of value for shareholders over the past decade. I think they've got great

brands and management. And they're in a sweet spot with craft beer outperforming the mass market beers, Miller Lite, Bud Light. Those volumes are down a little bit every year while craft volumes are actually growing and Boston Beer is leading the charge there. Before I kick it to Steve, We just got an email this week from one of our listeners who said he was at an event where the CEO of Boston Beer Company was presenting to an audience. And while he was making his presentation, he was just standing up there with a beer. Just every once in a while, as someone would typically have a bottle of water, he's just up there with a beer. And he just thought, that was pretty fantastic. It wouldn't be socially appropriate.

I'd probably give him a hug. As long as the toilet paper guys don't make the same kind of presentation. You never know. Steve, question? My question for Charlie is, does the guy in the Boston, the Sam Adams commercials with a really long beard, have you guys seen him? Yes. He's in every commercial.

The TV commercials. Does he really work there? I'd have to imagine he's a hired actor, but... Why would you fake something like that? I'm betting he probably is, but if you haven't seen the TV commercial, it's... He's in every one and his beard just creeps me out. It's down to the floor. It's like a ZZ Top beard on steroids.

He's not messing around with that beard. He's really not messing around. Question for Steve? Sure. Steve, when you are looking at a consumer-facing stock like Boston Beer as a potential purchase, do you actually have to like the brand before you buy it? No, I do not. As long as I believe that other people like the brand, I'm good to go. We were talking earlier in the office today about you, James, and you weren't there, so I figured I'd just share that out. But I think you might be the best example of anyone I know in

the investing world who is able to divorce his personal tastes and habits from his investing style, because you invest in companies like McDonald's, but you would never eat there in a million years. It rips me apart inside, but I try to do it, yeah. On that note, Ron Gross, James Early, Charlie Travers. Guys, thanks for being here. Thanks for having me, Chris. Thanks to our guest this week, Morgan Housel. You can read his column on Fool.com every Tuesday and Friday. Check it out, Fool.com. That's it for this edition for Motley Fool

Money. You can check out our daily podcast, MarketFoolery, on iTunes and online at marketfoolery.com. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.