Motley Fool Hidden Gems Investing - Motley Fool Money: 09.11.2009

Episode Date: September 11, 2009

What role did the Lehman Brothers bankruptcy play in the financial crisis? Is the Yahoo! CEO a shrewd negotiator or serious distraction? Is the latest from Apple much ado about nothing? We tackle those questions and share three stocks on our radar.   Learn more about your ad choices. Visit megaphone.fm/adchoices

This family is on the brink of civil war. On September 18th, Mobland, the hit original series, is back on Paramount+. We are the Hartigans! Don't know them yet? Then Google us. From the underworld of Guy Ritchie... Do you want to step up the ladder? I want Comet dead. Starring Tom Hardy, Pierce Brosnan, and Helen Mirren.

Do I have to do everything myself? You want more? I'll give you more! Mobland, new season hits September 18th on Paramount+. Welcome to Motley Fool Money. I'm Chris Held, and I'm joined in studio by Motley Fool senior analysts Seth Jason and James Early, and from an undisclosed location that we like to call Montreal, Shannon Zimmerman. Guys, happy Friday. Happy Friday, Chris. On today's show, Apple CEO Steve Jobs shows up in public, and Yahoo CEO Carol Bartz shows up her predecessor. But as we come up on the one-year anniversary of the Lehman Brothers bankruptcy, we begin with this question.

Was the government right to let Lehman fail? It was about this time last year things started getting a lot uglier for the financial markets. On Thursday, Treasury Secretary Tim Geithner said that Lehman's failure was not the main cause of the financial crisis, but it did accelerate the downturn. James, was the government right to let Lehman fail? Chris, the honest answer is nobody knows, but one person who does know, or at least claims to, is Jim Rogers, a hedge fund manager who thinks that letting Lehman fail was the only thing the government did right. Now, Jim Rogers can be a little bit dramatic, but I think his point is very interesting. In other words, in the short term, obviously, it was good to bail out AIG, letting Lehman fail hurt things

in the short run. But in the long run, what's really the best move? I mean, is it better for us to learn the lesson the hard way, a little bit of pain initially, and then be better going forward? Jim Rogers thinks bailing out long-term capital management, the hedge fund back in 1998, or thereabouts was actually the mistake that led to the current bubble and crash that we had now. Shannon, what do you think? I think it was a mistake to let Lehman fail, and I think that we spent most of the past year paying for that mistake.

And in retrospect, it just seems like an arbitrary choice, almost like parents who get upset over some small thing when really what they are really truly angry about is that Junior has stolen the credit cards and has cultivated online gambling addictions. I think it was far be it for me to disagree with Jim Rogers, but I think he's just being gratuitously provocative. Seth? He's never a drama queen. That's what James called them a little while ago.

I think I agree with him on this one. I think that you needed to have the fear in some of these bankers' minds, pocketbooks. Do they have any fear? I think they've lost it again is the problem. We haven't let any more Lehman Brothers go down. Lehman Brothers was a bit like a Ponzi scheme. A lot of banking is. It depended on borrowing billions every day so that it could loan that money out to others.

And when you lose the faith of the people loaning you that money, it's all over. I believe that the problem is we haven't dealt with the idea that banks are too big to fail. I don't know if we ever will. Everything is still seen as so fragile now. They're not going to let anybody fail, really. And I don't know. We may have lost the moment to fix that. And we've only got banks that are bigger, as we talked about on the podcast a little while ago.

Let me throw out a few numbers here. Over the last year, 6 million jobs lost. The Dow dropping about 5,000 points. Unemployment up to almost 10%. Do these numbers look different if the government actually steps in and saves Lehman? I don't think so. And remember, too, do we really have a bubble, or do we just have a period of very low interest rates caused by the government years ago?

I mean, there's government intervention on both sides. I mean, with the Federal Open Market Committee, setting interest rates and adjusting them. So it's a very complicated web, I guess, is the best way to describe it. Yeah, I think that we do have some evidence around that, Chris, because basically the government has said to the big institutions now, you are too big to fail and we're not going to let that happen. What's happened as a result is that we've had a period of stability and rising stock prices, particularly in the financial sector.

Whether or not that's a good thing, setting that aside for right now, I think that does indicate what could have been the result of not letting Lehman fail. Huge announcement by Apple this week. In fact, Steve, I think we have some audio from this event, don't we? Sorry, we couldn't resist. There had been a lot of speculation in the media over whether the company would introduce a tablet computer. They didn't, but they did announce... Speculation? People said, wait, it's going to be awesome!

They did announce some new iPod features like an FM radio. The big headline, in fact, was that CEO Steve Jobs made an appearance. Seth, what did you think? He looks a little too much like me. He needs to put on a few pounds. It was good for the Apple fans to see Steve there, and he made a plug for organ donation. Of course, he had that liver transplant, the one they originally denied, and he seems to be back in the driver's seat reportedly taking charge of this tablet product.

But it was a very strange press conference. It was like the Seinfeld of press conferences. It was sort of a conference about nothing. And even the Apple faithful, those that haven't been disappointed, have been very quiet. Adding an FM tuner to the iPod, which was at the Nano, actually probably a good idea. It's a feature you could get from the Zune or a Walkman. Or you could get from any number of companies a long time ago. So the video camera, I've seen people talking about how that's going to kill the flip camera, that Cisco product.

Never going to happen, of course. Crummy video cameras already exist in phones, and they haven't killed the market. It's really odd. You wonder why they had the party except that Steve was going to be there. Yeah, I have to concur. I mean, I was trying to research the story for the podcast, and I was trying to figure out what the actual story was. It just wasn't clear. I mean, FM radio, they have that at CBS.

I like an FM radio, but yeah. AM radio, now we're talking, but I mean, that's where I get my news. Shannon, what did you make of it all? Well, yeah, I mean, I think that it was kind of devoid of content, just a sort of raising a sharp relief, the fact that Steve Jobs is back. That clearly was not even the subtext, it was the text of the event. One thing that is kind of cool, there's been an iTunes update that I can't wait to get back home and try it out, because it allows you to share your library across multiple computers.

If that really works, it's going to be a cool thing. Otherwise, it was much ado about nothing. You couldn't do that before? No, you could have, like, five devices or something, but it was separate, right, if I recall? Exactly. So you can share it over your network. And there were ways around that, but this is the officially Apple-sanctioned way of doing it, Seth. Huh.

It just seems like they're catching up to features that have been available from others for a while. But, hey, you know, Apple can take credit for them, and everyone will be happy. Yeah. What I really want is a memory expansion slot, but something tells me that's never going to happen. No, that's for losers. We're trying to decipher the tea leaves here, but it sounds like Yahoo CEO Carol Bartz thinks her predecessor, Jerry Yang, made a mistake by not accepting the offer Microsoft made last year to buy out Yahoo at $33 a share.

In an interview on CNBC this week, when Bartz was asked if she would have accepted the deal, she replied, quote, Sure, do you think I'm stupid? Close quote. Bartz is known for not mincing words. during an earnings conference call last April. She dropped the F-bomb when talking about Yahoo's problems. Guys, I've said it before, and I'll say it again.

I love Carol Bartz. Now, I will couch that by saying I'm not a shareholder, but from an entertainment standpoint, I f***ing love this woman. She had you at the bad word. She had me at profanity. We all love a potty mouth here. The best part about her is, according to the Wikipedia,

she's a Minnesotan and a Wisconsin, So everybody has to love that. Well, sure. Sturdy Midwest values. Hey, she was homecoming queen. Don't call her sturdy. All right. In all seriousness, though, I mean, is she a loose cannon or is she a shrewd negotiator? Because you could look at this as her way of saying, hey, you know what? We didn't accept this offer last year, but the stock's trading at 15 and a half right now. We're open for other offers.

Well, I think she represents a breath of fresh air and a lot of clarity, which is what Yahoo needed. But the verdict is still out in terms of, or the jury is still out in terms of whether she's an effective CEO. I think we'll need another year or two on that. Shannon? Yeah, I have a big crush on her as well. And there's a way in which people that are regarded as making gaffes, politicians quite frequently make what the media calls gaffes. And really they're just saying what the truth is. I think that she does that.

The question is whether or not that's intended. And I almost don't even care, both for the entertainment value and just to state the obvious. It's good to sort of clear the air and say, you know what, that was a dumb choice that was not taken back when Yang was in charge. If I had it to do over, I certainly would not have made that choice. That's just a statement of obvious fact, and it gives someone a lot of credibility. Even if it does kind of undercut them in the short term, it gives them, over the long run, a lot of credibility to be that straightforward. Wow, I can't believe how the sides are shaping up here. As a guy whose shtick is to always say the worst thing and be kind of the naughty person, I think she's a little over the line.

I mean, I think if I wouldn't do it, if I think it's overlying, it must really be over the line. I think that Jerry Yang screwed up, and I think we said so at the time. I think I said so at least maybe on some video on Talking Heads CNBC. I'm a dude in a tie and a suit, therefore listen to me. But I don't know that I would have said what she said because it just seems a little more disrespectful than poor Jerry Yang deserved. I'm kind of curious. If this is what leaks out in public, what is she like in private? You have to figure that behind closed doors.

That's got to get wild. All right. As we head into the next week, guys, give me one stock in your radar. Shannon, we'll start with you, and I'll just say I'm hoping for something with an international flavor. You know what? I'm going to have to disappoint you on that. I came last week with an insurer, UnitedHealth. I'm going to come back with another insurer, WellPoint, tickers WLP.

And, you know, as the health care conversation, insurance reform conversation goes on, and it gets to be weaker and weaker soft in terms of what the industry is going to have to soak up, I think the insurers are going to benefit from that. And even, you know, on the House side, some of the Democratic leaders are saying, we don't have to have a public option either. That's good news for private side insurers continuing to do business as they've done it for all these years. James? Shannon, have you been to Tim Horton's up there?

You know what? In an SO station that I'm looking at right now, there's a little Tim Horton's booth, And, yes, I was there yesterday. Tim Hortons are everywhere in Canada. It's kind of like a Canadian Dunkin' Donuts, and they're just all over the place. It's like an institution. It's an interesting company. I don't know if I'd invest.

Is that your stock? Let me give you a different one. Cereal companies I've been looking at, Kellogg's and General Mills, you know, for the past few weeks, I think they both have attractive valuations. I think they're very solid companies, and if you're looking for a little stability, you can purchase either one of them. Cereal companies? Donuts?

Who are you? I was just getting a stock. We had cereal day yesterday, and I think James went to the Rotunda and had Cocoa Puffs, and he, oh, this solves two problems for me. I take inspiration from that, which is around me. I think this is like the pod person version of James, that it's not really James. It's the bizarro James who's just like, yeah, donuts. I love me some donuts.

There is a weird antenna coming out of his head. I have not had a donut in probably 10 years. Seth? I'm going to go back to Yahoo. and I was originally going to be harsher in this evaluation and I'm going to not try to be too harsh. I don't want anyone to get in trouble,

but I think there's room for Carol Bartz to say what the f*** again because I got this box in the mail with nothing on it and it comes from Yahoo. And you actually have the box in the studio. I'm going to unbox this on audio and if you folks out there

think that makes for terrible radio, you're right, but this is free, so no complaints. okay so this box has a stupid speaker in it that yells yahoo right it has a god-awful purple t-shirt size extra large what is this like 1995 everyone's wearing extra large or what does it say about me there's also a very strange foam bull in here and perhaps well the second weirdest thing is this weird little stash bag that you can like hang around your neck what am i going to a fish concert loaded down with dope or something.

This is absolutely insane. I don't know, Seth. I don't know what you do in your spare time. There's this chocolate money. I got dibs on that. It appears to be about Yahoo Finance launching some apps, one for the iPhone, one for the BlackBerry, where you can get a kind of condensed version of Yahoo Finance on their homepage. But the ultimate irony is that the screenshot on the little piece of paper in here that

shows the the home screen on the blackberry shows yahoo's pe as 4896 wow now as of yahoo finances quote today that's only in the mid 800s level but i think they have some cost cutting to do folks in pr i i feel a little bad about doing this and i know you're just trying to do your jobs but this is a waste of money somebody like me doesn't need this we can talk on a phone call But stop wasting money on this kind of stuff and figure out what's going on, Yahoo. I think they're hiding under their desks now. Seth Jason, James Early, Shannon Zimmerman in Montreal.

Guys, thanks for being here. You're welcome. Be with you. Thanks for listening to this edition of Motley Fool Money. As always, people on the program may have interest in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. Do your own homework and make your own decisions. And remember, the conversation continues 24-7 at fool.com.

I'm Chris Hill, and we'll see you next time. We'll be right back.