Motley Fool Hidden Gems Investing - Motley Fool Money: 09.20.2013

Episode Date: September 20, 2013

Bernanke surprises.  Microsoft makes a big buy.  And Tesla accelerates.   Plus,  producer Jim Bruce discusses his new film, Money for Nothing:  Inside the Federal Reserve. Learn more about your ad choices. Visit megaphone.fm/adchoices

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That's why they call it money. The best things in life are free. But you can give them to the birds and bees. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill. Joining me in studio this week from Motley Fool Inside Value,

all the way from Sydney, Australia, Mr. Joe Mager. from Motley Fool Supernova, Matt Argersinger, and from Million Dollar Portfolio, Ron Gross. How you doing? Good to see you, guys. Good to be here. Joe, one travel tip for the folks at home. It's good to have you back in studio when you're making the trip from Sydney, Australia, all the way to Fool HQ. Any tips? Yeah, don't sleep at all. So that way, when you get here, you can sleep the first night

that you're here. You'll be awake for about 33 hours. Sleep over that. Jet lag conquered. Is business class essential or higher? Oh, the Fool didn't ... Let's move on. We're not paying our bills, in case you don't know. This week, we've got the latest from big banks, big tech, and big fines. We will go inside one of the most powerful and secretive institutions in the world. And as always, we will share a few stock ideas to put on your watch list. But we begin this week with the Fed chief.

On Wednesday, Ben Bernanke stunned the investing world by announcing the Fed's bond-buying program will continue as is. The news sent both the Dow and S&P 500 to all-time record highs. And Ron Gross, I'll start with you. He had the green light from Wall Street. We had CEOs coming out saying, we're expecting the taper to begin, going from $85 billion to $75 billion. Some saying he made the wrong call. What do you think? I think, based on the economic data that we have in front of us, I think he did the right thing. The fact that the media had convinced us all that he was going to taper, I think is what caused the surprise. If you look at unemployment, if you look at GDP growth, things are not that strong. He could maybe start ... Taper

is an interesting word. You can cut back by $1 billion and that's a taper. He could certainly start slow. And I do expect when he starts, it'll be $5 or $10 billion taper. And I think I'm going to trust him to do it when he thinks it's right to do. It's going to happen. It's coming. The question is, what do you want to do about it? And yet, Matt, in terms of the window of opportunity, again, some people are saying, look, he had the window right there. He's not going to get that again in three months. Right. And my question is, what does Bernanke see? And part of it might be the sluggish economy, as Ron said. But also, he might be looking ahead to October here. And we've got this

dead-ceiling debate coming again. We've got Congress, who's got to come to some kind of budget agreement here, which we know is going to be almost impossible. And maybe he sees that and says, gosh, if the U.S. gets another credit ding, if treasuries sell off because of that, rates are going to go higher. On the monetary side, I got to stay ahead of that. And so maybe it's a little bit of caution on his part because of that. What do you think, too? I think the bigger story is just how people are or are not getting ready for higher interest rates. So REITs and MLPs are still very expensive here in America. I think they're going to get absolutely crushed when rates do start to rise.

As a value investor, were you at all disappointed? Because it's got to be harder to find value stocks when the market is hitting all-time highs, and it was already at an all-time high, and he sent it even higher. Yes. Yes, I am. It's a tough market to find cheap stocks, it absolutely is. I hear a lot from people, what should we do about it? If tapering is coming, if interest rates are going higher, what should we do about it. And I don't think you want to become a market timer, because my experience is that that kind of never works out, you never get it right. But with so many stocks hitting highs, I think you can look at your portfolio and you can selectively maybe sell

some or all of these stocks that have kind of run their course and have limited upside left. And just organically by doing that, you should really be doing that always, you'll move into some cash and maybe insulate yourself a little bit if we see a correction. Here are some of the stocks that hit all-time highs this week. 3M, Amazon, Boeing, FedEx, General Motors, MasterCard, Nike, Starbucks, and Visa. That is a pretty nice cross-section of the U.S. economy. Joel, I'll start with you. Of those nine, is there one you're particularly drawn to? Well, I own most of them, so I'm thrilled. Not business class, though. My favorite of

the bunch, and I think all those companies are doing very well, and they should be at all-time highs. My favorite is probably Amazon. It's classically expensive, but if you buy a Ferrari at a 30% discount, you're still getting a bargain, and that's the kind of business I think of this as. Still the biggest, baddest player in online retail, which is still sub-6% of U.S. retail. So, there's still a long runway here, and I think that, again, shares look expensive, but I think over the long-term, you'll be very happy. O' Matty, what about you? the Amazon call. I will just say, though, that GM, all-time high. I'm surprised you

didn't bring this up. This is a company that was dead, or it was almost dead, going back about five years ago. To see the business hitting an all-time high, and to see what auto sales have done so far this year, it's an incredible turnaround. Yeah, I was a couple years early on that thesis, unfortunately. But as we've talked about previously, you look at Europe maybe starting to turn the corner for the big automakers, Ford and GM, maybe even brighter days ahead for General Ron, what about you? I like to keep an eye on FedEx because of its bellwetherness. Is that a word? Can

we use that word? Can we coin that? It really tells me a lot about when I hear them speak about where we're going in the economy. And they had been struggling on the express side. The ground business has been okay. But internationally, a lot of competition. And they were struggling. They put some cost cuts in place. Now they say they think they're going to be able to raise rates in the future. They recently reported earnings that were solid. So, they are indicating that things are looking up. So, I like to keep an eye on what they have to say. It is not quite as big as the companies we just discussed, but another stock hitting a new all-time high this week is Tesla Motors, Matty, up more than 400% year-to-date. The

market cap, this is what caught my eye, the market cap is now over $22 billion, which is nearly half the market cap of General Motors. Is that justified? Well, I do this. Bear with me here. Take a breath. I want to compare this. I like to say, I like to compare this. I mean, Tesla is going to sell about 21,000 cars this year. You know, GM, BMW, Ford, these companies sell millions of cars every year. And it's interesting to make those comparisons and see where Tesla's valuation is. At the same time, we have to remember that this is an altogether a little bit of a different

company. The gross margins, for example, for Tesla are probably going to approach 30% this year. Elon Musk wants to get those up to 35%. A GM, a BMW, usually happy to be in the 10% to 15% range on the gross margin. So, it's a much more profitable company. The gross margins are certainly approaching Porsche-like levels. That's a little bit of a differentiator. At the same time, there's a lot going on with this company. It's a lot more than just cars. At the same time, it is up 5X over the past year. It's high. Joe, it's obviously not a value stock, but you just got done talking about Amazon and how the stock has really never looked cheap. Is Tesla at all attractive to you as

a value investor if you have a long enough runway, if you think this is a company that can execute. Obviously, not cheap today, but maybe over the next 10 years it pays for itself. No. I could see Tesla going on to do great things. Obviously, it's got a great leadership team, they're making great products, but at this valuation, probabilistically, you are deeply unlikely to deliver strong results in terms of the share price. It's selling at 16 times sales, GM's at 0.3 times sales. Obviously, there are different things to account for there, but on a very high level, this is a super premium price, and I think people are probably just going to be disappointed that it doesn't grow into that.

Microsoft is spending billions on something other than buying other companies. The tech giant announced a plan this week to buy back $40 billion worth of stock. Ron, they are also increasing the dividend by 22%. You like these moves? Yeah, I think they're pretty good. $40 billion is 15% of the market cap. We think the stock is undervalued here, so that's a good capital allocation. 3.4% dividend yield, I like that, especially in a company like Microsoft that isn't a huge grower in the future. It's obviously a very mature company, some would say a company in decline. Some would say. We've recently moved the stock to hold,

having had it at a buy for quite some time. They're looking for a new CEO, they're changing strategies. They're buying Nokia. There's a lot of changes going on that make the execution risk relatively significant, much more than we thought beforehand. So, we've moved the stock down to hold, and we're actually looking at the allocation to see if we're properly invested there. Steve Ballmer is going to step down at some point in the next 12 months. What does Microsoft need? If you're Bill Gates and you're putting together the job description, what do you need out of your next CEO? Because we go back in time, and we have the benefit of hindsight. It seemed, at the time, when Ballmer rose

to become CEO, he was a guy who was a great operator, and it made sense. What does Microsoft need now? Since they've laid out where they want to go, to basically move more towards devices, you have to get someone that is strong there. You can't get someone that would have loved to run the old Microsoft, for example. They've made their bed, and now they've got to find someone to sleep in it. I think that actually makes it more difficult. You've got to find someone that really buys into it, because you can't have someone new come in and then all start restructuring the other way. It's extremely disruptive. So, I think it's going to be a hard thing to find, but obviously

there's many talented people out there. They'll get it done. But as I said before, there's a lot of execution risk here. I was going to say, that sounds increasingly hard to find when you put it that way, if their attitude really is, no, no, no, we need you not just to be a great CEO, we need you to run the company in a certain way. I don't know, Matty, who's going to sign up for that? I know, it doesn't sound like a good gig to me. And I just have to say, why such this focus on hardware and devices? There's a lot of things Microsoft does really well, operating software, tools that help office productivity. It's just, we've seen what's

happened with the Surface, I don't know. Well, and we were talking earlier this week about Grand Theft Auto, so I know you're also including Xbox in that. Oh, sure. Coming up, advice for young investors. You're listening to Motley Fool Money. Hey, it's Chris here. Is your business protected from data loss? If it isn't, it should be. Join the 100,000 businesses who trust Mozi to protect their critical business files. Mozi automatically backs up your critical files to world-class data centers with maximum security.

It's easy to set up and use. It saves you time and costs up to 80% less than other solutions. Mozy is the most trusted name in cloud backup. So visit mozy.com. Use the promo code FOOL to save 10% on your initial purchase. That's M-O-Z-Y.com. Welcome back to Motley Fool Money. Chris Hill here in studio with Joe Mager, Matt Argesinger, and Ron Gross. This week, J.P. Morgan agreed to pay $920 million in penalties over its 2012 London

whale trade that went badly. The company also admitted that it violated regulations as part of the settlement. So, I turn now to shareholder of J.P. Morgan stock, Joe Mager. Happy shareholder. Do you own every stock? No, about 35. Okay. This was a slap on the wrist for them, wasn't it? Yeah, it's just a slap on the wrist. I mean, the real cost here was the actual trade. And

And I think that's as it should be. I mean, they got completely hammered on the trade. And it was a huge mistake. And obviously, there were poor internal controls around it. And then they could have been more forthright about internally and externally about the handling. That said, this isn't any sort of deal breaker. And, you know, are the shares a great buy today?

No. The time to buy was when the bad news was actually happening. This is just, you know, a small scale ripple effect. And it is a real amount of capital. Like, JPM could have done something with that money that said, in the grand scheme of things, this isn't going to be a huge deal. This is fine, I should say. Jamie Dimon, the CEO, sent out a memo to employees where, among other things, he stated, we're not out of the woods yet. There are still some outstanding questions.

Well, he's got to say that. What's he going to be like, pop the champagne? I'm not saying he says, let's pop the champagne. But I guess my question is, how worried are you that this is not the end for them? that, to your point about the internal controls, that we're only going to see more of this type of incident for J.P. Morgan. I think we're kind of in the realm of controlling the story and spin at this point, because there's been more rumbling about new controls on capital levels at banks here in

the U.S., which had kind of died away for a while, but that's come back. And more or less, more regulation here would mean lower returns for the banks, and so they'd like to avoid that. So, you know, Diamond and the other bankers are putting the best foot forward and demonstrating a lot of we're sorry-ness, and we'll see how it goes. Ron, let's pull back from JPMorgan. Last question on this topic. Instead of fining the firm and essentially hitting the shareholders to the tune of $900 million, what about fining the CEO? What about fining the executives? Not that amount of money, but saying to them, you know what, this was on your watch that this happened, we are fining you, in this

case, Jamie Dimon, we're fining you $5 million, and it's coming out of your pocket. You certainly would expect people to be more careful, I guess, if that happens, but then you'd probably start seeing contracts where the CEOs insist that they get indemnified for potential fines like that. Otherwise, there wouldn't be people willing to take those positions if they were going to be on the hook personally. It's like we need a commissioner. It's like the NFL. It's some guy who literally says, oh, Jamie Dimon, saw what you did last week, $5 million fine. Yeah, practically speaking, you get an organization with tens of thousands of people

dealing with financial contracts, trades, every day. Mistakes do happen. In this case, it was a massive mistake, a London wheel-sized mistake, but they do ultimately happen. I'm not sure that that's always necessarily ... it should be a financial backbreaker for a CEO. Last week, we talked about Pandora's new CEO. This week, shares up another 12% on the news that a secondary offering of 10 million shares is coming to raise $235 million. What is going on with this stock? Well, it's the same thing we saw with LinkedIn a couple weeks ago. It issued stock, initially sold off, but then actually hit a new all-time high. And I think with Pandora, I think the excitement here is about Pandora.

The new CEO is kind of an interesting story, but mainly it's about, I think, the emergence of internet radio. And I think iTunes Radio, which a lot of people think is going to compete with Pandora, is more or less legitimizing internet radio as a platform. And Pandora's got the biggest platform, it's got 75 million listeners, it's out there. So, they're raising this capital to do what with it? It's a good time to raise capital. The company, the stock is very expensive. It is a positive sign in my view. It's a good use of capital, I guess. You can follow the show on Twitter, at MotleyFullMoney is our handle. Got a question on Twitter from Logan Zuber in Fort Wayne, Indiana. He writes, can you give advice for young investors? I'm

18 years old and a business econ finance major at Indiana Tech. Go Warriors. What should I focus on studying? Is there anything I should read with a $500 portfolio? What should I invest in? There's a lot to chew on there, Ron. Let's start with advice in terms of reading. I'm assuming he's got plenty of textbooks. What else can he read to make him a better investor? There's obviously so many good books for beginners out there, but I'm a big fan of the collection of essays of Warren Buffett. his former shareholder annual letters. Study those. You really can't get any better advice than reading through the Oracle's words. O' Matt?

That's a great one. I'd go with Peter Lynch. His book went up on Wall Street. Peter Lynch, for me, pound for pound, year for year, is the best investor we ever saw. And one of the big things with Peter Lynch is that he bought a lot about what he knows, that he had interactions with on a daily basis. As a young 18-year-old in college, I don't know, you're playing video games, you're going to Starbucks, you're experiencing products and brands. No, no, no. He's a hard-working student. Oh, after all that. No, no. Logan's hitting the books. That's right. But he's experiencing products and brands all day. Take another look

at those companies and see if those are companies you might want to invest in. Joe, reading advice? The Little Book That Builds Wealth by Pat Dorsey. It's the best discussion of competitive advantage and moats out there. Alright, let's move to the stock angle here. We can't tell him what to invest in, but we can give him some stocks for a watch list. What do you think, Ron? I think Matty nailed it on the head, where the Peter Lynch model of, you should invest in things you're familiar with, things you like. If he's a sports fan, if he likes ESPN, Disney's a great choice. If him and his buddies are going out for burritos, Chipotle's

a great choice. Something that he cares about and can really watch from a business perspective. Matt? If you like playing Call of Duty or World of Warcraft, which you might, Activision Blizzard to me is the best company in the video game space. To me, it's the most attractive in terms of valuation as well, so take a look. Joe? Yeah, and if you're buying stuff you don't need, check out Amazon. Let's bring in our man Steve Broido from the other side of the glass. Steve, whether

it's reading advice or a stock idea, or frankly just life advice, because once upon a time You were a young college student. What do you say to our man in Indiana? I would say, figure out how you like spending your time, and try to figure that out as early as possible in your life. Because if you can figure that out, you're 10 steps ahead of just about everybody else. You're talking about free time here? Yes, all your free time. Where do you like spending your free time? Because that's going to really decide what you're going to do in the rest of your life. Steve is so deep. I miss that.

That's how I roll. Do you have, because you're also a very avid investor as well, do you have a stock idea that he can put on his watch list? A stock idea? You know, I bought some Sirius Satellite Radio a long time ago, around $0.30-some. It's at $3.80-some now. I still think Sirius Satellite Radio is going to be around for a long time. Ooh, bigger than internet radio?

Much bigger than internet radio. Did Steve just use the stock idea as an opportunity to take a victory lap? He may have. Oh, he's not a victory lap. He just dunked on all of us. He's 10X on his SiriusXM stock. All right. Ron Gross, Matt Argesinger, Joe Mager.

Guys, thanks for being here. We'll see you a little bit later in the show. Coming up, some have called it more secretive than the CIA. But next, filmmaker Jim Bruce is going to take us inside the Federal Reserve. Stay right here. This is Motley Fool Money. All we hear is Radio Gaga. Radio Goo Goo.

Welcome back to Motley Fool Money, I'm Chris Hill. Henry Ford once said, it's good people don't understand our banking and monetary system, for if they did, there would be a revolution before tomorrow morning. At the heart of that system is the Federal Reserve, a subject tackled by writer-director Jim Bruce in his new documentary film, Money for Nothing, Inside the Federal Reserve.

Jim, thanks for being here. Thanks for having me. I want to get to your film in a second, but first, there were not a lot of investors, professional or otherwise, who really saw the 2008 financial crisis coming, but it does seem like you were one of them. So, if you can, take me back to 2002. You'd just finished working on a horror movie. You're in Hawaii with your family and friends.

Everyone's looking to hit the surf and relax, and for some reason, you seem pretty intensely focused on the stock market? Yeah, I mean, my interest in the Fed does go back a while. And in trying to sort of piece together the post-tech bubble investment world as just a small investor in 2000, 2001, 2002, I started looking at Fed policy. And then I started reading people who were warning about some imbalances in the system, primarily mortgage debt, um you know things we came to know as uh you know securitized mortgages cdos mbs all that stuff and and you know i think the signs were there not many people were looking at them you know i i was i think i was fortunate to be reading some people who were you know economists who were talking

about these problems and just started paying attention myself and thinking about you know how to invest accordingly how to sort of navigate that world as the housing bubble just kind of blew up uh i was living in california watching it all around me watching people you know make all these crazy decisions that at the time seemed you know everybody was doing it kind of but then in retrospect it seems like um you know almost unbelievable that some of these things happened um and so so you know my background was was just trying to look at um at these big picture forces that were happening in our economy and trying to understand them and i think that's what i'm trying to do in the film is give people a way to look at the economy through the lens of the Federal

Reserve and to see some of the big trends we've been living through in recent decades from kind of a wider angle. And then you sort of begin to question some of those things. For those who don't follow the Federal Reserve all that closely, what is the primary purpose of the Fed and how has it changed over the years? I mean, the Fed is a complicated institution to explain. It was originally intended just to really be a backstop for the banking system to do some very simple things to ensure that we didn't sort of have a shortage of credit in these panics that we tended to have in the 19th century. A lot of times it happened in the fall. It even had to do with the agricultural season in the sense that farmers had sort of spent all their money and they

hadn't started to be paid for things yet. So the Fed was supposed to just kind of smooth out our financial system. It wasn't even supposed to supervise the dollar or inflation or some of the things it does now. Today's Fed has two mandates, one to maintain price stability, so to keep a lid on inflation, keep the dollar at a reasonable value. The other mandate is to try to create strong economic growth and full employment. And lastly, the Fed is also seen as a regulator it it serves as the probably the most powerful banking regulator um and even in the wake of the crisis has gotten some more powers to sort of try to oversee the financial system in general um and so it's got all these things that we're asking it to do and one of the questions

of the film is is where one of the things the film points out is that at different times the sort of mandate to create strong economic growth and employment sometimes conflicts with the idea of overseeing the financial system and trying to make sure it's a stable one. I think that's what we point out in the early to mid-2000s. A lot of people would argue that in trying to create faster growth and more employment, the Fed really fueled a giant housing and credit bubble, and that that was disastrous for financial stability.

So the Fed is trying to do a lot of things, and in the film we sort of question whether the Fed is trying to do too many things, because their role has really expanded since the Fed was first created. Well, among other things, the Federal Reserve is known for being a secretive institution. How did you gain access to the Fed, and as importantly, its key players? Not easily. It took some time to, you know, there's a lot of people in the film that viewers or commentators are almost sort of surprised that we have the lineup that we do. Paul Volcker was a former Fed chair. Janet Yellen, who now seems likely to be the next Fed chair. A number of current Federal Reserve Bank presidents who are, you know, voting on interest rates sort of as we speak.

A lot of former Fed officials. And then, you know, and then we also have a lot of, you know, outsiders and investors and people with different perspectives. But, you know, I think I was able to convince the people at the Fed that I, that the film wasn't about conspiracy theories, that it would be, you know, it would be, you know, reasoned and balanced. And, and that, you know, while it would be critical, the criticism will also be constructive. And I think we, I think we stuck to that promise. You know, we tried, the film isn't, you know, it's very critical of Fed policies in some cases, but we try not to demonize the institution or, you know, I don't think having met all these officials, they have good intentions, they're trying to do the best they can, they have a very hard job. So I think we do justice to that, but we also sort of question some of the choices they've made and some of the choices they're making. You're listening to Motley Fool Money talking with Jim Bruce. His new documentary film is Money for Nothing Inside the Federal Reserve. You mentioned Janet Yellen, the vice chairman. She is widely thought at the moment to be the successor to Ben Bernanke.

I am curious, though, because when I think about the Federal Reserve, I think about the chairman. I know there are a lot of people who work there. There are different people sitting on the board of governors. But it really does seem to me as an institution where the person who is at the top, Paul Volcker, Alan Greenspan, Ben Bernanke, wields an inordinate amount of power. Now, is that my getting the wrong image, or does the chairman of the Federal Reserve really have an outsized amount of power within the institution? I mean, it's one of the peculiarities of the Fed in some ways that there's been different times in history when the Fed chairman didn't have the confidence of the committee. Not many times, but a few of those times, and it was sort of deemed disastrous. I mean, at one point, I believe in Paul Volcker's career, he was sort of set to lose a vote.

And it's sort of understood that if you lose a vote as chairman, you should resign. It's sort of that extreme view. So it's a chicken or the egg thing that the chairman is really seen, you know, as guiding the group. And historically, that sometimes means that the chairman will change his position a little more to fit the group if there's a strong consensus in the group. But the other interesting thing about how the Fed operates is that they do tend to do something called consensus voting, which means that if there are 12 people voting on interest rates, for example, they don't necessarily all vote how they feel about what should be done. They don't all just raise their hand for one way or the other. What they'll tend to do is if they sense that the majority is going to move one way, people will generally, even if they don't agree with that decision, they'll side with the majority.

So there's usually, even if there's a lot of discussion and debate within the group, there's usually only one or two, or at the most I think I've ever heard, three dissents. And the others will sort of fall in place. And that's because they don't want to send a message to markets that the Fed doesn't know what it's going to do next. They want to present a sort of unified perspective to markets so that markets have a sense of where the Fed is headed. And so sometimes it's misleading. And I think you could argue that we might be better off if there was a little more willingness to dissent, because I think the end result is that usually if the chairman wants to do something, people tend to fall in line with them.

And as you saw sort of in the Alan Greenspan years, sometimes the policies weren't, you know, they weren't the best choices, and people didn't really, I don't think, you know, stand up to some of those decisions, and the Fed did sort of go wherever he wanted to go. So I think you can question how powerful the chairman is from time to time. I think we've seen it with Greenspan. And I think we may be seeing it with Bernanke as he's stepping down. There's probably a lot of people at the Fed who might think it's time to ease off on policy. But I can imagine at his last meeting, if Ben Bernanke wants things to go a certain way, that people would fall in line.

Let's go back to Alan Greenspan for a second, because at one point in time, when he was chairman of the Fed, he really had rock star status, helping to oversee the nation's longest expansion. but he also helped, as you pointed out, lay the groundwork for the financial crisis of 2008. How should history remember Alan Greenspan? I mean, you know, I think of him as sort of a fallen hero, a sort of classic tragic hero, you know, in the sense that I think early in his career he was very successful, especially through the mid-'90s. And, you know, you could imagine if he retired in 1995 that he, you know,

he would have gone out on top, so to speak. And, you know, as it happened, you know, in the late 90s, the stock, you know, tech bubble got really out of hand and Greenspan actually cut interest rates right in the middle of that bubble and decided consciously, you know, made the choice that he wasn't going to resist the bubble in any way, was just going to let it build. And then, of course, as it collapsed, he fueled another bubble with the housing bubble, you know, said was conscious of what they were doing. They thought the financial system could handle the risk. um you know they thought it was a calculated choice they were making uh and it all you know it all failed pretty pretty badly and i think you know i think you could you could argue he's almost a mythological character he flew too close to the sun you know he was he was viewed as someone who couldn't fail um and maybe you know as he got older and and sort of more entrenched in his

position he might have taken some chances um that he might not have when when he was um you know when he wasn't viewed as this, you know, sort of wizard behind the curtain. So I think, you know, one of the things the film hopefully does is to humanize these characters and to let people know that Fed leaders, as powerful as they may be, and Bernanke, you could argue right now, is the most powerful force in the global economy, you know, they're capable of making mistakes. They're capable of not seeing problems that are building up. So we should be skeptical about what our leaders are saying,

and we should question the policies we're choosing. You're listening to Motley Fool Money, talking with Jim Bruce. His new documentary film is Money for Nothing, Inside the Federal Reserve. You taped 70, 80 hours worth of interviews for this film. What surprised you the most when you were working on it? I mean, I was just happy with how, I think, you know, we taped lengthy interviews with people and I think it enabled them to get comfortable, you know, on a CNBC interview when you have three minutes. You know, sometimes you just, you know, people just say they're talking points or just spit out a soundbite.

I think I think we got people to really share their views and share their opinions in an unguarded way. And I think I think people will be surprised, for example, that Paul Volcker, you know, you know, sides with our with our theory that basically low interest rates led to a big, huge boom and a big, huge bust. You know, he sort of says it in those simple words. And so it surprised me, you know, how honest officials were willing to be. They were willing to be critical of the institution. But I think, you know, also as you interview these people, you realize that it's not easy to be in a position of power. You know, it wouldn't have been easy for anyone in 2005 or 2004 to say,

hey, there's a housing bubble, we should raise interest rates to stop it, or we should stop fueling it with low interest rates, or we should cut off all these mortgages, which are allowing people to take too much risk. You know, there would have been a huge amount of resistance to that. And so I think the film points out that, you know, that's one of the challenges, that we almost, we hold Volker up to, you know, to sort of hero status because he did stand up to a lot of pressure and a lot of frustration in his policies. And we argue that he created policies that helped people in the long run.

And I think that's one of the messages of the film is that we'd like the Fed to be willing to stand up and take the heat and do something that might not be the most popular thing in the short term, but in the long run is going to make us all better off. Now, this is a documentary film that, to a large degree, you have self-financed, but you have also worked on big-budget films like The Incredible Hulk and a couple of the X-Men movies. Compared to those experiences, what is the best thing about making your own documentary, and what is the worst thing? It's the same thing. The independence is the best thing. I mean, creatively, it's funny. Fed independence is a big issue. It's widely stated in economic circles that the Fed really needs to be independent of political influence

so they can make the right decision for the long term. And I feel like creatively, as I was making this film, I really valued the independence I had by doing it somewhat on my own and not having a studio come in and say, you need to simplify this, you need to dumb it down, or the types of notes you might expect to get from a studio that wants a film to be accessible to the broadest possible audience. And so I felt like the best thing about making a film on your own is that you have the freedom creatively to make the film that you want to make.

That comes with the flip side of it is that you don't always have the financing. So I did put my life savings, which I doubled in the years leading up to the crisis, by shorting financial stocks. I put that into the film. We also had to raise money on Kickstarter and donations through a 501c3. So we spent a lot of our time while making the film seeking out money and kind of proceeding in a hand-to-mouth fashion. So the hard part was not having the budget all the way through

and having to continually raise money to keep going. But then the beauty of it is I was able to make the film I wanted to make. Money for Nothing Inside the Federal Reserve opens in select cities across America this month, including Boston, Los Angeles, Houston, and right across the Potomac River in Washington, D.C. And for more information, you can check out the film's website, moneyfornothingthemovie.org. Jim Bruce, good luck with the film. Thanks for being here. Thanks so much for having me. Coming up, we'll give you an inside look at the stocks on our radar.

This is Motley Fool Money. 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. Joining me in studio once again, Joe Mager, Matt Argersinger, and Ron Gross. Time once again for the stocks on our radar. Ron Gross, what do you got? I got Titan International, TWI, manufacturer of wheels and tires for industrial uses.

Now, on Friday, they withdrew their guidance for fiscal 2013, which is a little scary. Stock got smacked. But we believe in the long-term thesis quite a bit. We think this is just a short-term problem. It's an opportunity to pick the stock up cheap. I think you can make 50%, 60% on your money here. Wow. Let's bring in our man, Steve, from the other side of the glass. Steve, question about Titan? How would I come across an opportunity like this as a layperson? You listen to this show.

They actually publish on the intranet, or even in the old-fashioned newspapers, stocks that fall quite a bit on any given day. You can check out, and then you can go see why. If you think the why is a short-term problem, then that could be a long-term opportunity. Is that how you found this opportunity? We happen to actually own this, and we're recommending it, so we keep a close eye on it. Matty, what do you got? I got Take-Two Interactive, TTWO is the ticker. Sticking with the video game space,

Take-Two owns Rockstar Games, which is the owner of the Grand Theft Auto franchise. Grand Theft Auto 5 came out this past week. First day, $800 million in sales, fastest-selling video game of all time, fastest-selling entertainment product of all time. Probably has already hit $1 billion by now. O' It did, yeah. Okay, there you go. So, Joe's already up to date. Interestingly enough, though, this is usually the time you want to sell Take-Two, because it's had a tremendous run, and years where it comes out with the Grand Theft Auto, which is every three to four or five years, the stock gets really bid up. But after that happens, there's a little bit

a vacuum in Take-Two's franchise portfolio. I'm watching the stock only because I feel like this might be one, it's near a year high, it might be one to fall off. Steve, question about Take-Two Interactive? This is a pretty violent video game, Grand Theft Auto 5. Should I let my son play this game? How old is your son? He's two. I'd say maybe within a year. No, no, definitely not. I'd say this is rated MA, which is, I think, 18 and over. Make sure he's at least in first grade.

Joe Mager, we've got about a minute left. What do you got this week? TD Ameritrade, ticker is AMTD. That's one of the few companies that will actually make more money when interest rates rise. And I think it's one of the cheap ways for you to get exposure to that. It's a nice hedge if you have a lot of bonds in your portfolio. You'll do well when rates rise. It's incredibly profitable, and they're paying a nice little dividend that's about to get raised in a big way.

I think it's a great natural hedge and a great stock to own in its own right. That's another Omaha company, isn't it? It is. Do you ever go visit them when you go out to Berkshire? No, I'm usually pretty busy. You're knee-deep in the See's candy. Steve, question about TD Ameritrade? They are a product of a merger, and probably a merger before that.

Will they be merging again? Good question. They are likely to buy E-Trade, which I own both of these. They're likely to buy E-Trade at some point down the line, but probably not until E-Trade gets all its mortgage issues behind it. So maybe a couple years after. Joe owns every stock in the universe. I'm just throwing that out there.

Not Tesla. Any of those three attractive to you, Steve? I don't know. I have some free time this weekend. I may like to shoot something. So, we're going to take two. Take two interactive. All right. Joe Mager, Matt Argersinger, Ron Gross. Guys, thanks for being here. Thanks, Chris.

That's going to do it for this edition of Motley Fool Money. The show is mixed by Rick Engdahl. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We will see you next week.