Motley Fool Hidden Gems Investing - Motley Fool Money: 11.11.2011

Episode Date: November 11, 2011

Greece gets a new leader.  The Obama administration puts a big pipeline on hold.  Starbucks makes a big buy.  And Disney reports big earnings.  Our analysts talks about those stories and share three stocks on their radar.  Plus,  Harvard Professor Niall Ferguson shares some insights from his new book, Civilization: The West and the Rest. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill. And joining me in studio this week, for Motley Fool, hidden gem Seth Jason. For Motley Fool income investor James Early, and for Million Dollar Portfolio, Ron Gross. Gentlemen, good to see you, as always. We have got retail earnings, Disney earnings, and a new player in the tablet wars. We've got bestselling author Neil Ferguson on the rise of China and America's innovation challenge, and we've got a few stocks on our radar, but we will begin overseas. The guys who were the prime

ministers of Greece and Italy last week are now on their way out. In Greece, George Papandreou has been replaced by Lucas Papademos. And in Italy, Berlusconi's likely replacement is Mario Monti. Seth, Jason, is any of this going to make any difference to what's going on in Europe with the debt crisis? And will that translate into better things for U.S. investors? Well, I think it's harder to say in the case of Greece. I think some of the tough decisions there have been made. I think in Italy, they're in much better shape getting rid of Berlusconi. I mean, this is a guy who, I guess, Daniel Gross at Yahoo called him an old satyr. And that's about right. This is a guy who ran the entire country like he ran his media company, which is he just did

whatever he wanted. And he was never really, I don't think, a serious politician. The potential replacement here, Monti, is a European antitrust cop, a former European antitrust cop, an economist, a real technocrat. And I think he's in a much better position not only to judge what needs to be done, but to actually get it done. And Italy's economy is the third biggest in the Euro. It's a bigger economy than India. It's a really big deal. I think they have no trouble paying their debts going forward, but it is a bit moribund. They need to get a new legislation that kind of cuts red tape and get the economy moving, and I think Monty can get it done. James? Well, that's the challenge in both Greece and Italy, is that the new guys have to come in and

be the bad guys immediately, enact all these austerity measures. We're basically seeing the end of the European welfare state, in my opinion. They have to do that, and even that's probably not going to be enough. Italy's borrowing costs are now above 7%, which makes it very, very hard for them to even make the interest payments on their debt, some would say. So, whatever happens has to be drastic, and these new guys are going to have to do it very quickly. Shares of Disney were up on Friday. Ron, fourth quarter earnings up 30% as a Disney shareholder. I'm happy about that. I'm a Disney shareholder as well. How are they getting it done? This was a really strong quarter,

kind of across the board. ESPN showed strength. ABC showed strength. Surprisingly, the parks, even in this economy we're in now here, which is shaky, was strong on both price increases as well as strong attendance. No way. What does it cost to get into one of those parks now? It ain't cheap. It already was at times. So they're moving overseas. There's expansion potential, China, India. And Iger, who is kicking himself up to chairman because they'll be getting a new CEO by 2015. It'll be interesting to see who comes in there. But they're executing very, very well right now. How does the stock look to you? Because I know you're a value guy.

I'm a value guy. I don't think the stock is cheap here. I think it's fairly priced. But it's the kind of thing, as I said, I'm a shareholder. It's the kind of stock I probably will never sell. What kind of dividend are they giving you out of there? I don't know the number. It's just about two. It's not bad, right? Two something, right? Yeah. That's pretty good.

But it's the kind of stock that you can probably own forever, and you'll get some nice returns. She won't knock the cover off the ball, but it's pretty good. That's a new analogy for you. You like that? Yeah, I do like it. They're firing on all cylinders over at Disney. You're listening to Motley Fool Money. We are here every week, but for daily analysis on the latest money news, check out our daily podcast, Market Foolery, on iTunes and at marketfoolery.com.

And if you want to see video, because we have broken into the video space now, you can check it out at fooltv.com. You can see stuff like this. Exactly. The guns at the camera. For the few people who are actually watching the video, they can check out Seth doing that. Starbucks has bought juice company Evolution Fresh for $30 million. CEO Howard Schultz said it is their intent to build a national health and wellness brand. James, is this a smart move?

Well, Chris, I can't tell you how many times Ron and I have been on a juice date and driven right past Starbucks because they didn't have a juice offering. What they're doing is smart at first. They're incubating this concept in the stores at first, just selling the juice, and then maybe they'll expand it to an actual store. But they're really doing more than just selling juice. They're trying to change the way people behave because we traditionally drink juice at home as Americans, or maybe we buy it from 7-Eleven, Coke and Pepsi.

Pepsi has Tropicana. They're big into the juice markets there. But we don't really go to stores or outlets to get juice. We do have Jamba Juice as an example, but that's a $111 million market company. The stock is like a buck something, and they're losing money. So Starbucks really has to create its own ecosystem if it wants this thing to work big time. And that's why I think this is goofy. The good news is it probably costs less than a kilo in the B to be into this.

The bad news is Jamba Juice, this is a big chain. Jamba Juice has more than 700 locations, roughly a half and half split between company-owned and franchises. As James mentioned, it's a $111 million company only, and that's because if you look at their numbers, their revenues have dropped from $350 million a year, kind of the height of the real estate bubble type thing when everyone was going to go and spend a bunch of money on a Jamba juice, down to somewhere just north of $200 million a year.

That ain't good. So Starbucks is getting in on what they think is a trend toward healthy eating. I think that trend is there, but I think the idea that people are going to go to a juice bar is not really, I don't think that's true can I just speaking of health a lot of these juices

are just loaded with sugar I mean it's like give you palpitations like three days worth of carbohydrates I think the first place we'll see these showing up is in the Starbucks store

where they're replacing their Pepsi the PepsiCo's naked brand juices so we'll see if they catch on you know Starbucks already does

a little bit of juice in that sense in their stores we'll see I mean to be clear this is a bottled brand now started by the founders

of Oatwalla naked right I think it's the same guy. And one of the other naked guys. So a couple of naked guys, a methanoid wallet guy mixed in there. But then the plan apparently is to roll this out as its own concept. And that's the part that I really wonder about. Well, we had Seth Goldman, the CEO of Honest Tea here in the office a few weeks ago.

And he talked about growing that business and eventually getting to the point where they sold the majority of it to Coca-Cola. Did they really? Yeah. Sellouts! But to your point about Jamba Juice, I mean, if you're Evolution Fresh, isn't that probably the smarter move to sell to a Starbucks because you're just going to have a much greater advantage over Jamba Juice, which is essentially going it alone? Yeah, I think that's certainly how you have to start. They're already in Safeway and Costco and Whole Foods on the West Coast. So they do have retail distribution.

They'll roll it out to Starbucks. That's an incredible distribution center or avenue. and then I think they'll see if it makes sense to go the retail route. Yeah, and $30 million, for a sale price, this has got to be a pretty big deal, a pretty small company looking at a huge whale in Starbucks. Sticking with coffee, shares of Green Mountain Coffee Roasters down 30% on Thursday, a day after reporting its first sales miss in two years. Revenue for the fourth quarter was nearly double.

What is going on here with Green Mountain Coffee Roasters? We were talking before, we were taping about, you know, there's a big short interest. This is one of those stocks. Nobody knows what's going on at Green Mountain. Yeah, nobody knows what's going on at Green Mountain. That's part of the cause of the huge sell-off. There's a very famous short presentation now that came out of the Value Investors Congress, 100-some slides.

Most of us have been through it. The first two-thirds laying out the troublesome financials, or what will probably be the troublesome financials for Green Mountain, which is the patent is coming off the K-Cups. They don't really make money on the coffee makers, so if anybody and everybody can make those K-cups, which is where the money supposedly is, what do the margins look like going forward? Probably no good. And then on top of that, they layered in some allegations about funky accounting.

These are allegations of hiding inventory in trucks on the day that you take inventory, bringing it back in. And so you get a small revenue miss, and everyone's nervous, and the stock drops something like 40% in one day. Yeah, the stock was priced to perfection. and then when you have these allegations of fraud, and then you get a miss on top of that, it's a mess. I think what they're hoping is once these patents come off, everybody starts making these K-Cups, and that actually allows them to raise prices on the machines, because the machines become more in demand. That is a big if. They could probably raise prices somewhat. I don't know if it's going to be enough to mitigate the damage done by the loss of this K-Cup monopoly

they'll have. But even more interesting to me is, despite all these people that are negative, The vast majority of analysts on Wall Street have it rated as a buy recommendation still. There's only two holds and one sell recommendation on the street. I find that quite interesting. And it'll be wrong, I think. I want to go back to the K-Cups and the competitive landscape for a second, because this came up on MarketFoolery the other day, this question of brand loyalty in terms of Green Mountain and the coffee that they produce.

because to the point you were making, Ron, you do have Starbucks, Dunkin' Donuts, others who have partnerships with Green Mountain to produce these cake cups. But you also have a lot of companies, Costco, Super Value, etc., sitting on the sidelines, looking to maybe jump in. How loyal do you think people are to the Green Mountain, to the coffee itself? I could speak personally because I do have a Korg machine and I do use the K-Cups, and I'm purely loyal based on taste. So I actually don't like the Green Mountain branded coffees. I do like the Dunkin' Donuts ones. I do like the Gloria Jeans ones, which is owned by Green Mountain.

So for me personally, it would be more about taste and less price conscious, but I might not be typical. I mean, those things are pretty expensive. If you can get them for half price and the coffee is decent. You can buy 500 of them at a time. It's a lot of packaging, too. People are going to buy those. And I think the Green Mountain management, I've read some of their remarks, and the CEO seems like he's lost in another world. There's some remarks about, we're the iPod of coffee makers, and hey, we're going to have, everyone's going to have, they're going to have one of our machines in the kitchen, and they're going to have one in the family room, and they're going to have one in the den, which is stupid.

It's not going to happen. But even if it did happen, they say they don't make any money on these machines. So you can't make more profit. They make it up in volume. You can't make up in volume if you're not making any money on these things. It's doubly absurd. I think they're in trouble. Ron, how many do you have in your house?

How many of these machines do you have? I have just the one in the kitchen. Weren't you saying at our production meeting that your wedding anniversary is coming up? It is. Tomorrow is my wedding anniversary. A new machine. Maybe a new machine for the missus. Perhaps.

One for the bedroom, Ron. That is romantic. One for the bedroom. Here, honey. The bathroom. Let's never leave the bedroom ever. Coming up, Barnes & Noble's new tablet gets a rave review from Barnes & Noble's CEO. More after this.

You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James Early, and Ron Gross. A bunch of retailers reporting earnings this week. Macy's profits up thanks to a big spike in online sales. Kohl's profits up 20% for the latest quarter. Nordstrom up nearly 7%. Seth, a lot there.

What stands out for you in the retail world? The bifurcated economy. We've talked about it so many times. Nordstrom doing very well. Comps up 8%. That's, you know, same-store sales. So, similarly good mark at Macy's. You have 4% comp sale there.

Just a quick comparison. Something like JCPenney fell 1.6% in the comps. What about Kohl's, though? Kohl's is good. Kohl's is not buying. Kohl's is smack in the middle, though. But they had the J-Lo and the Mark Anthony line just released. I did not know that.

I thought they divorced though. You can't compete with that. They did, but stuff is still selling well. I still think we're seeing higher-end retailers do respectively better, and I think you're going to continue to see online retailers do better. Macy's did well with this online bit, but actually the stock sold off, and that was attributed to the fact that free shipping, which may have juiced those online sales, was going to hurt margins.

How do you know so much about the J-Lo and Marc Anthony line anyway? Do a little research every now and then at the office. That J-Lo stuff makes my butt look big. I think retail looked pretty good, which is very interesting as we come upon the holiday season, and Black Friday is coming up. Very interestingly, driving with that, consumer sentiment numbers came out, and they're the highest they've been in five months. But what I love about Americans, this is just awesome, in the same survey, just one in five consumers expect an improvement in their own finances, yet we have consumer sentiment highest it's

been in five months. Span, span, span, span, span. The State Department said this week that it is putting the Keystone Pipeline on hold. The $7 billion pipeline would run from Canada to Texas and cut through six U.S. states. James, the government is reviewing the project, and a final decision will not be made until after the 2012 election. Politics aside, what does this mean for business and investors? Yeah, ostensibly it's because of two specific areas that the pipeline will cross through. But really, it's just punting on the decision, because there is opposition.

There's a lot of support, too. This would mean anything from 6,000 to 20,000 jobs, depending on if it's the State Department or TransCanada, which is the company that was doing this pipeline. It would be 700,000 barrels of oil per day, which is about 7% of the U.S. oil imports. Certainly, it's temporarily bad news if it doesn't happen for oil stand stocks, like Athabasca Oil Sands is one. Synova Synergy is another. Suncor is a third. So, you know, these oil sand stocks, I don't think, will be permanently depressed because of this.

The oil is going to find a market somewhere. It just might not be in the U.S. James, also this week in oil news, ExxonMobil signed a deal with Kurdistan. Chris, yeah, it's certainly a big deal, and it really signifies the future of oil. In other words, the private development is mostly used up. It's now about sovereign states. This is good, but this is also risky. BP had a deal with Rosneft, Russia's oil company,

and they basically felt they reneged and they're fighting in court for many years. A judge just awarded BP a claim for that, but it underscores the risk of going into these somewhat sketchier countries and developing oil there. Almost hard to believe that Russia would change the rules like that. It's amazing, but it happens.

This week, Barnes & Noble jumped into the tablet computer wars, unveiling a Nook tablet priced at $249. Seth, obviously, is competing with the iPad, Amazon's Kindle Fire. What is the appeal here of the Nook? I don't think there is one. I think that's the problem for Barnes & Noble.

It has a microphone. Yeah, but nobody cares. The Nook was doing fairly well for a while, at least just the reader version. Then Amazon released some new ones that are coming out soon, which will be better. So now they're releasing their sort of Kindle Fire knockoff. The problem here is that it's all about the ecosystem. This isn't much of a tablet war. The iPads get everything.

The Amazon Fire can compete, I believe, because, one, it's cheap. two it's got that whole amazon ecosystem of content this new nook runs on android and so it'll run you know hulu plus or netflix but that's really the only media you're going to get is sort of through third parties and the amazon uh kindle fire is going to have of course it's going to hook into all of that content that is at amazon in the amazon cloud so i think it's a much better value proposition especially since it's actually cheaper than this nook um it does have the advantage however, of the Barnes & Noble physical locations. If there's a problem with it, you can go in and ostensibly someone there can help you fix it.

Yell at somebody. Yeah, except that- Those Barnes & Noble locations ain't what they used to be. Yeah, exactly. And if you call Amazon and you have a problem with your- I know people who have- Can you call Amazon? Oh, yeah. You have three-year-old Kindle. And I know people in this office building who've called and basically said, oh, it's just old and I kind of broke it. And Amazon says, oh, well, we'll just send you another one.

I've had it. Yeah. They send things for free just to be nice. I think they're too generous. And again, the NIC tablet did get a great review called the best wireless media tablet in the portable 7-inch class. That comment coming from William Lynch, the CEO of Barnes & Noble. He's a big fan. He's a very big fan. Finally, it is induction weekend at the National Toy Hall of Fame. There are three new inductees, Hot Wheels, the Dollhouse, and the Blanket.

Yes, the Blanket made famous by Linus and Peanuts. I'm not exactly sure how. I don't even think that's a toy. Yeah, well, tell that to the people at the National Toy Hall of Fame up in Rochester. I'm looking at their list of inducted toys, and I was making a joke that Stick should be one of these. Stick was inducted in 2008. There you go, Graham. Stick.

We got 30 seconds left. Nominations for the National Toy Hall of Fame. Ron, what do you got? Nerf football. Nerf football. Let's do specific. The firework. The firework.

Oh, that's a good one. The toy? Any pyrotechnic? Who doesn't love playing with those? I'm fine. I'm going with James and Sharp Knife. Seriously, rock. Steve Broido?

Rock. Absolutely. There was a board game in the late 70s, early 80s called Mork and Mindy. And it involved grabbing a styrofoam egg and yelling Shazbutt. No way. It was the worst merchandising example ever, but that's what I would have done. You're going to throw it off. Have you seen our Motley Fool board game?

All right. Seth, James, Ron, we'll see you later in the show. Coming up next, bestselling author Neil Ferguson on the decline of the U.S., the rise of China and the problem with Occupy Wall Street. I have a train set and a garage full of cars And a soldier with a gun My mother says I should have more responsibility As I'm nearly 31

I have a plane, I have a crane That can lift up all my trains and all my cars I have a boat that doesn't float But a big machine that takes me to the stars Stay right here. This is Motley Fool Money. Show me the money Don't be talking no trash Welcome back to Motley Fool Money. I'm Chris Hill.

What is behind Western civilization's rise to global dominance? And is that dominance now coming to an end? Neil Ferguson is a professor of history at Harvard University and a professor of business administration at Harvard Business School. He is a best-selling author, and his latest book is Civilization, the West and the Rest. Neil, welcome to Motley Fool Money. Nice to be with you, Chris. So in the book, you identify six concepts, the killer apps, as you call them, that are behind

the rise of Western civilization. These are competition, science, the rule of law, modern medicine, the consumer society, and work ethic. Where is the West excelling, and where are we falling behind? Well, these days, we don't really come out too impressively on any of the six. But the point of the book is to show that it's these six things that propel the West into a position of astonishing dominance right into the 1970s. But if you look at what's happened in the world since the late 70s, it's striking how the rest have been catching up, led, of course, by China. And that process of catching up is, I think, partly true because it's partly happening because they're downloading the killer apps, but it's also happening because we're deleting them. So, for example, if you ask yourself, how are we doing when it comes to competition?

And we think of ourselves as still being quite competitive. And yet, when you look at the World Economic Forum's scorings, the U.S. has been sliding in its competitiveness score since they changed the methodology in that Global Competitiveness Index, which was about seven years ago. And China has been surging. So on that number one killer app, it's clear that we're losing our mojo. And I could go on because I don't think we score too impressively when it comes to scientific education or, for that matter, the rule of law. I mean, the rule of law thing is really interesting because when you look at those detailed figures on the efficiency of the legal system and the protection of private property rights, the U.S. scores amazingly poorly in the World Economic Forum rankings. I mean, it's not even in the top 30 on 15 out of 16 counts.

And in every single one of those 15, Hong Kong is a better place from the point of view of the security of private property rights and the speed with which you get justice done. So there's a lot to worry about, I think. One of the things that you touch on in the book is that, as you've just alluded to, China really has mastered the killer apps. Is it across all six or does China have an Achilles heel? It does have an Achilles heel because there's one app, the one you alluded to, rule of law, private property rights, where they're doing really poorly, except for Hong Kong. If you look at the mainland, there's a major problem. And that is that although it's better than it was under Mao, there are still serious question marks over the security of property rights. I

mean, you think you own the land, and then the party hack and the property developer tell you, no, you don't. We're building a tar block there. So bye bye. So that issue of property rights is a problem for them. More importantly, if you don't really have a secure rule of law, if the courts are really not a reliable source of justice, it's very hard to build anything like representative government. And one of the points that I make in the book is that we get to democracy in the West quite late in the day, but we're moving in the direction of democracy from early on with representative assemblies, not only in England, but also in the colonies of North America. And these representative assemblies are principally designed, in the first instance, to represent

property. So China not only doesn't have a good rule of law system, it's nowhere near having representative government. It's a one-party state. And I think that will be their biggest problem over the next 10 or 20 years. You're listening to Motley Fool Money, talking with Neil Ferguson, bestselling author. His latest book is Civilization, The West and the Rest. We are investors here at The Motley Fool. So when it comes to China, we tend to focus on the rise of Chinese companies like Baidu, Ctrip, Sohu, Sina, Yoku, etc. There are some people predicting that China will soon overtake the United States as the world's leading economic superpower. And there are other folks saying that China's headed for a crash, particularly when you look at their

housing market. Where do you come down on China's future? Well, I was an early enthusiast for Baidu, and I think, broadly speaking, I've been arguing for, I guess, 10 years or so that Chimerica, the sort of partnership between China and the United States, was the core engine of the world economy now. However, I think short term, there clearly is some difficulty in that residential real estate area where they really went pretty crazy in the period after their stimulus. I mean, they essentially told their banks lend to anything that moves in an attempt to deflect the knock-on effects of the Great Recession in the United States. So in 2009, 2010, I mean, that there was an extraordinary explosion of credit. They tried to rein it in at the beginning of this year,

but all that happened was that the activity moved into a shadow banking sector. And that sector is looking very vulnerable at the moment because monetary tightening has caught up with these various shadow bank entities. And people are going down. And there's no question that there's an awful lot of bad debt out there. And there's an awful lot of residential floor space that just hasn't got any likely tenants anytime soon. The overcapacity is hard to estimate, but there clearly are millions of apartments that are empty and don't look like getting filled for some time. The big question is whether this shock, which is real and is happening now, proposes a real threat to China's overall economic performance. And I'm inclined to think not. I mean,

And I think the difficulty about this is it's so hard to get reliable data. If the shadow banking sector is about 15% of gross domestic product, which is what I've heard from the People's Bank of China, then I think they can probably deal with it. The central government can even nationalize some of this housing and just call it social housing. If it's more like 60%, and I've seen estimates that high from some hedge funds, then this is bigger news. And the question will be, can the Chinese cope with this by relaxing monetary policy again and just essentially stopping the tightening cycle? They think they can because all the crisis in Europe is actually getting some of the heat out of commodity prices and inflation. And I think they probably will do that just to be on the safe side. But this is a tough one to call.

Where I'm clearly on the other side is in the debate about whether China is going to implode. I mean, I think Chinos and others have just gone way too far in the doom-mongering here. I just think, having spent a lot of time in China recently, the chances of a total meltdown are very, very low indeed. The stakes are way too high for the people running China. You're listening to Motley Fool Money. My guest is Neil Ferguson, author of the new book, Civilization, the West and the Rest. You write in the book about the role of innovation. The United States has essentially led the tech revolution with companies like Apple, Microsoft, Google, Intel, Cisco Systems.

But now we're dealing with a higher unemployment, a sluggish economy, decline in the middle class. How does America grow the economy and support the middle class again? Do we need more Apples? Do we need more Microsofts? Or do we need to bring manufacturing back? Is it something else altogether? I think one of the characteristic features of the tech revolution is that it's not a tremendous creator of employment, especially for the relatively low-skilled. And they're not going to be hired by Apple even if it increases in size by a factor of 10. That's really the issue.

A lot of the discussion in the U.S. is confused by the naive notion that it's because the top 1% got rich that the bottom 20% got poor. But the bottom 20% got poor mainly because of competition from Asia and other emerging markets. If you're an unskilled worker in the U.S., your bargaining power in a global labor market has just collapsed. And that makes it very difficult to wave a magic wand and find jobs for people other than on incredibly low wages. I mean, there's a whole bunch of issues at work here which explain why even quite cash-rich corporations are not running out and hiring or investing in a lot of new capacity. For example, I think there's enormous uncertainty about the future trajectory of taxation. and as long as we don't get some clear answers to the fiscal crisis that the United States is currently in, I think that uncertainty will persist. The Fed, of course, is still regarded

as somehow able to generate growth by the flick of a switch. I wish people would realize the limitations of monetary policy as a tool of economic stimulus. We see diminishing returns with everything that the Fed does, and dreaming about some magic bullet that Ben Bernanke still has somewhere hidden in his pants, I think, is just wishful thinking. So we need to recognize that in this globalized world that we called into being, after all, the opening to China was our idea, the opportunities for the unskilled in our society have dramatically declined. and the chances that we're going to surge back to full employment carrying this enormous mountain of public and private debt are pretty low.

So I don't want to sound too gloomy on your show, but my sense is that given the importance of consumption growth in recent years, it's hard to imagine that bouncing back because of the deleveraging process. And given the severity of the fiscal crisis, which is there for anyone to see in the Congressional Budget Office projections, I don't think we can expect anything like the V-shaped recovery people were hoping for back in 2009. Coming up, more with Neil Ferguson, including a round of Buy, Sell, or Hold. Stay right here. This is Motley Fool Money.

You're listening to Motley Fool Money, talking with Neil Ferguson, bestselling author. His latest book is Civilization, the West and the Rest. Let's look at the Occupy Wall Street movement, because certainly a lot of Wall Street institutions, Goldman Sachs, Bank of America, Wells Fargo, JPMorgan Chase, et cetera, have taken a lot of heat for their role in the financial crisis and for the growing income inequality in the United States. So to what extent do you think the big banks and Wall Street are to blame for that? Well, one's got to be careful about what you blame them for.

In my last book, The Ascent of Money, I was quite careful to lay some of the blame, not all of it, but some of the blame for the financial crisis on the too-big-to-fail institutions because I think they were too leveraged, and I think there was moral hazard because they just kind of assumed that they were too big to fail. And although Lehman turned out not to be, everybody else was. I mean, that's really the bottom line. And I think that's a problem. And I think these institutions, which whatever they may say, and this is, I think, relevant in the case of Goldman Sachs, whatever they may say, they did require government intervention in the financial system to survive.

I do not buy the idea that if AIG had gone down, if indeed the U.S. government had just stepped aside and let nature take its course, that somehow Goldman would have survived. That's not a credible claim, I think. So the first point to recognize is that they bear some responsibility for the crisis. The second point is that it's not only their fault, that the politicians in Washington have as big a share of the responsibility, because after all, it was politicians who rigged the mortgage market. It was politicians who encouraged lenders to lend money to homeowners who couldn't possibly afford to own their own homes and so forth. It was the politicians who were supposed to be regulating Fannie Mae and Freddie Mac and, in fact, turned them into one of the greatest gravy trains in financial history. So I think when you listen to the rhetoric of Occupy Wall Street and its academic supporters like, say, Jeffrey Sachs, what you miss altogether is any recognition of the role of government in this financial crisis. And I also strongly object to the tendency, which is very much apparent down in Zicossi Park, to allege that 1% of the population, let's face it, 3 million people, are all collectively guilty of criminal behavior.

I mean, yes, there have been some cases in which fraud has been demonstrated and firms have been fined, but I don't think it's plausible to claim that all the bad stuff that happened over the last five or so years was somehow the result of criminal behavior, because most of the mistakes that were made were perfectly legal, and they were legal because Washington allowed them to be legal. So I think there's a danger in the Occupy Wall Street movement that the whole story of the last 10 years gets completely caricatured and kind of morphs into a form of class warfare that, to my mind, is far from helpful. You're listening to Motley Fool Money, talking with Neil Ferguson. His new book is Civilization, The West and the Rest. Neil, we're going to wrap up with a round of buy, sell, or hold. Let us start with buy, sell, or hold, the future of the euro. That has to be a hold, actually. I think many people are over selling this as the imminent breakup of the euro.

I still think they'll do whatever it takes to avoid that. I'm going to hold. Buy, sell, or hold gold? Hold. Why is that? Don't change your gold position, but don't big it up. If you've got a nice 10% of your portfolio in gold, stay there. But I don't think there's massively more upside than this.

A number of internet companies have gone public this year. Groupon, LinkedIn, Pandora, Zillow. And this one could be next in 2012. Buy, sell, or hold the future of Facebook. Oh, that's a buy. You think it's a slam dunk? I think so. I think the one bright spot in this economy is technology.

And the power of some of these social networking brands seems to me to be really huge, especially when you see the speed at which this phenomenon is growing internationally. So I'm going to buy. He's one of the biggest rock stars in the world, and he's been at the forefront of global anti-poverty efforts by seller hold Bono. That's a sell. Why is that? That's a sell because few people have purveyed more confused and misleading notions about

development economics than Bono over the past 10 years. And I think at some point people are going to take a look at Africa today and they're going to say, hey, they fixed their problems with Chinese investment, Bono, not with Western aid. Go figure. So it's not a musical critique you're making. Well, I always really hated U2, which, I mean, you know, that for me has been a lifelong sell. That overblown, bombastic stadium rock always sucked.

And finally, filming has begun on the latest James Bond film. Buy, sell, or hold Daniel Craig as the best James Bond not named Sean Connery. Well, I'm glad you said that last thing, because I was about to share that Sean Connery was your best James Bond ever. Oh, that's, I mean, that's a hands-down, you know, there's no debate there. Of course it's Connery. I'll hold Daniel. I mean, he's second. He's saying best.

He'll always be second best 007, but he does the violence with the degree of credibility that Roger Moore certainly never managed. I'm not quite ready to offload 007 in the Craig model. In 2004, Time magazine named Neil Ferguson one of the most influential people in the world. And that certainly continues with the new book, Civilization, The West and the Rest. Neil, thanks so much for being here. My pleasure. 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 studio once again, Seth Jason, James Early, and Ron Gross. Guys, two minutes left. It's time for Stocks on Our Radar. Ron Gross, you're up first. What do you got? Not a recommendation, but just started looking at Skechers, SKX footwear company. Struggling lately due to their toning shoes called the Shape Ups. Had some missteps there. Stocks looks very, very cheap. Stocks looks real cheap, but it could be a value trap, so need to do work here.

You roll your feet and they're supposed to make your body look better? Yeah, they keep you off balance, and it helps tone. Our producer, Matt Greer, was a big proponent. He was a big evangelist for those. The Reebok actually settled with the FCC recently about some claims in the marketing. The FTC? FTC, perhaps. You don't think the Federal Communications Commission did?

Matt is clarifying. He had the original MBT brand. Beside Barefoot Technology, it stands for, I believe, right? Yeah. It could be very interesting, but it also could be a trap, so more research. We have five seconds left for our stocks. Exactly, yeah. James, what do you got?

Vodafone, 7% dividend increase, $143 billion market cap. This is a huge English-based telecom company. I'm not generally bullish on telecoms, but this one has emerging market exposure. Over 40 African countries it's in, has 370 million customers, and it also owns 45% of Verizon Wireless. All right. Seth? Innofos, I-P-H-S. They make food additives, mostly phosphate-based, and then recently added a small company which makes things like selenium, chromium, zinc, other stuff associated with wellness. I don't really believe in all of that stuff, but I do believe that other people believe in it, so it's worth watching to see what happens there.

And they also make sodium tripolyphosphate, which is the stuff that enhances algae growth and slow-moving bodies of water when it runs out of your dishwasher or laundry. Banned in the U.S. Excellent, yeah. Good company, actually. Good company. That's a business that's dwindling, unfortunately. I would love to see your bedside reading, just what that looks like. It's a good company.

It's a good company. I like it a lot. Five seconds. What are you working on next week in Hidden Gems, Seth? Earnings. Again, European stocks. James, Ron. Happy 17th anniversary to my beautiful wife, and we're welcoming all our new MDP members

this coming week. Fair enough, Ron Gross, James Early, Seth Jason. Guys, thanks for being here. Thank you, Chris. Thanks to our guest this week, Neil Ferguson. You can check out our daily podcast, Market Foolery, and as always, for video, check out MotleyFoolTV.com. That's it for this edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.