Motley Fool Hidden Gems Investing - Motley Fool Money: 12.23.2011

Episode Date: December 23, 2011

On this week's show, we discuss the MF Global scandal, preview the year ahead, and share some stocks on our radar.   Plus, former Gambino family associate Louis Ferrante talks about his book, Mob Rules: What the Mafia Can Teach the Legitimate Businessman. Learn more about your ad choices. Visit megaphone.fm/adchoices

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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 we've got a special edition of Motley Fool Money this week. We're going to have an encore presentation of one of my favorite interviews of the year. That's former mobster-turned-best-selling author Louis Ferrante. That's a little later in the show.

But right now, we are going to start digging into the collapse of MF Global. This is a story you've probably seen in the headlines. We did an in-depth series of articles on fool.com. I talked about that on last week's show. Joining me on the line now, two of the guys who worked on that series of articles, long-time contributors for The Motley Fool, Matt Kopenheffer and Tim Byers. Guys, thanks for being here. Thanks, Chris. Matt, I'm going to start with you. In a nutshell, what happened with the collapse of MF Global?

Well, basically, Chris, what you had was this company, MF Global, it was in the brokerage business, largely the futures brokerage business. And it ran into some problems, basically poor compliance and controls internally. A trader lost a bunch of money for them. They ended up with this investor stepping in, Chris Flowers. He kind of, you know, from the outside started to try to get the company back into shape, eventually brought in a buddy of his, John Corzine, who a lot of people know as a former U.S. senator, former governor of New Jersey, and he concocted this strategy to turn this broker into a full-on investment bank. What that ended up looking like is taking on a lot of risk at the company, including

a $6.3 billion bet on European debt. And that eventually spooked the market, spooked all of their counterparties, and it led to sort of a bankruptcy spiral. Now, that was bad enough, but even worse was the fact that as they went into this bankruptcy spiral, they revealed the fact that $1.2 billion of customer money, and when I say customer money, think like bank accounts or securities accounts, like your E-Trade account or your Scottrade account, that money suddenly went missing. So now we've got bankruptcy court, trustees, lawyers, everybody stepping in, trying to sort out.

We've got the FBI in there trying to sort out what the heck is going on and where this money went. Tim Byers, I want to turn to you. Sure. I look at this story as kind of an interesting story, but ultimately one that doesn't affect me. I look at John Corzine. I see him testifying before Congress saying, I don't know where the money is. And I know that's caused some people pain. As an average investor, this story doesn't affect me.

So, like, you know, why should the average investor care about the fact that essentially these rich bankers blew it and lost money that ultimately didn't belong to them? Well, and I think the last part of what you said, Chris, is most important. They lost money that didn't belong to them. And so, you know, it's really tragic when customers get stuck figuring out how to get their money back when they did nothing to lose it. And so Matt said, you know, $1.2 billion in customer money is missing. So think about who that affects. A big chunk of that money goes to farmers, for example, that were using MF Global to hedge contracts and say, you know what, I think I'm going to sell this, you know, whatever number of bushels of wheat in June. So what's the price on that in June? And so they lock it in and they do all kinds of financial planning.

And they can essentially be assured that they're going to get that money and the contracts are going to get paid. But MF Global blows up. Those contracts go missing. They have to meet margin calls. A lot of things go bad. And there were farmers that we spoke to that were suffering very badly as a result of this. So this isn't just a rich guy's story. That's one thing.

The second thing is, you know, there's the health of the markets to consider. When this stuff keeps happening, when guys that have very little to lose blow things up and don't get punished, it makes the market a little bit more difficult to participate in. It makes it harder to regulate. And it just puts a pall on the industry. So I think this is something that we have to fix so that we don't keep having repeating cycles of one blow up after another, you know, we have 2008 and Lehman Brothers, and now we've got 2011 and MF Global. I don't want 2012 and name, you know, the next blow up here.

So how do we prevent that? What needs to happen at the macro level or at the government level to make sure that this type of thing doesn't happen again? Well, Chris, I think one of the ways you have to think about this is it's sort of two stories. and they're obviously connected, but one story is MF Global going bankrupt and the other story is $1.2 billion of customer money disappearing. For the bankruptcy, you know, in a sense, you don't really want to try to regulate away failure. I mean, if you think about the banking crisis and Lehman failing and all of the government bailouts and everything like that,

I think there's a valid argument for saying when a financial company does something stupid, they should fail, you know, bottom line. And so that MF Global went bankrupt, there's something very right in that, you know. And, you know, the system didn't melt down. We don't have the sky falling and all that kind of stuff. I think there are some accounting changes that could take place that would have made what MF Global was doing a little bit more transparent. On the other hand, though, this $1.2 billion of money missing, the caveat, of course, is that there's still a lot of facts that need to be uncovered as far as what exactly happened there.

I think one change that we heard a lot of people talk about, and we like the idea, is having an insurance fund for the futures industry. So for bank accounts, there's the FDIC. So if money goes missing for some reason from your bank account, the FDIC steps in and will make you whole. In the equities industry, there's SIPC, which in a similar way will step in and make customers whole. In the futures industry, there's no such backstop. So in the case of MF Global, all of these customers whose money is potentially missing are in real danger here because if the money turns out to truly be missing, it's gone.

They're out. And so we think that having some sort of insurance fund, whether it's government-sponsored or some sort of industry-organized thing, that would be good. We talked about sort of the macro level of how we prevent this. What about at the individual level? What are one or two things that individual investors can do to avoid being caught up in this type of situation? You know, Chris, I think there are two things. You can never do too much due diligence, first of all.

You know, always read the financial statements and commit to knowing the businesses you own. I mean, I know this is a foolish principle that we talk about over and over and over again, but one of the things you'll find in reading the series is both Alex and Matt did some digging on this, and there were some clues in the financial statements. Admittedly, MF Global is a very complex business, and some of the risks were moved off the balance sheet, so you wouldn't have seen everything, but there were some warning signs. And then second, I'd say when it comes to investing in financial institutions, one of the things that regulators really get right is record keeping.

You can check up on your broker. You can check up on, you know, banks. You can check up on an investment bank. And in the case of MF Global, some of the digging that we did found that MF Global and some of its predecessor companies are one of the biggest violators of, you know, exchange rules, things like record keeping, trading violations. There were a lot of warning signs in the disciplinary records, and those are public. In the case of MF Global, it's at the National Futures Association,

but the Comptroller of the Currency keeps banking records. The SEC keeps all kinds of disciplinary records. And there is a section of the SEC Enforcement website where you could just see a litany of actions that the SEC is taking. So if you want to know who is getting in trouble, it's real easy to find out. But I think as investors, we don't consciously look at, you know, start looking around for disciplinary records. We want to trust people. But maybe what MF Global teaches us is that, you know, okay, trust, but verify. Now that we've wrapped up MF Global, we will look ahead to get an investing preview of 2012.

Stay right here. You're listening to 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, and joining me on the line still, longtime Motley Fool contributors Matt Koppenheffer and Tim Byers. Next week on Motley Fool Money, we're going to be doing our 2012 preview.

It's the entire show, but you guys get the first shot. Tim, I will start with you. As you look ahead to 2012, what is the biggest investing question you have? Will Netflix recover? And I think they will. I don't believe that all of the talk of Reed Hastings being the worst CEO ever is worth anything. I do believe that we're too early in the process of figuring out content arrangements and streaming arrangements to write off Netflix. Obviously, Netflix is a longtime recommendation of Motley Fool Stock Advisor, our flagship service.

And certainly, you know, this year going, you know, up to July, it was having a great year. It really fell off a cliff. Is this sort of like, you know, someone was saying the other day in the office, this is a little bit like a pro athlete entering his third season. You know, he had a great, you know, great rookie season, had the sophomore slump. And this is, you know, this is the year where you find out what Netflix is really made of. Yeah, I'd agree with that. And I'd also say that the industry is figuring out how to use Netflix.

So it's like, you know, Netflix is the great receiver, tons of talent, you know, runs great routes. And now, you know, they found something that it can't do. And so, you know, the quarterback's trying to figure out, okay, how am I going to exploit, you know, this great weapon that I've got? And I think that's Hollywood. You know, this is too good a distribution engine. Hollywood is not going to write off Netflix. There is going to be an iTunes-like deal in which it's going to make sense to distribute through Netflix. It's going to be economical.

It's going to get to a lot of devices. It's going to get over the web, and it's going to pay. Remember that the industry, the recording industry, was not very happy with Steve Jobs in what they did and the deal they had to sign with iTunes. They didn't like 99 cents a track. They wanted $2.99, $3.99 a track, and he told them they were crazy. And I think Reed Hastings is persuasive enough, smart enough to get Hollywood to understand that a flat rate, an all-you-can-eat subscription buffet makes sense.

On the back end, they're going to figure out how Hollywood gets paid fairly, but without killing the model, I think he'll do it. Matt Kopenheffer, what's your big investing question for 2012? Well, I'm going to be a little bit more boring here, Chris, and I'm going to go with Europe and what ends up unfolding there. It's big, it's important, and it has the propensity to really shake the entire world. I mean, as it has been for anybody that's been watching the volatility of the market. As investors, we're always looking for stocks that have upside, opportunities that have upside. So, Tim Byers, what's one industry that you think has good upside potential in 2012?

Mobile computing. I think usage patterns are changing so that there's no such thing as a smartphone anymore. I wrote about this recently. It's not that I think smartphones are dead. I think the term smartphones is dead. I don't think of an iPhone as a smartphone. I think it's just a phone. You look at the number of phones that are out there that have advanced functions,

calling that a smartphone just doesn't make sense anymore. The smartphones are the standard for phones now. Similarly, when you look at tablets, I'm seeing a lot of companies providing tablet apps, a lot of work in a technology standard called HTML5, so that a web page can be as interactive as software that you would load onto a device. And that has the net effect of, you know, say your iPad. You can go to what Salesforce.com is doing in 2012. They're going to have a site called touch.salesforce.com.

And so you're going to be able to get access to everything you do in Salesforce, all of the advanced functions from any device, whether it's on your smartphone or your tablet, your computer, what have you, anything that's touch-sensitive, and everything will be consistent. I think that changes usage patterns. You know, there's some statistics that say TV watching is going up in part because people aren't spending more time on the couch. They're spending more time watching TV on tablets. I think that's remarkable. Are there any surprising winners in this market? Are there surprising winners? I don't know that they're surprising, but I think, you know,

if an investor wants to make a bet that isn't obvious, you know, for the purpose of trying to get a little more upside, look at the components. Look at a company like Qualcomm, Q-C-O-M, that is making chips, very comprehensive chips for enabling a lot of these features. Another one might be Cypress Semiconductor, which is the ticker CY, which does multi-touch functions, but they put it all on a chip, a little controller, so that you can take your two fingers and mimic a lot of the functions you would otherwise need a keyboard for. So those are stocks that are a little hidden, but are very interesting and really play into this trend.

Matt, what about you? What's one industry you're watching in 2012? Well, I'm a value guy, so I tend to look at things that other people are hating on. And so I'm looking at banking right now. Oh, the poor banks. Nobody loves them. And when I think banking, I'm thinking primarily for people to be looking at the regional banks, the really boring regional banks, I think like M&T Bank, BB&T, PNC. I mean, these are banks where the business will put you to sleep. it's like watching paint dry. But in terms of the ability for these guys to kind of slowly

build their way back from the disasters of 2008, 2009, I think there's a lot of good potential there. All right, we've just got a little bit of time left. Give me a few stocks that are on your watch list for 2012, regardless of industry. Tim Byers, I'll start with you. I'll give you three. Apple, the numbers on the iPhone, if it hits the upside target that analysts are looking for, 190 million iPhones sold in 2012. That will equate to more revenue just on the iPhone than Apple generated in fiscal 2011. It's remarkable. NetSuite, which is a ticker N, which is a kind of Salesforce.com light, but it doesn't touch customers. It touches the back end of boring stuff, managing accounting. A lot of companies like it. And venture capitalists are

increasingly telling companies not to spend on buying capital equipment like servers, just use the cloud. That really plays into NetSuite's market. And I'll go one social media stock, LinkedIn. I think if you look at the pricing that LinkedIn is able to command, it's remarkable. They have had, what's interesting is how Netflix had the sort of a revolt when they raised prices. LinkedIn charges hundreds of dollars annually for subscriptions to some of its most valuable data, and people are paying it, and the growth is accelerating. So there hasn't been this chilling Netflix effect on higher prices at LinkedIn. I think that's an incredibly bullish sign. The valuation is very high. I recognize that. But again, when usage patterns change,

I think that's a very bullish indicator, and that seems to be the case with LinkedIn. Matt, what do you got for stocks on your watch list? Well, I've got three as well. I'll go Berkshire, which is just a tremendous collection of businesses, and the price is right right now. ArcelorMittal, which is one of the premier steelmakers worldwide, really well-run company, been whipsawed by Europe, but I think has a good future ahead of it.

And let's go with Bank of America. This is just a flyer here. It is so, so beaten down. It's basically something terrible is going to happen to this bank or investors are going to make a lot of money. It's kind of a lottery ticket, that one. All right. Matt Koppenheffer, Tim Byers. Guys, thanks so much for being here. Thanks, Chris. Thanks, Chris.

Coming up, an encore presentation of our interview with Louis Ferrante. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Forget Harvard Business School. My guest this week says, you want to learn about business? Study the Mafia. Luis Ferrante is a former insider with the Gambino family, and after spending eight and a half years in prison,

he is now an author and motivational speaker. His latest book is Mob Rules, What the Mafia Can Teach the Legitimate Businessman. And he joins me now. Luis, thanks so much for being here. Thanks for having me, Chris. I'm happy to be on your show. I want to talk about the book in a minute, But first, let's start with your own experience.

What was your role in the Gambino family, and what was the primary business of the Gambino family? Well, the primary business, to answer the latter question first, the primary business is profit, making money. So that's their role in the world, period. My role in the family was I kind of had, I guess you could say I shared three different roles at one time. I was an employee for the company, which was a guy who makes money, who earns, on commission, strictly commission, which you make, you get a piece of what you make, a piece gets kicked up to the boss. I was also a middle manager, taking orders from top guys in the family and handing them down to my crew, and I was the CEO of my own crew.

I had over a dozen guys that answered directly to me. We were like a small company within the family. We did our own thing, and we kind of like the answer to the franchise. Wow, it's amazing. I guess I never thought of the Mafia as having middle managers. I just think of that as sort of like office parks out somewhere have middle managers. Yeah, the middle managers are usually like capos, usually captains of crews. I guess that's the closest analogy you could use for them.

But, yeah, it's built just like a corporation. Your underboss is a vice president, your boss is a CEO, and you have outside consultants. They're called consuliers. Usually there's one strong consulier in the family, but there are also a lot of guys who consult, who the boss may consult with, who the underboss may consult with. It's built just like a corporation. And in terms of your own operations for your own little business, you were, among other things, hijacking trucks, weren't you?

I was. I was the guy the family came to if they had a tip on a score. That was my thing. I had, like I said, an over a dozen guys that answered directly to me. They knew their part when we had a score to take down, a heist, a truck hijacking, a vault, whatever it might be. If you think about it, just imagine how funny the mob would look if somebody owed them a million dollars and came to them and said, hey, listen, I got a great tip on this vault in this warehouse. And the guy, you know, the mobster said, gee, I really don't know who I could call to do that.

You know, we'd look so foolish. So they would call me. They'd bring me in, say, Lou, this is what we got going on. Can you take care of this? And it was done. Whatever I had to do, I did. I was like a prime employee. I did my job exactly the way it was supposed to be done, and I delivered the goods.

So you end up eventually going to prison. And what changed for you in prison? How does a guy go from being an elite performer for a mob family to becoming an author of multiple books? Well, first I have to say, by the grace of God, my eyes opened up in a prison cell and I saw that, you know, what I was doing, victimizing people, is, you know, there is a violent part of the mob, too, and there are victims. Although it is run like a company, a corporation, aside from the violence, you could say that, But there is still violence involved. So that was the moral question.

But aside from that, with all the snitches turning bad and sending us to jail, from a business perspective, there was little room for advancement. You know, where was I going with this? I'm already facing the rest of my life in prison at the time. I ended up pleading guilty to 13 years. I reversed one of my cases in jail and got out in eight and a half years. I did study law and did that myself. But I said, hey, am I going to come out of jail and hobnob with the same gangsters that I always hobnobbed with,

who one of them is going to turn one day and then send me away again? And maybe next time they'll throw away the key, which is what they were trying to do this time. So I made the decision to change like anybody can in any field. It's like somebody who's maybe unhappy with a job they might be doing in the real world, and they say, you know, I feel like there's something better for me. and they may leave their company or their corporation and, you know, head out in a new direction, maybe even try it on their own, start a company of their own. That's basically what I did.

So when you're, you know, on the inside, you make this decision to sort of turn your life around, what leads you to the world of writing? I was locked in a cell with absolutely, you know, nothing at my disposal, nothing to do but a pen and paper and books. So I asked a friend of mine, he was actually the caretaker of John Gotti's South Queen Social Club. John Gotti was the big reigning boss at the time. And he was the caretaker of the club, and he had all these tattoos on his body, and some of the tattoos were biblical verses.

So I knew that he at least read the Bible to at least have, you know, had the knowledge to put these biblical verses on him. So I called him up and asked him to send me books in prison. And he sent me some interesting books. He sent me Mein Kampf by Adolf Hitler, an autobiography, Caesar's autobiography, and a biography about Napoleon. So I called him up and I said, I had no idea what books to ask him for. I said, where did you get these ideas?

He said, I went to the bookstore and I told the broad at the store a little about you, and she gave me these books. I said, what did you tell her? He said, I told her you were short and bossy. With that, she sent you Three Dictators. But that was the beginning of my reading, my love of reading. It started with those three books. I understood almost nothing of what I read.

When I put those books down, I struggled through them. But as I kept going, as I kept reading more and more books, I started to understand words better. I would study more vocabulary words. I would look words up, write them on a sheet of paper. And I had nothing but 20 hours a day in a cell to pursue whatever I wanted to do. So luckily I went to jail, and in a twisted, fateful way, going to jail was the conduit for me getting an education

and becoming a writer. How I taught myself how to write was reading 19th century novels. How does Victor Hugo or Leo Tolstoy begin and end a plot, introduce a character, etc. I would take notes as I was reading, and that's how I taught myself how to write. You're listening to Motley Fool Money. My guest this week is Louis Ferrante, author of the new book Mob Rules, What the Mafia Can Teach the Legitimate Businessman. And before we get to a few of the rules, a couple of questions about the mob itself. In what industries is the mafia most prevalent?

Today, Chris, I would say that they're losing their stronghold on a lot of the major industries that they once did hold. When I was coming up in the mob, a lot of the old-timers had control of the piers and the seaports. They had control of the garment center. They had control of the waste management industry. As far as New York is concerned, Mayor Rudolph Giuliani, from a legal perspective, did a fine job in cleaning a lot of that stuff up. He really, really, you know, banged away at these profitable areas that the mob had controlled for so long and took them away from the mafia. So today, I mean, today they're probably grasping on to a few unions now. You know, I've been out of that life since I came home from prison.

I went straight. I'm a writer now. But from what I understand, they have a couple of strongholds as far as unions are concerned. The construction industry is very, very big for them. I don't believe a skyscraper rises in Manhattan without the mafia's earth-moving machinery, recycling the debris, companies that do just about everything you could think of from top to bottom, pouring foundations, et cetera. So, you know, they're still there, but they have lost a lot of their power and a lot of their bigger industries.

Now, at The Motley Fool, when we're looking at businesses and industries, one of the questions we like to ask as investors is, what's the opportunity here for this company? So, you know, you say they're losing their stronghold. What is the big opportunity for the mafia these days? Oh, gosh. I would say that it's in a degenerate form of what it was at one point. So the opportunities that are out there probably have what we would have considered back then less ethical, like drug dealing and stuff like that, maybe. You know, these are the opportunities I think that'll last. If I was considering the mafia as a stock, I would see some signs to sell now. It's going to be around for a long time, but it's competing with much bigger,

You know, it's like almost like books as opposed to e-books. You know, e-books is doing a lot better lately than books. So, I mean, that's the best way I could explain it. You're listening to Motley Fool Money. Our guest this week, Louis Ferrante, author of the new book, Mob Rules, What the Mafia Can Teach the Legitimate Businessman. Let's talk about the book. I want to spot you up with some of the business lessons in the book and have you elaborate on them. Let's start with one, which is get your own coffee.

that's great i used an example in that in that chapter uh that's a real prime example i mean there were a number of examples that popped in my head it's uh the full chapter title is respecting the chain of command without being a sucker and that's uh go get your own coffee uh here in the mob there's a chain of command and obviously you're taught to respect your elders and you must follow that chain of command, and the penalty for not doing so is death. I mean, you could definitely lose your life if you're told an order and you don't follow that order. But you can't spend your day making coffee for the boss.

You're never going to go anywhere. And in the corporate world, you can't spend your day ordering Frappuccinos at Starbucks for the boss. So I used an example in which a high-ranking Gambino family boss was in jail with me, and he asked me to iron an outfit for him. And I told him, hey, listen, buddy, he really didn't know me. He knew, he met me really on the street. There's a lot of Gambino family members. You don't know every single one of them when you're on the street. It's a large family. I was well acquainted with the people in Brooklyn and Queens. He was from New Jersey.

And he said, hey, can you iron my pants for me? And I said, hey, I don't do my own pants. I pay somebody for them. So he asked me again. And because of his high rank, and he was twice my age, and he had a tremendous amount of respect. I guess he thought because I was a Gambino guy also, he could ask me to do that. Well, I asked the guy who were in my pants to crumple them up into a ball and press them and make them look even worse than they were, and I gave them back to him. And I said, this was the best I could do. And he got the message, and I got a laugh out of it, too. And I said, listen, no offense, I don't lie in pants. I'm not here facing the rest of my life in prison because I wanted to work

in a laundromat i could have gotten that job easily never had worries about the fbi so he laughed and we got along after that and in the end to make sure he was my friend i used my connections at the prison laundry to get him a brand new uniform gave it to him shook his hand smiled and he gave me tremendous respect after that and he would never ask me to do a menial task again so there are ways in the corporate world where if a boss is abusing you and sending you for coffee every day at Starbucks. You could let the boss, you know, get the message in a funny way. Coming up, more mob rules with Louis Ferrante. Stay right here. This is Motley Fool Money. You're listening to Motley Fool Money. Our guest this week, Louis Ferrante, author of the book

Mob Rules, What the Mafia Can Teach the Legitimate Businessman. Another rule from the book, Don't Build Yankee Stadium, Just Supply the Concrete. Great chapter. This chapter is when the mob operates, and you were asking earlier about the different industries that they once controlled. Maybe years ago the mob was able to obtain the huge contract to build Yankee Stadium or somehow get attached to it. Now, being that the major things are taken away from them,

they still have that predatory instinct for business, And they may look at Yankee Stadium as, gee, maybe we can't get the major contract to build a stadium, but there are 100,000 ancillary needs that the stadium needs that we could provide, whether it be concrete, whether it be plastic seats, whether it be flagpoles. They could almost look at the stadium and its money-making potential, you know, and sit and ponder it. I was with mobsters who'd sit in a coffee shop if they were faced with this and say, okay, they're building a stadium smack in the middle of the Bronx. This is our territory. How can we move in? Well, we could start by opening up sausage and pepper stands when the workers get there

and hot dog stands, make sure all the workers are supplied with our food. Then we could definitely try to get some of the concrete contracts. Then we could get, oh, there's flag poles. I know a guy, Bobby Flagpole, he sells flagpoles. I'll get the flagpoles from Bobby, and we'll see if we can get them cheap enough that we can get the contract for flagpoles. The sign, oh, I know Johnny Signs. Johnny Signs makes signs over in Brooklyn.

Maybe we could make the Y, the A, the N, the K, the double E's and the S for the stadium sign. You know, they'll try to really, really attack that stadium from every different direction. And there might be areas of the profitable areas that other people would turn their nose up at, and the mob will run into. You know, a mobster might say, I could supply the urinals. Let me get the bathroom contract. All I need is the urinals, and I'll have a $4 million contract just putting the urinals in. You know, so this is what the mob does,

and they really, really then work hard at getting anything that could be put to use in that stadium by the main general contractor, and they work at getting those contracts. They use their networking capabilities to get those contracts, too. And networking is huge in the mob. Every mobster has a huge list of legit and illegit friends who he can turn to to try to get something accomplished. Another lesson from the book, which is near and dear to my heart, certainly my favorite film of all time, and the lesson is,

leave the gun, take the cannoli, and beware of hubris? In this particular chapter, I started out with leave the gun, take the cannolis. When I left the mob, I left the gun behind, and that's symbolic for the violence and the cutthroat ways, et cetera. And I took the cannolis, the sweet things I'd learned along the way, the different experiences that I'd lived through, the integrity that we did share when we were doing business correctly with each other. There were a number of mobs who did business the right way.

not greedy guys, we did not resort to violence all the time, and we made a lot of money doing things the right way. So that was the cannoli, the sweet things I learned along the way. And beware of hubris. The second part of that chapter is a very, very stern warning to people who make it to the top and get a little dizzy at the heights. And the examples I used was a national leader, Adolf Hitler, who brought Germany to its ruin.

And I used a mafia leader, John Gotti, who pretty much, and he was a good boss, but he had a lot of character flaws, and he brought the mob to its ruin by being so flashy and causing so much attention, and then his Gambino family was dismantled by informants. I suffered as a direct result of that era. And the last leader I used was Ken Lay, who participated in bringing Enron to its ruin. We're going to wrap up with a round of Buy, Sell, or Hold. And let's start with, this faces more and more competition, Buy, Sell, or Hold, the future of Atlantic City.

Hold, briefly. Just briefly? Hold for another year or two and see where it goes. People still like a place to go. People still like the aura of a casino. I think that e-books will not overcome books completely, although it looked as if they would for about six months or a year. It looked like no one was going to want to, you know, buy a book again.

But there are still a lot of people who like to hold books in their hands, and I use that as an example for the same thing with Atlantic City. I think people are still going to want to go there, get that comp and that prime rib dinner that they can't get in their living room, you know, the whole, that nice Romeo and Juliet cigar that the waitress is going to bring over with the bunny outfit. You're not going to get that in your living room. But then again, you're going to lose a lot of people. you know, who just rather sit there and do their thing.

So I would hold it and see where it goes. I wouldn't sell so quickly. It's a new TV show on VH1 following some women affected by the mafia. Buy, sell, or hold mob wives. I'm going to go by the many fan mails I've gotten from around the country who've read my first book telling me that it stinks. I'll sell. Yeah, I haven't watched it myself.

I just have tremendous, my fan mails have been inundated with people say, and it's the worst show they've ever seen, so I'd say sell. Fair enough. And finally, The Hurricane is an Oscar-nominated film about a tough guy who becomes a writer in prison. Buy, sell, or hold a movie based on the life of Louis Ferrante? Buy. Put all your money on it. And, I mean, you get to cast it. Who are you picking to play you? I was asked this in the past before. I don't know. I mean, there might be some... It was 20 years ago when I was running around on the streets before I went to prison, so it would be a young actor, maybe an up-and-comer that I haven't even seen yet. I don't even like to think about it, I'll tell you the truth,

until I get that phone call. But this book has already been approached by a major actor in Hollywood to purchase Mob Rules, so who knows what'll happen. But I would buy. There has been some interest, and I've been kind of just lax with where it's going, but I may get a little more aggressive with that. The book is Mob Rules, What the Mafia Can Teach the Legitimate Businessman. It's just out this week. It is available everywhere. Pick up a copy. It is great stuff. Luis Ferrante, thanks so much for being here. Thank you so much, Chris. I had a great time with you. That's all for this week. On behalf of everyone here at The Motley Fool, we hope you have a safe and happy holiday season. Coming up next week, it is our 2012

investing preview. We will talk about the big questions facing investors, which corporate battles we're going to be watching, and the stocks that are on our radar heading into 2012. No guests next week. We've got two full panels of Motley Fool analysts and advisors. A lot of stock ideas, so you don't want to miss it. That's our 2012 preview coming next week. That's all 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.