Motley Fool Hidden Gems Investing - Motley Fool Money: 12.31.2010

Episode Date: December 31, 2010

What's the big question for investors in 2011?  Will Apple eclipse Exxon Mobil in market cap? Will Facebook go public?  In this installment of Motley Fool Money, we offer up some New Years predictions and revisit conversations with Ford CEO Alan Mulally and Columbia University Professor Dickson Despommier, author of The Vertical Farm. Learn more about your ad choices. Visit megaphone.fm/adchoices

Don't you wish you could just hit skip on the worst parts of your life? You know, the same way you can skip an ad? I get it. I'm Siaya and I live in Ice Cove. I've made some questionable decisions that didn't end up the way I planned. And today I'm still figuring it out. Somehow things usually get worse before they get better. Apparently, that's how I roll.

So bundle up and come along for the bumpy ride. Stream a new episode of North of North Tuesdays on CBC Gem. 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 i'm joined by motley fool senior analyst seth jason James Early and Tim Hanson. Guys, happy new year. Happy new year, Chris. On today's show, we'll gaze into our crystal ball and give you some predictions for 2011.

We'll hear from Ford CEO Alan Mulally. We'll get a glimpse of the future of farming. Plus, as always, we'll tell you about the stocks that are on our radar for 2011. But guys, investing is all about the future. We'll get to some specific companies in a moment. But first, Tim Hanson, let me start with you. When you think about 2011, when you're looking out over the next 12 months. What is a big question that you have in your mind? And it can be globally, it can be about an industry, a company. What's the big question on your mind for investing? Well, I'm intrigued in 2011 to see if we actually start to see any evidence of decoupling. And for people who don't know what decoupling is, it was this theory that's been

advanced that the United States economy can be slowed down for a long period of time, but other parts of the world can grow in spite of that. We haven't quite seen that happen quite as aggressively as some economists have predicted over the past two years with a slowdown in the United States having dragged on Latin America, Europe, and Asia. But people are again predicting a fairly tepid year for the United States and Europe. And I've seen some very aggressive growth expectations for Asia and Latin America. And it'll be interesting to see how those things materialize and if we do see some decoupling this year. Why would we let facts get in the way of our theories? It's not a good theory unless it spits in the face of facts, in fact. Seth Jason,

And what about you? Oh, boy, the same thing everyone in the U.S. is looking for probably is, are consumers going to spend, continue to spend, maybe spend a little more? And if so, where the heck do they get the money? It's the old, does our economy start rolling or not? A lot of whether or not an economy grows is just entirely, it's in our collective mentalities. Do we think good things? Are we outspending money?

Are we out starting businesses, investing, et cetera? So you're saying we could all just get together and just decide to be happy? If they held hands and sang a little more Kumbaya, everything would be fine. So I'm interested to see whether or not that will happen, starting right now. James Early, what about you? Well, you know, Chris, my own personal questions tend to revolve around hair loss. But otherwise, I'm asking myself, should I start those Mandarin lessons now or later? You know, it seems like only a matter of time that China is going to dominate more so than now.

But I do see the next year as an inflection point for that country. I think it's going to go one way or another, a big crash or continued dominance. Tim Hanson, what do you think? I was going to say, James just stole my New Year's resolution, which was to re-continue my Mandarin lessons, which I have slacked off on over the past six months because, A, the baby, which I've mentioned a few times now on the show, but, B, we have an analyst now in-house who's fluent in Chinese and makes my life that much easier. But I think, you know, for a lot of reasons, I should renew my Mandarin. So you're just leaning on Sean's son?

You know, I've gotten lazy when it comes to interpreting Chinese documents. Yeah. Before we completely let go of 2010, let's just go around the table real quick. What's one thing you learned as an investor in 2010 that you want to put to use in 2011 and the years beyond? And Tim, I'll just stick with you. I don't know how well I'll be able to put this to use next year, but I learned the lesson this year that it's hard to be sort of a bottoms-up fundamentals guy like we all try to be in our investing life. I mean, with the latest nail in the coffin being these massive insider trading probes and market manipulation schemes that have been going on, you know, it's hard to be the small

guy. Well, and we've certainly seen, you know, as you said, at The Motley Fool, we really espouse the whole bottom up, you know, look at the fundamentals. But in 2010, maybe more so than ever, it just seemed like the federal government was so deep entwined in Wall Street. There was, I'm not, this is an excuse for my own poor performance. It wasn't a terrible year, But still, it's a tricky time to be a small, individual, fundamentals-focused investor. I think that probably has to change over time. But it was a disappointing year in that regard. James?

Of course, I'm still jazzed that I can find investing information over the Internet. I mean, I don't have to go to the library. It's huge. Actually, I'll get philosophical for a second. Buddha said that all is illusion, all is vanity and emptiness. Unless you're watching reality TV. Exactly. My lesson is that nothing lasts forever.

There's no business advantage. There's no competitive edge that is permanent. And I think as we move more into the future, that's going to be true. In other words, blue-chip companies won't always be blue-chips, you know, these solid, steady companies. Companies like J&J, for instance, with this massive round of recalls, you just can't trust them like you used to. Seth? Predicting stuff is really hard. There are so many companies that are soaring right now.

When I look at them, they just look so vulnerable to small shifts in their business model. And then there are other companies that I thought over the last year or maybe two that had a great chance of actually not existing, going completely bankrupt. And none of that happened either. And one reason was a surprising amount of consumer spending, as little as it was. It was more than nothing. And the other was government stimulus. And so I would say that the lesson there is really just don't be too sure of yourself. Don't be too sure of yourself.

And the best kind of bets, I think, to make in the stock market are the ones that everybody thinks are completely idiotic, because those are the ones that are most likely to be mispriced, and that's where you can do the best. Let me go back to something that James just touched on, which is this whole notion of competitive advantage. We talk at The Motley Fool about companies that have a moat around them, that they have some sort of sustainable advantage. Tim, when you look at companies that have advantages, is that something? I mean, if we're to believe, James, that no company has a permanent competitive advantage. There's always a siege engine for that moat. So, I mean, how often should you be checking a company's competitive advantage?

Well, you know, competitive advantage is one of those things that's great to say you have it, but it's really hard to prove it or to measure it. You know, there are a variety of metrics you can look at, things like profit margins and return on invested capital, where when they start declining, it means the company is trying to compensate for a declining competitive advantage, either by cutting prices or things of that nature. So I say we probably look, glance every quarter, but really check in maybe once a year. But it's tricky because you've got a lot of data to look at. You have to look at it relative to other competitors.

You have to look at it relative to the past, relative to the macroeconomic situation. So it's tough, but I agree with Jane, especially in this era of rapidly changing technology, no moat is unassailable these days. And sometimes you don't know that it's gone until it's way too late. You're listening to Motley Fool Money. Chris Hill here in the studio with James Early, Seth Jason, and Tim Hanson. All right, guys, time to look into the crystal ball. Tim, I'll start with you.

Give me a bold prediction for 2011. Go out on a limb here. So my bold prediction when I was thinking about this was $100 oil, but I've now seen people predicting that. So I'll go out on my limb and say $120 oil. This one goes to 11. What is oil now? Oil is in the mid-80s right now.

I thought you were going to say $101 oil. Come on down. No, so I'm going to say $120 oil, I think. $120 a barrel. A barrel. You know, there is a fascinating, of all the things WikiLeaks has exposed recently, I think one of the most fascinating, and I think this is one thing everybody already knew this, and maybe that's what's been so fascinating about WikiLeaks is just exposing things people already knew,

but now it's in writing. But Venezuela has just been rampantly lying about how much oil they're producing. What? Who would have thunk it? Come on. Venezuela and Hugo Chavez? And underinvesting in their oil infrastructure. So they're probably going to be producing even less oil for the next few years.

So declining production in some key markets, rapidly rising demand, and as far as I can see, no real consensus on what to do in terms of alternative energy. I think it's going to drive oil prices a lot higher next year. James Early, bold prediction. I would say besides Motley Fool money tripling its subscriber base, I will say there is a 20% chance of a big, big bubble bursting in China. What kind of bubble? Maybe real estate, stock market, something like that.

I mean, the government will try all it can to stop that or maybe obfuscate it if it thinks that would help. But I think, again, to WikiLeaks, there's apparently some fudging going on with some numbers, not that anyone would be surprised by that. But, yeah, I think we could see some sort of a bursting. Seth Jason? I have trouble predicting stuff I don't think will really come true. Google will produce a few new products that everyone will talk about, and then they will be complete flops.

And we're seeing that kind of already with Google TV. Maybe I'll stick with that. It already seems like kind of a flop, but I'll go ahead and predict complete flop. All right. And people won't be talking about it anymore because, well, it's not nice to talk about things Google fails at. Oh, yeah. We never like to do that.

Plus they'll hunt you down. Yeah. So, I mean, there's that. Yeah, they know. Oh, Google Maps, Google Earth. They know where we are right now. They can smear you based on your browsing history. Oh, yeah, your wife looks on, all of a sudden you're getting ads for this.

Whatever you are, huh? That's Google. Quickly, we did bold predictions. Give me a not-so-bold prediction. Give me a safe bet for 2011. Tim Hansen, start with you. I will say that neither the United States nor Europe will make any progress in 2011 in reducing their debt or deficit loads.

None whatsoever? None at all. Come on, we've got a new Congress. None? All right, James Early, a safe bet for 2011. I was going to make a Tim Geithner joke, but I'm going to say maybe we have continued unresolved information or matters on inflation, deflation. We'll still be having these discussions in a year. Really?

I was kind of hoping we would be done with the inflation-deflation conversation in a year. Me too, me too. Seth? Euro not doing so great. Euro not good? Euro not good. Still here or just down? I think still here, but I think that every time there is a quote-unquote shock, people start buying U.S. Treasuries, which is funny for a couple of reasons.

One, because to listen to people in this country talk about the dollar or U.S. Treasuries, they're the worst thing you could possibly have. There's a shrill cry that we should all be buying ammo and beans and gold. But the world is worried. Nothing's going to get me wrong with that. Yeah, the world is worried. They buy things, I guess, like oil and U.S.-denominated treasuries, and they worry about the euro. And finally, before we go to break, give me one stock that's on your radar for 2011. It could be on your radar for good reasons or bad.

Tim? I'm going to go with not one stock but a group of stocks, and James alluded to this, but I think it's going to be a real tipping point for China and for small Chinese companies in particular. I've said in the past there's a massive valuation discrepancy today between Chinese companies that recently came public and small Chinese companies that have been public for a long time, and people have a hard time trusting their numbers and their corporate governance. since some of the companies are willing to just sort of write it off and go into the annals of stock market history as failures.

Others are actively trying to improve and get better. But this is going to be a real make-or-break year for all those companies, that entire sector. If you think they're going to do some good this year, it's a good time to just buy a group of them and check back in 12 months. If you think they're going to go away, then steer clear. But something's going to change by 2012. That's what I think. James? Like Tim, I also have a group of stocks.

If you want to play it safe, I would say a company like Unisource. This is a Phoenix-based electric utility. It's hard to go too, too wrong with electric utilities. This one's a little bit more growth-oriented. But if you look at Clorox, Kellogg's, Procter & Gamble, these are consumer products companies that have significantly underperformed over the past year or so. And I'm looking for mean reversion here. In other words, I think they're going to start to do better over the next year. Seth?

Group of stocks. I cover mostly small caps for hidden gems. And I look at these sectors, these small cap sectors, and one of the ones that has not done as well for a while is small cap health care stocks. There are good reasons for that, which is that the moats can be easily breached sometimes in small cap health care stocks. But we have a few that I like, and I think a basket of them would work out well for investors. One of them would be BioReference Laboratories, BRLI, and that is a testing company. Another would be Almost Family, AFAM, which is a home health care provider. And then finally, we have a small clinical research organization called, or a CRO called

Kendall International, which is also one that the market is pricing as if it's not going to be around, and I think that's false. Coming up, a buy-seller-hold free-for-all. Stay tuned. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. For investing commentary and analysis 24-7, go to The Motley Fool's website, fool.com. Chris Hill here in the studio with Seth Jason, James Early, and Tim Hanson.

All right, guys, we do this every week with our guests, and now we're going to put you guys through the ringer. Of course, the ringer I refer to is buy, sell, or hold. Tim Hanson, anyone can jump in here, but Tim, I'll pick on you first. Apple is introducing the iPad 2 in 2011. Estimates are that Apple will sell 8.5 million iPads in 2010. So buy, sell, or hold the likelihood that Apple sells 20 million iPads in 2011. That's a big number.

It's a big number, but I think we've gotten burned in the past underestimating Apple and the number of people in this country willing to light money on fire. So in that context, 20 million is not that big, so I will say hold. But like Apple stock, it's probably not an attractively priced option. You've got to go buy. I mean, the iPad is amazing because there's nothing really productive to do it. We have colleagues who have them, and what do they do? They're always on Twitter.

They just put them on their counter and look at them. It's this huge worthless thing, and everyone's got to have one anyway. All right, James Early. Buy, sell, or hold the likelihood that Yahoo's CEO, Carol Bartz, will still be Yahoo's CEO one year from now? You know, I have to say sell. I can't even define Yahoo's business succinctly right now if you ask me to, and that's a bad sign.

But I do believe, Chris, you would always have your shoulder to cry on, if I'm not mistaken. Oh, you know, I think we all know. I'm a big fan of hers, if only for the profanity that she uses on conference calls. Yeah, please, God, when they fire her, someone be there with a mic. I will come with a contrarian opinion here and say bye. And the reason I'm going to say that is because, A, I think nobody suspects that this is going to happen. And, B, in this short expectations world we live in,

CEO success is often measured by stock price more than a clear business strategy or money-making ideas or anything like that. And over the next year, I've said this in the past on this show, So Yahoo has a lot of assets that Carol Bartz can't touch and screw up that they can monetize, and they are Yahoo Japan. What a ringing endorsement. You're so optimistic. Well, we're betting on whether she's going to be around in a year.

My expectation is that she can move stones over the next year to get that stock price up. The liquor cabinet is locked. Her job. And whether that's a sellout of their stake in Alibaba Group or a spinoff of Yahoo Japan farther, she's got some levers to pull for job security. And so I'll take the cynical buy there.

All right, Seth Jason, this guy's been CEO of his company for a full 10 years. Buy, sell, or hold the likelihood that Microsoft CEO Steve Ballmer steps down in 2011. Wow. 10 years is a long time. No, you have to sell that. I think Ballmer likes running Microsoft. He doesn't really need to do it for the money anymore. He likes to be kind of the outspoken guy who surprises everyone.

He even likes to be the guy that people make fun of. I mean, he wouldn't say the stuff he says if he doesn't enjoy seeing himself getting ripped on to a degree. So I think he's still there. Like James. Tim Hanson, buy, sell, or hold a Facebook IPO in the next 12 months? I will. Ooh, that's a good question. I'll say buy, and I'm going to say that because, as Seth has pointed out a number of times,

Mark Zuckerberg, the billionaire, actually doesn't have any money. He just has fake stock or real stock in a not-listed-yet company. And, you know, the IPO environment has been hot recently. and some of the numbers that could be thrown out there that he could raise money, it'd be stupid not to. Yeah, I mean, there are tons of rubes who will buy this stock. Just as many people who are going to buy iPad 2s, if not more. All right, finally, James, you're the big Apple guy in the room.

Buy, sell, or hold Apple overtaking ExxonMobil as the most valuable company in the world by market cap. How close are they now? I mean, that's... Oh, they're, you know, they're maybe like $30 billion off, $40, $50, I don't know. I'm going to say sell, but maybe that's a five-year or ten-year possibility. So you think eventually they do? I wouldn't be surprised, yeah. I think smartphones are more of a commodity nowadays than oil is in a lot of ways.

And if I'm going to stand behind my $120 oil prediction, there's no way Apple would get Exxon this year. Seth? You have to sell that. And then eventually, I mean, Apple is doing some great things, but Apple is one of those companies that has one of those moats that everyone, and they say, oh, the competitive people scuttling. As soon as Steve Jobs is dead, it's done. All right. In the 30 seconds we have left, New Year's resolutions.

Tim? I mentioned it earlier. It's to renew my Mandarin Chinese lessons for a variety of reasons. I think the country's got an optimistic business future ahead of it. And having been there a few times, I'd love to be able to take my family over there and show them around some of the insider stuff that I've gotten to see as a result of being with Mandarin speakers. James Earl Mills?

Kind of like that. They're great. Tim, actually, I'm learning Tagalog, the Filipino language, So if you know any good resources, email us at radio at fool.com. Seth? Wow, all this learning. I just want around a half dozen marathons or so without falling apart. You know, learning Mandarin sounds a lot less painful.

You'd be surprised. Some of the sounds you have to make are not comfortable. Steve? New Year's resolution? I need to get in better shape. I think we can all agree on that. Steve, why don't you come out to some of these marathons with me? I don't need to get in shape that badly.

Come on, Miami next month, baby. All right. You're taking your towels to South Beach? I was actually looking at hotels in South Beach. If you know anything about hotels in South Beach, again, email us, radio at fool.com. All right. Seth Jason, James Early, Tim Hanson. Guys, thanks for being here.

Thank you, Chris. Happy New Year, Chris. Coming up, Ford is racking up big profits and big returns for shareholders. And it was the only major U.S. automaker not to take bailout money. The man credited with Ford's turnaround is CEO Alan Mulally. We had an opportunity to talk with him recently about the future of Ford. Stay tuned. This is Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill. Last year, Time Magazine named Alan Mulally as one of the most influential people in the world. For the last four years, he's been the president and CEO of Ford Motor Company, and he joins me now. Alan, thanks for being here. Well, glad to be with you, Chris. Ford just posted record third-quarter earnings, and you've said the key drivers going into 2011 will be increasing quality, an improving competitive position, and a gradually improving economy. Now, you have control over the first two, but not the third one.

So my question is, how does Ford string together a few more quarters like this last one if the economy basically stays where it is? Well, Chris, it's a really important part of our plan because, as you well know, four years ago, we made some pretty big strategic decisions which would allow us to profitably grow forward, not only through the worst recession that we've all seen, but clearly to improve that performance as the economy started to strengthen. And so, you know, everybody had a chance to see with our third quarter results that even at this, you know, lowest industry that we've had in nearly 40 years that we are able to operate profitably based on the strength of the fabulous new Ford product line and, as you pointed out, our ever-increasing quality and productivity. So right now, our best estimate is that the U.S. economy will expand maybe a little bit less than 3% for the year 2010. And we anticipate that. I think we're pretty much aligned with most of the economists that it'll be somewhere around a 3% expansion in 2011. So Ford's well-positioned. We took the tough structural actions, operate profitably at this lower demand.

We invested in the new products. And now the customers have the price that they really do want and value available for it as we recover. I want to read you a headline from Wednesday's Wall Street Journal. And the headline is, GM could be free of taxes for years. And the article goes on to talk about how GM won't have to pay as much as $45 billion in taxes on future profits because of special tax rules made to specifically benefit government bailout recipients. Now, unlike GM, Ford didn't accept government money. Ford is profitable, just posted record earnings.

So how do you compete with a company that's backed by Uncle Sam? Well, we knew that we were following a different strategy. Remember, Chris, we actually, during the time when GM shared with everybody that they were completely bankrupt and they were going to go into bankruptcy, that we actually testified on behalf of GM and Chrysler for the good of the industry and also to help prevent a collapse of the industry, which many people believe could have taken the U.S. from a recession into a depression. So we supported that temporary help from the government. Clearly, we have been on a completely different plan for the last four years,

and we did not want or need to take precious taxpayer money. And also, we were also investing during the worst time in our new products. Now, clearly, we were disadvantaged in the near term on the debt because that was essentially wiped out as we went through bankruptcy. But our plan always was get back to profitability, generate free cash, and then accelerate the improvement of our balance sheet. And one neat thing, Chris, about the third quarter was that we shared the progress we're making on that. And with our commitment to pay the $3.6 billion in the VEBA on the

retiree health care, remove that and honor that commitment, we have now for the year repaid $10.8 billion of our debt. And we also gave guidance, Chris, that we're going to be cashed net positive by the end of the year, which means that we'll have improved that net cash position by nearly $8 to $9 billion for the year. So the most important thing we do is continue to make the cars and trucks that people want, improve our quality and our productivity like we're doing, and then accelerate the improvement of our balance sheet. And we'll be just fine. You're listening to Motley Fool Money. We're talking with Alan Mullally, the president and CEO of Ford Motor Company. Ford's making a big push into the electric

vehicle and plug-in hybrid market. Is there a point where you think that will make up a majority of your product line? And if so, when do you think that is? Well, I think, Chris, it's going to be a while before it's a substantial part of the product line because clearly, you know, Ford has a very, very robust technology roadmap going forward to not only improve the quality and the fuel efficiency, and safety, but also provide that across all of our vehicles. And the technology roadmap that we see is there's a lot of room to improve the internal combustion engine, and you see that with EcoBoost, with turbocharging and direct fuel injection, nearly 25% improvement in fuel efficiency and 15% reduction in CO2,

new lightweight materials, integrated electronics, aerodynamics. Then we see gradual electrification of the vehicles, And the first major push will be the hybrids, where you have an internal combustion engine and an electric motor. Then you'll see more plug-ins, and then you'll see gradually more all-electric vehicles. Now, the rate of that expansion will be really dependent on the improvements that we make in the battery technology and the electrical components, because we need to get the weight down, the scale up, the cost down, the capability to charge in warm and hot temperatures and do it quickly. And, of course, Chris, the other enabler will be the infrastructure throughout the United States

and a smart electrical grid so that we can actually, you know, charge the vehicles conveniently. So I think that public-private partnership is going to be a very big piece, but the most important thing is that we keep developing enabling technologies and make them technically and economically viable. So if I'm reading between the lines, it sounds like you're saying five years. Oh, at least, Chris, because you think about the infrastructure that we have in for gasoline today is tremendous, which makes it all work for all of us. And whatever we do, it's got to be economically attractive, but also has to work for our lives.

And the infrastructure is just not there now to be able to support the vehicles. Plus, the vehicle's got to be economic, because if the consumers, we're all going to make an economic decision, And we all care about fuel efficiency, and we care about quality, but we also care about the economics that go with that. So the most important thing we do is to keep improving the technology and work with the public sector and utility companies to get the infrastructure in place. You're listening to Motley Fool Money. We're talking with Alan Mullally, the president and CEO of Ford Motor Company. Alan, what was the first car you ever owned? I think I had a Chevrolet before I moved to Ford.

Is there anything in particular that you remember about it? And it can be anything. It can be the color. It could be. I think it had, my first Ford had moon hubcaps and black rims that offset the cream-colored body. And I just remember how neat it was when I got my driver's license and the highways were open to me to move about freely. And you just took off, I'm guessing. Absolutely.

Like all of us. You know, Chris, a neat thing about Ford and Henry Ford was his original vision, which we are accelerating today, is to open the highways to all mankind so that all of us can move and feel the freedom that the automobile brings and also have great, safe, and efficient transportation, plus have great careers with Ford wherever we operate around the world. So, you know, it's just an honor to be accelerating the implementation of Henry Ford's original vision. You're listening to Motley Fool Money. We're talking with Alan Mullally, the CEO and president of Ford Motor Company. Alan, before we let you go, we have to wrap up with a round of buy, sell, or hold.

So let's start with something that certainly has its fans as well as its detractors. Buy, sell, or hold the future of ethanol. Well, I would say a buy because I think that clearly we're going to have many elements of the solution, energy independence and security, and I think that the ethanol we have today is a start. I think we're going to see more biomass fuels going forward, and they'll be part of the solution. Google has developed one that has logged over 140,000 miles on the road. buy, sell, or hold the driverless car? I think I would probably hold on that

because I think that people just really, really enjoy that driving experience and there is nothing that can replace the ability of the human being to assimilate all the different situations we're going to be in and be able to react accordingly and, Chris, enjoy it. See, I thought you were going to say you were going to hold on it because it's just kind of creepy. Well, you know, I've worked on automatic systems for my life, as you know it, with commercial airplanes and automatic landing systems and autopilots and autothrottles. And when it comes to the car and with an airplane, the most important thing is that the driver or the pilot is completely in charge because the human's ability to simulate all the different situations that we can get into is absolutely amazing.

The best thing we can do, just like we're doing in the automobile industry, is to give the drivers all the situational information that they need and the alerts that they need, and then let the human being do what they do best, and that is focus on driving and using the human being's ability to react. We don't hear quite as much talk about it these days. Buy, sell, or hold a manned trip to Mars in the next 20 years. I probably would sell on that. And that might happen someday in the future, but I think that's a ways out.

And finally, you're a top executive at an aerospace company. You're the CEO of an automotive company. So I think more so than probably anyone else in the public markets, you are the most qualified to weigh in on this topic. Oh, my. Speak slowly, Chris. I'm getting ready. Buy, sell, or hold, by the end of this century, flying cars. I, well, clearly, we have made flying cars. I think the real question is, will it be widespread and economically viable?

And I sure don't think so. because the economics of commercial airplanes to be able to deliver a large number of people around the world is so compelling, and to do that in a small two- or three- or four-passenger just really doesn't make sense economically. Not even with 90 years lead time? Well, you know, I have been working on the future, but maybe that's a little too far out. He is the president and CEO of Ford Motor Company. Alan Mulally, thanks so much for being here.

Well, thank you, and thanks for covering the Ford story. Coming up, could New York City become a farming juggernaut? Stay tuned. This is Motley Fool Money. Well, baby, what I couldn't do with plenty of money and you. As always, people on the program may have interest in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money.

I'm Chris Hill. Dixon DePommier is a professor of public health at Columbia University and the author of Vertical Farm, Feeding the World in the 21st Century. I recently spoke with him about the idea that could change the way we think about farming. Let's start with just the basic question of what is vertical farming and how does it work? Well, vertical farming so far is a concept, and it began about 11 years ago in a classroom, believe it or not. And just try to think back to your own college days as to how many things actually made it out into the real world. And you'll get a hint as to how surprised everybody is at the fact that this is almost about to happen.

So it began as a rooftop gardening project that the students picked themselves. And it didn't actually turn out so great because there's not a lot of rooftops to feed 2.3 million Manhattaners, let's say, for instance, or Manhattanites, I should have referred to them as. But I then challenged them I said, you know, well maybe you can take this idea And move it inside of abandoned buildings And make use of all those floors Let's say a 10-story or a 20-story or a 5-story building You could improve greatly the amount of crops that you could produce

If there were some way of doing that And of course there is some way of doing that Because that's what the greenhouse industry is all about So that's how the idea started So it has evolved to the point now of enticing designers and architects and engineers to the table to sit down and decide actually how to do this. Now, you know, I've been to farms.

There's a whole lot of dirt there. I mean, are vertical farms, I mean, there's no soil? None. Absolutely none. It's all done hydroponically, and there's a newer technology called aeroponics, which takes hydroponics to the next level and actually sprays a mist of nutrient-laden water onto the roots of the plants, they're perfectly happy as long as you feed them properly. And they don't require soil or food.

They're just required as a solid matrix. So if you can supply that in some other way, and certainly the hydroponics industry has found lots of clever ways of doing that, you don't have any soil at all. So you don't have a weight problem if you're going to put this into a room, say, for instance. It's not designed for soil-based agriculture. So are we just talking about, when it comes to vertical farms, are we just talking about fruits and vegetables, or are we talking about animals, too? Because if you tell me that these vertical farms are going to smell a whole lot better than the average farm, then I'm in. I'm sold.

Well, I can promise you that they'll smell better because we're going to keep out the four-legged varieties and let in chickens, for instance, and ducks and geese, and aquaculture. You can raise fish, of course, like tilapia, and some saltwater species of fish can be raised this way as well. Crustaceans like shrimp, freshwater and saltwater shrimp. There's a whole industry out there that's actually doing all of this already. So nothing's impossible. I think the four-legged livestock problem has to stay on the grasslands and in the farms, unfortunately. You're listening to Motley Fool Money. We're talking with Dr. Dixon de Pommier.

His book is The Vertical Farm. One of your biggest supporters is not from the world of science. He's from the world of music, and that's Sting, who has secured the rights to the Vertical Farm movie. Is this going to be a documentary? Yes, it certainly will be. The first customer, so to speak, who agrees to actually sit down and work out the plans for a prototype Vertical Farm, which we imagine would be the first iteration of this new concept, would be the beneficiary of a documentary film as to how all of that came about.

And, you know, Sting is very passionate about the rainforest, and he sees this as a way of saving the rainforest, because if you can supply food to people in another way, they don't have to encroach into these beautiful, diverse hardwood forests of the tropics. What do you think the timing is looking like, and do you have a couple of finalists, for lack of a better word, in terms of a location for this pilot project? Yeah, we actually do.

I was sort of hoping that you would have asked that question, and I'm glad you did because we've been in discussions now. When I say we, there are some obvious associates of mine as well who have gotten together and said, you know, this would make an interesting company if we could parlay this into a consulting firm that would teach people how to proceed in terms of making indoor food production a livelihood for them. We've been fortunate to be invited to the table in Jordan, in Abu Dhabi, in Dubai, in Qatar. In those situations where those countries have virtually no soil to speak of to feed their people

and still great need for food security and food safety issues, those would be at the top of my list for those that are going to start to do this first. But I've also been in touch with the cities of Chicago and Seattle and Portland and San Francisco and New York City. And I haven't received any flack from those people at all. They've all been enthusiastic about the concept. It's just that generating the funding for this would be the biggest difficulty. And Newark, I should have mentioned Newark also.

Newark has expressed deep interest in wanting to do this. All right, Dr. Dupin-Mier, before we let you go away, we have to wrap up with a round of buy, sell, or hold. Uh-oh. No, this is going to be fun. You'll love this. All right, it's the biggest scientific challenge confronting New York City today, buy, sell, or hold bedbugs.

Ah, now you're into a deep area of interest of mine. I'm actually a trained parasitologist. I would buy bedbug control. I wouldn't buy the bedbugs themselves, but I would certainly buy controls that actually worked. and we're still looking for those because it's an intractable problem of dense populations. Yeah, I was going to say, you can buy the controls, but from what I've read about the problem, right now I'm buying bedbugs because they look like they're not going anywhere.

I see your point. All right. If I'm a bedbug, I'd buy into this one, no problem. All right. This is really big on Facebook. Buy, sell, or hold Farmville. Oh, I'm going to buy that. In an instant, I'll buy that in a second, and I'll incorporate the vertical farm concept into it. We'll write off into the sunset on that one. If you throw in Lego, I'll do that one too. Perfect. And finally, this is a license plate motto

that has a lot of people scratching their heads. Buy, sell, or hold New Jersey as the Garden State. Well, I happen to live in New Jersey, and when we gave our presentation to Newark, we actually used the motto, bring the garden back to the Garden State. But of course, we'd bring it back in another form. I would leave the Garden State as a natural wonderland and incorporate vertical farming.

So I'd buy the state, but I would convert it back to what it used to be before we got there. Congratulations, Doctor. I think that's the first time anyone's used the words New Jersey and natural wonderland in the same sentence. The book is The Vertical Farm, Feeding the World in the 21st Century. It is an absolutely fascinating idea. Good luck with the book, Doctor. It's available everywhere. Dr. Dixon de Pommier, thanks so much for being here.

My pleasure. That's it for this edition of Motley Fool Money. Our engineers are Steve Broido and Gail Año Nuevo. Our producer is Matt Greer. I'm Chris Hill. On behalf of everyone at The Motley Fool, Happy New Year, thanks for listening, and we'll see you next week.