Motley Fool Hidden Gems Investing - The Science of Timing

Episode Date: January 12, 2018

Facebook makes a big change. Walmart boosts pay and closes some Sam’s Club stores. And Activision Blizzard bumps up its game. Plus, best-selling author Dan Pink talks about his new book, When: The Scientific Secrets of Perfect Timing.  Thanks to Casper for supporting The Motley Fool. Save $50 on a mattress at http://www.casper.com/fool (promo code “Fool”). Learn more about your ad choices. Visit megaphone.fm/adchoices

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But you can give them to the birds and bees. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio this week from Million Dollar Portfolio, Jason Moser and Matt Argersinger, and from Rule Breakers, Aaron Blockchain. Guys, good to see you, as always. We've got the latest headlines from Wall Street. We've got bestselling author Dan Pink in front of a live audience here at Fool HQ. And as always, we'll give you an inside look at the stocks on our radar. But we begin with the social network. Shares of Facebook falling more than 4% on Friday

after CEO Mark Zuckerberg announced changes to Facebook's news feed. And Jason, he made no secret of the fact that this will decrease user engagement in the short term. And Wall Street doesn't want to hear that. No, I guess not. I mean, this really all goes back to what the core purpose of the Facebook platform is in the first place. It's about connecting people, it's about sharing what's going on in each other's lives, building relationships, all of that good stuff. It's supposed to be very personal in nature. And so, I think for most of its public life, Mark Zuckerberg, he's had to sort of strike this balance between that personal nature and building a credible ad business. And obviously, he's done a very

good job with the ad business, but oftentimes, these are at odds with one another. I mean, This is a big decision, no question about it. I think it's easy to sort of hop on that, this is probably not a great decision in the short term because of those engagement concerns. But I definitely do think, given its core purpose, the reason why it exists, I actually do think this is a smart decision for the long-term success of the business. I don't fault them at all for it. So, the purpose of the Facebook platform is not to mint cash? I thought it was.

It's supposed to just make people angry. I think the market, obviously, is just concerned about what this means for publishers and advertisers? Are they going to have to modify the way they approach the platform and the way they approach users? And, you know, I think it's an outstanding question whether or not this ultimately affects ad revenue. They just need to put it on the blockchain. No, I'm just kidding. I think one of the largest risks here is actually regulatory. So, they'll have to tread carefully. Facebook's received a lot of heat for fake news. And so, this is a way to tackle that. But it's sort of a catch-22, because now they're in the

censorship position, where they're having to make calls, and they can make more enemies that way, too. So, in terms of the stock, Jason, do you look at this as, in fact, just a short-term adjustment that'll have to be made? Probably so. I mean, anytime you prioritize something, you deprioritize something else. And so, the publishers and content providers are going to take a little bit of a backseat. That's going to affect their business, which is in turn going to affect Facebook's business. I think the advantage that Facebook has here is not only the strength in that Facebook platform,

but let's remember, they have Instagram, which they're already monetizing. I think that's going to take probably some of that ad revenue from the Facebook platform. Really, the big question marks for them still are WhatsApp and Messenger. I just think the nature of those services make them far more difficult to monetize from the ad perspective. So, those are the question marks hanging out there. But I think that Facebook, the business itself, is still in very good shape. O'Reilly. Walmart making all kinds of headlines on Thursday. America's largest private employer announced it is raising the minimum wage for hourly workers, as well as offering bonuses to more than 250,000 long-tenured employees. Walmart also announced the sudden closing

of 10% of its Sam's Club locations. Aaron Bush, which of the two is more important to Walmart's future, do you think? I think that they're actually both not important. I think they're both very meaningful for employees, but for investors, I think both of those stories are a bit smoke and mirrors. So, they are closing about 10% of their Sam's Club stores, but that still represents maybe like half of 1% of their total store count. Eliminates way less than 1% of their workforce. And honestly, I think it's just a sneaky way for them to transfer those stores into new e-commerce fulfillment centers. They don't have to build anything, they can just transfer at a low cost. And the wage

increases, I think that's a great thing for employees. And a lot of this, they sort of timed it with the tax bill, saying, yay, because of all the greater tax benefits we're receiving, we can now afford to reward employees. I think that if the tax bill didn't go through, they would still be doing this exact same thing. Because the reality is, between low unemployment rates and more immigration restrictions, companies are already competing for lower-wage labor. And it does make, for a good headline, $300 million, an incremental increase of the labor expense is a big number. But in the context of the recent tax bill, that only represents probably about 15% of the tax benefits they'll receive.

So, in terms of turning some of those Sam's Clubs into fulfillment centers, is it reasonable for investors to expect that Walmart's e-commerce, which has been on the rise over the last couple of years, is it fair to bump up those expectations even further? I think so. I think even without this move, it's safe to say that they're investing heavily in e-commerce, and this is just a good way for them to double down. Yeah, I mean, they explicitly stated, I mean, some of this real estate is going to that very purpose of helping them grow that e-commerce business. So, the puck has already sort of gotten to e-commerce, right? So, they're kind of skating to where the puck already is, but you can't fault

them for getting there. I mean, they may be a little bit late to the game, but I think it's also worth noting, I mean, Amazon, as it grows, they're going to go through some growing pains, too, as, you know, they kind of meet that e-commerce demand. And so, Walmart is going to be there to play a part in that. And honestly, you got to root for that if you're an Amazon shareholder, because we want to keep antitrust off their backs, right, Matty? That's right, absolutely. I just think Walmart, it's a challenge right now, because they have to make sure their employees are happy, make sure their core retail business has modern, updated stores, inventory managed. At the same time, they have to invest heavily

in this e-commerce business, and so the trade-offs there are going to be a lot starker in the future. I think it's not a big deal right now, Aaron, but I think in the future, they're going to have to make some much, much harder decisions. But it certainly looks like Walmart is certainly further ahead on the e-commerce game than Target is. Yeah, absolutely. But just wait until Walmart buys Wayfair. You heard it right here first. 2018, baby! Shares of Activision Blizzard hitting a new high on Friday. The video game giant debuted its new Overwatch esports league Wednesday night on Amazon's live streaming site Twitch.

Matty, Activision CEO Bobby Kotick was very clear, this is not going to be hitting the bottom line anytime soon. But fans sure are enthusiastic about this. They've been gearing up for this for a while. It was a pretty big debut, if you look at it. Over 400,000 peak views on Twitch. The Burbank, California Blizzard Arena was sold out. The reviews have been very, very positive. There were no major hang-ups. This is part of a $90 million deal, by the way, that Amazon's Twitch has with the Overwatch League to showcase the games. I think it was a great start. Of course, Amazon's stock's already up 10% so far. In 2018, it's up almost 100% going back to the beginning of 2017.

There was also a little nugget of news, I think, this past week as well, about Activision closing its last U.S. warehouse distribution facility, which might not seem like a big deal, but this is the facility that packaged and distributed a lot of their hard disks of their games. The fact that they're closing that down, they're outsourcing that, and have basically said, we see the trend towards digital sales, it's only increasing, we're not really going to be in the hard disk games anymore. And I think that's a bit of a seminal moment for video games and Activision as well. And I do think the Overwatch League is a big deal, but I actually think that

that second point about going digital is even a bigger deal, because that impacts every single game they sell and has a very big impact on the bottom line. I think 2020 might be a little ambitious, but if they can pull that off, that's some serious margin that they're gaining and all the rest of the video game industry will follow suit. Yep. Should we stop being surprised that people are showing up to an arena to watch this? No, no, no. I'd say, in North America, it's still kind of a really unique thing, but I think this is the year where esports in North America really becomes mainstream, and this is just the beginning.

Alright, let's get to the stocks on our radar this week. And our man behind the glass, Steve Broido, will hit you with a question. Jason Moser, you're up first. What are you looking at this week? Sure, let's jump into real estate. looking at RE-MAX, ticker is RMAX. You probably see a for sale sign in someone's yard, chances are it has RE-MAX on that sign. This is an interesting business because they essentially sell these franchises to folks looking to get in the real estate game. So, it's a capital-light business model, which is attractive. Big long-term trend, obviously, in housing. And we're looking with the refi boom here coming to a close. Purchases should help fill up some of that

shortage there. Remax has got a national brand identity, one of the biggest players in the space, very nice recurring revenue stream. And they've just added a mortgage side to the business as well, Motto Mortgage. So, not only can you have the real estate agent help you find the house, but they're also going to be able to help you get that loan, too. So, tricky ownership structure there with the share class, but an interesting business, one that's done very well. Steve, question about Remax? With interest rates still around 4%, if interest rates cross into 5% territory, does real estate just tank? I don't think it tanks. I think it just

becomes a little bit more difficult to buy that house. Aaron Bush, what are you looking at this week? I'm looking at Nintendo, which is the massive Japanese video game business. Traditionally, the best time to buy Nintendo is when business is terrible. And that's actually not right now. The company's new console, the Switch, is on fire. But I think this time might be different. Famous last words. But why I'm interested, though, is because I do think that there are some other forces out there that can keep momentum running. Nintendo is way behind the times when it comes to digital sales and online gameplay. And I think the Switch could help them catch up to other big publishers. They're starting to

attract more third-party publishers. They're not big in esports, but I think maybe a game or two that they have might fit in there. And they just have great IP that might launch in China. There's just a lot of moving pieces that are interesting right now. And the ticker symbol? N-T-D-O-Y. Steve, question about Nintendo? So this isn't a question. This is a statement. Santa delivered a Nintendo 3DS to my son for Christmas, and he forgot to include a power adapter to charge the 3DS.

I just wanted to tell Nintendo, please include that, because Santa's little helper had to go to Target at 1030 on Christmas Eve to pick that thing up. Santa delivered a Nintendo Switch to my house. All the cords were included, though. Matty, we've got about a minute left. What are you looking at this week? Going with Jason a little bit on the real estate theme, Alexandria Real Estate Equities, ticker ARE. Interest rates have crept up a little bit,

as Steve hinted at, and that's caused REITs to actually sell off quite a bit recently, at least to start the year. Alexandria specializes in life sciences facilities, medical technology. And so, for me, it's a great way to play biotech without actually buying biotech stocks. They own great real estate in Boston, San Francisco, all the biotech hotbeds. Excellent way to play biotech, and it yields 3%. Steve? Can we ever go wrong with real estate plays? Not with this one, for sure, not.

Steve, three very different businesses. You got one you want to add to your watch list? I think that I'm going with RE-MAX on this one. So, Santa and the Nintendo and the missing cord, that really did you in, right? That did me in, yes. Alright, Jason Moser, Aaron Bush, Matt Argersinger, guys, thanks for being here. Thanks, Chris. Up next, a conversation with best-selling author Dan Pink. Stay right here, you're listening to Motley Fool Money.

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To get started, go to rocketmortgage.com slash fool. Equal housing lender licensed in all 50 states and MLS, consumeraccess.org, number 3030. Welcome back to Motley Fool Money. I'm Chris Hill. If timing is everything, then when we actually do things matters more than we think. Earlier this week, I got the chance to sit down with Dan Pink in front of a live audience here at Fool Global Headquarters. Pink is the author of several New York Times bestselling books, including Drive and To Sell is Human. His new book is entitled When, The Scientific Secrets of Perfect Timing. This book is, as the subtitle suggests, all about the science of timing. And as you've said, this is not a how-to book.

This is a when-to book because one of the things that you really dig into is the fact that how we do tasks, how we approach tasks is important, but when we approach them is equally, if not more important. With that in mind, since it's a little after 2 p.m., When should we be having this conversation? Is this a good time for this? This is, in many ways, the exact worst time to have this conversation in the course of a day. So thank you, fools, for being here.

But it's on me. And I actually mentioned this to Mac when I walked in because originally this was scheduled for 10 a.m. one day last week. And I had a last-minute trip that I had to do. So it's on me. But there are some things that we can, you know, it's actually both your intro and your question are great. So the big idea that you hit on, Chris, is that we are very, very intentional about how we do things. So how many people here have a to-do list today? Most of the people in the room.

So that's the what. So you have been explicit. You have enumerated what you're going to do today. You have probably focused on how you're going to do things. You've taken courses. You've tried to get better at things. um the uh even as wacky and crazy a place as the fool you have people who focus on who do we bring in to hire right so we thought we're very intentional about those things but the questions

of when we do stuff we don't take it seriously it's sort of like we're having a family dinner and like when is sitting over there at the kids table with the paper plates and it actually belongs at the grown-ups table because it has as chris is saying it has in many many dimensions of our life. It has a material effect on our performance. It has a material effect on our well-being. It has an effect on our health. It has an effect on how kids learn. It actually matters. It matters. I don't think it matters more than what or how, but I think it matters just as much. So let me go to something specific to our universe as investors. And it's one of the things in the book and that is conference calls for public companies oh yeah because you dig up

some research that when public companies have conference calls in the afternoon the tone and tenor of those calls is far more negative yeah than in the morning yeah first of all why is that and second of all what as investors should we do with that information yeah that's a great great question i'm so glad you picked up that research because when i when i look this is some research from three scholars at NYU Stern. When I uncovered that, I'm like, whoa, this is amazing. And I keep Googling and saying, why hasn't this gotten more press? This is extraordinary.

And I'll answer both of your questions, but let me give a long-winded prelude. One of the exciting things about what's going on, and I think it affects investing too, one of the exciting things that's going on in the world of research in general, how do we derive insights about human behavior and the human condition? So a lot of the insights that we have about behavioral science for a long time, And this is legit, came from things like we assembled 71 undergraduate students. We put 35 in this condition, we put 36 in this condition, and we ran an experiment to see what the difference was. And that's cool.

That's the scientific method. What's happening now is that big data is allowing scholars of all kinds to find really, really interesting insights using massive, massive amounts of information. I mean, just spectacular. And so, that's how this, so that's the study that Chris is talking about did this. So, as you guys know, there are transcripts of these conference calls for companies, all right? Public companies, there are transcripts. The transcripts are publicly available. There is now software out there that evaluates text.

And one of the things that it does, even at its very primitive stages right now, is it can measure the emotional valence of words. So, it can take a word like somebody writes in a tweet, I'm bummed out. Oh, that's kind of negative. I'm pumped about X, Y, or Z. That's positive. And so you can put these giant amounts of text in these programs, and it will measure the emotional valence of the words, and then you just plot it against anything, but you plot it against time of day, and you see these patterns of mood over the course of a day. So what they did with this case is they took 26,000 calls, transcripts of 26,000 conference calls, through the text into one of these programs. And what they found, exactly as Chris is saying, is that calls in the afternoon were more negative, more irritable than calls in the morning.

Even, and here's the kicker, and my editor and I got into a battle over this, about whether I was allowed to italicize this phrase. Even when you control for the fundamentals, all right? So it didn't have to do, it's not simply that companies reporting bad earnings scheduled their calls in the afternoon. It was that even if you control for what they're actually reporting, calls in the afternoon were negative. And here's the kicker. It even, to the point, had an effect on a temporary effect on the stock. That is, it had the stocks were mispriced in response to this negative sentiment. So even stocks that had no fundamental reason for dropping dropped in the short term because of the afternoon call. I mean, I find that kind of stunning. Now, what do you do as an investor?

I'm not sure because the listen, you guys do that. The stock mispricing was fairly fleeting. It was maybe, you know, but I think with, you know, if I were smarter, I would have figured, I think there's probably someone could use this research to write one of these, you know, one of these programs that looks for misplaced negative sentiment in these calls and makes a trade based on that. I mean, you'd have to do it, you know, within hours or minutes, but I think it's possible to sort of, you know, sort of arbitrage the emotion or something like that there. And but it's just really it's kind of amazing. I think what's interesting about that is that we have this notion of CEOs, the people who are on these calls being these like hyper rational actors. And they are affected by these patterns of the day, patterns of the day as well. So, you know, if you have here's the thing, if you have the companies that you guys recommended, tell them to do their earnings calls in the morning. That's the other thing you should do. That's going to boost the full portfolio a little bit.

Coming up, we'll discuss the one time of the day that you do not want to schedule surgery. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Let's get back to more of my conversation with Dan Pink about his latest book, when the scientific secrets of perfect timing this is something you you just alluded to there's a lot that's been written recently about the the science of sleep and one of the things you get into uh in the book is not just sort of the the science of sleep but also just sort of uh the patterns that we have as human beings throughout the day and and i think it's it's common for people just to

classify themselves in in the two broad categories of well i'm a night owl or i'm an early bird and one of the things you get into is there's actually three classifications of people and in fact the majority of them are neither early birds nor night owls yeah i mean it's yeah it's barely even i mean we classify things in our lives and biologists classify things just because it helps us understand the world a little bit better so so what you have is you basically have uh you know you have a distribution of what are called chronotypes which is basically your propensity to wake up early or fall asleep early or wake up late and fall asleep late Some people are very strong larks.

They get up early, fall asleep early. That's about 14% of the population, very strong in that way. About 20% of us are very strong owls. And then most of us are kind of in the middle. But there's sort of a tilt in general toward a little bit more of the larkiness. And I actually think that the corporate world is very much designed against owls. I mean, it's really biased against owls and its designs. The other thing that happens is there are big, big differences in age.

That is, people hit their peak owliness between about the age of 14 and the age of 24. So you have teenagers, right? Yeah, so you've seen that, you know. So around the onset of puberty, people's chronotype shifts to sometimes even three hours later. And it has nothing to do with teenagers being lazy. It has to do with simply their biology. So you have little kids. Little kids are very larky in general.

older people are very larky in general and but this this period here i mean i i just think about this i had a 15 year old and um a 15 year old boy and man oh man i'm no joke like i saw him today when he was leaving from school and i looked at him and i was like i'm not sure he is actually he left for school today at about 7 50 a.m i'm not sure he's actually awake he could be at this moment sleepwalking he could be sleepwalking to school right now not because he's a lazy guy he's not but because he's 15 so and i have to say there are there are a lot this is a very hands-on book which i which i greatly appreciate in terms of uh not just um iterating various studies and the findings from those studies but also very tangible sort of how to how you can apply this to your own

life. There's a lot in terms of mornings being a peak time for people and just as much evidence about afternoons being valleys, which leads to this question. How scared should we be about things that we're doing in the afternoons? Because you make it very clear, among other things, that If you have any kind of medical procedure that you have the ability to schedule, do not schedule it in the afternoon. Totally. I mean, I got nothing to add to that. I mean, you're totally right. Like, literally, after looking at this research, I would not let a loved one, anybody I cared about, go to the hospital or go to an important medical appointment in the afternoon.

I simply wouldn't. My elder daughter had to get her wisdom teeth taken out a year ago. And my wife and I, I'm sharing my research with my wife, who's a close collaborator on a lot of stuff that I work on, and we're like, okay, Sophia, 7.30 a.m. appointment. I don't care how tired you are. You're going in 7.30 in the morning because it's general anesthesia. And so what it shows, it's actually somewhat terrifying.

Let's take anesthesia as an example. Anesthesia errors are four times more likely at 3 p.m. than at 9 a.m. Yeah, it's a wow. i agree i appreciate that response because it's a wow it's like you think like oh well wow i gotta pick the right surgeon i gotta find a good hospital and then you just sort of haphazardly schedule like when you have your procedure and it matters let's take because one of the great ways to get out of this valley this trough in the afternoon is to talk about colonoscopies let's talk about colonoscopies let's all right so well we got we got two 50

year old men up here so that's what we talk about in a like in our spare time we talk about getting colonoscopies true um and um and um but you um uh you take the same population of patients uh endoscopists find and find half as many polyps which are the things that you're looking for in colonoscopy they find half as many polyps in afternoon examinations as they do in morning examinations with the same population i mean it's crazy um hand washing in hospitals nurses hand washing in most of the studies of nurses by 4 p.m they're like they have the hands of like a two-year-old child you know now fortunately there's there's a i don't want to be too alarmist but there's a there's there's a there's an antidote for all of it sure well yeah yeah i

mean there's the hand actually hand washing ends up being especially in hospitals ends up being this i actually think one could write not a book but i think a really really good article about how do you get people all the things about behavior you learn in as hospitals try to get people to wash their hands there's actually a lot of research on this so so there's things like it turns out in the short term monitoring people has a huge effect you know installing closed circuit cameras that spy on people in the short term it gets people to wash their hands it also gets people to quit their jobs but it gets them to you know it gets them to wash their hands David Hoffman

at UNC and Adam Grant now at Penn but was at UNC did a really interesting piece of research where they put up different kinds of signs to try to motivate people and it turned out that a sign that said there were three signs, one of them was

gel in, wash out, one of them was hand hygiene prevents you from catching diseases, another one was hand hygiene prevents patients from catching diseases and it turned out that third sign hand hygiene prevents patients from catching diseases actually got doctors and nurses to wash their hands because it reminded them why they're they're doing things anyway all of which is to say the antidote is actually even simpler on this is that when they gave the nurses breaks especially breaks that where they were able just to do something non-work

with somebody else they came back restored and their hand washing compliance went up and it just part of this overall what i think is pretty remarkable research on the importance of breaks and that and it changed my mind on breaks big time that research i was going to say that's that's where i was going to go next because um i think that in any office setting um the average person has a need for taking a break of some sort um what have you learned about the most effective way to make use of your break time yeah there's some there's some really really good research on this and you had mentioned chris the science of sleep and i i think that the science of breaks is where the science of sleep was maybe 15 years ago that you know 15 years ago we thought people

who stayed up all night were heroic now we think they're idiots and that's largely because of the science came out and said whoa wait a second i think that breaks are are very much in that in that line and it did it really did change my view on it um what it shows and and it just turns out this research is actually very, the principles end up, the research ends up yielding very specific practical principles. So what we know about breaks are some just general design principles. We can't say, oh, everybody should take a 13-minute break at 2.03 p.m. or anything like that. We don't know anything about that. But the design principles are like this. Number one, something is better than nothing so just taking any kind of a break is better than powering through and i'm like the

king i was the king i i've deposed myself i was the king of there was a coup yeah there was a coup of rationality that displaced me here um i i very rarely took breaks i took it as a point of pride of just powering through some kind of mix toxic misc mix of hyper masculinity and hyper puritanism you know, where I never would take breaks. And that's completely, completely wrong. So we know something is better than nothing. We know, and I think this makes intuitive sense to a lot of people, that breaks where you're moving are much better than breaks where you're stationary or sedentary. I was blown away by the research on the importance of nature. That is going outside, even being exposed to trees and greens and things like that is, I was really, because I'm not a huge

nature person. That was really surprising to me. That's very restorative. Social breaks are better than solo breaks, particularly if you can, if you have a choice over who you take a break with. If you're forced into it, it's less effective. And that's true, amazingly enough, even for introverts. Even for introverts are more restored having breaks with other, breaks with other people. And the other thing that's really important now and something I've tried to get better on is that fully detached beats semi-detached. That you really, there's a lot of research now

on this concept of, particularly in the light of all these mobile phones, detachment, full detachment. So if you go outside and take a break through the beautiful, natural wonder that is Alexandria, but your nose is in your phone, that's not a break. And so you can use those kinds of things as guidelines. And what I have done myself is, again, I like things that are really super practical and doable. What I myself have done is each day on my list of things to do, I make a break list.

So I say, okay, I'm going to take two breaks in the afternoon. And I write down, you know, 1.30, I'm going to take a break. I work out of the garage behind my house. And so what I'll often do is I'll say 1.30 walk. And I will, at 1.30, I'll go out and take a walk around, like, just two blocks. all right it's like 10 minutes that's it and then come back to my office that's it but what i what i'm getting is i'm getting full detachment i don't bring my phone with me i'm getting a little bit of movement i'm getting a little bit of nature and it actually you know works so you don't have to go

crazy so two 10 minute breaks are incredibly effective and i think the bigger point here and and again i i have the zeal of the converted in in this because i truly have changed my mind on this, is we have to start thinking of breaks as part of our performance. Not as a deviation from our performance, but as part of performance itself. And I had it completely flipped. And the truth of the matter is, is that there's a difference between professionals and amateurs. And it's this. Professionals take breaks. Amateurs are the ones who don't take breaks. And I always had it the reverse. Amateurs don't take breaks. Pros know to take breaks. And so in a workplace culture, I mean, a workplace culture like this is going to be pretty amenable to something like that because you have so much autonomy.

Everybody has a shared sense of mission and whatnot. But having those regularly integrated breaks, even if they're 10 minutes, is incredible bang for the buck. Coming up, Dan talks about the most important meal of the day. And I promise it's not what you think. Stay right here. This is Motley Fool Money. All right, before we wrap up the show this week, got to say thanks to Casper. I don't know the last time you bought a mattress, but if it's been a while,

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US, Canada, and now the UK. And you can get $50 off select mattresses by visiting casper.com slash fool and using the promo code fool at checkout. Terms and conditions apply. That's $50 towards select mattresses by visiting casper.com slash fool and use the promo code fool at checkout. Welcome back to Motley Fool Money. I'm Chris Hill. Let's wrap up my conversation with Dan Pink. You mentioned the idea that there was a good stretch of time where someone who worked all night was considered heroic, and now with the science of sleep that we've learned that those people are morons.

But there's a, I think in my opinion anyway, in your book, you have completely shattered another accepted truth, which is that the most important meal of the day is breakfast. And I think that You seem a little bit troubled by that, Chris I'm troubled for you Because there's a lot of money being spent By the breakfast industry on advertising

And it is built around It's the most important meal of the day It's been that way since you and I were kids And once this comes out That actually it's lunch is the most important meal of the day Big breakfast is coming after you, my friend Oh, man Yeah, I hate to

Yeah, I'm going to have Tony the Tiger is going to show up on my front lawn It might be just that simple. Yeah, but, I mean, when you talk about, I mean, you joke, how, you know, but, like, to me, it's like, in every kind of joke, there's an element of truth to your joke there, which is this, is that, so there's research, here's what the research on breakfast shows, I think pretty clearly. Because originally, well, so I wrote about breakfast, and what I was going to do is basically put it in the chapter on beginnings. And then I realized about, because I have a whole chapter on beginnings, midpoints, and endings, and I was going to say, okay, breakfast as a beginning, let's talk about, you know, how to, and it turned out that the research wasn't that compelling.

Indeed, I don't think you can, you can't, you can't say that breakfast is the most important meal of the day. There's evidence showing that breakfast, that eating, that people who eat breakfast are pretty healthy. But that could also mean, it doesn't mean that breakfast causes them to be healthy. It means that healthy people could be eating breakfast, all right? And so, and what you have is that most of these studies, I don't want to empty the room here by talking about methodology, but most of these studies on breakfast are what are called observational studies, where you just watch what people do. And so, if you see healthy people eating breakfast, and you notice that healthy people eat breakfast,

your conclusion, the only conclusion you can draw is that healthy people eat breakfast. breakfast, you can't conclude that they're healthy because they ate breakfast, all right? And so, there's very little experimental research which gets at causation. The other thing about a lot of these observational studies, to Chris's point, and Chris was joking but not joking, is that some of these, many of these observational studies, particularly the early ones, were funded by cereal companies. And so, you have to, so, should you eat breakfast? I think the answer is, I don't know.

I mean, truly, I think that's what science is telling us. like, my view is like, eat breakfast if you want to, skip it if you don't want to. There doesn't see, I don't think it's conclusive, but I think there is some emerging evidence that's very powerful that lunch is more important than we think. Think of it like a stock, all right? So basically breakfast is overvalued as a stock, all right? So you want a short breakfast, all right? And you want to go long on lunch because lunch is undervalued. And there's some interesting research on lunch basically as another kind of break that we take. And lunch ends up fulfilling some of these things, particularly the detachment principle of breaks, sometimes the social aspect

of breaks, to the extent that people eat outside the nature aspect of it. So I think that's not a bad way to look at it. Lunch is undervalued and breakfast is overvalued. I really feel like this book has changed you because the just the conclusions that you've reached um and some of the things that you write about it's you're very upfront about the fact that um sort of your your eyes were were opened on a lot of issues other than sort of the taking breaks what are a couple of ways it has changed your day-to-day life i thank you for saying that because it gets to the gen i mean truly the reason i wrote this book is that i want i mean i wanted to read it in that I realized I was making all these when decisions,

but there wasn't any guidance out there. I started looking at the research, and I said, oh, my God, there's a huge amount of research. You know, it would be awesome if someone would put it all together and tell me what to do about it. And then I, you know, looked around, and no one was doing it, so I had to spend two years doing it myself. And so there's all kinds of good stuff.

I'll just give you one, though, and it's totally changed things. So I have a whole chapter on endings, and there's a really wonderful study about this. which should you give first, the good news or the bad news? I always do the good news first before the bad. Because, I mean, it's uncomfortable giving bad news. You know, it's like somebody gave you something, did some work for you or whatever, and it's not good enough. And you have to say, I'm sorry, this is just not good enough, or it's not what I wanted, or you screwed this up. It's uncomfortable doing that. And so, you know, want to sort of be nicer

up front, lay down a little cushion. But suppose you're on the receiving end of this. I've got some good news and some bad news. What do you want to hear first? Four out of five people want to hear the bad news first. And the reason for that has to do with some of the science and really interesting effects on our behavior of endings. Basically, given a choice, human beings prefer endings that elevate. We prefer rising sequences to declining sequences. So this is one area where I have totally changed. I always give the, even in emails, I'm like, I always want to start with bad news. Even if I have to manufacture it. Oh, this is terrible. No, the, so I always get, so that's total, I've done a complete 180 on that because I just assumed, and this is the problem,

you assume without, you know, it's basically another huge behavioral problem with human beings, which is our theory of mind. We suck at understanding what other people think. All right. We're just not very good at it. And so what other people want, like you asked me that question. What do you want? The good news or the bad news first? Totally want the bad news first. I always want the bad news first. But I but I but in my sort of narcissism and our narcissism, we say, oh, but I'm kind of special. No one else would ever want that. But they do. And so if you learn nothing else from this session, give the bad news first. The book is When, The Scientific Secrets of Perfect Timing. It is available everywhere books are sold.

And I promise you, this is an eye-opening book. I have already made changes in my day-to-day life based on this book. So check it out when you get a chance. That's going to do it for this week's edition of Motley Fool Money. You can check out past episodes of Motley Fool Money and all of the Motley Fool's podcasts by going to our podcast center, podcast.fool.com. And hey, if you want to tell the world that you're an investor, you can check out the brand new Motley Fool podcast shop at shop.fool.com. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.

We'll be right back.