Motley Fool Money - David Gardner on Tesla, Star Wars, & Advice for Graduates

Episode Date: May 15, 2015

Verizon buys AOL. American Express hikes its dividend. And Shake Shack serves up surprising earnings. Our analysts discuss those stories and other business headlines. And Motley Fool co-founder David Gardner shares some advice for graduates and talks Apple, Tesla, and Star Wars. For more insights from David and his Supernova team, go to DiscoverSupernova.fool.com     Learn more about your ad choices. Visit megaphone.fm/adchoices

Instagram teen accounts have automatic protections for what teens see and who can contact them, plus time management tools. And Instagram will continue adding built-in safety features to help create age-appropriate experiences. Learn more about teen accounts and Instagram's ongoing work to protect teens online at Instagram.com slash teen accounts. Everybody needs money. That's why they call it money. My best thing I'm From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Full Money Radio show.

I'm Chris Hill joining me in studio this week. For a million dollar portfolio, Jason Moser, from Motley Fool Income Investor, James Early, and from Motley Fool Deep Value, Ron Gross. Good to see you, as always, gentlemen. Good to see you, Chris. We've got earnings. We've got a big deal in new media, and we've got David Gardner as our guest this week. Plus, as always, we'll give you an inside look at the stocks on our radar.

But let's start by going back to the future, because one of the big movers this week was AOL, the company formerly known as America Online, back in the spotlight this week after being bought by Verizon for $4.4 billion. Ron, what is Verizon want with AOL? Well, first, who can tell me why the investment banker's codename for this deal was Project Hanks? Tom Hanks. You've got mail. You got it. So, yeah, bankers always give a codename, and that was this one.

And this is a deal mostly about technology for selling ads and delivering quality video. Verizon wants to get into that business in a big way. Who knew that AOL had the tech to get that done? So $4 billion might seem like a lot of money, but if they can help Verizon get into this business, it seems actually quite reasonable. James, were you surprised to see this deal just because you and I are old enough to remember back in 2000, the AOL Time Warner merger, which I hasten to point out was a deal. somewhere in the neighborhood of $165 billion.

It's crazy. AOL, world enough to have seen the whole cycle of AOL in the early 90s. Remember, it was just this basically had these chat rooms with perverts. I mean, some, not exclusively. But it's really grown from the small discussion board community to this huge thing, $63 billion market cap. Yeah. And then it, and now it was $4 billion, $4.4 billion.

It's almost come full circle. Yeah, they do have a lot of valuable assets, even to this day, whether we talk about the Huffington Post or TechCrunch and Gadget. Obviously, the technology I spoke about, you know, they still have 2.1 million people that use A-Will dial-up? Still using 2.1 million folks that have not moved away yet. I really hope at some point in the future we get an interview with an executive from Verizon who's tasked with dealing with those people and try to convince them to move over to broadband. It's going to be interesting to see how this unfolds. I'm glad that Tim Arne

strong as staying as CEO. It seems like it's going to be run as a somewhat autonomous unit of that, of course, the tech will be folded into Verizon. But it's going to be interesting to watch it unfold. I'm glad they got some value out of it. But I think the real lesson is just how fast value can be created and value can go away in technology. Zillow reporting a loss in the first quarter. Revenue came in lower than analysts. We're expecting shares down a little bit this week. Jason Moser, you looked at the quarter. What did you think? Yeah, well, we know they jumped out in front of the bus here a couple of weeks ago. of pre-announced to give us sort of the take on things. So the quarterly numbers weren't much

of a surprise. But the real estate market is undergoing a seismic shift and how consumers are able to access information. And Zillow really has been at the forefront of this movement from the very beginning. And so, you know, the addition of Trulia here now gives them a very, very big reach in the business is growing. Great, great rates here. You look at their total agent advertiser count has gone from 62,000 last year to, or last quarter, I'm sorry, to 103,000. currently. So we know that many, many agents are looking to get on that platform and get their names out there. And I think the big question mark was in regard to losing the relationship with List Hub, which provided them so many of those listings from the MLS. And actually, this has worked out

quite well for them. They had the, you know, the wherewithal to see this coming. And, you know, it was interesting, interesting quote Spencer Raskoff for the CEO made in the call. He said that Zillow and Trulia now have more active listings than they would have. if the News Corp List Hub contract had not ended. Clarification is Trulia or Trulia? I was going to ask that, too. I think I've always been in the habit of saying Trulia, but I believe it's Trulia. So maybe that's just that.

Thank you for clarifying. Maybe that's a bad habit on my course. Just throw that in for free. I always just assumed it was one of those words like data. Data, data, data. It works either way. Poupon, Coupon. Potato, potato.

Dare we talk about evaluation with Zillow? I really don't think, yeah. It sounds like you just did. That's one you could sit there and argue till the cows come home. I think, really. I think you have to look at this from the bigger picture down the road. How is this business shaping the real estate industry going forward? Valuation-wise, it doesn't really make a whole heck of a lot of sense right now. It's not profitable. It's barely squeaking by on any cash flow out there. But this is a growth business, and they are plowing all of the money

they're making back into the business now. It's kind of a LinkedIn situation. You have to kind of take it on faith. This will be a relevant platform for many years to come. Given the nature of mobile, given what they do and how they've disrupted the internet. industry to this point and the Trulia, or Trulia acquisition, I think that, you know, we have a legitimate player in the space that didn't go in anywhere. A couple of big companies raising their quarterly dividends this week. American Express upping there is 11%. Delta Airlines raising their quarterly dividend. Do I have this right, James? 50%. Are you throwing them a parade for that?

I'm quite happy. Delta is more simple. America, Amex is sort of like their situation tickles. Is it Amex or Amex? I'm going to say Amex. You're right. Delta paid off a lot of debt. Oil prices are low. They're doing the right thing. You're going to return 50% or more of their free cash fully to shareholders via buybacks and dividends. But AMX is sort of like a big picture situation. It's sort of like imagine a guy who has a bad day where he gets a demotion. He hits a pole in the parking garage. Maybe he learns he has hemorrhoid surgery. But then the vending machine accidentally gives him two packs of ho-hoes. So he goes home to his wife and that's the story he leads with. So Amex has

had a rough jar of it, actually, at a lawsuit. Earnings are going to be flattened down. They lost a 16-year Costco deal, they're cutting 4,000 jobs because the revenue is just not, not what they wanted to be, but they have enough capital to raise their dividend a little bit. So, you know, that's their big news. I mean, good for them, good for them, right? But it's still a 1.4% yield with a 17% payout ratio. So it's nothing that I'm kind of jiggling about. It's good, but they've obviously got some bad stuff too. Well, and it does seem to your point about the yield. It does seem like they can afford to up that a little bit more at some point in the future. They had to get fed permission, but yeah, I think they could. I think they need to

up that dividend. I mean, right now, this is an uncompelling investment from every perspective. I mean, look at the timeline with Amex, 10 years, five years, three years, year-to-date. It's losing to the market every which way. So reward your shareholders bump that dividend up. Of which Warren Buffett is a large one. He is, but yeah, he bought those shares a decade ago, two decades. Warren's doing fine on those. So, yeah, I mean, I just think it's a host situations where they have the coverage ratio So in the means to reward shareholders a little bit more with cash of the pocket today, buying

shares back might not really help the cause. First quarter revenue for Wayfair rose 52 percent, but shares of the online furniture and home goods company down more than 12 percent this week. They're growing revenue, Jason, but people are looking for the profits, and they're just not there. Yeah, I wouldn't be looking for those any time soon. Again, this is one of those Zillow, Amazon growth stories where they are just plowing all the proceeds back into the business and really playing on the customer service side of things

and playing on the growth in e-commerce. I mean, I was impressed to see gross margin grow to 24.2% versus 23.4% a year ago. That's going to be something we need to keep an eye on because that's going to tell us what kind of pricing power they can maintain and really how the cost of goods sold is eating into the business. Because this is a tricky one. I mean, they're selling furniture more or less online. I like the nature of the platform and what it does. The numbers make it a little bit difficult to really see too far into the future there. There's a very healthy balance sheet with $360 million on the balance sheet there. They guide it up rather significantly, and I think the market initially liked that. But again, this is one that is going

to take a little while to play out. It's a founder-led business, and they are committed to running this their way. It's going to be a story that takes some time. Do you have any sense of what the customer experience is like? I've never bought anything on Wayfair.com. I don't know if you have. I personally haven't. You know, I've gone to the sites and I've seen the stuff before. I mean, it seems to be, you know, quite user-friendly. It's a good consumer experience. I understand the logic there and that if you're looking for something for your house, you know, a couch, you just don't know exactly what you want. It's a lot easier to go ahead and just surf those websites that they have as opposed to driving from, you know, furniture store to furniture store. But again, I mean, it costs a lot to move that stuff around. And the benefit that they have is they don't maintain any inventory. They have this big network of 7,000 suppliers around the country. which helps whittle down those shipping costs. And I think as long as they can continue to maintain those relationships, this business stands a chance.

I do like it. Coming up, retail, restaurants, and a few radar stocks. 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 yourself stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill, here in studio with Jason Moser,

James Early and Ron Gross. Guys, three new radio stations to welcome to the Motley Fool Money family, all right here in the Commonwealth of Virginia. WMNA FM 106.3 in Gretna, WIQO FM 100.9 in Lynchburg and WBZFFM 102.5 in Roanoke's. Welcome. Great to hear. Love to be aboard these brand new stations. First quarter results for Nordstrom were mixed. Revenue looked good for the luxury retailer, but Ron, the profit number, it wasn't It wasn't quite there. It wasn't quite there, but I really like this company, and I think they're doing the right things, and they're doing better than certainly some department stores out there.

The big numbers, same store sales are up 4%. That's a strong number, 4.4 actually. And total revenue was up almost 10%. I like that. The reason profits were weak is that there were some acquisition costs for a company called Trunk Club online and store expansion in Canada and elsewhere. So there was some real costs in there for growth initiatives. and that hurt the bottom line. But they're still doing a really good job. E-commerce especially

was strong. Trunk Club, as we said, hot look, Nordstrom.com. I like what they're doing with their rack stores. So although the stock has not had a good year, it's nothing to write home about. I do like what the company is doing. You're pretty into fashion. I didn't know. I really like the experience at Nordstrom. I'm actually a fan of the company. I didn't know they bought Trunk Club, and my assumption is part of the growth there is an advertising spend, because I see a fair amount of Trunk Club advertising online. line or hear it on podcasts that I listen to, that sort of thing. Is that something that they

need to deal with for their acquisitions as opposed to Nordstrom itself because the brand is so established and it seems like their target market is established that, not to say they don't have to advertise, but maybe it's less important. I think they certainly have to do some of that. They made an investment recently in Bonobus. I believe that's how you pronounce it. Bonobos. Oh, really? Via Via.

Sensing a theme for the show. And that's really a relatively new brand that they'd certainly have to get the word at, both in stores and online for a brand like that. Surprising first quarter profit from ShakeShack sales up 56%. And James, they made a profit. I don't think anyone was expecting this. This is another one of those businesses where you've got to ask what's the contribution to humanity. But you're right.

I mean, they did. Same store sales up almost 12%, 4 cents per share profit instead of expected 3 cents loss. shares are up 51% year to date. But what's the long-term future? These guys are strong in New York City, but I think the restaurants they've built elsewhere are not doing as well. Do we really need another kind of fancy burger shack? And are there local dominations like here around D.C.? We've got five guys in the west. They've got in and out these sort of like regional change. That's going to be their ceiling or the thing they're going to have to prove themselves against. No question. It's a competitive space. But when you look at the growth opportunity,

I mean, they still have, don't they still have just fewer than 80 locations? Yeah, that's right. Very few. But the valuation is really, really high. First quarter results for El Pollo Loco came in better than expected. Revenue up 11%. The profits up. Same store sales were up.

Jason, why did the stock get hit? Guidance compared to expectations were less than Caliente, Chris. So, yeah, I mean, the market actually, I think, is just expecting more. And guidance for full-year growth implies 20. 25% earnings growth with these guys. And before that earnings announcement, shares were trading in around 42 times those expectations. So there was something out of whack there, something had to give. And obviously, the market decided to go ahead and ratchet back its expectations. And I think that was appropriate to do so. This is an interesting, interesting business.

But I mean, I think to James's point on Shake Shack, this is, I don't know that this is going to be one that has the national appeal, right? I mean, this is a very limited market where it is today, and to sit there and say that it'll be able to translate nationally, I think, is a bit of a leap. And so, you know, restaurants are very tough business. And you have to make sure that the growth prospects are really there. And I think with El Pollo Loco, the market's less than convinced. So when you look at the stock falling the way it did, you don't look at that and think,

oh, that's a buying opportunity. Personally, no, I kind of put it up there with, you know, bojangles, you know, the janglers. It's like you like the restaurant and love the food. I just, I'm not sold on the stock yet. It's the jangler. I don't know. That's Jason's nickname for Poges.

That's Jason's nickname at night or something. It's the jangler. Radio at Fool.com is our email address. Got an email from longtime listener, Sam Muffley in New York City. He writes, I know what a big fan of the Olive Garden that Steve Brodo is, and I'm wondering whether he's seen this. And Sam sent along the news that starting June 1st, Olive Garden will start using breadsticks for chicken parm and meatball sandwiches.

And of course, guys, of course, the sandwiches come with a side of unlimited breadsticks. Steve Broito, our man behind the glass. We know you love the chicken parm. Are you going to try it in the sandwich form? I don't know. I don't like to usually stray off the norm, but I may go for it. I'm willing to give it a chance. Now, it strikes me that these breadsticks might not be wide enough to hold any substantial sandwich.

What's your take on this? Yeah, that's a good point. It's a new recipe. It's not the exact recipe. It's not the test and learn. I'm going to test it. I'm going to learn from it. It's a lot of cards.

Will you report back here sometime after June 1? I will do that. All right. Let's get to the stocks on our radar this week. And of course, Steve will hit you with a question. Ron Gross, you're up first. What are you looking at? Stevie. Dawson Geophysical, DWSN. Very big caveat. A radar stock, not a recommendation. I'm looking at it here. I'm looking at it here. Microcap potential deep value here, only $120 million market cap.

They provide seismic data acquisition for oil and natural gas companies. Big merger recently with a company called T. EGC. As I'm sure you know, lower oil prices kind of have the energy industry in flux. We'll get an update on how that's affecting them on Monday when they report value investment or value trap. I need to figure it out. Steve, any questions about Dawson Geophysical? Is it possible that oil will never come back? And if so, what would that do to Dawson's when there's only one drop of oil left, I bet it'll be a trillion dollars. No, I think oil will come back. It's a cyclical thing. And I think we'll certainly see high

than here. I don't know how high. James Early, what are you looking at this week? After a 13% drop, thanks to slightly disappointing revenue, I'm going back to Copa Airlines, my Panamanian airline that I like so much. It's been down overall because kind of a wacko dictator in Venezuela named Nicholas Maduro. This is a guy who moved Christmas to November 1st. You could do that? He did, yeah. And he mandated no Barbie doll to be sold for more than $2.50 in Venezuela because he loved Barbie, although Chavez hated Barbie, which is very confusing because the two had a good relationship. But anyway, Copa is the most profitable airline in the world by profit margin as a solid yield.

I think this is a buying opportunity. And the ticker symbol? CPA. Steve, question about Copa Airlines? Is Southwest the gold standard to compare an airline against? No, the U.S. airlines have very, very high costs for labor. Copa only pays about 10 or 11 percent of its revenue labor costs compared to 20 or 30 percent in the U.S. You know, when you're a dictator, you can do just about anything.

I can't believe you can move Christmas. That's fascinating. He changed the Lord's Prayer from Arbor's Prayer from Arbor. Our father to Arsavez, also, like the title of it. Sounds great. He's not very popular, so that's a good thing. He's probably going to be kicked out one of these days. It's like the old saying, power corrupts, but absolute power is awesome.

Jason Moser, what are you looking at this week? I feel like there's just a great movie idea here. You've got to come up with something. I'm going to look at IPG Photonics. Ticker is IPGP. And this is the world's largest manufacturer of fiber lasers, Steve. They make lasers. And we know that the world is going to lasers.

But this is a business that, you know, it's still relatively small, $5 billion market cap, and it's a vertically integrated business, which means everything is kept in-house, from research to production, to distribution. So they get to keep all their secrets inside and develop new technologies, led by the founder of the company Valentin Gaponssev, who I believe is kind of getting up there in years, these 75, so I have some questions there about succession. But when you have a market leader like this in a market that is growing considerably in the fiber laser market, I think there is an industry.

interesting opportunity here and little known fact here, but it's true that IPG Photonics is our top performer in million dollar portfolio today. Steve, IPG Photonics? This is a company that's been, I've heard the name IPG a lot around here, and it seems like it's never really done as well as people have expected or wanted to. Can you speak to that? Well, I would say it's up close to 300% for us in MDP, so I just am not really sure what to say that it has performed very well. Steve, IPG, Copa Airlines, Dawson Geophysical. Any of those three interests you? I'm going to go Dawson Geophysical in the hopes that oil comes back at some point.

All right, Ryan Gross, James Early, Jason Mozer. Guys, thanks for being here. Thank you, Chris. Up next, David Gardner talks Apple, Tesla, and what to do the next time your stock drops 20%. Stay right here. Because I don't care too much for money, but money can buy me love. This is my money. Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. David Gardner is the co-founder, co-chairman

of the board and the chief rule breaker here at the Motley Fool. And he joins me now in studio. Thanks for being here. I'm never on and up, Chris. I'm psyched to be invited. Thank you. Well, we'll get you back on a regular basis. We'll get to you as often as we can. There are a bunch of things I want to ask you about company-specific. But let's start with the market in general. We are in year six of a bull market. There are increasing numbers of people, including, by the way, our own Morgan Housel, saying, look, a crash is coming at some point.

You know, you're a market historian. You know at some point the market is going to drop. But I'm curious how you deal with market drops. And in particular, if you have a checklist, if you wake up one morning and you see whether it's the market in general or some of your holdings have fallen 15, 20 percent, what goes through your mind to help you figure out, okay, do I need to seriously consider selling these? Or is this a storm I just need to run out? You're not allowed to ask me three questions in your first question.

That's not fair. I'll do my best, though. First, the market drops one year out of every three. That's just something that anybody who's an investor should know. If you didn't know that, now you know it, but you probably knew it if you're listening to Motleyful money. So one year out of every three. Over the course of time, that means out of 100 years, about 66 of them are going to be

up years, and about 34 of them are going to be down years, actually 67, 33. So that's just how it is. That's what we should be used to. We shouldn't live in fear of that one year out of every three. We should just appreciate that. It's like we're shooting a basketball at a hoop, and it's a free throw, and we're going to hit about two out of three of them, and we don't live in fear of missing a shot. So I don't think what we've seen is six years without those two that have dropped, but then the two years that preceded that were horrendous years and took the market down to levels that nobody, that everyone was shocked by. So it all kind of blends out, and I don't really care whether 2015 ends up being one of those two or one of those one. And I don't presume to know, and I don't follow people who talk about that. And it's not that they're not smart or wonderful, and I don't think Morgan's one of those people, by the way. It's the people who are the pundits who make market calls all the time, and I know I've talked about this on the show over the years

and on our site for decades. Let's just score everybody. What I would love to see is anybody who's going to opine or make a call about a stock or the market overall, that person should be getting tracked. And we are a learning system when we know who's right, who's wrong, how often. We don't learn. We go in media circles. The financial media fails to improve or level up over time because there is no watchdog scoring mechanism like we have and take for granted in professional sports. Can you imagine going and not knowing the stats of any of the players because nobody's keeping them? And players are trash talking. talking each other, they're saying, I'm going to lead the league in home runs, and no one's

actually counting. Sports would be not fun, and it wouldn't be anything we could learn from. It wouldn't get better, by the way. That's what's been happening for decades when it comes to financial punditry. By the way, you wanted to ask me something as well about what I think about a stock, if it's down 20 percent. We can talk about that. That was going to be my follow. Is that your follow? Okay, great. So when you do see, not the market in general, when you see an individual holding of

yours, take a hit. What are the questions that you asked to figure out what you're going to do next with this stock? Because you've had stocks, and Amazon is just one example. This happens every day to me, Chris. Yesterday, literally five of my Rule Breaker active recommendations lost double-digit percentages just in one day. So this is happening. If you're an investor, you probably are used to this. If you have a diversified portfolio, which I would define at a minimum as 15 stocks. In fact, when anybody joins us at Motley Fool stock advisor, which is the service that I love and have spent time on for 12 plus years now, and is the entry-level service of the Motley Fool. I want you to get from zero stocks, if that's

where you are, to 15 as fast as, not zero to one or zero to three, zero to 15. So once you have done that and you're an investor, you're going to have the ones that drop 20 percent. It's going to happen in a lot, especially if you're me and you're overseeing a universe of 200 picks, all of which are active recommendations that I've made over the years and I tend not to sell. So I have 200 stocks that I'm watching. So, factors that I would look at right away. First of all, I wouldn't do anything right then. I would do nothing.

I would probably spend a few days and try to figure out what happened or why. And then I would most specifically look at three things. The first is I would look at the balance sheet of the company. I want to know, is this company cash rich with no debt? In which case, they probably can rebound from this? Or is it the opposite? A lot of debt, not much cash. So there's a big difference how you respond. Obviously, if it has a ton of cash, you're likely to hold it, I would hope, or maybe add to it. By contrast, if it's strapped, then you're going to hold it at best or sell it. Two other quick factors. Is the company performing on plan? In other words, a lot of times we're seeing companies report earnings that seem okay, but the market, this earnings quarter, sold it off. The company did okay.

I don't really care what this. I mean, I'm sad that the stock, I always want my stocks to go up after earnings, but that's okay. Or is it the opposite? Are they off plan? Are things going wrong? Is your original investment thesis, which I hope you have before you buy a stock? Is that intact or not? Then the third and final factor is, do you think that the company is continuing to innovate and do good things in the world? And both of those things are important. Do good things. If companies start to do bad things, I don't want to own them. And if companies are not innovating. I also don't want to own them in a world in which innovation is speeding up and is really required to succeed in business, I think, at a big level.

You've said one of the best investments you've ever made, maybe the best investment you ever made, was AOL. You bought it in the early 1990s. It had an incredible run, culminating in the merger with Time Warner, the $165 billion merger with Time Warner. Earlier this week, Verizon buys AOL for a fraction of a four. Four. Four. Four point four. Four billion. I'm curious, when you saw that news, what was your reaction to that? Mine was actually a little bittersweet. I say this as someone who's never owned shares of AOL, but I just couldn't help but reflect on the rise and fall. I barely noticed it. I didn't really think much about it. In fact, somebody had to tell

me at about noon because I had missed the story that morning. We still own a few shares, I think, in one of my children's accounts of AOL. It was an amazing stock from 1994 through the year 2000. It went up over 150 times in value, and there were a ton of Motleyful members and followers at the time that owned it. And I hope they held it through that period. A lot of people talked about how it doubled, and then they sold it because they thought it had already made its move on its way to 150 times. There's a lot of those stories. I think generally people aren't holding long enough. I continued to hold past the dramatic drop in 2001-2, but I then did start to sell it off just systematically in people.

pieces because I decided this isn't as good as my other ideas. Ideas like Netflix, which is where a lot of my money moved over the course of time from AOL, which was such a big stock. So some companies can keep it going for decades, and some companies are part of an era, and some of those eras are short-lived. I kind of admire that AOL kept going and just kept, I mean, it was big enough that it could just do it, but it lost leadership and really rule breaker-like relevance. a decade or so ago. So I kept a few shares just to track it. So I guess I have Verizon. I'm not

even sure. Are we getting cash or stock? I don't even know. But it's just, it's not a big thing anymore. It's not as relevant a company, not top of mind for me. Let's talk about a company that has kept it going for a couple of decades, and that's Apple. I noticed you're sporting an Apple Watch. I just got it two days ago. I'm still figuring it out, Chris. How are you using it so far in just the first couple of days? My immediate first reaction to the Apple Watch is that it is a more complex, harder to intuitively use object, which I appreciate, but is going to thine, it's going to bifurcate, I think, the user base or the world, because the people who enjoy going to the settings of any app or who like clicking through Excel menus and figure out exactly what Microsoft. Excel can do, and by the way, it's amazingly amount more than any of us expect, I think.

Those people are going to really love the Apple Watch and use it, because it is going to superpower you and make you wearably capable of things that you weren't before. You have to put an effort, though. And the people who are like, I love my iPhone, it makes things so simple for me, but I don't actually know what the Settings button is on the iPhone. Could you show me what those people are not going to use or adapt the Apple Watch. So in a way, it's a simple machine, but it's a smarter machine. It requires more of us. And so for me, I aspire to be that first type of person, but I have friends that are so much more awesome than I am at figuring out how to use stuff. So my new conversation, when I know someone has an Apple Watch, is going to be, hey, how are you

using yours? Or give me a tip or tell me the app or what is it? Because it's so tweakable in so many different ways. Do you think for shareholders, this is a device that is going to take a little while before it has any sort of meaningful impact on what this is up? It's already had a meaningful impact. So, I mean, some people paid $10,000 for their gold one. That's not me. But that's real money that Apple's already taken.

I think those sold out pretty fast. And a lot of people have bought them. It's a $3, $400 proposition for a lot of people. So of course, it's already helped Apple a lot. I think it's very promising. I like mine. It's fun. It's much more customizable than anything else. Like what you choose to have on your watch face or what that even looks like is much more configurable than we're used to from Apple stuff. Coming up more with David Gardner. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. Join in studio by David Gardner.

Last week on the show we talked about Tesla Motors, their most recent quarter, but also the announcement that they had made prior to their earnings about the home battery, the power wall. I know right now this is a company that when you look at the stock and Maddie Argusinger made this point, that it's all about the vehicles right now. But I'm curious, what is your expectation of this company 10 years from now? Do you expect 10 years from now primarily we're going to look at it as a battery company? Chris, I'm sorry. I was distracted. My Apple Watch told me that I have 21 of my third. minutes toward my exercise goal. As you asked your question, I was distracted. It started shaking my risk. I'm sorry, what was the question? No. That's half true what I just said. I think

I did hear your question. So my reaction is I love that Tesla is doing that. And why are we named Tesla Motors? That is the formal name of the company. So I think we should probably drop motors at some point, because as we hoped when we picked it in Rule Breakers several years ago, and I'm happy to say a few hundred percent ago, and we just continue to hold the position all the way through, as we typically do, with our best stocks. We didn't foresee exactly what they would morph into, but they're morphing. And I love the companies that have that capability, that can become much more than we thought when we first bought it. And usually, of course, that's happening because the people who are running the company have vision and ambition.

And so whether it's Elon Musk or Jeff Bezos or a number of other CEOs, I would say Steve Case was the CEO since going back to AOL. These are people who start with one thing and can make it play out laterally in directions we didn't expect and sometimes vertically up or down in a way the market didn't foresee. But I specifically target that kind of person or those kinds of companies, and I want to own some shares of them, and I usually hold them for long periods of time. So I guess my immediate answer to your question is maybe we should drop motors from our corporate name. You mentioned Elon Musk. There's a new authorized biography that's out. And one of the

bits of information from that book that's gaining attention is Musk's belief, or I should say concern that his friend, Larry Page over at Google, is possibly going to develop robots that could turn evil and destroy the human race. Okay. And by the way, Alon Musk, not alone in expressing concern about artificial intelligence, Stephen Hawking, Bill Gates, and others have expressed similar concerns. How do you think about artificial intelligence, and to what extent, if any, are you concerned? So, I mean, I have to respect it. So I don't, it's not something that I fear. I think it's just too early to know. I think typically you're hearing ahead of time misgivings, which is good

that we should be thinking about that. It's good, for example, that someone, you're, someone is saying that, as opposed to no one even thinking or saying that. So I think they're out ahead of it and getting people to think smarter about these technologies. I'm always the optimist, and I love growth and technology. So I don't think that's going to happen, because in the end, it's humanity that's programming all these machines. And I realize that once you start creating an artificial intelligence that could be acting on its own or self-flying drones that could be all of a sudden taken over by somebody else, there's an additional element of risk. But it's so natural for us to think dystopically when we think about science fiction.

And the science fiction of, you know, was 1984 the book, 1984? Well, those of us who've gotten to live found out that 1984 was really nothing like 1984. for. And so while there are elements of truth and possibility for all these things, I think we should be just asking ourselves how to make things more awesome. And here's the key. There's so much connectedness now that if you wanted to do something really dumb or really, really dangerous, it's increasingly difficult to act autonomously in a way that is not trackable and could harm humanity. It certainly is still possible. You see it every day in one-off ways, but it's reducing over time. It's not increasing. Much lower homicide rates in our country today than

30 years ago. Most of the metrics we care about longevity, prosperity, innovation. All these things are at all-time highs going higher. So the dystopian view is not mine. A couple of things before I let you go. I know that you are a big fan of Star Wars. How are you feeling about Episode 7, The Force Awakens? If that's a stock, are you buying it, or are you going to wait and see? So I have two thoughts. The first is it will be the biggest movie of all time. It will gross gigantic amounts.

And it will later be superseded, but I'm very confident that it's going to be the number one grossing movie up to that point. I mean, I don't think there's any real wisdom there or any real insight. Maybe that's just a... But good news for Disney shareholders. No doubt. And so that's my first thought or prediction, which I don't think is particularly daring on my part. And my second thought is that I'm not watching the trailers. You're not. You want to go in completely surprised.

I was just at Age of Ultron last week. And of course, naturally, the Star Wars trailer came on before the movie, and I just put my head down. I still heard it. I'm fine with that. But to me, I don't want the visuals spoiled. And so I want to go in and just see it with absolutely fresh eyes. I will say that I did make a successful prediction about 10 years ago when they finished the previous one I was like it will be coming back they will go there when I think oftentimes you hear that that's the last one and I think it's gonna I mean it's only more

they're already inventing the side story movies for it's a gigantic phenomenon it's a wonderful acquisition by Disney as a Disney shareholder I'm delighted by it but as a fan and as a person in our culture Maybe you want to copy me on that, Chris. Because I think making it special for yourself, we see too much with the trailers. So things that really matter to me, I tend not to watch the trailers. Over the next few weeks across America, more than 3 million young people are going to graduate. They're going to enter the job market.

So whether it is career advice, personal advice, a book recommendation, what's one piece of advice you have for the graduating class of 2015? own your first stock. I hope you did 10 years ago. Some of you did. Some of you got your first stock at age zero because your parents started an account for you. And if you're a parent, you should do that for your kids. Many don't have any stock at all. Some have funds. Great. But I think everybody in America should own a stock. And, you know, so rhetorically, I ask, what if every child turning 18 had a stock. How would we be different as a society or a culture? If we could say yes to that, which we obviously can't, I think we would be a stronger society, a stronger culture. Even if you want to be invested in funds or you don't even want to care, I think everybody

should own at least one stock just to understand what that is, what it means. You're a part owner of Under Armour, let's say. And to watch that. And if you're a fan like I am of investing in stocks, you're going to see how if you pick good companies, you'll outperform all those funds that everybody else has and their 401ks or that they're mailing in with index funds. I love index funds, but I only love them because most people need some stability and simplicity, and they don't want to pick stocks. But I think everybody should pick stocks. And I think if you do, you'll beat the market. I think all of our work here at the Motley Fool, I'll say everything that I've tried to do over 20 plus years is about beating the averages, and it's very rewarding to beat

the averages. But forget about being the market. Just everybody should be an investor. And so that's what I hope for for every graduate. He is the co-founder, co-chairman of the board, and the chief rule breaker, David Gardner. Always a pleasure. Indeed. Thank you, Chris. Wait, I'm sorry, my Apple watch. It's lunchtime. You know, David Gardner and his Supernova team are taking a long look at stocks in the e-commerce industry, as well as energy stocks, social media, and a lot more. And if you'd like to learn a little bit more about David's Supernova service, you can do that.

just by going to discover supernova.com. That's all one word, discoversupernova.com. That's going to do it for this week's edition of Motley Fool Money. You know, you can subscribe to us on iTunes. Just click that subscribe button. Our engineer is Steve Roido, our producer's Matt Greer. I'm Chris Hill. Thanks for listening.

We'll see you next week.