Motley Fool Money - Motley Fool Money: 01.21.2011

Episode Date: January 21, 2011

Is President Obama's new economic advisor a bad investment? What will a new CEO do for Google? Will healthier foods translate to healthier profits for Wal-Mart? And will the iPad be able to save Playboy? We'll tackle those questions, share some stocks on our radar, and talk with New York Times writer Eduardo Porter about The Price of Everything. Learn more about your ad choices. Visit megaphone.fm/adchoices

If you're a small business owner, you already know what it takes to keep everything moving. You're juggling customers, invoices, and about 100 decisions every day. Thankfully, taxes don't have to be one more thing on that list. With Intuit TurboTax, you can get your business taxes done for you with a full service expert. TurboTax matches you with your dedicated tax expert. Who knows your industry understands your business write-offs and gives you the personalized advice your business deserves. upload your documents right in the app, hand everything off, and still feel like you're in the loop the whole way through. You can even get real-time updates on your expert's progress right in the

app, which makes it so much easier to stay on track. And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit turbotax.com to get matched with an expert today, only available with TurboTax full service experts. Everybody needs money. That's why they call it money. The best thing in life are free, but you can get them to the bread. 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 Ron Gross. Guys, good to see you. Good to see you, Chris. On today's show, we'll look at the big news from Google, Apple, Walmart, and more. And as always, a look at the stock.

on our radar. But we begin with the big macro. This week, the U.S. China Summit produced a trade deal worth $45 billion for some U.S. companies. And on Friday, President Obama announced that GE chairman and CEO, Jeffrey Imel, will head up Obama's outside panel of economic advisors replacing Paul Volker. Seth, Jason, you're excited about Jeff Imelt coming to town, aren't you? Jeffie. Well, he's not going to come to town. This is the thing that, you know, poor GE, they all have a hell of a time with it, with the contracts and the government. or anything, no access in Washington, but now their CEO will go down there and rub

elbows with the president. And this is, by the way, exactly the guy you want in charge of economic issues and jobs. I'm looking at a chart here that is the GE share price since he took over. Only down 54%. That seems pretty good. That's nitpicking.

That's net picking. Within the margin of area. Earnings also lower than they used to be. By the way, they ballooned up during the sort of housing bubble, not coincidentally because GE was one those companies out there making lots of loans. And from looking at GE's employment numbers, he's a kind of guy who likes to cut workers. So I'm not exactly sure what he knows about creating jobs. I think he might know a lot about efficiency. To me, this is clearly Obama trying to say,

hey, you business guys out there who keep calling me a communist and everything, look, I'm in the room with one of you guys now. Please stop hating me so much. You welcome corporate America's scraps. James, what's your big macro headline in the week? I'll touch you on the China Summit. The big news here was that who Jintao showed up. Who showed up? Which is, I'm paid to be here, folks. Obama here's the who? Which is better than not showing up. But yeah,

they did buy $45 billion worth of U.S. stuff and gestured towards better treatment of U.S. companies, as well as Chinese people in general. So it is puffery, but it's at least puffery in the right direction. I don't think we got anything investable out of this, though. Ron Gross? Yeah, I agree. It's a nice kind of dog and pony show. For me,

when I think about China, I'm more focused on them being interested in bringing down the growth of their economy and their inflation as well. The recent numbers show them growing at almost 10 percent, and inflation looks to be pretty strong there. So they're raising reserve requirements, raising interest rates that will obviously have an effect of lowering the growth in the economy, that will have implications on our multinational companies, those based here in the U.S. as well. And I think we need to be aware of that as investors and take that into account when we look at valuations. It might also have an effect on some of those Chinese companies.

Yeah, maybe. Google reported better than expected earnings, revenue up 26%. But Seth, Jason, the bigger news is that CEO Eric Schmidt is stepping down and handing the job to co-founder Larry Page. What do you think? Geez, I'm just full of CEO hate for today. Again, looking at another graph that all you out there in Radio Land can see, I'm looking at the amount of money Eric Schmidt made just selling Google shares since July of 03. Any guesses? Anyone know what that would be? Lots.

$1.684 billion. My question is, what did the guy actually bring to Google? And I don't think he brought that much. I still think that primarily most of the good decisions, if not all the good decisions, were made by the two co-founders. And we see from some of these, there's a lot of news reports now showing the quotable Eric Schmidt. He tends to put his foot in his mouth a lot. But some of them betray some pretty interesting decisions. Stuff like Android, not even on his radar, brought in by page. And the same thing with Google Earth. They just bought it without telling them one day. They bought it for a few million. And those have been some major drivers at Google have helped their position in search. I think Schmidt was basically paid billions

of dollars to make Wall Street feel better and to look like a chaperone. They're better off without Ron, the earnings news did get overshadowed, but the numbers were impressive this quarter. Yeah, that's right. As you said, sales up 26 percent, net income up 29 percent. Android is now on over 300,000 devices. YouTube revenues have doubled. There's some stories out there that Google, after losing out to the coupon combination, is actually creating a product to go after Groupon, which will be interesting.

Paid clicks up 18 percent year over year. cost per click up 5%. So the company really is doing quite well and making quite a bit of money, $13 billion of operating cash flow in the latest quarter. Still an ad company, though, sounds like. Absolutely. It's a bottom line. Well, and we've talked here before about how CEO succession is a difficult thing to pull off well.

So now that Google is about to do this, what should shareholders be looking for out of Larry Page? If you're a Google shareholder, what do you want out of Larry Page that maybe you didn't get out of Eric Schmidt? I think you turn to social media here. Schmidt has come under some criticism about not being there on the social media side. So you've got to look at Facebook as the big competitor here, and so they need to be really firing in all cylinders with regards to that. And even Apple, as a competitor, looking at mobile software and advertising. I think that the next administration needs to be wary of those things. James?

I just modify that slightly to say, I would look for page to not do anything stupid in relation to social media, because Facebook is the elephant in the room here, and they are, I don't say desperate, but I could see them being desperate. I think it's important that they don't act desperate here. Seth? I think you might get a little something that they don't seem to have had at Google for something. You might get a little humility out of Google. You might get a little more humility out of page, and I think that is actually important, not just because it will get people to stop kind of hate on Google, and there's a little bit of backlash,

But because when you are not humble enough to know what you're capable of or to know where your shortcomings are, and it never seems to me that Schmidt was very humble about that, you make lousier business decisions going forward. So I would actually be much more excited to buy Google stock once Schmidt is out the door. Unfortunately, he's not all the way out the door. Hopefully they've successfully neutered him with the new position. Well, and you touched on his quotes. Rob Paggararo, our friend over at the Washington Post, a great tech writer,

had a column spotting up with some of the classic quotes from Eric Schmidt over the years. In response to the notion that people were offended, that photos of their homes were on Google's Street View, his response was, Just Move. Really? That's worse than I thought. One quote, he said, most people don't want Google to answer their questions. They want Google to tell them what they should be doing next. That's what I want from Oprah. Final one.

One day we had a conversation where we figured. we could just try to predict the stock market. And then we decided it was illegal, so we stopped doing that. What about the one where he said they need to give all younger Americans a free name change once they become adults? Because everything that Google will have on them from when they were teenagers and doing stupid things will be so embarrassing that they won't be able to function in society. It never occurs to the guy to maybe not leverage that information. Instead, the solution is cover it all up later, as if, you know, then Google wouldn't exactly know. who these people were to begin with. I mean, you're listening to Motley Fool Money. We're going

through some of the headlines of the week. Walmart is teaming up with First Lady Michelle Obama in an initiative aimed at providing healthy and affordable food. Over the next five years, Walmart is pledging to reduce sodium and added sugars in some foods. The company also plans to eliminate trans fats from its package foods, build stores in poor areas that don't already have grocery stores, and reduce prices on produce. James Early, Walmart is the nation's largest retailer. It's also the largest grocer. It's nearly twice as big as the number two grocer, Kroger's. This is pretty big news. It is, Chris. The quick serious answer is that this is great news. Walmart is like Oprah. Anything that it does is huge. And unfortunately, many of its

customers are huge, too, at least made that way by Walmart. According to a UNC study, adding one Walmart Supercenter for 100,000 people results in an average weight gain of 1.5 pounds per person over the next 10-year period, and it boosts the overall obesity rate by 2.3 percentage points. Now, my advice would simply be to do away with the motorized shopping carts and put all the junk food way in the back because these stores are like six acres. I mean, it's a pretty good walk to get to this. But economically speaking, Walmart often accounts for a third, a half, or a quarter, something

like that of its supplier's business. I mean, it is their big customer. So it's big enough to command them to change their products, and they will basically make these product-align changes across. the board, meaning the stuff they shipped to Kroger, the stuff they shipped to Safeway, is probably going to be also Sands TransFat. So it's a win for Walmart, but it's actually a win for the nation's health. I think it's also a little bit of Walmart trying to kind of get some hype and maybe take a bit of credit for a movement that's already going on trans fat,

have been the bad word for a while. So a lot of companies that make these products have been trying to remove them and have been selling them to other outlets. So that'll happen more quickly now that Walmart's on board, and it may happen for a few more products entirely, but Walmart here is, it's better late than never, but they're late to the game. Once it's totally safe to jump in the pool, yeah. Yeah, then you can always count on Walmart to do the right thing after they've exhausted all the other options. Over the next five years, and Walmart has plenty of companies that are listed as competitors, Target, Kroger's Safeway, et cetera. Over the next five years, if you could own Walmart or you could own any one of those other competitors in the field,

what would you rather have, Ron? I'm a Costco man, Chris. Okay. I think they'll do well, five years, ten years, 20 years out. James? Well, I haven't written in my nose. Only a dumb man bets against Walmart. What about Walmart? I wasn't thinking about Costco.

I definitely go with Walmart. I just think you can't go too wrong. Seth? I think that's the problem with Walmart. Everyone already believes that, and I think that's your recipe for subpar returns. I would look to some of these smaller family dollar-type operations that are actually taking the fight to Walmart. becoming more of a Walmart than Walmart was in some of the more rural areas with smaller stores. And I think that they have the opportunity to give you better stock returns.

And make carry trans fans. Coming up, another tech giant with big earnings and a management shakeup. This time it's Apple. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money for investing commentary and analysis 24-7. Go to the Motley Fool's website, Fool.com. You can also check out our new daily podcast, Market Foolery,

Every Monday through Thursday, we'll give you our take on a few of the big stories of the day. Market Foolery, check it out on iTunes or online at MarketFoolery.com. Chris Hill here in studio with Seth Jason, James Early, and Ron Gross. A lot of companies reporting earnings this week. Apple had blowout iPad sales. Another great quarter was overshadowed by the news earlier in the week that CEO Steve Jobs is taking a medical leave of absence. Chief Operating Officer Tim Cook will handle his day-to-day duties while Jobs is away.

Ron Gross, what did you make of the week in Apple? So I think in the short term, the strong earnings kind of was a wash with jobs leaving. But I think if we look out longer term, jobs leaving is a bigger deal. I think he is a big part of this company. I can't speak to what would happen with the stock in any kind of a short-term perspective. But in terms of the leadership, the visionary nature of what Jobs brings to this company, I think it's a big deal. But for now, Apple's... The dictatorial clarity.

Yes. For now, Apple is absolutely firing on all cylinders, whether it's iPads or iPhones or Macs, unbelievable balance sheets, $60 billion in cash, net income up 78%. They're just doing it all right. James? I will say the hidden talent here is Jonathan I. This is the Scottish designer of the iPod, the IMac, the iPad. That chic look that we expect from Apple products basically comes from this guy. And yeah, he's not running the whole company, but at least he's still there. Seth?

This, to me, is some interesting news for, there's a couple of very interesting threads. One is a sort of a kremlinology we're going to have to resort to figure out what's going on with jobs. This to me is imprudent and it's a little bit egotistical on the part of the board on jobs, which is to say, I'm leaving, no more questions, please. His health matters to shareholders. As he did in the past, he takes the, they're taking the stand that it doesn't matter and everyone should just leave the guy alone. Well, you know what, when you're paid as much as he is and you're as important to the kind of company as he is, you don't get to say, you know, my health doesn't matter. He's only paid

52 bucks a year or something. 50, no. That's because they gave him so much back at the past. But from a disclosure standpoint, I mean, the company is covered. I mean, they've basically, like, there are certainly people out there arguing you should come forward with more. But Apple has, legally speaking, legally speaking. Yeah. What they're doing is, do they have an ethical obligation? Is legal. The other thing I think is interesting here is the iPad. And if you take the iPad news and take a look at what's going on with some of the other chip makers and computer companies out there, you'll notice that there's an interesting trend, selling lots of iPads, other also tablets coming into the market because of the success, and stuff like Netbooks completely going out

the window. Now, I didn't think the iPad would be a smash hit, but one of the things I did think might happen was it would completely kill the netbook business, and that appears to be happening, and it appears to be taking business away from lower-end laptops as well, which changes which changes the landscape of computing in a very big way. If you're an Apple shareholder, which is a greater concern, Steve Jobs' health, or this sense that this is a stock that is almost priced to perfection, meaning that they have to have perfect earnings, expectations are so high for this stock.

What's a greater concern? I would actually say they're not priced for perfection. I think that's a bit of an exaggeration. How dare you accuse that? that. 20 to 25, 20 to 25 P.E. ratio, 13 times EBITDA. Certainly not cheap, but not crazy.

But not crazy either. 46 of the analysts out there that follow Apple have an outperform or a buy rating on the stock with a price targets as high as $550 on the stock. Those sell side guys don't often get it right, but I don't think it's some crazy valuation here. And to the broader point, the job loss is more of like assuming he does. doesn't come back if that were to happen. This is more of a five and 10 year thing down the road, you know, the missed opportunities. It will be really interesting to see what happens if and when he's gone, because in the past, when he was gone, sort of the company fragmented, you get these power

struggles, you get, you start to get committee decisions. Now, I think committees don't always make bad decisions, but they make different kinds of decisions, and they make the types of decisions that tend not to be favored by the Apple cult. People like Apple because they don't go to Google to be told what to do or Oprah, they go to Steve Jobs. And Steve Jobs says, this is how you want your computer. This is how you want your phone. And anything else is bad. Without that, I wonder if they remain as successful 10 years down the road. Studies have shown the committees have to make better decisions than the typical individual, but not than the smartest guy. The smartest guy is better than the committee. And isn't Steve Jobs saying something like, people don't

know what you want until you give it to them? Until I tell them. Yeah. Hulet Packard announced a shake of the company's board of directors. Gone are four members involved in the fiasco around former CEO Mark Hurd's departure. In are five new members, including former eBay CEO, Meg Whitman. Seth Jason, I guess it's lucky for HP shareholders that Meg Winbin didn't win the gubernatorial election. Yeah, and it's also great news. I mean, you can look forward to some really bad, huge acquisitions maybe, you know.

You think HP's going to buy Skype now? Skype's available, isn't it, right? Maybe they could go back for, how about this Vonage thing? Groupon. I heard about this. Or Groupon. Yeah, why don't we just reach and stretch for something? There's some synergy there.

This is, I guess it's not, it's not that unexpected. It's a little unprecedented, bouncing four directors at once. And these, by the way, were the directors who sort of were the most sympathetic to heard and who were trying to kind of hem and haw and keep him around longer in the wake of this. Remember, it was not a sexual harassment issue. They said officially. The official reason is that he did something bad with his expense reports, and the rumored reason is that that was.

in order to commit sexual harassment. But I think it's probably a good move for HP in the long run because the board there seems to be a train wreck and has been for a while. Online auction site eBay reported better than expected earnings. Ron, how are they getting it done? Well, eBay, the basic business, the marketplace business, is still growing, but it's somewhat mature at this point. Maybe 5% or 6% growth we're seeing.

Where they're really firing, again, on all cylinders is this PayPal business. That's your go-to analogy, isn't it? Yeah, it seems to talk about Ford and GM. Actually, it's not appropriate in this case because they're not firing around centers. PayPal is really the star here of eBay, and it's growing significantly, and the international opportunity is pretty big as well. So that's the exciting part of eBay. The marketplace business has some competition out there in the likes of Amazon and others. Not as exciting to me.

Steve, do you ever buy any stuff off of eBay? I do happen in a while, but I did pick up, I believe, a nifty Buck Rogers nightlight. And low quality or not, you can't. Hold on, hold on. How old were you when you bought this? A couple years, five years ago. Why are you buying nightlights? I don't know.

Dude, it's dark in there at night. I just learned way too much. It's just cool. I don't know. Buck Rogers. Cool. Buck Rogers from the TV show? Yeah, the TV show.

Let me ask you something, Steve. After you got married, where'd your wife tell you to put that nightlight? No, it's in our basement restroom. I kind of thought so. You can't get that anymore in the store. You have a restroom in your home. That's so fam. It's got to rest somewhere.

It sounds classier than bathroom. All right. Coming up, a conversation about the price of everything. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. So why do I pay $2 for a cup of coffee at Starbucks, but I refuse to pay a dollar for a 20-ounce bottle of soda?

Eduardo Porter is an editorial writer for the New York Times, who recently explored human behavior and economics. His new book is The Price of Everything, solving the mystery of why we pay what we do. Eduardo, thanks for being here. Yeah, thanks for having me. What got you interested in this topic? Well, about 10 years ago,

I was reporting on a totally different matter on immigrants into the United States, and I was having this conversation with a farm worker in the San Joaquin Valley in California. And he was sitting there very, very important, matter of fact, he discussing with me what I thought

was amazing whether to bring his children illegally into the United States over the desert from through Arizona or through

a border checkpoint using fake documents. Now, his decision hinged on a question of prices. Bringing his kids over the desert would cost him

about $1,500 per head to pay to a smuggler and bringing them over a checkpoint would have cost him about $5,000 a head. Still, bringing them over a checkpoint reduced incredibly the chances that something bad would happen to them along the way.

So in a way, I took away from this notion that we can put prices on even the most precious things, in this case, the life of his children. So anyway, these kinds of consideration led me to see how prices are involved in everything that we do, how they are in even our deepest decisions that we think have to do with like love or even religious faith, suddenly prices pop up. And so I thought this was a fantastic subject for a book. One of the things we do at The Motley Fool is we really study companies, and one of the companies that, well, for probably obvious reasons,

that gets a lot of attention is Apple. Apple is a company that can charge a premium for its products in a way that some of its competitors like Dell or HP just can't. why is that? What is it about Apple that allows them to charge a premium? Apple managed to convince us that what it did was, you know, defining the zeitgeist. Essentially, when we're buying an Apple product, we're buying a gadget, but we're also buying into a sort of belief set in the beauty of technology and in, you know, the enormous possibilities that all these new devices

will give to us by connecting us to media in different ways. So I think that in a way we are paying for some sort of brand image. But also I would argue that because Apple has been the first in so many of these new gadgets, I mean, it was the first one to create the iPod, the first one to come up with this like fantastic new type of phone. It was the first one to come up with the new pad. I mean, the fact that it's the first one to arrive with this and basically set the terms for this. market will also be valuable to consumers because it sends the idea that it is the most innovative company around and people like to be associated with this level of innovation.

But I would agree, which seems to be the undercurrent of your question, that much of this value is not necessarily in the physical object, but in the kind of like the things that we attached to it, the psychological and emotional aspirational attributes that we associate with these objects. You're listening to Motley Full Money. We're talking with Eduardo Porter, whose new book is The Price of Everything, solving the mystery of why we pay what we do. What surprised you the most when you were working on the book? Well, what surprised me the most was perhaps what led me into it, was this notion that prices are involved in all sorts of social and individual decisions. I mean, say, take a look at sexual promiscuity. I mean, something that, you know, I wouldn't necessarily... Right now, you want me to take a look at sexual promiscuity?

Well, consider it. Consider sexual promiscuity. For you, I will. In 1900, about 6% of 19-year-old women were estimated to have been had premarital sex. Six percent of women had premarital sex in 1900. Flash, fast forward to the present, and about three-quarters of 19-year-old women will report having had pre-marital sex. premarital sex. Now, why is this? Why did the Moors change that it became okay when a hundred years ago it was such a taboo? Well, I would argue that what happened was that the price of premarital

sex dropped a lot. And why is that? Well, essentially because of the development of effective contraception. In 1900, the cost of premarital sex was potentially having a kid. The likelihood of that was pretty high. Right now, the likelihood of that is, you know, as low as you want if you, because contraception is available. And therefore, as the price of premarital sex declined a lot, well, demand for it increased, you know, the demand slope curves downward. And therefore, you know, primarital sex is a much more common part of the culture than it was back then. So this, kind of like the appearance of price in these sorts of, like, deep decisions that we do not associate with this type of cost-benefit analysis is what surprised me, it's what drove me

to write this book. Boy, leave it to the field of economics to make sexual promiscuity boring. You're listening to Motley Full Money. We're talking with Eduardo Porter, author of the new book, The Price of Everything. Eduardo, one of the things you write about in the book is a study that was done about a quarter century ago entitled Orange Juice and the Weather. Tell me about the study and sort of what it says to you about. about the stock market? Well, this study is, of course, about the wisdom of crowds.

The result of this study, in a nutshell, was that people who traded orange juice futures collectively had a better sense of the weather that was affecting the orange crop than even the weather service. So they had a very, very accurate estimate of what their weather was going to be like. this tells us that prices can be right in the sense that markets can correctly identify the real price of an underlying asset, of an underlying event. However, this isn't the way all markets work, in particular this is not the way that the housing market works or the stock market works. And the difference here is very important. There is an underlying objective thing called Florida weather that has nothing to do with investors' desires and appetites.

the weather is outside of our, you know, the realm of decision-making. However, that's not true of house prices or of stock prices. So when all, you know, all the investors in the market are getting around to decide the price of a stock, they are actually moving the underlying price of this stock. There is no such thing as an objective, non-humanly determined stock price. It is determined by these investors. and therefore the possibility of bubbles arising, of investors allowing their enthusiasm, their exuberance to lead prices astray,

is a very clear possibility. And again, I would point to the housing bubble most dramatically, but also to the dot-com bubble, as examples of this investors pushing prices away from, say, their sustainable levels and leading to a bubble. that had to inevitably collapse. What do you think is the biggest misconception about gas prices? That they're too expensive. They're not?

They're not. And I get this question a lot. Gas prices, energy prices generally, do not take into account a fundamental component of their cost, which is the cost of dealing with, the future effects of the carbon that is being released into the atmosphere when we burn fossil fuels. So given that we do not include that cost at all in the price of, you know, a gallon of gas or a kilowatt of electricity, means that we're paying too little for it and that we're consuming too much of it.

You're listening to Motley Full Money. We're talking with Eduardo Porter, editorial writer for the New York Times, and author of the new book, The Price of Everything, solving the mystery of why we pay what we do. All right, time to wrap up with a round of buy-seller hold. Let's start with, from the business standpoint, buy-seller-hold, the relative merits of the All-You-can-Eat buffet. I would buy it.

Because from the point of view of a store, the All-You-can-Eat is not extremely costly. Most of the costs that a restaurant will have are in the rent, the staff fixed cost. not necessarily, you know, in the variable costs of the extra slice of pizza or the extra, you know, serving of salad. So the added cost for allowing somebody to eat all he or she can is probably low compared to the benefit that you get from, you know, the same marketing impact of drawing people in with this offer.

Buy-Suller-hold Southwest Airlines' Bags Fly Free campaign. I think that airlines' decision to charge customers for every little thing they do is ultimately going to hurt them. And I think that any move against this trend to offer more service to, you know, beleaguered flyers, is going to ultimately pay off. Buy-sellerhold, people paying for a print edition of the New York Times in five years. Oh, sell. People, some people, will pay for the print edition of the New York Times, but it will be more of a luxury product, perhaps something that you see in, you know, fine hotels which smell of lavender and old oak. But I believe that most people are going to gravitate towards an electronic version, and I think they will pay for it. And finally, this has been around for more than 50 years.

Buy-Seller Hold, the TV game show, the price is right. Apparently, hold. It's not a show that I watch, but I am amazed that it is still around. Eduardo Porter is an editorial writer for The New York Times, and his new book is The Price of Everything, solving the mystery of why we pay what we do. Eduardo, thanks so much for being here. Thanks so much for having me.

Coming up, Facebook, Playboy, and the stocks on our radar. This is Motley Fool Money. 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. I'm Chris Hill, and back in the studio, with me, our trio of senior analysts, Seth Jason, James Early, and Ron Gross. Guys, before we get to these stocks on our radar, a couple other stories in the news this week that wanted to get to. Ron, let's start with Goldman Sachs. There was the story earlier

in the week with the Facebook offering that Goldman was now going to restrict it to foreign investors. Yeah, what a fiasco. So let's make sure listeners understand what we're talking about here. Goldman was leading a private placement of Facebook shares, and the media attention that the story garnered actually turned it into what the SEC would probably consider a public offering, and that's a no-no as far as the SEC is concerned. So they moved this overseas where the SEC doesn't have jurisdiction, and they can raise the money that way. The fact that Goldman didn't see this coming is an unbelievable thing to me. Back in my hedge fund days, I wanted to sponsor my son's baseball team and put the name of my hedge fund on the backs of their little

uniforms, and my lawyer said, no, no, no, that'd be considered advertising. You can't do that And so the fact that Goldman didn't see this comment is shocking. Especially given the email they sent out, which was reprinted in the Wall Street Journal. And the Wall Street Journal ran it above a Nigerian scam type email. And it read as exactly the same thing. So Goldman should have known, first of all, they're talking about the most popular company on Earth. And second, all, they're sending out this really creepy, scammy-looking email. They should have known it was going to be everywhere.

We put our hedge fund logo on golf balls once. I don't know if we'd give them away, though. So just to be clear, Chico's bail bonds, that's okay on the back of the liberal league uniform. Not my hedge fund. You should just buy a bail bond business. If I have some wealthy relatives overseas, should I be encouraging them to try and get in on the offering? They need millions of dollars. I would say, my value investing self would say no, but in this particular case, I'm going to say yes, there's money to be made.

Yeah, there's going to be so many, what's the word I'm looking for? Can I go to Deadwood? Hooples looking for these shares when it eventually IPOs, that you'll be able to just flip them out of the market at a higher price. All right, another story that made headlines late in the week. Warren Buffett will be leaving the board of directors of the Washington Post Company when his term expires in May. Seth, Jason, what did you make of the news?

I just feel like if I'm a post investor, which I'm not, if I'm a shareholder, that concerns me a little bit. It's a bit of a yonder and subsist. is part of the reason he was on that board for so long as he had this sort of lifelong fascination with newspapers. He liked rubbing elbows with the elite in Washington. You know, originally the Post buy and the position there gave him access to some of that. I secretly wonder myself whether some of this doesn't have a little to do with the fact that the Washington Post gets, I believe it's, you know, all their EBITDA or more from its Kaplan

division and Kaplan is along with a lot of for-profit educators under fire for pretty much peddling low-value high-cost education services to low-income people on the taxpayer dollar, the idea being that they know full well that the student loans are going to go bad so that the taxpayers are on the hook for this. I wonder if Warren isn't trying to get himself away from that, which is a scandal that just continues to grow. Ron? I don't see this as that big a deal. If I'm Correct. This ends Mr. Buffett's board participation in any outside board other than Berkshire Hathaway. He left the Coca-Cola board last, and he's really focusing on the Berkshire entities now, and this was just the last one to go. To me, it's not that big a deal.

So you're back to calling him Mr. Buffett. Exactly. He deserves it. So earlier in the show, we talked about Hewlett-Packard, their board of directors, just sort of broadening it a little bit. As investors, how much does a company's board of directors matter to you. Is it something you even take into account when you're looking at whether or not to invest in a company? Well, for me, as a dividend guide, boards in the U.S. set the dividends. So it does matter to a degree. I think in general, CEOs are not nearly as forthright with their boards as the boards would think. So, yeah, and a lot of boards have people who really don't know much about business as well. As a former shareholder activist, I will say it depends. There are companies

that will rubber stamp almost anything a strong CEO wants to get through. And then, There are other boards that are made up of independent folks who have the shareholders' interests in mind. I wish there were more of those types of boards. Seth? Yeah, it definitely depends. Like Ron said, at a certain price, even a lousy CEO and a crooked board become a bargain. So it all depends on the price. And finally, Hugh Hefner used Twitter this week to announce that Playboy magazine will be available on the iPad beginning in March.

Is this or anything going to save Playboy magazine? No, this will not be a game changer for Playboy. Playboy is going to be a licensing business going forward. The fact that you can access it on the Internet. Can we clarify what Half was trying to pull? Half is trying to hitch his wagon to the iPad and the idea, hoping that people would assume this was an app, which won't happen because Steve has a no-porn-no stance on those things.

All it is is a website that you could get on any device that gets the Internet. So Hefner is full of it. How dare you say that about it? and another American icon. All right, time to get to the stocks that are on our radar. And Ron Gross, I will start with you. Great, Chris. I've been taking a look recently at a company called National Grid, ticker NG, company based out of London. They own a substantial piece. Easy for you to say. Exactly. Of the electric grid in the UK, as well as the northeastern U.S. They recently raised $4.6 billion of new capital.

The stock got hit. They needed to upgrade their power infrastructure. This will hopefully cause them to raise rates, which would be good for them. Strong dividend yield, 7%. Looks interesting to me. Need to do some more work. James? National Grid is an income investor recommendation, by the way.

They tried and just failed to get a decent rate increase in New York State, so this could be a good time to look at this company. I'm going to go with some fellow utilities, gas utilities in Oklahoma, one oak and one oak partners, which is the pipeline, basically, affiliated with the gas utility. One oak, the ticker is OKE, OKS is the partnership. Just supplies gas to Oklahomans. Essentially, one oak raises dividend by 8%.

One oak partners, the pipeline, by just a penny, which is less than 1%. These companies are not, or entities are not super cheap, but I'd buy them on dips. Seth, Jason. I'm going to talk about a stock we own over at Hidden Gems. We have it currently on hold, and that is Logitech International, ticker as L-O-G-I. And this isn't a buy or a sell-type situation. We need to think about it and go, hmm, situation. Logitech, for a long time, has made most of its money selling things like mice and keyboards,

and that has been a pretty good business for them. And when netbooks were going well and laptops were the big sales, it was an even better business because the first thing people did when they bought one of those tiny computers was go out and buy a real keyboard or real mouse to use when you have it at home, right? Well, Apple has upset the Apple cart

and there are me a lot more tablets than just the iPad out there. And to the extent that those displace netbooks and laptops, and I think they are going to, I think that reduces a lot of Logitex revenue stream and they've been kind of banking the future on some internet video conferencing.

and I don't think that's going to work out either because people are going to be doing that on tablets and other small devices. So I think you need to be careful with Logitech right now. All right, Seth, Jason, James Early, Ron Gross. Guys, thanks for being here. Thanks for Chris. Thanks to our special guest this week,

Eduardo Porter from the New York Times. Our engineers are Steve Broido and Gail Año Nuevo. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.