Motley Fool Money - Motley Fool Money: 04.02.2010

Episode Date: April 2, 2010

Are US automakers on the road to recovery? What's the biggest challenge for Apple's iPad? Which company is best positioned for a post-DVD world? On this week's Motley Fool Money Radio Show, we tackle those stories and share three stocks on our radar.  MIT Professor and 13 Bankers author Simon Johnson talks about the business of big banks. And CNBC Sports Reporter Darren Rovell talks about the business of Tiger Woods.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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What? Oh boy. Fantastic. You guys go hard. Daredevil Born Again official podcast Tuesdays and stream Season 2 of Marvel Television's Daredevil Born Again on Disney Plus. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money.

Welcome to the show. Thanks for being here. I'm your host Chris Hill, and I'm joined by Motley Fool Senior Analyst, Seth Jason, James Early, and Shannon Zermary. Guys, good to see you. Good to see you, Chris. On today's show, the big question about the iPad, the business of Tiger Woods, and an inside look at the stocks that are on our radar. Plus, MIT Professor Simon Johnson talks big.

big banks and why President Obama should take a cue from Teddy Roosevelt. But we begin with the big macro. This week, the Dow hit its highest close since September of 2008. Factory orders rose for the 10th time in 11 months. We got some better than expected consumer confidence in housing numbers, and we got a mixed batch of jobs numbers. Shannon Zimmerin, I'll just start with you. What was your headline for the week?

Well, you know, Seth has always wanted to brandish our history credentials. I'm going to bust out my literature credentials and say that it should be great. It's not a particular headline, but using the beatwriter, the only good beat writer, William Burroughs, cultivated this technique called cut-ups. And so you would take pages from James Joyce or a comic book and mash them up together, essentially, to form your own sentence or poem. So I've looked at the data. And to me, if you look at the various headlines that appeared above the data report stories and put that together with the idea or the announcement that the Fed has now gotten out of the mortgage-backed, security purchasing business. I think that the real headline is that the economy is about to take a real test of its resilient. So the stimulus spending by all best estimates is going to be kaput by midsummer. You've got the Fed backing out of its program to provide liquidity. So what's going to be there to prop up the economy? I don't know. People keep focusing on manufacturing numbers, which continue to look quite good. But as we've been saying for a while, a part of that is an inventory replenishment. Once that does dissipate, I'm not sure what props up the economy when you've got near double-digit unemployment and a consumer-led economy. James, what's your headline for the week?

Chris, mine is Obama to allow oil drilling in various offshore places. That was big news. But the big thing here is simply counterbalance is what's going to be probably a cap-and-trade type of thing. So I'm not jumping at any energy stocks just yet because of this. I like them for other reasons, but it's sort of like a net neutral news to me. Seth, Jason, your headline for the week? Mixed job numbers. A lot of job information out this week and people taking, for some reason, getting excited about it,

no matter what. So a Wednesday we had ADP saying that we lost more jobs again, but it was a smaller amount than maybe we've been losing in the recent past, but you're still losing jobs. So I think it's tough to take away that the economy has turned a corner, at least for your average worker. So I'm with Shannon. We need to see what's coming up. But don't discount just silly optimism as an economic driver because silly pessimism can be a real driver in the other direction. At long last, Apple's new iPad is finally on sale. There's been a lot of hype and the early reviews are mostly quite positive. Guys, for some reason, Steve Jobs forgot to send Motley Fool Money a complimentary iPad so we could review it ourselves. Did he at least send it's a single word

email? No, we got nothing. Steve Jobs, we got nothing from him. But just quickly, what is the biggest question that you have about the iPad? To me, it's an interesting concept and so I would be inclined and to like it if I had received a free one, I think, Steve Jobs. But if it's one more device, I'm going to have to carry in addition to my iPhone. If it doesn't really have a real keyboard, I'm going to have to rely on a virtual keyboard. I'm probably not going to be that interested. Seth, Jason? My question is really more philosophical.

What the heck is wrong with people in this country that everyone is just this wound up about another rectangular screen to look at? And when he says philosophical, he means crumudgeonly. It's really kind of beyond me. Just the hype about it? Yeah, the hype and everybody's, you know, we've got a holiday weekend coming up. I'm not even very religious, but if the iPad is what you're thinking about this weekend, I think, you know, you need to, I don't know, you need to go to church or get out of the basement and kiss a girl or something. James Shirley, you're a big apple guy.

I am a big apple guy, but I think this is, like I said, sort of the El Camino car truck that doesn't really fit. I mean, it seems like a laptop that just doesn't unfold and doesn't have a keyboard, and what's so great about that? Steve Brodo, you're also a gadget guy. I mean, for crying out loud, you're the guy who actually makes this show work. So what's your question about the iPad? I'm not really sure how it fits into my life. I've got an iPhone and I've got a Mac laptop. And I don't know. I'm not at this point intending on buying one. I just, I don't know where it fits. You don't need a third eye gadget? No, I don't, not right now. I mean, maybe someone in the office will have one and I'll covet it and go out and buy one.

But at this point, I don't see it. I just, I don't know how I would use it. I don't know when I would use it or where I would use it. I just don't see it right now. I'm glad you took a turn there because I really thought you were going to say that you were going to covet it and then steal it from one of our coworkers. Well, that's always an option. Breaking two of the Ten Commandments, which you would know if you went to church. Exactly. All right, quickly. Who do you think is most threatened by the iPad? Is it Amazon's Kindle or is it Apple's laptops?

I think it's definitely Amazon's Kindle. It's not a laptop replacement. I agree, but I think the iPad is going to be threatened by smaller and lighter laptops in the future. Seth? See, I don't think it's a replacement for the Kindle because of the screen issue, but I think the biggest danger is to netbooks out there because if you are somebody who only uses a little underpowered computer to check email and surf the Internet a little bit, then this is probably going to be a great alternative.

That's exactly right. And Mac, our producer sent around David Pogue's review in the New York Times, I'm sure when that appear, but it's well worth reading. And he makes the point that this is a device not for creating content, but for consuming it. So if you're doing anything beyond just the basics of surfing and reading email, it's probably not going to be the laptop replacement for you. You're listening to Motley Full Money.

We're going through some of the big stories this week. Research in Motion, which makes the Blackberry reported an increase in quarterly profits, better than expected subscriber growth, and strong international growth. But Wall Street wanted more, and shares of research in motion fell. Says BlackBerry still has around 43% of the U.S. smartphone market. Compare that to the iPhone, which has 25%. Can Research in Motion hold off Apple? Not only are they not going to hold off Apple, they're not going to hold off random factories in China,

they're not going to hold off HTC, other companies making phones for Google's Android system. They're not going to hold off anybody in the long run. I think research in motion, unfortunately, doesn't have an ecosystem like Apple or even an ecosystem like Windows has. And so it has done a great job because it was the first in the marketplace with a reasonably good push email system. But everybody has that now. And so I think the problem isn't necessarily, well, one, they can't hold them off forever, but two, it's also a problem for investors because what has happened at Research in Motion is that gross margins have fallen precipitously over the past few years.

I'm looking at a quick graph on my computer here, and I'm looking at a gross margin of 55% in 2006, down to 42% as of November 2009. That's a huge drop. Now, if you can make it up in volume, you might be okay, and your profits will continue to rise, but you're not going to make it up in volume forever. This week in Auto Makers, GM sales for March were up 21%. Toyota sales in March up 40%, and Ford sales in March, up 40%. James, you've already invoked the El Camino, so you're clearly our auto expert.

What did you think of the numbers? Well, Chris, my friend's dad used to have a takeout pizza place, and we saw one time he put an ad in the paper or an announcement that he had expanded seating capacity by 50%. Come to find out, he had gone from four to six seats. So it's kind of what's going on here. We're looking at you-over-year numbers from a last year that was really, really terrible. So, of course, they're going to be good.

In Toyota's case, it was simply big incentives and, I guess, brave buyers. For GM and Ford, they just had Toyota. In other words, you know, with 8 million cars recalled, there was plenty of negative press. I was a little bit impressed, though, with the numbers, I have to say. I mean, Chrysler actually fell 8%. So for GM and Ford to do that, I think that says good things. Exit question, what's the best car you ever drove? For just me?

Yeah, just you? I had an old Audi that I really liked. It was kind of small, and it just handled so well. You could work on it a little bit, and I did. It was just something about it. It was fun. Seth? I have a one-year-old Honda Accord, and it's the best car I've ever owned.

I love that car. Shannon? The first car I've owned was a 65. Ford Mustang, and my mother wanted me to have that because she always wanted one when she was a girl, but it was a lovely car to look at, not so much fun to drive. We dropped the transmission about two days after we purchased it. Steve? My first in favor car, I think, was a 1978 Ford LTD, which was larger than a football field. It was absolutely massive, and filling it out, my dad used to yell at me because how much,

I mean, it was, at that point it would cost $20 to fill up. This is many years ago. That was just insane. were you at the time? 16. 16? You're driving the LTT? Yeah, it was great. You know, I've met your father. He seems like such a sensible guy. I'm surprised he actually let you do that.

Yeah, and he's a little fella, too. I have a buddy who's a car collector, but he collects only crappy cars. So he has the AMC Madador, the Gremlin, and the Pacer. I think those are all AMC cars, are they not? The Gremlin. Classic. Hey, here's a fun fact. If you have a really loose definition of the word

fun, groceries now make up more than half of Walmart sales in the United States. Shannon, the grocery business is not a high-margin business. Are Walmart shareholders happy about this? They should be. This is by design. This has been in the works for quite a while. Walmart has already had great success with it. Last year's figure was 49%. What is making this news for the mainstream financial media is the tipping point. Now it's more than more than half. It is a low-margined business, but it's volume, volume, volume. Who is better than Walmart at earning money through volume? To me, if Walmart is going,

swimmingly through the economy, that's probably not a good sign for overall economy because people are trading down from price of your rivals. And if Walmart itself is expanding its footprint of food sales, or in the food sales market, then it's getting even stapler, which is not good. So I think that as an economic indicator... Staplier. I was going to say, is stapler or a word? It is now. And Walmart, I think should, if you're listening to Walmart, here's a business proposal for you,

they should license their data as an index and sell it to Russell or, you. to S&P and let them do a Walmart index because I think it's a contrarian indicator for the economy. You know, I used to shop, I don't really like Walmart, but when I lived in Columbia, Missouri, I shopped at the grocery store, the Super Walmart there. And unfortunately, they really did have the cleanest store, the best selection, and the freshest stuff. The volume really mattered there. Or at least the stuff with the most preservatives. Well, they're big in organics now, too, though.

Well, Target has the same. Target has also made a push into the grocery business. If you had to hold Target, Walmart, or Whole Foods over the next five years, which would you pick? Walmart, definitely. But I think that you could have Walmart and Whole Foods in the same portfolio because they complement one or another inside the same space, but different ends of the economic spectrum. Target, I think, is going to be a third-tier player in that area. James, what do you think? Whole Foods for the feel-good factor, but I think Walmart is the better investment, yeah. I think we all knew that you being the organic guy, we're going to go with Whole Foods. Seth?

Boy, I don't know. I'm partial to Target because at least they try to be hip with their low-end stuff, but Walmart's a beast. And I think, Seth, you are also going with Target because it's a Minnesota thing. And you're Minnesota's favorite son. All right, time for our dubious study of the week. According to data from FeedFlix, Netflix Instant Watch views already outnumber DVD shipments. Now, that data is based on people who sign up for a third-party application, so there's a really good chance it overweights for early adopters. You think?

Quite possibly. Seth, you're a big gadget guy. What does this study tell you? Well, yeah, this is a little bit like, you know, asking the guy, finding out that the guys who watch Star Trek and live in their parents' basement have kissed fewer girls. That's not true. But it is interesting. And at my house, where we don't watch Star Trek and I'm... I have kissed a girl.

We actually, I can't even remember the last time we put a Netflix DVD in the player and we watched the streaming Netflix every night through the Xbox 360. So I think no matter if this data is a little bit slanted because of the sample, I think it's definitely the direction we're headed. And it's pretty interesting. And it also presents some challenges for the internet infrastructure and everything else because those streams aren't uniformly great yet. Yeah, and I think that we saw a little foreshadowing of this.

when Netflix struck its deal with Warner's, and there's a 30-day window during which they're not going to be able to do anything but sell DVDs. But in exchange, Netflix got a wider array of its back catalog. And they need that because actually the on-demand catalog of movies for Netflix is pretty slim. We mostly watch TV because there's more of that and it's better. I interviewed Netflix CEO Reid Hastings last year. He said that DVDs would be the primary mode of delivery for a couple more years. So my question for you guys is, in a post-d-d-D-D world, what company's the biggest threat to Netflix? Apple, I think, is definitely the biggest threat. Not the Amazon. No, Apple, because they didn't do it in tandem with the release of the iPad,

which is unfortunate, but they got La La La, the streaming music service about six months ago in anticipation of getting this all up in the cloud. It's not just going to be music. It's going to be books. It's going to be movies, television shows. I think Apple's the biggest threat. All right. The guys will be back later in the show. to share some of the stocks that are on their radar. But coming up, MIT professor Simon Johnson weighs in on why the big banks need to be cut down in size and why President Obama should steal a page from Teddy Roosevelt's playbook. Stay right here. You're listening to Motley Full Money.

Welcome back to Motley Full Money. I'm Chris Hill. So what do we do when the banks are too big to fail? Simon Johnson is an MIT professor and the co-author of the new book, 13 Bankers, The Wall Street Takeover and the Next Financial Meltdown. Simon, welcome back to Motley Full Money. Thanks for having me. The title of your book comes from a meeting President Obama had with the major banks last year when these banks had seen their stocks hit rock bottom.

Some of them have seen their shares bounce back since then. Treasury Secretary Tim Geithner said this week that President Obama had no choice when he was confronted with the financial crisis. Do you agree with that? No, I completely disagree. In fact, that's why we wrote the book, and I'm very glad that Secretary Geithner is making these statements now because it makes me feel good that we wrote the book. I mean...

He's helping you market your book, is that it? Well, I'm sure he wouldn't see it that way. But the point, this is really the heart of it. Was there only choice in March of last year for the Obama administration? There was plenty of choice. I mean, there is no other bailout of this scale in the history of humankind that I'm aware of, and we go through lots of specifics in the book. But no other bailout where you keep every single CEO,

they get to keep their boards of directors, their pay, their bonuses, their pensions, their key staff, their empires. And essentially, the message that comes out of this is unconditional support. You get the subsidy. The credit market, of course, recognizes this, and you get cheaper financing as a result. Big can become bigger. And these people have every incentive to go out and do this again. And the belief system of Wall Street, which is just important of the incentives, is these guys think they didn't do anything wrong. They think, we did great.

Let's do it again. Well, you said that we need to break up the biggest banks and cap bank size as simply as possible. How does something like that happen? How would we go about doing that? Well, there is provision in the law already in the Regal Neal Act of 1994. There's a cap on bank size in this country. The problem is twofold. First of all, that cap is a percent of retail deposits.

No bank can have more than 10 percent. And obviously, the action since 1994 has not been retail deposits. the wholesale borrowing and lending. That's where the big expansion of the bank's balances uses come from. So you need to apply the same sort of cap and have it apply to the overall size of the bank. And cap, I would say, is a percentage of GDP. The second problem is they've had a lot of loopholes in that 1994 legislation, and you could drive some pretty big banks, it turns out through those loopholes. So you need a very, very tight cap that no one is allowed to go beyond. And we propose some specifics that would really roll the banks

back in size to where they were in the early 1990s. And this is something you would phase in over a couple of years. It wouldn't be hard for them to apply with. Now, to some extent, would U.S. banks be disadvantaged relative to other banks around the world that may not have similar restrictions? No, not at all. Again, the evidence is that there's no economies of scope or scale for banking over $100 billion in assets. A hundred billion dollars is quite a big bank, by the way. But we have a trillion-dollar banks, a city group at the moment when it ran into big difficulties in 2008 was a $2.5 trillion bank, if you measured it correctly. So, you know, our banks were very good.

They were very globally competitive. They provide plenty of good financial services to the real economy, which is actually what banking should all be about, in the early to mid-1990s. And that's what we should go back to. Now, sometimes people get confused because some foreign banks, for example, in China, for example, in some European countries, have big subsidies implicitly or explicitly from their government. But we in the United States do not feel that just because somebody in some other country provides a dangerous and really unpleasant subsidy to an industry that we should do the same. On the contrary, we like our markets to be freer and faster moving. And that only works if people can fail. If you're too big to fail, the entire market economy structure gets distorted

and ruined. Coming up, more with Simon Johnson. You're listening to Motley Fool Money. Welcome back to Motley Full Money. I'm Chris Hill. We're talking about with Simon Johnson. about his new book, 13 bankers, The Wall Street Takeover and the next financial meltdown. All right, let me spot you up with a quote from someone I'm sure you're a big fan of, J.P. Morgan's CEO, Jamie Diamond, who said that big companies can't get big loans unless you have big banks. And his quote is, large businesses are large for a reason. You can't do an $8 billion loan if you are a small bank. Is that fair? No. It's a complete misrepresentation of the reality.

because as you know, and I talk to CFOs, I talk to lots of people in the non-financial sector. George David, who's the head of United Technologies, did a blurb for the book, strongly supporting the book, which is on our website. The point of the matter is that companies are quite happy to have their loans syndicated. Any bond underwriting deal usually has four or five primary bookrunners, lead people, and then maybe 10 or 20 other firms involved. You spread the business around. You do not want to be, if you're a non-financial firm, you do not want to be, if you're a non-financial firm, you do not want to be so reliant on J.P. Morgan that they can take advantage of you. No doubt J.P. Morgan Chase would like to have that position, but nobody in the right mind in the real economy is going to fall for that. One of the things you write is, quote, we have been here before. The confrontation between concentrated financial power and democratically elected government is as old as the American Republic.

and one of the examples you talk about is Teddy Roosevelt. What could we learn from Teddy Roosevelt that would be abused to us today? Yeah, the Teddy Roosevelt case is extremely interesting because when he came, when he became president and in his first year of office, nobody thought that the big industrial trust, remember this is the days of the big railroad trust backed by J.P. Morgan and so on. Nobody thought these were a problem. Everyone was kind of surprised when Roosevelt took them on. Nobody thought he would win, and nobody understood why was he doing that.

There's no even antitrust theory at that time. And Roosevelt was very clear. He said this is about the excessive political power of these people, and the problems that causes. And he really shifted the consensus in this country from believing that big is necessarily beautiful to thinking, well, big sometimes may be okay, but other times it can come with a lot of costs for society.

So that's the thinking we now have about monopolies and monopoly pricing. We need to update and modernize and apply that same general approach to banking because banks have become too big to fail are a complete distortion of the market economy, and they only lead to serious trouble for taxpayers and ordinary citizens. We're talking with Simon Johnson about his new book, 13 bankers, the Wall Street takeover, and the next financial meltdown. So a year from now, are we going to be talking about new financial regulations that limit the size of a bank? I don't think so.

I mean, there is a chance that the legislation, the Dodd bill and how it gets reconciled with the House version will make some progress. in this direction uh... but to be honest the odds are the odds are pretty pretty slim uh... but this is not over i mean this this is going to keep going because the banks will keep going the banks will get bigger the banks will will will pay themselves extraordinary amounts of money uh... wells fargo uh... ceo john stumph has just got a big cash package and the spokesperson for the bank uh... says he deserves it because two thousand nine was such a good year

well excuse me two thousand nine was a disaster uh... wells fargo was saved by the federal government what makes that a good year so You know, you'll see more of this. You'll see attitude. You'll see behavior. And I really, really hope that we fix it before we have another mega crisis. But I don't know if we will. All right, Simon.

Help me out here. Let's just say that I'm out with friends at a bar or a barbecue. The financial crisis comes up in conversation. And I want to sound really smart. What is one line, one observation or insight that I can add to the conversation that will really impress people? J.P. Morgan came to see Teddy Roosevelt in 190. and Roosevelt was taking on Northern Securities. And Morgan said, if we've done anything wrong in this vast monopoly structure,

send your man to see my man and we'll fix it up. And Teddy Roosevelt said, no, we don't want to fix it up, we want to stop it. That's the idea. That's the thinking. That's what President Obama has not done to this point. That's what Hank Paulson, naturally enough, didn't do. But it's also what this administration is not willing to do. It's what nobody on Capitol is willing to do.

You have to take on the big bankers and you have to break them. And it's about breaking their political power. It's about breaking their ideology and the grip they have on what people think is good for the country. We need some good old-fashioned trust busting? Yes, that's exactly what we need. We need political leadership, actually, and obviously that will lead us towards what became trust busting. But the trust were dangerous to society. The trust were dangerous to a market economy.

Monopoly is bad for markets. We understand that now. We have, you know, lots of experience and expertise around that. Massive banks are bad for the market economy. They're bad for growth. They're bad for regular people. We need to wake up and smell the coffee. All right.

Before we close, I want to do a quick round of buy, sell, or hold. I'm going to spot you up with a couple of concepts, ideas, people. And you tell me if you would be buying, selling, or holding them. And we'll start with the future of Treasury Secretary Tim Geithner. Well, he is on a big PR rise right now. I think he is prepared. I think it's an exit. I think that if they win in November, he'll leave, and if they lose in the November, he'll definitely leave.

Okay, 100% chance then. Buy-seller hold the likelihood that China will experience a recession in the next two years. Not in the next two years. I think actually this is where the next big boom is coming from. Everyone I meet who works on China tells me China can only go up, it can only, it's just an easy way to make money, which makes me very worried, of course, but not on a two-year cycle. It's more like a three, four, five-year cycle. So, you know, I guess if I were so inclined, I would get in and then try and get out. But, of course, everyone thinks that, and that's how these big bubbles occur.

Buy seller hold, the future of the euro. Fascinating one. That. I think the euro will survive. I think Greece will have to restructure its sovereign debt. Now, that's not an extraordinary thing for an emerging market to do, but we haven't seen a debt crisis and debt restructuring of, you know, what was regarded as a serious, industrialized rich. country really since the 1930s. So this is moving us into new territory and how far the debt

restructuring approach goes. It remains to be seen. But the euro will survive because if anybody, any of those guys leave the euro at this point, they will get so run over by the global financial system. And finally, we have an updated version. We have a sequel of Wall Street coming out this fall. So buy-seller hold the likelihood that we're going to see a movie based on the book, 13 bankers. Absolutely. It's a compelling. I don't know. It's a movie or it's a document. The story is amazing. The moment and what it tells us about ourselves and what we've become is absolutely compelling. I hope they make it in 3D, of course. Oh, of course. High-Duff. And, you know, if you could get some of those blue people from Avatar.

Right. Just to do some cameos, that would be great. The new book is 13 bankers, The Wall Street Takeover, and the next financial meltdown. Simon Johnson, thanks so much for joining us. Thank you. Coming up, the Masters Tournament is just days away. We're going to talk about the business of Tiger Woods with CNBC, sports business reporter Darren Revelle. This is Motley Fool Money. Welcome back to Motley Full Money. I'm Chris Hill. The Masters Golf Tournament starts next week and it takes on added significance this

year because it marks the return of Tiger Woods to the golf course. Just how important is Tiger to the business of golf? Joining me to weigh in on that topic and more is Darren Revelle. He's CNBC's sports business reporter and he's the author of several books including First in Thirst, How Gatorade Turned, the science of sweat into a cultural phenomenon. Darren, welcome to Motley Full Money. Thanks for having me, Chris. When we talk about what Tiger Woods means to the business of golf, what is the closest analogy?

Is it Michael Jordan to the NBA? Is it Ali to boxing? I think it's more than Michael Jordan to the NBA. Because what you've got to realize is Michael Jordan did to the ratings what Tiger Woods does to golf ratings during the NBA finals. but an average game still did pretty well if it was not with Jordan. Tiger does double when he's in the hunt on an average tournament. So the best way to explain it is golf is a niche sport without Tiger,

and basketball was more than that without Jordan. You're listening to Motley Full Money. We're talking with Darren Revell from CNBC. All right, so obviously Tiger has varying impacts on varying entities. Let me give you a few, and if you could, I'd love you to rank these in terms of Tiger Woods' importance to their bottom line. Nike, CBS, which is obviously broadcasting the tournament, other pro golfers, TMZ. Okay, now start. Nike. Nike golf is a $650 million business, and Tiger, you know, makes up less than 10% of a Tiger branding stuff. and again, the economy is probably the more important thing to come back than Tiger.

Remember, Nike's a 20 billion-plus company, maybe a little bit of a brand impact, but I don't think there is hers as people might think. CBS, obviously, he's got to make the cut, and then he's got to be somewhere in the hunt for them to have the most outrageous number of all time. If he's in the hunt in the final pairing or final couple pairings, it'll do three or three or four times the rating on that Sunday of the NCAA championship game on the previous Monday. Other pro golfers, prize money will be up a little bit this year. I was to think about a flat last year.

So that's where the other players come in. The more he plays, the better he is, the better they are off in terms of money. And then TMZ, this is finally bad for them. because, you know, you would think that this is starting to signal the end of what could be dug up, maybe not. But I will say from a TMZ standpoint, I've thought that I've never dismissed them. I've always thought that they, you know, the idea of checkbook journalism or celebrity journalism or whatever you want to call it, you know, they get much. most of their stuff right. And, you know, whether you believe they should be doing it or not, they get most of it right. And if they didn't, they wouldn't have any credibility. So I think it

kind of winds down here, and now they have to go search through the archives in Vegas of old Michael Jordan and Charles Barkley Tales. You're going to be heading down to Augusta for the Masters. what are you most interested in? What is the question you are most interested in? Or maybe scenario is a better word from the standpoint of the coverage that you're going to be doing? I'm interested in how crazy Augusta is. Ticket prices have not gone up that much. In fact, they're about half of what they were five years ago.

There's a lot of people saying it's going to be so crazy I don't want to go. So from a business standpoint, we have this image of this is the best year of people cashing in in Augusta, and at the same time, I kind of wonder whether it will be an average year or even less because people want to stay away from it. But the most undeniable great story is just Augusta and Augusta National and just what they are. I mean, they're basically the only business in the United States that doesn't care about capitalism. They sell their pimento and cheese sandwiches for the same price they sold them for in 1965. They're probably losing money when you factor in inflation. They haven't sold tickets in 30, 40 years.

You've got to get them on the secondary market. They don't care at all about, you know, CBS or whatever, or ESPN who starts broadcasting at, you know, 4 o'clock, on Thursday and Friday. If they feel like it, they'll put Tigers tea time at 825 just to spite them. I mean, it's literally the weirdest relationship out there. So that's also an intriguing story. Now, Darren, you don't just report on the business of sports. You're a pretty active participant.

You run marathons. You've played tennis against professionals. You've taken part in a hot dog eating contest. For those of us looking to impress at barbecues this summer, What is the key to eating a lot of hot dogs in a short amount of time? You just got to relax. I mean, everyone watches the Kobayashi's of the world, and they're shoving it in there. If you do that, you have no chance.

You just have to eat it casually and let, you know, you can't shove them in your mouth, and definitely do not do the water in the bun method. Don't stick the bun in the water. That is a major mistake. It tastes so horrible that, you know, you can't. can't deal with it. All right, Dan, let's wrap things up with a quick round of buy, seller, hold. These are not stocks. These are concepts or ideas, and just want to know if you're buying, selling, or holding them. And let's start with buy seller hold, the likelihood that colleges will

start paying athletes in the next five years. In the next five years, athletes will get paid in some way. It will be through licensing, though. It won't be a woman's cross-player getting paid. I do believe that players will get paid for their jersey sales, whether it's in escrow or some licensing deal. They're not going to get cut checks or have those checks being thrown under their dorm rooms, though. All right. It seems like certainly since I was a kid, which was a long time ago, that people have talked about soccer being the next big thing in the United States. Buy seller hold the business of soccer in America. Selling that. I've never believed in it.

business is soccer for kids fine, but there's a difference between kids participating. I mean, it's the third most popular sport in America in terms of participatory. You know, you have 13 million people playing it. And, you know, I doubt 13 million people. You could possibly get, you can't get 13 million people to say they've watched one MLS game, total. I certainly can't be one of those people. Right. All right.

And finally, you wrote an indefinitely. entire book on Gatorade, we still see players dumping Gatorade on a coach after a big win. Buy seller hold, the Gatorade shower. I got to buy it. I mean, it's not ending. I mean, it's amazing. It's been going since we're on year 26 right now. I mean, it's not ending.

You think they'd come up with something more original, but just not the case. CNBC sports business reporter Darren Ravelle, Darren, have a great time in Augusta. You got it. Thanks for having me. Thanks very much. Hit me with the Flasidate. Gatorade. Gatorade.

Gatorade. Sweet. Sweet. As always, people on the program may have interest in the stocks they talk about. Don't buy ourselves stocks based solely on what you hear. Joining me in the studio again, our trio of senior analysts, Seth Jason, James Early, and Shannon Zimmerman. Guys, it's that time again. Let's go around the table.

Give me the one stock that is on your radar this week. And Shannon Zimmerman, I'll start with you. Well, it's Cisco. The tickers S-Y-Y-Y, the food distributor. And I like them because it's just a powerhouse company, very solid financially, great returns on equity, which is a metric that you can use, both as a gauge of profitability and then to determine how effective management is in terms of being stewards of the equity that they control.

They are above 30% over the last 12 months. They are exposed to the restaurant sector, but they have a wide-ranging customer base. And even if the restaurant sector withdraws, because people are cutting back on discretionary spending, They have schools that they service and hospitals that they service as well. A well-run company in, I think, an area of the market that will do well over the next 12 months and trading not at a super dirt cheap price, but cheap enough for me to put in my watch list.

Fair enough. James Early. Chris, my stock is Wattsco. The ticker is WSO. This is an HVAC consolidating company that basically goes around, buys up these Ma and Pa, heating, vitting, and air conditioning companies and assembles them. and somehow they're better when they're all together. They do do new construction, which is obviously suffering, but they do a lot of maintenance work, too.

I like it's a little less risky than some of the direct real estate exposed companies. 1.8 billion market cap, 3.6% yield that just raised its dividend to 8%, excuse me, and it has 16% insider ownership. So Wattsco, W-S-O. Is that like Christmas morning for you when a company raises their dividend? Do you just get giddy? I get really giddy, actually. Studies have shown that if you buy dividend-raising

stocks, you will beat the market. So I figure, hey, I'm not one to go against the grain there. No, for a second, I thought you were going to talk about a giddiness study that you were a part of. Seth Jason, one stock that's on your radar. I have one of those radar stocks that's not so much a, hey, look at this, you should buy it, but it's a, hey, look at this, what in the heck is going on? And theoretically, I should know what in the heck is going on because it's a stock at Hidden Gems. We own it in our Hidden Gems, real money portfolio. It's inventive health. A ticker is V-T-I-V. But what happened is it recently jumped up, oh, what, from the teens into the low 20s here.

And first there was a rumor that was in the New York Post that they had gotten Goldman Sachs to help them shop themselves around. Then they came out and said, oh, no, that's not actually what happened. What actually happened, well, let me tell you what they said happened. Inventive Health, Inc. announced today that is, has been approached by financial investors regarding a possible acquisition of the company. I'm reading their press release. It seems a bit rushed to me. I'm not sure what a non-financial investor is if somebody was going to swap sheep for the company or not. But it appears that people are looking to buy this company.

It's an interesting play in the healthcare sector because they provide a lot of services, staffing, consulting, and other things that help other health care companies who are being pinched on costs or who have complex issues to deal with. That's why we own them in hidden gems. We got a big jump out of the stock recently. If it turns out that there's a bidding more for this company, it may go up further. All right. Provided sheep as a currency. Provided sheep as a currency, and the financial investors bring money. Seth, Jason, James Early, Shannon's every guy. Thanks for being here.

Thank you, Chris. Thanks to our special guests this week, Simon Johnson and Darren Ravel. If you missed any part of the show, you can find it at our website, motleyfoolmoney.com. You can also get a copy of our free report. Motley Fool's top stock for 2010, all that and more at motleyfulmoney.com. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill.

Thanks for listening. We'll see you next week.