Motley Fool Money - Motley Fool Money: 04.12.2013

Episode Date: April 12, 2013

The stock market hits a new high.  J.C. Penney gets a new CEO.  And PC shipments hit a new low. Our analysts discuss those stories. And Motley Fool Asset Management portfolio manager Bill Mann talks about international investing. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, I'm Charlie Cox. Join us on Disney Plus as we talk with the cast and crew of Marvel Television's Daredevil Born Again. What haven't you gotten to do as Daredevil? Being the Avengers. Charlie and Vincent came to play. I get emotional when I think about it. One of the great finale of any episode we've ever done. We are going to play Truth or Daredevil.

What? Oh boy. Fantastic. You guys go hard. Daredevil Born Again official podcast Tuesdays and stream season two of Marvel Television's Dead Evil Born Again on Disney Plus. Everybody needs money. That's why they call it money.

The best they do. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Ellen, joining me in studio this week. From Motley Fool 1, Jason Moser, and for a million-dollar portfolio, Charlie Travers and Ron Gross. Good to see you, as always, gentlemen. How you do, Chris.

We've got the latest on the PC industry, the coffee industry, and the banking industry. We've got the latest examples of how to reinvigorate a brand and how not to reinvigorate a brand. And as always, we've got a few stocks on our radar. But we begin this week with the market in general, because this week, both the Dow and the S&P 500 hit new record highs. And once again, Ron, you've got people out there in the media saying, this is great, but it's too late for individual investors. It's too late to get in.

Is it? Oh, that silly media. Well, I think the answer is no. It is not. And it's because people have to shift their mindset. You have to think about investing in companies and not. stocks. The problem people get into is they try to time the market. Until crystal balls are invented, it's just not possible to do it consistently and correctly. You have to own companies for the

long term, ride out the storms, enjoy the good times. Over the long term, you're going to be just fine, and you're going to be less stressed out, too, by the way. I think crystal balls have been invented. I just don't think they actually work. So I think working crystal balls. Jason, you were saying earlier when we were talking that this is one of those times when value just becomes more and more critical. Yeah, it is. We've talked a little bit about the disconnect kind of between Main Street and Wall Street here, and it's because the stock market is where you're going to get the best returns

right now. I mean, I liken this to just kind of that road trip you're driving on the interstate and you're hungry is all get out. All you see the signs for fast food, so you stop and you get some fast food, right? It's not because it's the best food in the world, but it's because you're hungry and it serves as a purpose. It's the best option. And that's what the stock market is today.

it's the best option. And I think that with all of the inflation in stock prices that we've seen over the past couple of months, I do think it is a little bit frothy. And I think that at this point, while I agree with Ron that it's imperative to focus on buying into great companies, I think, Ron would also agree that valuation, I think, is more important today than probably ever before. I think that's true. If I was going to give you the typical Wall Street answer like you would see on some of those other shows, I'd say the PE ratio of the S&P 500 is 18 and typically is 15. And that indicates that maybe stocks are richly priced. Therefore, stay out of the market. Right. So what am I going to? I'm going to start selling stocks. I'm going to move to cash. I may miss upside. I might not. It's impossible to tell. It's impossible to predict. I like my cash balance to be more organic. On a case-by-case basis, if I want to sell a stock for whatever reason, it turns into cash. And then if I can't find something I like to buy, then the cash just sits there until I can.

And it's more of organic kind of way to manage your money than it is to be a market timer. Charlie, when you look across all the industries that are out there, are there some that are looking like there's still some good values to be found? And if so, where are you looking? I think large-cap tech is the space where values to be found, specifically Apple. You know, you want to talk about the market soaring. Well, Apple, the most popular stock in the world last year, is now out of favor. So it's not hard to find good bargains out there. You just got to be keeping your eyes open and looking. Yeah, one other thing that I think we should bring in is the Fed, which is... Kind of a wild card here, right? So many quantitative easing programs have kind of put interest rates near zero and made stocks the really the only alternative for investors. They recently indicated in the latest minutes that perhaps it's time to ease up on their easing

programs as long as the labor market looks like it's going to take hold. I honestly don't know what happens in that case, and that's where the crystal ball would be nice to have. Can they engineer this wonderfully soft landing where unemployment works, interest rates go up a little bit and the stock market's okay. I certainly hope so. I don't know the answer, though. Well, and Jason, when you look at what was revealed in the minutes from the most recent meeting, you had some members of the Federal Reserve, not just saying, hey, we need to talk about ending this. They're talking about ending it as early as this summer.

Yeah, we need to do it now. We were talking about this earlier in the week on market foolery, where regardless of whether it happens three months from now or six months from now, I think that one thing, to Charlie's point about Apple, is a lot of those companies, like your apples and Googles and Amazon's of the world are going to start looking that much better because as the tide starts going out and the cost of business starts going back up with rising interest rates, there are going to be a lot of companies that are feeling the pinch from that much sooner than others. And so I think that when you, Charlie's point about large-cap tech, I think was a really good one. Sticking with tech, some big tech companies were rocked this week by a new report from the research firm IDC.

The report says worldwide laptop and desktop shipments fell 14 percent in the, first quarter. It is the sharpest decrease since IDC began tracking the data nearly 20 years ago, and Charlie, Microsoft, Hewlett-Packard, Dell, they were all down when this report came out. I don't think you quite painted a bleak enough picture, though, Chris. It was actually four consecutive quarters of decline. So it's like down 13.9% in Q1, but they were down three in a row before that as well. So it's really horrible. And so I looked into what HP and Dell were saying about their businesses, and these are big conglomerates that do a lot of different things besides cell PCs.

HP reference that consumer notebooks are poor as they are shifting sales to tablets, specifically Apple's iPad, which is not made by HP or Dell. And so you saw a similar story out of Dell where their consumer space was their worst performing segment as compared to large and small enterprise use. So I think there's a huge trend here, and it's obvious to anyone who's been. and watching what's been going on with the iPad over the past few years is that consumers are buying tablets and smartphones and not desktops and notebooks. Shocker there. But I think there's more to the story that the financial media is missing.

And that was that coming out of the financial crisis, Windows 7 sales were booming because companies didn't spend money on their IT infrastructure because they were retrenching. And so you saw record revenue and cash flow out of Microsoft from 2009 to 2012. And so all those businesses that upgraded to Windows 7 have no need to spend on Windows 8 right now. We'll see if that holds true as time goes on. And I think that's the second half of the story that the media's missed. And yet, Ron, IDC really seemed to blame Windows 8. Even though all of these companies are out there making PCs, they basically laid the blame at the feet of the Windows 8 operating. You've got to lay it somewhere.

I mean, I'm not averse to blaming Microsoft for various things. But this just seemed a little harsh. I've seen actually mixed reviews. I've seen very positive comments come out about Windows 8, but I've also seen many reviews that think it's missing the boat on several things. But I think, as Charlie said, the refresh cycle is the story. Eventually, there will be a refresh cycle. And I would imagine Microsoft's cash flow will pick up when that happens.

They, of course, have to get it right, and they have to give people the features they need. but eventually that's going to happen. Just to wrap up on Microsoft stock, as I mentioned, Charlie, it was down when this report came out. Microsoft actually reports earnings next week. This seems like the sort of thing that would maybe increase the pressure a little bit for them to come out with some good numbers. But what are you going to be looking for next week when Microsoft reports earnings? Sure, Chris. It's a combination of factors.

They got to give an update on how many Windows licenses were sold, I think, after the launch of Windows 8, they said it was $60 million. You'd really like an updated number. That's a lot stronger. If you haven't heard of the Ben Kieser group, I'm pretty sure Starbucks has. This is a conglomerate based in Germany. And in 2012, Ben Kieser spent around $1.3 billion to buy Pete's coffee and tea, as well as Caribou coffee. On Friday, Ben Kieser announced it is buying a European coffee maker for around $10 billion.

Jason, this is Master Blenders, which is based in Amsterdam. Ben Kieser really seems to be stocking up for the coffee war. Well, they are, and I think there's good reason why. I think this deal makes a lot of sense for Ben Kieser, and it's right in line with what it looks like their overarching strategy is here to really tap into that consumer package goods segment, the grocery stores. They have a great distribution network in that regard. And so, you know, the purchase here, it's interesting because you look at the global coffee market, it's estimated somewhere in the neighborhood about $80 billion or so on. So we hear, I think, in the States, when you say coffee, I think the

first thing that comes on. Typically, is either Starbucks or maybe Dunkin' Donuts or something like that, but there's a whole other world out there, Chris. And so this acquisition of master blenders is one that's going to give them tremendous exposure to Europe. That's where they really make their hay. And so I think they're in 18 of the leading markets over there, and in seven of those markets, they hold a number one or number two market share position. And so I think it really is something that it's good for Ben Kieser. It's right in line with their strategy. But it's also important to note that this isn't like a zero-sum game. It's not something where Starbucks is going to win. Ben Kiezer is going to lose.

Ben Kieser's going to win and Starbucks is going to lose. There's room for multiple winners here, and I think that we're looking at, we're talking about the two of them right now in Starbucks and Ben Kieser. The ones I would really be afraid for are the Maxwell houses and Folgers of the world because I think that's a coffee that was decades ago when the coffee aisles and grocery stores looked a little bit different. These companies are reshaping that, and I think we're going to see that sort of a generational shifting of coffee preferences in the aisers over the coming decade.

You know, but it's not just the strategy. Europe that they're executing because earlier in the week, Ben Keiser announced that they're going to be closing about 15% of Caribou coffee shops here in the U.S. They're going to take another 20%, particularly around the East Coast area, and convert them into Peets. They really seem like they're being pretty aggressive. And I'm just wondering if this is in any way a response to what we've seen out of Starbucks over the last six months or so when they talk about increasing the number of locations

that they have. Well, I think there's no question that that's the case, because number one, when you look at the storefront, it's going to be hard to compete with Starbucks's, you know, 17 to 18,000 installed stores around the world. But the grocery store segment is a bit of a different game there. And I think that that's what Ben Keeser's really doing a great job with, with the Caribou and the Piz acquisitions. And so I expect that both companies will benefit from this. They are tended to push each other. And we also just saw that Starbucks is cutting their grocery store bags of coffee by a dollar in order to get more exposure and problem more people to do. buy those bags of coffee as well. Coming up, meet the new boss of J.C. Penny, same as the old boss. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser, Charlie Travers, and Ron Gross. Earning season kicked off this week, and on Friday, two of the big Wall Street banks

were reporting. J.P. Morgan Chase and Wells Fargo both beat on earnings per share. And yet, Ron, they were both down a little bit Friday morning. This is one of those situations where the phrase, quality earnings. comes into play. Well, as I've said, I'm notoriously not a big bank investor, and that's because it's very hard to determine what the true balance sheet looks like, and there's a lot of shenanigans that they can play with the income statement, with the profit and loss. And in this case, what we saw is that both companies lowered their loan loss reserves, their provisions for

losses on loans. And that makes earnings look better than perhaps they would have if they didn't do that. So revenue was weak, specifically in mortgages, which is actually a bigger deal for Wells Fargo than J.P. Morgan, because Wells Fargo was a problem. big player in the mortgage business. And they both took away some, like, expenses, if you will, which boosted profit. So earning quality, not great. It's more important to look at the revenue line here, I think, than the net income. This seems like one of those things that is like, well, that's great for this quarter, but there's no way that's a long-term strategy. Well, one thing, are they now under-reserved? They're probably going to continue to lower these

provisions next quarter and perhaps the quarter after. And then what happens if things get bad again? Are they under-reserved and does it all hit the fan once again? We certainly hope not, but those are the games and the projections that these companies need to make as they run their business, and it's very difficult. After 17 months as CEO, Ron Johnson is out at J.C. Penny, and the new CEO is Mike Holman, who was the CEO for the seven years before Ron Johnson got there. Jason, this is one of those situations where on a certain level, you are your numbers. That's how it is in sports. That's how it is in television ratings. And under Ron Johnson's tenure, they lost customers, they lost sales, and they lost half their market cap. Yeah, it took bad. They went from bad

to worse. And certainly going back in for sort of this second round, I think Allum looks probably a little bit better. And I think they're going to benefit from his experience there in being able to help kind of write the ship, at least temporarily. It certainly doesn't solve J.C. Penny's underlying problems of really just not having the same impact on the retail customer that they had 20 years ago. So when I saw this news, it seemed a lot like if you take the milk out of the fridge and it's bad, you don't put it back in. There's a reason that Ron Johnson was brought in in the first place, and it wasn't because J.C. Penny was doing all that well. Does it really make sense to go back to the guy who was here before? I'm not sure that it does, but I'm also not terribly convinced that they had a lot of options out there.

I mean, I don't think a lot of people would want to step in to that role, considering the mess that Ron Johnson made, along with the fact that they were stepping into a staff that Ron Johnson had just brought in, along with an activist shareholder in there who brought Ron Johnson in there in the first place. I think that a lot of people are really looking at this J.C. Penny situation and trying to kind of figure out how to wrap this thing up and sort of move on. It's scary to think about it. You know, J.C. Penny, we talk about them looking to try to raise a billion dollars in this low-interest rate environment. I didn't realize this at the time, but their credit rating over the last year has been knocked, it's been knocked down six notches just over the past year, which is apparently one of the fastest ever. And so they're so far in a junk territory at this point that I don't know they would be able to raise any money. It's worth noting they have a $1.8 billion line of credit.

But the problem with tapping that line of credit is all of a sudden it seems like that's their last resort and last option. I don't know that very many investors would want to jump on that ship if that was really the last option. Shares hit a new 52-week load this week. Ron Gross, value investor? Any interest? No, I think they're the walking wounded. It's a great opportunity to invest in a turnaround if they do it. But I think the odds are not good here. And I said before it's a little harsh. I don't know if the world really needs a JC penny. This week, five new cases of the bird flu were found in China. That is 38 cases so far, resulting in 10 deaths. And one of the ripple effects is that it is hurting China's poultry and restaurant in China. industry and Charlie, that's YUM brands. How worried should shareholders be about this? I think this is a short-term concern. If you look at YM Brands and the companies they own, it's KFC, Taco Bell and Pizza, and these are all American chains. But if you look at the numbers,

China is actually half of Yom's revenue. So when you talk about same store sales being down double digits at KFC for YUM, this is a very big deal for the company as a whole. On the bright side, I think these are the kind of issues that can lead to buying opportunities for investors because they are temporary in nature. Their same store sales were down 20% in January and February. They're down another 13% in March. This could be a lingering issue as we head into the summer because consumers are scared about bird flu and eating chicken, even though there's absolutely no relationship to that. It's mostly if you're a poultry worker handling the chickens, you have to be a little concerned.

So they have some work to do with their marketing and convincing consumers that it's safe. And in the long run, I think they're going to be fine. I would keep an eye on this stock for an opportunity. 11 straight years of double-digit profit growth. That streak would seem to be in danger at this moment. Yeah, it's like going on the D.L. in August from baseball. And finally, we alluded to J.C. Penny, trying to reinvigorate their brand a year and a half ago by bringing in Ron Johnson. That did not work out.

But this week, Old Spice demonstrated once again how you really reinvigorate a brand by releasing a new line of bar soaps with names like Pure Sport, Swagger Bar Soap, and my personal favorite Fiji Bar Soap, which Old Spice says, smells like palm trees, sunshine, and freedom. Wow. Sign me up. But isn't this kind of amazing that Old Spice, like when we were growing up, Old Spice was like sort of like our dad's deodorant or aftershade. with the pocket knife kind of shaving the bar of soap on the commercial. No, that was a different one? That was the Irish. That was Irish Spring or something like that.

But this was one of those things that, you know, like we talked about once upon a time with Tang, sort of this unknown brand, an old brand, and someone comes out. I don't know who the creative director is at Procter & Gamble, who was tasked with turning around the Old Spice brand, but he or she deserved a heck of a race. Yeah, you know, one theme I love, I love investing in broken brands, but you got obviously have to be careful because a lot of them break even more. But if you get a name that is well respected and really old school and you can get it cheap, it can often be a great investment. Well, and from an investor's standpoint, this isn't just like, oh, this is neat. They've

turned their brand around. You know, you look at the sales of Old Spice, and they've just skyrocketed over the last few years since they've done this. We've got about a minute left. Let's bring in our man, Steve, from the other side of the class. Steve, palm trees, sunshine, and freedom. That scent is taken. But if there was a sense, that you could bottle, that you could put into a soap or something like that. I'm just spitball in here. What's of interest to you? How about liberty, equality, fraternity, and coconuts.

I like that. Justice, with a little mix of coconuts. Do you have a scent you want to throw out there? I'm a sucker for anything banana flavored or scented. So if we could somehow work in banana, I'm in. Jason? Bacon. Can I change mine to bacon?

No. Hope and optimism. There's no way I'm on top that. Jason Moser, Charlie Travers, Ron Gross. Guys, thanks for being here. Coming up, we will take a trip around the world of investing with Portfolio Manager, Bill Mann. Stay right here. This is Motley Fool Money.

Welcome back to Motley Full Money. I'm Chris Hill. And joining me in studio is Bill Mann, the Portfolio Manager at Motley Fool Asset Management. Thanks for being here. Hey, Chris. How you doing? I'm doing well. I wanted to talk to you about a bunch of things.

I knew you had a recent trip to India, and I want to get to that. But the last time you were on the show, it was early February. And the first thing we talked about was the performance of the market in January, which was fantastic. The Dow was up nearly 6% at that point. And here we are. It's mid-April. And the market's up more than 12%. So I'm going to ask you the same question.

Am I 6% more nervous than that was? Yeah. You know, a 12% gain. That's a good year for the market. Yeah, it's a great year. You know, so I think you have to put things in context. And I believe in February I said, yes, I was I was a little bit nervous simply because it had happened so fast. I mean, think about what's going on in the world right now.

I mean, you have, I mean, basically Cyprus, which is a teeny country, but it matters for a lot of different reasons, has been bailed out. I mean, absolutely flat bailed out by Europe. And so essentially, you know, for a lot of reasons that really wouldn't make good radio, euros in Europe are now worth different amounts, which is kind of a scary thing. And yet the market here keeps going crazy. And I think a lot of it has to do with the fact that it was still pretty undervalued, but movements like that keep me on my toes because they, I mean, we don't really invest this way, but they can reverse quickly. So, you know, I'm struggling a little bit. I mean, to be honest. Let's talk about your trip to India. And I know you've been there before, but what opportunities do you see?

as an investor looking at India and did anything surprise you on your trip? So I would say that the thing that really interested me the most about India, this trip, and I hadn't been there since 2007, so it's been a few years since I was there. In Mumbai, at least, there seems to have been a change in how property gets dealt with. And by that, I mean, it used to take years and years and years, property would be, before it would be able to be redeveloped. There would be all sorts of, you know, you've got to, you know, basically pay this guy and fill this form and, oh, did you do it in black ink? No, he didn't do it in black ink. Did you get this stamp? There's massive building going on in Mumbai right now. There's, the area where we were was called the Bandra Curla complex, and it's just a brand new downtown that they're building in Mumbai. So things are changing very quickly. And I think that it suggests that some of the, some of the bureaucratic, uh, um, issues that have, you know, that have beset India are, are changing to some degree. The other thing that really interested me is, and this is, this goes a little bit counter to that point, is that

the real growth in India right now is no longer happening in the big cities, like Delhi and, and Mumbai and Chennai down south. They're expensive. I mean, they're expensive. And so people are, you know, so where it used to be that people who were in the rural areas were flocking to the cities, it's not happening so much anymore. So India is not one market. It never was, but it really isn't now. So the areas where I think that the most growth in India is going to come are in the tier two and the tier three cities. So that was really interesting to me, and it wasn't something that I foresaw before I went.

You're listening to Motley Fool Money talking with Bill Mann, portfolio manager at Motley Fool Asset Management. To learn more, you can go to foolfunds.com. I want to ask you about North Korea, and specifically, The new leader in North Korea, Kim Jong-un, who... We've gone all politics. We have got a little positive. But it is worth asking just because we were talking about this earlier, on the one hand, I don't want to give him more credence than he deserves. I got plenty going on in my life.

I don't need to spend a lot of time worrying about the new leader of North Korea. And yet, when I hear things like Japan is setting up Patriot missiles in Tokyo, that... And we are a boiled pumpkin. Did you see that? Yeah. And that gets my attention. Sure. You're more experienced in international affairs than I am.

What do you make of Kim Jong-Oll? So I would say that South Korea, not so much North Korea, South Korea has been an area where we have had a tremendous amount of investing exposure for a long time. We spent a fair amount of time in the country, and we've talked to a lot of people in South Korea. I think that the U.S. and South Korea are handling North Korea very well right now. And by which, I mean, all of this that's going on, obviously it's a game that could easily spiral out of control, but it may not be happening because of things that are, you know, because of things that are happening in South Korea or that the U.S. is doing. And by that, I mean, a few weeks ago, it was announced that the new prime minister of North Korea

was named, and he's a reformer. And you think of a reformer, you know, like a Gorbachev, or you think about, you know, this is a North Korean reformer. I mean, this is no Democrat coming into office, but he is someone who has said, we need to have, we need to follow the Chinese model. Our people are starving. You know, we need to have a little bit more of a market approach to our economy. And so it really could be. And he was basically handpicked, right? He was handpicked, and by handpicked, he was handpicked by the crazy 30-year-old who also apparently has his hand on the trigger.

So it really could be that this is an ongoing battle between Kim Jong-un and the military. It could be a show of strength where he's really consolidating power. So I think they've handled it really well by reacting by, you know, preparing but not rhetorically doing so. Like, you know, when he comes out and says, I think everyone should get out of South Korea. and all the foreigners should leave, the U.S. Embassy said, meh, you know, like, we're all right. You know, it's fine. We don't believe that there's a credible threat.

And I think that's about right. When you and your team are investing, you are looking not only across the U.S. but around the world. I'm curious, you know, a few years ago, India was the hot country that you had to invest in. And, you know, Brazil. Where are you looking right now? What is a country or a region that you're looking at that is maybe not getting as much attention as others? Yeah, Korea is definitely one of them.

I mentioned that before. Another one, and although I would say if you pay attention, it's getting a lot of attention now is Africa. You know, and we spent some time late last year in Nigeria, which is a place where I really, you know, if you'd ask me a couple of years ago, are you going to be investing in Nigeria? It seems kind of unlikely. but even compared to places like China and Russia, the corporate governance in Nigeria is actually pretty good, which, you know, surprises me. But, you know, maybe that's that should tell you something about the corporate governance in Russia or the corporate governance governance in China. So Africa is a really big place, you know. And I would also say, say markets like, like Mexico are very interesting to us.

They're growing rapidly, but the headline risk on them is awful. I mean, you know, what do you hear mostly about Mexico? Well, you hear about a war that's going on between the drug, you know, the drug lords between each other and them and the government. And, you know, sometimes people don't necessarily know who the good guys are. So, but Mexico is actually very quietly, you know, it's a great growth market, you know, and, and we found some some really interesting places to invest. And so we, I don't want to say that we love. bad news because bad news is always bad, really, really bad for somebody, but it tends to create values for us. So, you know, if you read the headlines and you see bad things are

happening in some place, that's probably a place where we're interested. As I mentioned, people can go to foolfunds.com to learn more, but definitely to sign up for declarations, which is your monthly newsletter that you write. We're very proud of it. And it's, it's, I enjoy it because I always feel like I learned something new when I read it. And in the March issue of declarations, you wrote about a battle that I think most people don't think about. And it's not between two countries. It's the battle between politics and capital. Yeah. To your way of thinking, capital always wins the war. Why is that? Well, because capital ultimately is going to go where it's wanted. You know, so you have these, you have these political battles. I mean, take,

take, take China, for example, for years and years and years, China was, you know, China was absolutely averse to the rights of capital. Everything was state owned. And so basically China was, you know, a billion, you know, indigent farmers. I mean, it was, it was a very, very poor country. And then they, you know, there were reforms and they decided, okay, we are going to actually treat capital with some respect. It is something that we need to take, you know, its rights are, you know, or something that we need to take seriously. And really what happened then was that capital flowed into the country because capital was not looking at a place like, you know, a place like China beforehand. And you see the same thing now with, with Russia, for example. I mean, it is very difficult

as an outside investor to believe that if there is, you know, if there is, you know, if there is a question of legality, if there is a question in which there needs to be a ruling made, and you are outside capital, that you have a fair shake. And so the easiest thing for capitalists to do, and capitalists, by the way, it's all of us. It's not, you know, the big bankers or whatever, is to stay away. And, you know, more importantly, to, you know, for people, you know, capital that's within Russia to leave. And that's what's happening. So, you know, we take this very seriously in terms of, you know, in terms of thinking how we might deploy capital. And, you know, and a lot of times in the political realm, this sort of, you know, the rights of capital is sort of the last on the list.

You know, so, you know, the list is huge of where capital reforms have happened in a positive way and, you know, the benefits have accrued to society. Do you think that's part of what is fueling the run-up we've seen the last couple of years in the U.S. stock market, that for investors, particularly large investors, They look around the world and they think, well, I got to invest somewhere. And some places, as you mentioned, there are headline risks and other places like Europe. They're kind of a mess. I mean, I think that's certainly true. I mean, you see one of the really interesting stories that's going on right now. And I mentioned this actually in the article is that France has enacted a tax on stock market transactions, both on the buy and the sell side.

And it's a very small tax. It's 0.2% of the notional value of the tax. trade. But if you think about it, if that's $5 million that you're trading, that's a $10,000 tax bill. So one country, which has, you know, almost never seen a tax that it didn't like, Sweden was like, this is a terrible idea. And the reason that Sweden thinks this is a terrible idea is that Sweden's markets nearly collapsed in the 90s when they tried to do the same thing. Because what happens is, you know, I think you're probably making a bad decision if a 0.2% tax is really what makes you decide whether to make or not make an investment.

But, you know, if you're looking for an actual return, what you really don't want to do is to make yourself that much more unfriendly of a market to capital because capital just move. It just will. There's, you know, there's really no denying the fact that that will take place. You know, so for us now, in the back of my mind, if I'm looking at a French company, I'll go, oh, well, there's that tax. You know, so is that something that I... It doesn't go in the plus column. It doesn't go in the plus column. Exactly.

Thank you for, you know, thank you for drilling. That's exactly it. Yeah. On the list of assets, that's not one. Before I let you go, this week officially kicked off earning season, I'm curious with all of the companies that you're watching, all the industries you're focused on, is there one in particular that you are really interested to see how they turn out? It could be because you're not really sure.

Or it could be because, boy, this company really needs a hit quarter. Yeah. Well, I think, and this will sound somewhat cliched because it's, you know, it's probably the most, the highest profile company in the world, but Apple is going to be very interesting. I mean, you have seen a, you know, you have seen a company that really could, could do no wrong. Beat earnings, something like 40 straight quarters. And now that, and now suddenly the bloom seems to be off the rose from a, you know, from a market perspective. The stock is down, you know, 40% from a, you know, 40% from a. from its peak. And the peak was extreme, but it could be anything this quarter compared to expectations. And so I don't know that I consider Apple to be a bellwether. I mean, in 2012, it was a fairly flat market, and Apple did very, very well. Apple was basically the only thing that worked. But I am really, really interested to see how their quarter turns out. What did you think of Tim Cook's decision to apologize in China on the Chinese language website. He got some criticism for that. Do you, did you agree with the criticism?

No, I didn't. I mean, you know, at, at some level, if you want to be involved in any country, if you want to be a credible participant, you have to play by the local rules. So, you know, if you ask the Chinese consumer, and basically most of them didn't even recognize what the controversy was about, even people who were, you know, who were Apple product consumers. But, you know, if if the government is certain, is in certain ways demanding an apology, you know, sometimes you have to swallow your pride. I mean, pride is not an asset, you know, in running your business in a lot of ways. He's the portfolio manager at Motley Fool Asset Management.

You can sign up for his monthly newsletter declarations at foolfunds.com. Bill, man, thanks for being here, my friend. Good to see you. Coming up, we'll give you an inside look at the stocks on our radar. 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 Full may have formal recommendations for her against. So no, buy or sell stocks based solely on what you hear.

I'm Chris Hill, joining me in studio once again, Jason Mozer, Charlie Travers, and Ron Gross. Time once again for the stocks that are on our radar. And we'll bring in our man, Steve, from the other side of the glass with a question. And by all means, just fire one back at him. Just, you know, don't take that. But don't take it from. Ron, you're up first.

Steve, I've got a company called BKI Technologies, BKI. Now, you've got to follow me here. They're a maker of cellulose-based products, which are used in, like, disposable diapers, oil filters, food casings, like outside of hot dogs. And it's a company we own a little bit of already, but I want to increase my position. They report in a few days, next week, about 10 days from now. And I'm really interested in what they're doing with their European business, because not surprisingly, it's been really weak. So if they can shore that up, I think this is a really great investment to add to. Steve, a question about the cellulose product industry?

Well, my question more is about technology companies like this that are innovative. How do you know that one will win over another? It seems like every company is doing something on the technology front that's totally game-changing and yet so if you win. Yeah, well, I typically am not an investor in innovative, early-stage technology companies. A company like Buckeye, they're well-established, nice market share. you know, are in many different industries, many different products. So I'm really not betting on what comes next.

I'm just betting on their ability to shore up Europe and just continue to generate some nice cash flow. It's a much tougher game if you're betting on who's going to come out with the next big thing. Question for Steve. So you're a relatively new dad. I guess it's not so new anymore. But since Buckeye does make disposable diapers, I want to know a favorite. You got a favorite brand there? Yeah, we're on Huggies.

It's going well. He's a size four. He's creeping up to size five. He's a year and a half. And he just had his first or his 18-month appointment. And he's putting on a bit too much weight. We're going to get him on a program? I think so.

Jason Moser, your stock? Okay. Going to go with Bristow Group. Ticker symbol is BRS. And they provide helicopter services to the offshore energy industry, primarily. Looking at a very unique space, obviously, in what they do. They are the biggest player in that space with a fleet of more than 500. helicopters at this point in the game. A lot of things I like about this company, but really one of the

most important aspects of it is its market-leading position. I mean, it holds with the biggest fleet a lot of a competitive advantage there in an industry that has very high economic barriers to entry otherwise. You've got to buy a lot of helicopters and maintain them and keep them up. Solid management has run the company very well. Stock has been on a tear. It's done really well. A good history of beating the market. But I do believe that we're going to see a lot of activity in Deepwater and Offshore Drilling over the next, you know, coming years and National Oil Varco, another company we follow, their CEO recently referred to this as the Deepwater Century. So I have a feeling that we'll probably see, you know, a nice, nice, healthy demand for Bristow's services.

Question, Steve? How do you come across a company like this? I just look, Steve, you know, I just sit in front of my computer for hours on end and I look. But is there something specific about this company that made you perk up? Well, I think for this, it is, when you're looking in the energy space, you're trying to find something a little bit different than maybe an explorer or producer. You look for sort of the companies that help them to get their job done. So that's kind of how I found Gulfmark, which is a company that supplies a lot of the ships

for these companies. And Bristow was another one that we followed a little bit here for a while. And actually, Brian Hinman was the one who initially showed it to me. Charlie, we've got about a minute left. Western Union, tickers WU. As I mentioned earlier in the show, there's tons of companies laying out there in plain sight that are good values. This is one you've certainly heard of. And they're the leader in global money transfer.

Stock is trading at just eight times earnings. You can count on them to do about a billion in cash flow each year, which almost all of it goes into share buybacks and dividends because they don't really need to spend a whole lot of money to grow their business. And you get a yield over 3 percent, and they raise that dividend pretty much every year. You know, market leader's safe, stable business. Steve, question about Western Union? Are they competing with PayPal? today? There's a lot of competition emerging, specifically in electronic money transfer, but they are

working with banks and telecom operators around the world to do that themselves. Steve, you got a favorite? I don't know. Cellulose, Steve. Ron's company does sound intriguing. Cellulose does sound like fun. I do notice in the diapers that they're pretty sweet. We'll end it there. Guys, thanks for being here. Our engineer is Steve Broido. Our producer is Mac Rear. I'm Chris Hill. Thanks for listening. We'll see you next week. Thank you.