Motley Fool Money - Motley Fool Money: 04.15.2011

Episode Date: April 15, 2011

Google reports weaker-than-expected earnings.  Zipcar revs up on Wall Street.  Best Buy thinks outside the big box.  Cisco says goodbye to the Flip.  And the Winklevoss twins learn to live on a budget.  Plus, Ben Stein shares some investing lessons and weighs in on the business of Facebook and the future of Donald Trump. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Everybody needs money. That's why they call it money. 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 Motleyful Senior Analyst, Seth Jason, James Early, and Ron Gross. Guys, good to see you. Good to see you, Chris.

We've got earnings from Google and Bank of America. We've got a couple of big retailers rolling out new business plans, and we've got a couple of hot IPOs. Our guest this week is Ben Stein. We'll talk investing, economics, and Ferris Bueller's day off. Plus, as always, a look at the stocks on our radar. But we begin today with the big macro. On Friday, the U.S. Labor Department said the Consumer Price Index rose in March, increasing by a half percent from February. Seth, Jason, I will start with you. This is the government's key inflation measure. What were your thoughts? Well, what you think of this report depends a little bit on what you want it to be. don't mean that in terms of what you want the numbers to be.

I want it to be awesome. Because, well, as we all know, they report a core inflation rate and an all-in inflation rate, which includes food and gasoline prices, fuel prices, and those are very volatile. So if you want this to be an indicator of the sort of sticker shock that the average Joe experiences, then I think this is a marginally bad report. Food and energy prices are pinching consumers, means they have less to spend the rest of the month that Hooters and Applebee's. And so that's not great news.

If you want it to be an indicator of sort of the future macroeconomic outlook for the country, I think it's not bad because food and fuel prices are volatile. They tend to come back after they've risen. And our inflation rate, the core inflation rate, has risen slightly. It's still below the 10-year average, but it's sort of out of the close to deflation rates. We were seeing a couple of months ago, and that's actually good news. Ron, what do you think? Yeah, it's interesting because, so this is a backward-looking number.

And in this case, the number was helped by lower clothing expenses for one and smaller gains in medical care for another. But if you look forward, for example, Nike has said due to rising raw material prices and energy, we're going to be raising prices, raising clothing prices down the road. And I think there's going to be more of that. So while this may be good from a backward-looking perspective, I do think inflation will start to creep in on a going-forward basis. Shares of Google fell on Friday after the company reported earnings that fell short of Wall Street's expectations. Ron, Google took in more than $8.5 billion in revenue. Why the miss?

Yeah, $2 billion in income, the company is doing just fine. It just fell short of estimates. And for good reason, they spent a ton of money on hiring and marketing, which presumably will be for growth in the future. What's got the street spooked and investors spooked is, is that money going to be used wisely? Is it going to be used, is going up against Facebook a daunting task? Is going after some more of the mobile phone ad market, a daunting task? And that's what's got investors spooked. I think the sell-off and the stock actually creates an opportunity for investors. Seth?

Google is still the best ad company ever invented. But unfortunately, it is sort of just remained an ad company. All of their other innovation, visualize my air quotes, is pretty much nothing. The only other thing they're really famous for is for buying the Android operating system, which is an iPhone clone and giving it away free, that's not very difficult to do. I think the thing I would worry about, where a Google investor, would not be whether this investment right now in people and systems pays off. In other words, I would wonder if it has to be ongoing.

In other words, what I read is that it's about chasing display ads and other items. And if this is the kind of thing that continues, that would suggest to me that the business isn't as scalable as it once was, which would kind of give you a permanently lower margin profile. I'm not saying that's the case, but that's the thing I would be most worried about. This was the first earnings conference call for Larry Page, the co-founder of Google and the new CEO. He only lasted a couple of minutes on the call. Ron, when you talk about what spooks Wall Street, where does Larry Page as CEO fit into that category? The fact that it's showing up in this discussion and stories makes it,

maybe more of a story than it actually is, but certainly for his first conference call, I would say we overblow things? I would have liked him to stick around a bit more. I would like to have heard more about his vision, even some of the operating things that he did during the quarter. And he did touch on that. He was around for, what do you say, three minutes or so. You could say a lot in three minutes. A lot can happen in three minutes. Promoted his favorite managers immediately to see level positions, right? Half a dozen or more of them. They did, you know, institute salary increases for non-executive employees 10% across the board. And remember in January, they said they were going to be hiring

6,000 people. So we knew these expenses were coming down the road. But I would have liked to just heard a little bit more from him, especially since this was his first call. He was playing hard to get, or didn't that much to say? I think he turned it over to the CFO. He's the new guy. He's playing a little coy. You're listening to Motley Full Money, Chris Hill, Seth, Jason, James Early, and Ron Gross as we hit some of the big headlines of the week. A couple of big banks reporting earnings this week. J.P. Morgan Chase reported a 67% increase in profits, while Bank of America reported a sharp drop in first quarter profits. James, take them in either order. What do you think?

Sure, Chris. Well, like everything with banking these days, this is just kind of weird. The Fed pushed the turbo button on the economy a while back, you could say. and that has, it's still helping in the form of low interest rates, but it's helped so long that the help is sort of become part of the fabric of the economy and not just a boon to banks in particular. So banks are less correlated these days, and that's what we're seeing. We're getting very disparate results. We have JP Morgan beating expectations, Bank of America, losing largely because of the foreclosure stuff, which is kind of a mini-comedy itself. You have banks making loans to people who can't afford them. Then they lose the paperwork and have to unforeclose or things that's so mixed up.

knows who owns these loans. The stock was barely down in Bank of America's case, which tells me, in fact, you didn't have much movement with J.P. Morgan either, which tells me these were largely anticipated, and I think the Fed's rejection of Bank of America's proposed dividend increase was very telling. Seth? One of the pieces I've been talking about the last few times we've discussed bank results is that there was a divergence I was seeing at the time between sort of investment banking, wealth management, and retail banking, which I was using as a rough proxy for how Main Street is doing. And I didn't see quite as big a split this time around. I will note that I think it was one of the few good areas for Bank of America was handling the money of people who don't need really

any more money. But on the retail side, it looked a little better to me. And I thought that that was a cause for hope, at least a little bit. When it comes to evaluating bank stocks, are the And there are just too many X-factors for the average investor? Like, is this an industry that in general investors should maybe steer clear of a little bit? Yes. I agree with that, actually. A lot of bank results are driven by estimates, not by reality. Bank of America released some loan loss reserves in their retail division, for instance, this quarter, and that helped.

But how do we know that they're right? We don't. And things have gotten so complicated, and there's so many estimates involved that the safer thing to do is to stay away, least in American banking. I think some of the overseas banks or even Canadian banks are a lot safer. I've always stayed away from them, and even as a professional investor, because I just don't know what I don't know. You think you have a handle on the situation, but you really don't. There's things that are going on behind the scenes, behind the balance sheet that you're really not understanding. I think small community banks are an interesting place. Those are easier to understand, and that might be a better place for investors. You can look around your area and provide the bank you're interested in isn't also making loans in East Texas and it's located in New England.

You can have a rough idea of what their loan book might look like to businesses in the area. So there's a lot less uncertainty, I think, in smaller banks. But a lot of those are not publicly traded. No, but a surprising number are. Coming up, a couple of hot IPOs this week and news of another one coming later this year. Details in a moment. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Seth Jason, James Early, and Ron Gross. Guys, we had a couple of hot IPOs on Thursday. Zipcar, the car sharing service, went public.

Shares were priced at $18 and soared more than 50%. And Arcos Dorados, an independent franchise owner of McDonald's in Latin America, also went public. Shares were priced at $17, gained more than 25%. Seth, Jason, I'll start with you. Either of those companies looking attractive? I would be much more interested in Arcos Dorados since there's a business with profitability and a path towards profitability.

Details, detail. Yeah, Zipcar seems to be mostly one of those things that hipsters are interested in. Zipcar has kind of some brand cachet, so I wouldn't write the business off completely. And of the two as an IPO, I think I would rather have been it's it's tough zip car i think the company got got hosed by by its bankers when the and the stock goes up 60% on opening day that means that you as a company selling shares have left a lot of money

on the table or it's been left on the table and given to others and zip car was one of those ipos where the majority of the shares were actually sold by the company and not just by individuals who already owned them and so they missed out arco starrados most of the shares being sold were sold by holders, so they're just kind of lining their pockets. And the minority of shares were company shares, still brought in a lot of money, which they're pledging to use for capital expenditures and expansion. I like that business better. I like the Arcoe O'Darado's business better. I don't like the price on either. Google Ventures, which is the venture cap arm of Google, has invested in a service called Relay Rides, sort of a competitor of Zipcar. The difference is

relay rides allows you to rent your car. to your neighbors, which, frankly, we were talking about this on Market Foolery the other day. I have a hard time envisioning any of us saying, oh, yeah, I'm just going to lend my car. Yeah, I won't loan them my weed whacker, but I'm making the keys to my car. Just out of curiosity, if I wanted to rent your car, what are you charging me? I'm a responsible driver, Ron. What do you think? For a week?

For a hell long. Just for a day. I just need to run some errands around town, Ron. Just pay for gas, and it's yours, but... Really? Yeah, I'm a good guy. Wow. I'm guessing I'm not going to get that from James or Seth.

If the seats are covered with plastic sheeting, then the price is lower. The Wall Street Journal is reporting that Groupon is expected to select Goldman Sachs and Morgan Stanley to underwrite its planned IPO later this year for an expected value of. Wait for it? $15 to $20 billion. Ron Gross. What the hell? Well, we've talked a lot about a social media bubble on this show.

I think this is a fine example. to your listeners will recall. They last raised about $950 million at a $4.75 billion value. Then they turned down a $6 billion offer, supposedly, from Google. Now we're talking $15 to $20 billion. Google went public at $23 billion. If we think that Groupon perhaps has a similar type of future as Google, that would be perfectly fine. I think, you know, the business model, first of all, doesn't make great sense. Second of all, there's a lot of competition coming, whether it's from living social or Facebook. So to me, the valuation really does not make good sense. So I'd get in on the IPO if I could, wouldn't you?

Oh, yeah. There'd be a lot of suckers. Zipcar when I'm 60%. So there are a lot of suckers. I'm serious. If you look at this one, this is a dump-the-company on the Rube's type IPO as well. From what I'm seeing, the reports are that only a billion dollars would go to the company. and the rest would be lining the pockets of these early investors, I suppose, good for them, but bad for the retail bagholders who are getting it afterwards. And people are going to, they're going to inevitably compare this to Google. The difference, I think, there's a huge difference right up front, is that Google at the time was operating a really highly scalable ad business that you could add a lot of revenues and generate huge increases in profits. Groupon

depends on old-fashioned sales teams fanning out and pounding the pavement. And that's, never going to have the same kind of leverage. And supposedly a third or so of businesses actually don't make money from these promotional offers, which, you know, that says that the regular customers are not coming back for repeat business. So I think the business model kind of falls down. So what would have to happen to justify that kind of valuation for Groupon? What would you need to see to say, okay, that actually makes sense to me?

It doesn't make sense. The reason it's going to happen is because people like us are talking about it so much. the folks who bought in at an expensive price, you have very easy opportunity to sell at a much more expensive price. Earlier this week, Cisco Systems announced it's laying off 550 employees and cutting several consumer businesses, including Flip. No. Flip is the digital video camera company that Cisco bought just two years ago for nearly

$600 million. James Early, Cisco has got tens of billions of dollars in cash on the balance sheet. Is this a situation where they just have too much money? Well, Chris, actually, I'm going to credit Cisco a little bit. There are two narratives going on here. The first is that new gadgets have rendered the flip phone. Like your iPhone. You got a new iPhone, didn't you?

I did, yeah. Long carrying the Motorola or whatever that is that I had antique. Have rendered the flip irrelevant. The second is we're in an era where tech is being redefined. It's no longer the case that tech companies always have to grow. They don't have to shoot dividends. And we're evolving to different striations of tech. tech, and Cisco is, first of all, good for it to pay a dividend, and the fact that it's focusing

on cutting costs and backing out of what was attempt to chase growth is, to me, a positive. Yeah, you still have to wonder about the knuckleheads running the company, you know. This was not that long ago, and the giant innovation of the flip camera was simply putting the USB do-hicky onto the camera instead of waiting for people to lose a cord. It seemed like a good idea at the time. Well, except that anybody could do it, and then, of course, you know, all the video went from phones an instant sharing. They should have seen that coming, and some of us did see it coming. Luckily, 600 million to them is like couch changed for the rest of us.

On Thursday, Best Buy announced it plans to scale back its big box stores and open up 800 mobile stores in the next five years. Mobile? They're going to, like in a van, like the tackle wagon? You never know. You never know. They're creative out there at Best Buy. I wear ski masks. James, Ron, I know that Best Buy is a company on both your radar. James, I'll give it to you first.

Chris, it was only a decade or so that Big Box seemed to be the answer to everything in retail, and it's sort of tempting to catarize Best Buy's pullback from the Big Boxes maybe some sort of attempt to find the harmonic means, so to speak, in retail size, but it's really more just an indication of how fast retail evolves. We have the Internet now. We have Walmart, and we have a more knowledgeable customer that sort of commoditized a lot of the electronics business. So you go into Best Buy for service that used to be what you need, but now you have Amazon reviews.

You don't really need the same service. So they're smart to be pulling back. The question is, you know, is it too little, too late? Ron? Yeah, I think it's necessary what they're doing. I think it's a mess, but it's better to do it than certainly not do it. Let's at least try to fix the problem. The CEO has said the reason that brick and mortar will always exist

and be necessary is that service matters. I think in this particular case, they need to really step up on that line because the service is very, very poor. It is not a good shopping experience. I have a serious accounting question for Ron. You guys have this at MDP. Do you know where in Best Buys, in which margin line they count occupancy costs for their stores? Where is rent?

Is it in the gross margin or is it in the operating? Kids, huddle around the radio. We're talking about occupancy costs. Nobody breed. Because I've been looking at, here's the story at Best Buy is that gross margins, which is roughly the amount of money they make, you know, just. above their cost for the item has been relatively steady, but operating margins have been dwindling consistently, and that just suggests to me that whatever they're doing at these stores or whatever

they're spending on advertising isn't getting the job done. Ironically, I think the way you save Best Buy is you make that margin line even worse. I think you actually have to spend more on your help, because the reason the rest of us are shopping at Amazon and other places is that we get no value ad from Best Buy. And that's because they hire people who don't really care. They keep them disgruntled. And I think in order to get interested sales staff who will bring

the rest of us into buy items at Best Buy, you have to pay them more. And finally, guys, if you saw the movie The Social Network, you may remember that the Winklevoss twins claimed that Mark Zuckerberg stole their idea for Facebook. They sued him and settled for $20 million in cash and $45 million in stock.

Then they said Zuckerberg had not been forthcoming with information disputed the valuation put on Facebook for their settlement, so they filed another lawsuit. On Monday, a panel of federal judges ruled that the Winkle Vi can't back out of the original deal, so they're going to have to make due with what amounts to $160 million. The judges said he lied to you the first time. You shouldn't be surprised if he lied to you the second time.

Is that what it was? Kind of like that, yeah. All right. Seth, Jason, James Early, Ron Gross. Guys, we'll see you later in the show. coming up a conversation with author, economist, financial commentator, and actor Ben Stein, as we discuss alternative investments, the future of Donald Trump's political career, and Ferris Bueller's Day Off.

Stay right here. This is Motley Full Money. Welcome back to Motley Fool Money. I'm Chris Hill. Ben Stein's career has been unlike any other. In addition to his work in film and television, his roles have included economists, presidential speechwriter, trial lawyer, university professor, and financial columnist and commentator. He's written more than a dozen books. Way more than a dozen. Way, way, way more than a dozen.

And his latest is The Little Book of Alternative Investments Reaping Rewards by Daring to Be Different, a book he has co-authored with Phil Demmeuth. Phildomuth did 99% of the work. You just lent your name. Right, exactly. Let me start with something from early in the book, and I'm quoting directly here. Consider this book to be your personal how-to-comasutra investment manual. We're going to rip off the plain brown wrapper and show you some new positions to try.

I'll be honest, Ben, you had me at Kamasutra. What are some of the alternative investments you think we should be considering? What are the new positions? Well, we listed a tremendous number of them, but just to give you a few of them, there would be global currency funds, event-driven funds, funds and arbitrage between the interest rates, or between and among the interest rates in various countries. these funds, funds that go for extremely small capitalization, stock market neutral funds,

which is sort of the same as that. And we also tell you a number to avoid, which I don't want to mention any of them by name. It's a powerful outlet as yours, but basically we dislike anything involves any meaningful degree of leverage. But I have to say, at the end of the, we also, although the book is called The Little Book of Alternative Investments, and I suspect that the powers that B. at Wiley wanted us to write about things like collectibles of Robert Lee and Stonewall Jackson's last meeting at Chancellorsville, which I happen to have a setup. That's why I mentioned. We are not big collectibles or antique cars, join them. That's great, but to expect to make money on them any consistent. Yeah, I was going to say, I mean, this is one of those things. You guys are very clear

that you're interested in sort of the 60-40 split, 60% of one's portfolio in stocks, 40% in bonds. Right, but we have a lot. But we have a lot worse strategies than that. And, in fact, if I may mention this, I wanted this book to be called The Little Book of How Not to Lose Money in Investing, because what we really have here are a number of strategies which diversify your portfolio to such an extent the stock market, you have a good chance of not losing anywhere near

as much as the stock market. And these have to do in part with market neutral and short funds. But they also have to do it a wonderful, simple, extremely basic alternative investment called cash. I was going to say that, I mean, you really do lay that out as the premier alternative investment. It is a great investment. You know, the great Samuel Johnson said that, and this was stolen from him by Ben Franklin, said that in times of adversity, the best friends to have are an old dog, an old wife,

and ready money. And the ready money part is extremely valuable. I think you cannot overestimate the comfort of having enough ready money. All cash is foolish, but a significant amount of cash makes tremendous sense. You're listening to Motley Fool Money. My guest is Ben Stein, his new book, The Little Book of Alternative Investments, Reaping Rewards by Daring to Be Different. Written with Phil Demuth, who did 99% of the work. There are a couple of hedge fund strategies I'd like you to elaborate on, because you really do,

sort of lay out hedge fund strategies as being sort of the third leg of the stool between, you know, with stocks and bonds. Well, I would say actually hedge funds, and also we love REITs. So we would say REITs are, maybe they're four or five legs to this. Maybe it's a very sturdy stool. Maybe it has four or five legs. But we would definitely say hedge funds have a place, and I certainly have a hedge fund, and I've been well with it.

There are lots and lots of hedge funds. And the beauty is there are lots and lots of publicly traded hedge funds or hedge fund equivalents, so you don't have to have a million dollars or $10 million to get into a hedge fund and get the rewards of this form of trading. Yeah, I mean, you identify some mutual funds that employ hedge funds. Well, they're not all mutual funds. Some of them are ETFs, but they're similar to the mutual funds. Are there any names in particular you think are worth taking a look at? Well, I love the merger arbitrage area.

It seems to me that's where the hedge fund I have a little bit of concentration, and they seem to me to be shooting fish in the barrel these days. I mean, that's saying. But those are called event-driven funds. I like a lot, one called M-E-R-F-X, which is the merger fund, and the Arbitrised Fund, Arb-A-S-A-R-B-F-X. They only have a $2,000 minimum purchase, and we think that they're pretty darn good.

And we also like managed futures, which use a trend-following system to go long and short on commodities, has relatively low expenses. It doesn't have much of a amount to get in. There are quite a few of them. We have a long list, and I must say I was stunned that Phil came up with such a long list of funds. There's also a beautiful field, which I know you guys know a heck of a lot about, convertible arbitrage in which you arbitrage between the stocks and the convertible debentures of companies. And that field, it's just the gift that keeps on giving. I mean,

I did a little tiny bit of investing in that when I was in law school, almost 40, well, more than 40 years ago, it was making money then still making money. You mentioned real estate investment trusts a little earlier. There are reports this week that the family controlling the Empire State building may want to include it in a new publicly traded reet. Is that something just for the pure symbolism of it, for no other reason? Is that something you'd be interested in investing in? I wouldn't want to invest in anything for the pure symbolism of it, but a fund that included that, among many other real estate investment assets would be a perfectly fine thing. We have to bear in mind real estate investment trust got hammered beyond imagining in the financial crisis of 2008 and early 2009.

Many of them, not all of them, many of them continued to pay fantastic dividends even so. Some of that was taken out of principle, let's be honest about it. Now a lot of them have cut their dividends are being managed much more prudently and are still doing well. They've had a correction just recently, but if you had gotten into them at their bottom, but of course no one never knows what the bottom is, you would have done stupendously well. But I think over the long run, they tend to do well because they pay dividends at such a high rate,

and any entity which pays dividends at a high rate tends to return your investment very quickly and thereby get you out of the woods, out of the swamp, and back onto solid ground very quickly from which everything else is a gain. You're listening to Motley Full Money? My guest is Ben Stein. Ben, what do you think is the biggest mistake

that investors make. First vacation and short-term thinking. People stop me in airports. I practically live in airports because I give so many speeches, but people stop me all the time and say, what do you recommend I invest in? And I always just say the broadest possible international index, and that would be TTI, and also a judicious amount of either cash or very short-term. I love the S-H-Y, very short-term Treasury Securities. Interestingly enough, with all the fear about inflation, even those have been knocked down a little bit, but they're pretty darn close to a cash equivalent and they put money in a... When you look at your own portfolio of work that you've done in your career, what has given you the most enjoyment? Well, I think it was something I did a long time ago, which was teaching.

I taught at American University in Washington, D.C., right after I've gotten out of Yale law school and graduate. school in economics and also I was able to say graduate school in art. They were very generous of credits in those days. And I enjoyed that fantastic very, very much, and I enjoyed teaching in Pepperdine in Malibu very much. You know, it's interesting. I just gave a speech just yesterday morning to a group of people who are doing online teaching. And it's a great endeavor, and it's very, very good for people who have a hectic work schedule and cannot fit in normal classroom time.

But I don't think for the teacher it would be as satisfying as actually serious. the kids' faces when they learn something and realize that they've figured something out. I enjoyed that very, very much. I'm going to go on a limb, though, and guess that while it's given you the most enjoyment, I'm guessing that teaching was probably not the most lucrative thing. No, it was not at all. But, you know, in those days, I lived extremely frugally. Things were very cheap.

My wife and I could have a perfectly fine dinner, perfectly fine, for $2.50 for both of us, for the 50 cents more for the tip. And it was a whole different world then. And we lived in a one-bedroom apartment, and we lived very modestly, and it was fine. It was absolutely fine. Is it fair to guess that the voiceover work that you've done in your life is probably the easiest money you've made? Not the most, but it's the easiest.

The most would probably, well, most at this point is if I have a good year in the stock market, in terms of work, the best paid is, if I had to say the single, You're listening to Motley Fool Money. We're talking with Ben Stein. Ben, your father was an economist who served under President Nixon, President Ford. Reagan, too. And what was the biggest lesson that he taught you about money? He frugal. I mean, he had grown up in not in poverty circumstances, but very modest circumstances during the Great Depression, and he was very, very cautious about money. I always remember something he said to me, which was be prudent. That was one thing. And then you're from Washington, so you'll understand this very clearly. I was looking for a house on the eastern shore, and I saw a beautiful, beautiful estate on the eastern shore. And my father said he thought it was a lot of money.

And I said, well, I could buy this and still not be anywhere near the neighborhood of poverty. And my father said, good, because that's a neighborhood you don't ever want to be in. And, boy, was he right about that. I mean, thank God I have not yet been in that neighborhood. I don't ever want to be. but some slim notion of frugality remains in my nevertheless incredibly spendthrift life. What has been the biggest change in your economic thinking over the years? Skepticism about all schools of economics.

I knew from day one that supply side was a fake and that you're not going to get enough revenue from increased economic activity to offset the cut in revenue from the cut in tax rates. That was obvious from day one, and never, ever, ever came even close to doing that. The second one I've learned, I think, just recently is that Keynesian stimulus is somewhat oversold or overbought, you might say, by Democratic policymakers. It's been a colossal failure in the Obama years, and it wasn't really that much of a success in the FDR years, except when we got to total mobilization for World War II. So I am skeptical about any school of economics that claims to be able to predict anything with any specificity.

And as you know, Ben, one of the things we do at the Motley Fool is whenever possible we try and learn from our mistakes. With that in mind, what would you say has been your either dumbest investment decision or dumbest business decision? I'd say not diversifying completely. I really wish that only my picks in individual stocks except for Brookshire Hathaway have been. some have been great, some have been just disastrous, and as I say, if I were a starting out investor, I would just put on blinders about individual stocks, period. Coming up, we'll play a round of buy, seller hold with Ben Stein, plus we'll give you a look at the stocks on our radar. This is Motley Fool Money.

Here listening to Motley Fool Money, we're talking with Ben Stein, author of the new book, The Little Book of Alternative Investments, Reaping Rewards by Daring to Be Different, which he co-authored with Phil DeMuth. who did 99% of it. Ben, we will wrap up with a round of buy-seller hold. Let's start with Bill Gross, manager of the world's largest bond fund, is shorting these buy-seller hold U.S. government bonds. Well, long-term, I wouldn't hold them.

I don't know if I would short them, but long-term I wouldn't hold them. We have a line in our book in which we say a very basic thing. With short-term, the upside is limited and the downside is unlimited, so I don't do any shorting, but I'm cautious about long-term treasury bonds. My seller hold the political prospects of Donald Trump. You know, Donald Trump, the thought of him being president is extremely frightening, and I just hope that he does not pursue it much further. I mean, I've never voted for a Democrat, but for any office,

but the thought of Donald Trump as a Republican nominee is extremely sobering. I mean, maybe he will say things that make me change my mind, but I know him quite well. I once wrote an article about a lawsuit against him about the bonds he had issued for some of his casinos, and I must say I did not form a favorable impression of him. God bless him, and I hope he's a wonderful man, but I'm not a huge fan of his. God bless him. I mean, the lawsuit had pluses and minuses.

He had his own side to say, but I would not be a fan. Buy-Seller-hold, the political prospects of Sarah Palin. I think she has passed her cell by date. I like her a lot, but I think her star has risen and fallen. Michelle Bachman is the one to watch. Over the past year, we saw a big shake-up in the late-night TV landscape. Buy-Seller-hold Jimmy Kimmel. Oh, bye, bye, bye-bye.

He's the most talented guy out there by a million miles. I mean, I hope you're getting residuals from his show. No, I love him, but I don't get any residuals from his show, and I think he did more for me than I did for him, and I love him. Buy seller hold gold I wouldn't I would be selling it at this point I still don't understand why it went up so much

and I wouldn't be I would be selling it at this point but I could be wrong I'm often wrong Buy seller hold The business of Facebook I don't understand why it's worth anywhere near what they're saying

It's worth 75 billion 50 billion does that mean it's going to throw off 7.5 billion or 5 billion in income each year hard to believe Buy seller hold, the economics of marriage. Oh, marriage is the best thing in the world if you have a great wife, as I do. I mean, if you have a terrible wife, it's the worst thing in the world, but if you have a great wife, it's the best thing in the world. And finally, it's one of the defining movies of the 80s.

Buy seller hold a sequel to Ferris Bueller's Day Off. Can't ever have it because John Hughes is no longer living. God rest his soul. God rest his soul. I mean, you said that when people come up to you in airports, all the time. the time they're asking you for investments. Yeah, but they also want to say Bueller, Bueller. I was going to say, that's probably a 50-50 split. Yeah, probably about that. The book is The Little Book of Alternative Investments Reaping Rewards by Daring to Be Different,

the one and only, Ben Stein. Ben, thanks so much for being here. God bless you. Thank you. Bye-bye. 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 once again, our trio of senior analyst, Seth, Jason, James Early, and Ron Groh. Guys, time to talk about the stocks that are on our radar. And Ron Gross, I will start with you. Thanks, Chris. First, I'd like to wish my beautiful wife a very happy birthday. Happy birthday. My stock on my radar is Bridgepoint Education, ticker symbol BPI. It's a for-profit education

company. Pretty controversial coming under a lot of fire, even from Congress. But at 2.7 times, EBITDA, we think all the risks are worth it and that we're being compensated with that cheap valuation. And we're owners of the stock. And the ticker symbol one more time? BPI. James Early. Chris, I am going with Procter & Gamble, who, maker of Tide, strong enough to handle any man's underwear, and many other consumer products. Including for Brise. Including for Brise. That's right, including for Brise. Just raised its dividend 9%. This is an income investor recommendation.

And consumer products like P&G have lagged the S&P over the past two years, but I think P&G is underval. And the ticker? PG. I love that about Procter and Gamble. Seth Jason. If you'd like to buy any fine Procter and Gamble products, you should go get them at one of the grocery stores owned by Super Value. I've talked about this grocery chain before. SVU up 18 or 20% or something like that on the heels of a not so great earnings announcement this week, but the key is that this is a thesis I discussed before. This company was doing really horribly. It's doing

less horribly, and that's enough to move the stock way up. If they get to mediocre, this is going to be a big winner for people. SVU. SvU. Ron, quickly, how are you and your wife? How are you going to be celebrating with your life? I think we'll celebrate in the typical way we do every year by filing our taxes on time. Wow. Yeah, it's pretty, pretty exciting over at the Gros household. You romantic devil you. There's no reason to peep through their windows. There'll be some chocolates and some jewelry, and it'll be a lovely evening. Just chocolates and jewelry or? Closed, too. All right, Seth Jason, James Early, Ron Gross. Guys, thanks for being here. Thanks, Chris. Bye-bye. Thanks to our special guest this week, Ben Stein, his new book,

The Little Book of Alternative Investments Reeping Rewards by Daring to Be Different. If you haven't already, check out Market Foolery, our new daily podcast every Monday through Thursday on iTunes and on Marketfulery.com. That's it for this edition of Motleyful Money. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening.

We'll see you next week.