Motley Fool Money - Motley Fool Money: 04.16.2010

Episode Date: April 16, 2010

The SEC sues Goldman Sachs. President Obama talks about the business of space. Google, Intel, and Mattel report earnings. And Twitter debuts a new business model. On this week's Motley Fool Money Radio Show, we tackle those stories, share three stocks on our radar, and talk corporate espionage with Politico reporter Eamon Javers, author of Broker, Trader, Lawyer, Spy. Learn more about your ad choices. Visit megaphone.fm/adchoices

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app, which makes it so much easier to stay on track. And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit turbotax.com to get matched with an expert today, only available with TurboTax full service experts. Everybody needs money. That's why they call it money. 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 Zirman. Guys, good to see you. Good to see you, Chris. On today's show, corporate espionage and the Chocolate Wars.

Earnings News from Bank of America, Google, and Intel. Plus, as always, We'll give you an inside look at the stocks that are on our radar. But we begin with Friday's news that the SEC is charging Goldman Sachs and one of its investors with fraud for misstating and omitting key facts about an investment product called Abacus. James Early, what in the world is Abacus? Break this down for it. Chris, it's a little complicated. It's not extremely complicated. Goldman Sachs basically assembled a CDO trade that sold to certain investors, foreign investors, pension funds, hedge funds. who thought that these CDOs were assembled by some sort of an independent manager, per the prospectus, apparently, come to find out that independent manager was John Paulson.

Allegedly, don't sue us Goldman's hat. Or John Paulson. A guy who ran a hedge fund that was up, what, 500 percent in 2009 betting against real estate. So the question is, how do you define independent? I don't know. I think the SEC is certainly under pressure to squeeze some milk. of something, and this is a good looking target. If it is as advertised in the SEC complaint, this is pretty bad.

And even if it's legal, it certainly doesn't pass the smell test. And there are a couple of things that are very interesting to me. I actually urge everyone to read the SEC complaint. It is not that long. This was a synthetic CDO deal. They didn't even have a piece of the actual chopped up mortgages. They had a piece of a thing that just points to the mortgages and bets they'll go down, which is even crazier.

And that, of course, is one of the really dangerous things about what happened in this credit bubble because if you allow people to do that, you basically have infinite leverage. And by the way, we don't know yet, or at least I haven't seen yet, who bought the other side of this trade, but it was very likely sort of widow and orphan money. And pension money too. Exactly. Just to be clear, what the actual problem is, is not so much Goldman profiting, you know, or someone trying to profit at someone else's expense.

It's specifically Goldman allegedly misrepresented a certain investment that it sold to other people. So, you know, who knows what other sorts of potential cases like this are lurking out. Yeah, I think that there's probably a lot more of this. And Paulson does deserve credit for, I think, investing according to what we probably all believed around the table, too, that there were a lot of bonds out there and these CEOs that had ratings that were not warranted by the stuff that was actually in them. But he saw that, thought there was a disconnect, bet against him, and consequently, you know, he made a lot of money as a result.

In other banking news, Bank of America and J.P. Morgan Chase reported better than expected earnings this week. Thanks to. Wait for it. Strong trading profits. J.P. Morgan's CEO, Jamie Diamond, said the economy was looking up, but said a crackdown on derivatives trading could reduce the company's annual trading revenue by hundreds of millions or more. That would be so sad. Oh, my gosh. I'm going to send a donation, Chris. First on the derivatives. Most of them or many of them are not traded over an exchange. And they really should be. that will bring a lot of transparency and certainty and comfort to the market. So that needs to happen, regardless of whose revenue it affects.

But basically, the reason banks are so hot is stocks are at or near an 18-month high. People are trading more. There's more volume, more investment banking volume accordingly, too. People want to go public at a time like this. It's not a real rally. We're still fueled by the Fed. We're still fueled by the Treasury Department indirectly. The bank should be doing well.

If not, it would be an embarrassment. So the problem is, if we have a double dip, what happens to the banks? The latest edition of The Beige Book was released this week. This is the report the Fed publishes eight times a year. The headlines, the economy is picking up in most parts of the country. Factories are increasing production. Retailers are reporting better sales, but many companies are still wary of hiring. Seth, we also got news on Friday that March housing starts were better than expected.

So let's just go around the table. We'll start with you, Seth, Jason. What's your big macro headline of the week? Wow, I think the Fed is smoking something. To me, it starts with unemployment and the simple fact that 44 states and the District of Columbia, according to our government, recorded jobless rate increases from a year earlier. 24 states recorded increases from unemployment increases from last month, and nine had no change. So things are not getting a whole lot better for American workers.

And the entire thing about housing starts is, as I've said many times here, the horrible truth is no one knows what's going on. The margins of error are far bigger than the reported gains, which means we don't actually have any conclusions. The one bit of good news on that front is that permits are actually slightly on the rise. Building permits, both from last month and from last year at this time. That's a little bit further down the road, but it's actually outside the margin of error. So we have some conclusive evidence that things are a little better. James Early? Chris, first of all, let me just say, whoever named it the beige book needs to hand over his man card.

We all use it. This is the same guy who came over the yellow pages. Probably, yeah, maybe the MOVE book or something. Better. But for me, a couple things. I see, as alert listener, Steve Broido, who's also our engineer pointed out, foreclosures are up 7% from the prior quarter. Mortgage rates are creeping back up after the Fed is backed out of that market. And going back to those bank earnings, while the banks showed improved credit quality, a lot of them have been relinquency.

A lot of them have been reluctant to make new loans. And if the environment is so great, why aren't they doing that? I think points to a possible double-diff, not likely, but it's certainly possible. Shannon Zimmerman, what's your big macro headline for the week? CPI. The forecast was for 0.2 uptake. It was 0.1. And yet the big story was Bernacki coming out and talking yet again about the need to get back on the deficit bandwagon, deficit reduction bandwagon. I think that's a mistake. And why on earth he's sounding that or dialing that up during a time?

when we still have near double-digit unemployment, and some concerns about growth is really beyond me. And we move from the beige book to Barbie's Playhouse. Mattel reported an unexpected quarterly profit. James Early, we're talking about Barbie. We're talking about Thomas and Friends. What was your take on Mattel's quarter? Chris, what's interesting, first of all, they had a loss last year, so it's great to see them

doing better this year. Overall, toys sales were up 12%. But the neat thing is that actually they didn't so much come from the Barbie and the Thomas the Train. Barbie was up only 5%. And Thomas's division lagged by a percentage point below the average. What kids really went for this quarter was World Wrestling Entertainment Toys. Yeah.

Quality on top, right? And Toy Story stuff as well. So I think that was so unexpected about it. All right. Exit question. Which of these is not an actual Barbie product? Barbie Princess Fashion Horse? the Barbie Doggy Park play set

or Barbie with sensible shoes Barbie with sensible shoes Barbie Princess Fashion Horse Doggy Park Really? I thought that was just Barbie with sensible shoes There's no sensible shoes She's Barbie for crying out loud

It seemed so crazy I thought it had to be true Well she can't have sensible shoes Because she does not have sensible feet You're right, you're right Your feet are permanently in high heel position Aren't they? At least that's all my Barbies are Coming up, earnings from Google, Intel, and GE, plus the business of space. Stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth, Jason, James Early, and Shannon Zimmerin as we break down some of the headlines for the week. Shannon, on Thursday, Google reported a 37% rise in first quarter profits on better than expected earnings and revenues. On Friday, shares of Google were down. What is going on here? It's the return of the whisper number. Apparently, they did not hit the whisper number that was reported on whisper number.com. I thought that that mentality had kind of gone away.

That's a 10-year-old thing that's come back from the debt. Yeah, it's kind of silly. What was interesting was a little bit of the theater of it. They didn't trot Eric Schmidt out to be on the call. And I think that's interesting because, you know, the level of symbolism kind of indicates that maybe they're trying to shift away from being a story stock and get analysts really focus on their financial results. As they go head to head with Apple, as they go ahead with Microsoft and search. And I think that that's probably a good play on their part. The problem for them is that

the Nexus 1 phones are apparently not selling as well as they thought that they would. And until they can really get a dog in that fight, it's going to be an uphill battle. Fortunately, their core online advertising sale business is doing fantastic. So Google remains that thing that I always say this, and I always get yelled at for saying, it's just an ad company people. Come on. It's a very good one, but it's an ad company. James Early? And it's just a fundamental problem with growth stocks. They've got to grow, you know, and if they don't, they get pummeled. But that said, I think I was skeptical of Google at $100 a share, so don't take my advice. Are you five times of skeptical now? Exactly. Exxie question. You touched on a couple of their competitors. If Google could eliminate one

competitor, who would it eliminate and why? I would say Apple. You know, that's the problem. They know that the future is on mobile devices, and Apple dominates that. And based on, you know, the poor experience that a lot of folks are having with Nexus 1, they're not there yet. So they can to eliminate Apple, that would be a good thing for Google. Anyone disagree with that? I say Microsoft because they just have so much cash, even though they're not as good, they can just throw so much cash at stuff. They need Microsoft,

though, because for all the complaining or the rock-throwing they do at Microsoft for being bad, Google is able to make its money because of Microsoft's platform, and that won't change for a while. Apple is somebody they need less, but who is a bigger threat down the road. GE's first

quarter earnings were down 32%, but the company said things were picking up both for the company and the broader economy. Shannon, you believe them? Well, this is sort of interesting. We've been talking about, you know, really impressive earnings reports coming against very easy comps. Well, it turns out that, you know, relative to a year ago, GE's results are actually worse, and it was still better than expected. So the response to their report was positive. I think it's, you know, the ongoing story of GE is this effort to sort of winnow the portfolio of businesses that they have and focus on the core industrials business. It's not going to, you know,

eliminate all of the other things that are ancillary, but they're being treated as ancillary now. GE Capital is always talked about as something that they might potentially sell. Interesting that they want to focus on industrials and new equipment sales kind of in the tank, but the service is part of that, in part because the equipment sales are in the tank, doing much, much better. So it's a good quarter, even relative to a year ago, not as strong. Intel reported better than expected earnings thanks to companies upgrading employees' laptops. This must be other companies since I don't actually have a laptop.

But Intel CEO said many customers at full HQ. Intel CEO said many customers are buying cheaper computers with older chips. AMD also reported better than expected earnings. So Seth, Jason, who's winning the chip war? Well, Intel is winning. And AMD I'm going to not even talk about because they're just the also-round that Intel lets exist so that they don't get an antitrust suit. It's interesting, there's a lot of interesting stuff just in the few headlines of this Intel report.

One of the things is that they sold more high-end chips as well. is that Adam, which is a microprocessor designed for netbooks, down 19%, these are sequential numbers, is that the death of the netbook already here? We've predicted it here. Maybe it's happening sooner than we thought. But if you look at what's happening at Intel, which is a record quarter, I think it says good things about the rest of the computer market, because this isn't just better than last year.

This is a very good quarter, and so it means other follow-on companies, including PC makers, operating system sellers, and chip makers probably have a little more to look forward to down the road. So I think this is actually a very good bit of economic news. Yom Brands, the parent company of Pizza Hut, Taco Bell, and KFC reported a 10% increase in first quarter profits. In China, where KFCs make up most of Yom's business, profits increase 37% making it Yom's most profitable region worldwide. Shannon, are you bullish on Yom? I'm bullish on Yom. I'm bullish on Yom. I'm bullish on. on KFC and I want to go get one of those sandwiches

that we talked about last week. The double down? With the chicken for bread? Come on. I'm sure that, you know, we help pop that stock as a result of that. And just a review, if you missed last week's show, we're talking about a bacon and cheese sandwich and instead of bread, you've got fried chicken.

Exactly right. You know, and I say this was empathy because we're exporting some of our bad habits. I read that 25% of Chinese are now overweight or obese. Are you saying it's all KFC's fault? It's probably 50%. No, this is actually a very interesting story, and I pegged Young Brands a while ago in one of our Blue Chip reports as a company really worth watching, not only because they do a pretty good job operating here in the States, but because they were dominating in China already, and they continue to do that.

This is going to be a major profit center for them. Twitter is looking to make some money through its Promote Tweets program, where advertisers pay to have promoted tweets placed at the top of Twitter search results. It's kind of like Google's model, except without all the users. Google has more than 300 million people using its search each month compared to less than 3 million using Twitter's search. So, guys, do we think this is the first step to an actual business model for Twitter? It's a first baby step. They've got to do something.

This is the obvious thing for them to do. So, all right, good, next. Yeah, the back of the envelope numbers you'll see out there. I saw one in the Wall Street Journal that says, let's see, We got 3 million searches, 20 million searches every month. That's $200,000 a month in revenue for Twitter from this. This goes to, I've said this for a while. I think Twitter gave away the business a long time ago.

Most people don't go to the Twitter page. They're not doing Twitter searches. Most of the users are using applications on phones or other applications on their computers. So there's no reason for them to start generating this Twitter search. And without a huge base of searchers, you're not. not going to have a lot of search money coming in. Exit question. Twitter's co-founder, Biz Stone, and yes, that's his name, Biz Stone.

Did he give himself his own nickname? Because that's against the rule, as we've said. It's very important to find out if he did it. I think I have one of those removed ones. He said this week that Twitter now has 106 million registered users and is adding 300,000 new users per day. Let's say, for one day, Biz hired the Brain Trust here at Motley Fool, money as his consultants. He asked for our advice. What are you going to tell him?

Oh, IPO now. You sell now as fast as you can. Head for the exits. And finally... Wow, we've never agreed on anything like that. We're just like, get out of here. I think those board seats are now not going to happen. And finally, President Obama outlined his plans to revamp the space program this week.

In addition to canceling the space shuttle program and a return trip to the moon, Obama's plan calls for the private sector to take on a space program. sector to take on a bigger role in space exploration, which could be good news for the likes of PayPal co-founder Elon Musk and his company, SpaceX, could also be good news for Amazon CEO Jeff Bezos, who's working on his own sort of top secret space thinging. Seth, is this the new space race? Well, it has been for a little while, and I have to say this story bums me out a little bit because Neil Armstrong, James Lovell and Eugene Sernan, I was born, these guys wrote a letter criticizing Obama's move, caused Obama to backtrack a little, some of the other outcry.

I was born the day that Neil walked on the moon. July 20, 1969. Neil was a guy who shunned the spotlight for a long time. I actually have a Neil Armstrong autograph because he sent my brother and I autographs because as twins we were born this day. So I'm really bummed that Neil is against this because I really do think it's the right move. There was a panel of space experts that recommended that Obama throw out some of these programs that really weren't going to pay back.

and that we let private industry, smaller private industries, handle the heavy lifting on the low-tech shuttle service in and out of orbit. And I think that's absolutely the right thing to do, and that NASA should focus on more far-reaching technologies, like getting us further out of the Earth's atmosphere. I understand why the astronauts would feel threatened by the fact that we don't have our own kind of taxi service. We don't have our own car. We're dependent on renting from the Russians or others.

But I think it's absolutely the right move. The truth is that private industry is already doing this anyway. So NASA has always been an advisory role. It's just moving from the few giants like Boeing, Northrop Grumman and others, to a wider group of companies. But I have to say, as an Amazon shareholder, I'm not actually wild about the fact that Jeff Bezos is spending any time on this. I want him focused 100% on his own company.

You want him just behind the desk at Amazon all day long. Yeah, pretty much. Yeah, not all his ideas are great ones. At one point, Amazon had nine-pound boxes of nails that you could get chipped for free. I know, and the more time he spends behind the desk, he can weed out, you know, ideas like that. I was going to say, you know, all this stuff kind of makes me want to grab a diaper and drive down to Florida to fight this.

You know, what is funny? There's a blast of fast. Would you ever have guessed 40 years ago that we're going to be dependent on the Russians to get to space? I mean, that's ironic. Let me take you on a little trip, my super sonic ships that you're disposing if you feel so inclined. Well, all right.

We're going to travel faster than light, so do I appear. You're overcoat tight and you go anywhere you want to decide. All right. The guys will be back later in the show to share the stocks that are on their radar. But coming up next, we're going to pull back the curtain on the secret world of corporate espionage. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money.

I'm Chris Hill, and it's time to dig into the business of spying with Aymann Jabbers. He's a reporter for Politico, and he's the author of Broker-Trader Lawyer Spy, the Secret World of Corporate Espion. Ayn, welcome to Motley Full Money. Hey, thank you for having me. So I think when the average person thinks about spies, you know, we have visions of the CIA, the KGB, government agents, that sort of thing. But you've written a book here that the private spying business is becoming a big part of the way regular companies do business.

How are companies using spies these days? Yeah, that's right. If you want to really understand the global economy, you've got to understand the intelligence piece of how companies, large financial institutions, law firms, and others are using corporate espionage to get an edge in this, you know, very complicated, expanding, contracting global economy. What I found is pretty much any time there's a major dispute, if you've got massive litigation, if you've got a merger acquisition, a hostile takeover, perhaps, if you've got a hedge fund that's looking to get information, all of those are areas where espionage companies.

into play because the information edge that you can get from spying techniques and technologies can really help you win the day in a lot of those different fights. Well, and one of the things that surprised me in looking through your book is they're active CIA officers. They're on active duty and they can work freelance for these private businesses. How is that working? Like, how does that happen? Well, when I revealed that in the book, the United States Congress was a little surprised

to see that too. they actually passed an amendment to the Intelligence Authorization Act this year, a bipartisan amendment that said, you know, the Director of National Intelligence, they want him to report to Congress every year now on who these CIA freelancers are, where they're working, and what exactly they're doing. In the book, I revealed that because the CIA is under so much pressure right now, financially, they are losing a lot of people to this private intelligence industry, which pays a lot better than the government does, as all private industry always pays better than the government.

The CIA decided that they have to have this moonlighting policy where they allow their guys to work nights and weekends in the private sector. And that's sort of everywhere in the private sector doing all kinds of different things, but they won't say sort of exactly what. But what I found in the, and I reveal in the book, is that in past years, active duty CIA officers have worked at a firm called BIA, Business Intelligence Advisors, which was founded by a core group of veteran CIA interrogators, people with 20, 25 years of experience doing interrogations, who are now selling that interrogation experience and those techniques that they learn and developed inside the CIA in a corporate context, mostly to hedge funds who are looking to

really eyeball CEOs when they're appearing on television or when they're giving their quarterly earnings calls and that sort of thing and really watching the body language and listening to the word choice the way an interrogator would to get a sense of whether they're really confident in what they're saying, whether they're telling the truth or not. So CIA folks, active duty folks, were working at that firm in the past. We know at least that much. But there's a lot about this that we don't know. And I think that's why Congress jumped in after my book came out. They really wanted to find out a little bit more about where these folks are working and what they're doing. You're listening to Motley Fool Money. We're talking with Amin Javers, author of Broker, Trader, Lawyer, Spy,

the secret world of corporate espionage. So you talk about BIA and how they're watching CEOs testifying. One of the things you write about in the book is how BIA listened in on an earnings conference call. This is back in 2005, and the company is Southwest Airlines. What was BIA listening for? Well, the key thing they listen for in all of these is indicators of deception. They pride themselves on the ability to do what they call deception detection, and they basically turn themselves into human lie detectors. And what they're listening for is any indication that the team, the executive team that's presenting on that quarterly call is not telling the truth, is unsure about something, is hedging

on something, and they've developed a series of psychologically based techniques where they can actually spot that, or so they claim. And it's all based on this principle, which is kind of fascinating. I got really into this when I was doing the research, and I was just incredibly fascinated by it. The principle of cognitive dissonance, and that's the theory that the act of holding two opposite ideas in your brain at the same time actually causes sort of subconscious physical discomfort, and people will do almost anything not to have that physical discomfort. And so when people are being deceitful or lying, they don't tell a flat out lie. They look for ways to hedge so that it's sort of true but still misleading. And the classic example of that is Bill Clinton during the Lewinsky affair when he said there is no affair. Well, of course, that was correct when expressed in the present tense. But there had been an affair in the past. But he was telling the literal truth there in an effort to be deceptive without experiencing cognitive dissonance. The other thing that they found is that it causes physical symptoms of discomfort.

And so people tend to scratch themselves or rub their face or they engage in what's called grooming behavior. They line up all the pens on the desk neatly and squarely or rustle their papers and line everything up and they try to clean the area where they are. All of that is sort of subconsciously driven behavior that these CIA interrogators say is an indication that. that the person is being deceitful when they're giving whatever remark they're giving at that time. So they're watching for all of that in the CEO context. These also sound like good tips for the average listener out there the next time they go in a meeting with their boss. I tell you, I mean, you can use this in your day-to-day life. I mean, you know, what's your wife up to?

I found, you know, a lot of it, just as an investigative reporter myself, a lot of it sort of made intuitive sense. I mean, sort of hit me in the gut. you know, we all, reporters all have sort of a BS detector. And, you know, what these guys have done is sort of laid it out in a very detailed way, sort of how you can develop a good BS detector. But a lot of it just seems like, you know, good old-fashioned street smarts to me as much as anything else. You're listening to Motley Fool Money. We're talking about the secret world of corporate espionage with Amin Javers. The things that you write about where companies are hiring spies to listen in on conversations at public restaurants, that sort of thing.

That's not illegal. No, it's not. In one of the chapters in the book, I call it the Chocolate War, this sort of epic battle that's been going on for years between Nestle and Mars, in which Nestle spies were dumpster diving at Mars headquarters to try to pull documents out of the trash. And I loved what they did.

They were so meticulous about their dumpster diving that they were worried the janitors at Mars headquarters would notice that the trash was missing when they came by, every night to take it. And so they brought dummy trash with them to put into the trash bin so that there would be the same number of trash bags in the morning when the janitor came back out to, you know, bring the next load in. So, by the way, wait a second, where's this going? Where do you go to get dummy trash? Or do you have to just create it on your own?

I think they just took it from their kitchens. I'm not totally sure. But eventually what they were doing was, you know, it got very elaborate. And they were taking the old trash out, bringing it back to their offices, sifting through it, looking for documents. documents, emails, calendars, anything that could help them sort of build a case about what was going on inside Mars headquarters on behalf of Nestle. And then after a certain number of days of, you know, looking through that trash, they would bag it back up and they would bring that back. And so they were bringing the old trash back and stealing the new trash. And they had this sort of elaborate, you know, conveyor belt of trash going. But these guys were also tailing the Mars executives.

They were listening to their conversations when they're at an executive retreat. in the eastern shore of Maryland. They followed them there and they booked hotel rooms in the hotel so they could listen in on what the guys were saying at the bar after work. All of that was going on in order to help Nestle get a picture of what Mars was up to. And all of it, you know, these veteran secret service officers who were involved in this thing, you know, all of it was done with government style, intelligence, investigative techniques. But it was all about chocolate. I mean, it was about, you know, market share in the chocolate business. Holder right there. Coming up in a minute, we'll have more with Amin Javvers and a round of buy-seller hold.

You're listening to Motley Full Money. You're listening to Motley Full Money. We're talking with Amin Chavvers about broker-trader lawyer spy, his new book about the secret world of corporate espionage. Amin, what surprised you the most when you were working on this book? A couple of things. One was the active duty CIA piece of this. I mean, I knew going into this book that I was going to be investigating a world where you have a lot of retired intelligence officers who get into this business. So veteran CIA people, veteran FBI people, British MI5 officers and the like. The fact that you had active duty CIA people involved in one of these firms was really astonishing to me because that sort of brings up a real core question of,

you know, what do we want our government intelligence operatives to be able to do and not to do? And who are they really working for here? I mean, are they working for the taxpayer or are they working for the hedge fund billionaires? I mean, I think that's a valid question. that we need some answers to. But I was also really interested in sort of the global mix of how this works. So in one of the cases, you know, we find ex-KGB and Soviet military intelligence guys who now, you know, work in Roslyn, Virginia, just around the corner from Langley, the CIA headquarters, and they're doing corporate intelligence work now on behalf of American companies.

And these are guys who are out of work after the Cold War, veteran communists, veteran Soviets. and now they're working for Disney and American law firms and others, you find American CIA veterans who are working for Middle Eastern Sheiks. You find British MI5 veterans who are working for Russian oligarchs. So the mix internationally of who's working for who and sort of just where some of these intelligence assets are going and how they're being deployed is fascinating and I think a little bit spooky when you look at it. Because ultimately these guys are in it for the money.

You become a spy for patriotic reasons, you know, in theory. You go into the CIA or the MI5 or something because you love your country and you want to protect it and defend it. You become a corporate spy because you want to get rich. All right. Before we let you get away, we're going to play a quick round of buy, sell, or hold. I'll spot you up with some concepts, ideas. You tell me if they were stocks, would you be buying, selling, or holding them? And keeping in mind that, you know, you do have a new book out, but your day job is working for Politico.

uh... so reports out this week that sarah palin has earned at least twelve million dollars since resigning his governor by seller hold the likelihood that sarah palin will run for president in twenty twelve uh... i don't think uh... i think she's in this for the money speaking of people who are in it for the money i think she's making an enormous amount of money right now and uh... it's clear that she enjoys that she relishes this the stage and platform that she has uh... it's not entirely clear

that she wants to get back into the arcane policy weeds and do the kinds of things that she needs to do on the substance end to really get through a Republican presidential primary. I think that if she's savvy at all, she knows that other Republican presidential candidates will be really after her in a big way in a primary. And she will, at the end of the day, I would predict, and this will come back to haunt me, but I would predict she will sit it out. All right, it's one of the more ubiquitous online scams. Buy seller hold, the future of the Nigerian email scam. Buy, buy it.

Strong buy, huh? It's always, I'm a strong buy. It's always going to be with us. And in fact, one of the things that I learned in doing the research for my book, a precursor to the Nigerian email scam, which they called in the 19th century the bootle game. And basically, it was a deal where people were so embarrassed at having been taken in by this. that they never reported it to the police because it was too humiliating to admit that they had been suckers.

I think that's just a part of human nature and it will always be with us. Buy seller hold a manned trip to Mars in the next 10 years. Sell. It's not happening. It's too expensive. The United States financial position is just much different than it was in the 1960s when we sent men to the moon. I just don't see Congress ever really backing that to the extent that it needs to be back to make it actually happen. I think what you're going to see is actually Congress financing NASA just enough to avoid major traumatic layoffs there, but not enough to have any spectacular accomplishment. That might be sort of a vision of NASA limping along in the future, but I think that's where the politics shake out.

And finally, Amon, he's been around for a while, but he's got a lot of competition these days, buy seller hold, the future of James Bond. That's a really good one, especially given my book. I mean, I would say buy, just in the sense that it's such an iconic figure and can always be reinvented for a new generation. I mean, the sort of dashing, globetrotting spy with all kinds of technology, something just inherently appealing to that. And it's like the Star Trek franchise.

You know, you can kind of keep reinventing it for a new generation and coming up with new takes on it and making it current. I think Bond is sort of the same way. I think we'll be watching Bond movies with our grandchildren probably. The book is Broker, Trader, Lawyer, Spy, the Secret World of Corporate Espionage. It is fascinating stuff, and any investor will think twice about their investments when they read this book. Amy Jabbers, thanks so much for being here. Hey, thanks a lot. I really appreciate it.

As always, people on the program may have interest in the stocks they talk about. Don't buy ourselves stocks based only on what you hear. Chris Hill here in the studio and joining me once again, our trio of senior analysts, Seth Jason, James Early, and Shannon Zerman. Guys, we've got a couple minutes here, so we're going to do a little something with Harper's Index from Harper's Magazine. And we'll get Steve Broido on Mike here. Steve, can you throw out a couple of questions from the Harper's Index? You bet, the percentage of taco shells that Taco Bell Mexico imports from the United

States. That's going to be an unlikely answer, but I'll say 67%. 100. 100. Excellent. 100%. Wow. What do they know in Mexico about taco shows? Nothing. Give us another. Okay, the number of U.S. patents issued for corporate tax avoidance strategies. Again, the number of U.S. patents issued for corporate tax avoidance strategy. I know this one. You would think that would be a growth industry. It's huge. You would. Grover Norquist must have 50. 10,000. A thousand. No, several hundred. The actual number is 32. Yes. Still a lot.

You know what, America, we can do better. Come on, get out there. All right, last one, Steve. Okay, the number of escort services and McDonald's restaurants, respectively in Washington, D.C., my own town. Okay, so we're looking for two numbers here. Can we just give my ratio? The number of escort services and McDonald's restaurants in Washington, D.C.

Two numbers. I'm going to take the roughly comparable and around 327. Wow. Okay. I was going to say 30 or 40. 40 each. I'm going to say 30 to 40 McDonald's and maybe a fourth as many escort services. Steve? The numbers are actually 26 escort services, 23 McDonald's restaurants. No way. In the D.C. Metropolitan Area or just in D.C. Inside Washington.

It's a lot of McDonald's inside the District of Columbia. Wow. All right, guys. Time to talk about the stocks that are on our radar and Shannon Zimmerman. I will start with you. Well, this is not really a stock that I'm putting on my watch list for the sake of, oh, maybe I'll buy it. I think it's more of a canary in the coal-line stock. It's Schwab. The ticker is S-C-H-B. And they, unlike the institutional trading volume, their businesses for retail investors. And that's on the decline.

About a 19% drop in trading led to worse-than-expected first-quarter earnings. That's something very interesting to watch. A lot of mom-and-pop, individual investor, retail money staying on the sidelines. And maybe, you know, mom-and-pop, they're going to call it right after this rally that we've been on for so long. James Early. Chris, if this banking rally persists, I'm tempted to short some of these names. Ideally, I'd go for a lower-quality bank like Citigroup first. It's very risky, since I wouldn't advocate this for everybody.

But if it's pricing enough, it could be a good trade. Maybe just buy puts. Your risk is capped that way. All right. Seth Jason? I wish I knew of a company after that escort service thing. It provided like VD shots, but I don't know who does that. So I'm just going to go with McDonald's?

I'll go with McDonald's. Now, I'll go with something related, a hidden gem. company related to the computer industry, which is form factor, F-O-R-M. They provide testing products for the folks who make computer chips, memory chips. And if we are in the beginning of a cycle, as I believe we may be in tech, then they stand to gain. And the stock has been pummeled lately. And the ticker symbol? F-O-R-M.

Okay. Seth Jason, James Early, Shannon Zerring. Guys, thanks for being here. Good to be with you. Welcome. Thanks also to our special guest this week, Amon Javers, the author of Brayette. broker-trader, lawyer, spy, the secret world of corporate espionage, available in bookstores everywhere on Amazon. Definitely check it out some really interesting stuff. And if you miss any part of the show,

you can find it at our website, motleyfoolmoney.com. All one word, motleyfoolmoney.com. You can also get a copy of our free report, the Motley Fool's top stock for 2010. All that and more at motleyfoolmoney.com. And hey, drop us an email. We want to know what the stocks are that are on your radar. We want to know if you've tried the new KFC double-down sandwich and live to tell the tale. Our email address is Motley Fool Money at Fool.com. That's Motley FoolMoney at Fool.com. Our engineer is Steve Brodo. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.