Motley Fool Money - Motley Fool Money: 05.04.2012

Episode Date: May 4, 2012

The government reports weaker-than-expected jobs growth. Yahoo! deals with a leadership controversy. Whole Foods serves up big earnings. Green Mountain Coffee serves up some bitter earnings. And Microsoft bets on the Nook. Our analysts discuss those stories and share three stocks on their radar. Plus, Motley Fool co-founder Tom Gardner talks about his approach to investing. Learn more about your ad choices. Visit megaphone.fm/adchoices

love it. A Lego set is a gift that always clicks. And clicks. So beautiful. And clicks. For kids who love to create, choose a Lego set. A gift that always clicks. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Full Money. Thanks for being here. I'm your host Chris Hill and joining me in studio this week from Motley Full Stock Advisor, Jason Moser, and for a million-dollar portfolio, Charlie Travers and Ron Gross. Gentlemen, good to see you. How you do, Chris? We've got a couple of CEOs under the microscope.

We've got a few companies making headlines with their earnings, and we have got a whole lot going on in the world of tablet computers. Plus, as always, we've got a few stocks on our radar. But we will begin with the big macro. The latest jobs numbers are out. $115,000 jobs added in April, Ron Gross. Unemployment dropped down to 8.1%. that's down from 8.2%. What do you think?

I think you're misleading all of America. I'm just sharing the numbers. Chris. Can I say I'm disheartened, Chris? If you actually look at the labor force participation rate, which is kind of everyone that would like to work, total employment actually fail 169,000. So we need to focus on that whole total number, which is 14 and a half percent, which remains unchanged. The labor force, the labor market is weak, and that is not good for the economy. Although we did see some of the data from the prior months was.

revised upward. So, I mean, at a minimum, Charlie, it seems like we're getting mixed numbers, murky numbers. Are you with Ron on this? All this government data is always murky to me. But I am with Ron on this. I think the 115,000 jobs that were added is lower than what we need to really bring the unemployment rate down in a very real sense. Jason? Yeah, I think we need to focus on real unemployment, which is still, what, over 14, 14,000-9 percent now. It's just when you see, when you see, the unemployment rate drop as reported, that is, to me, more indicative of people sort of quitting the search. And I also still think we're probably going to have to get used to a new norm here of unemployment because I think a lot of jobs that went away are not going to

be coming back. So to summarize everyone agrees with me. Pretty much, yes. Then by all means, let's move on. Scott Thompson has been the CEO of Yahoo for just a few months and he is already on the hot seat. The company's board of directors is looking into accusations that Thompson patted his resume by claiming to have a degree in computer science. Ron, the charges come from Dan Loeb, who's an activist investor, who also just happens to be Yahoo's largest individual shareholder. You got to watch these activists.

You own shares of Yahoo in the million dollar portfolio. What do you make of all this? It's unfortunate. Yahoo cannot just get out of its own way. It just can't get it done. It's seemingly a small thing, but on the other hand, it's actually not. But when you have a CEO of a large public company getting something wrong so simple as his resume, his educational background, it's just indicative of a company that really can't get his act together. And Yahoo's trying to pass this off as if this was an inadvertent oversight, but this was actually on Scott Thompson's bio back when he was the president of PayPal as well.

That seems a little bit too convenient to me. And I think Loeb is right in that this really is an intentional act. on Thompson's part, and that raises a lot of questions around, you know, the guy. And this is something that Yahoo does not need at this point in time. Thompson's only been on the job since January. He was brought in to replace Carol Bartz to help turn Yahoo around, and he announced some plans in Q1 to focus on their core properties, which are valuable. They're financed the sports and the news and to get some deals done overseas all at a time

when Dan Loeb is launching a proxy fight and trying to gain some board seats. So this significantly weakens Yahoo here. I should point out that Scott Thompson is the CEO as of this taping. By the time we're done taping, who knows. Who knows? But, I mean, Ron, just to Charlie's point, I mean, is the board, I mean, they can't relish the prospect of going through yet another CEO search. Are they going to do that? Plus, it's kind of a reconfigured board.

So you're kind of starting off kind of just with a check in the con column. And it's got to be kind of a nightmare over at Yahoo this morning. More details about Facebook's IPO emerged this week. The company plans to sell the stock at $28 to $35 a share, raising around $10.5 billion. Jason, this would put Facebook's market cap at around $86 billion. Yep. What do you think? I think that is a very big number.

Facebook is one of those IPOs that I think is going to create a lot of excitement. And I think rightfully so, I tend to have a rule of thumb to avoid 99.9% of all IPOs. Facebook falls in the category of one that I'm really paying a lot of attention to. And I think the main reason is because it's one of those platforms that, you know, with 900 million active users, and it more or less dictates how people live their lives, how they set up what they're going to go do. That's how people communicate now. Once you get into that environment, I think it's pretty hard to extricate yourself from that environment as well. So I think they've done a great job in bringing people in to their world.

It is going to be a lofty IPO, but I think it's also going to be one that the market reacts very positively to, because when they see IPOs like this with companies that are very successful, the market tends to go ahead and bid it up. It is, you know, in relation to other companies, you know, this valuation is going to imply a price to sales of around 23. And if we look at something like Google today, which is more like a price to sales of five, Amazon today, which is a price to sales of about two, you can see that it's obviously significant. significantly valued significantly higher than those. But I think it's rightfully so. I mean, it's going to be a great IPO and a lot of fun to watch.

Ron, what do you think? They have about 3.7 billion in revenue for 2011, Facebook. They would need to get to about 40 billion in revenue within six to seven years with the same profit margins they have now, which is about 27 percent, in order to justify the valuation. So if you're an investor, a long-term investor, you're not just playing kind of the flip on the IPO. You have to buy into the fact that they'll have 40 billion in revenue six years from now, that's a coin flip for me. How does one know that? And that's just it. I mean, they make their money from primarily advertising at this point.

I mean, last year, the revenue, 85% of revenues regenerated from advertising alone. You know, LinkedIn is another good example of a company that started out with a little bit more of a modest valuation at the beginning of the day. But when it closed the first day of trading, you know, its stock had more than doubled, and that implied a price to sales of around 20. So that brings it closer to what we're seeing Facebook at now. And I think, again, And LinkedIn is one of those unique companies that it has a tremendous user base and really dictates a lot of how people do what they do. And so you look at LinkedIn and Facebook, and I think those are two unique situations.

Charlie, I want to get back to LinkedIn in just a second, but Jason is at least curious about the IPO. What about you? Opening day, you're going to be interested? So if Jason was 99.9% on avoiding IPOs, I'm 100. I just, it's a very different way to run a business as a private company than as a public company, The pressures increased tenfold. You know, you can't ignore the market's focus.

And I'd like to see management get a couple quarters under its belt before considering a purchase. And it will be interesting to see. I mean, we've read stuff about prominent CEOs in some ways either advising or, to some small degree, mentoring Mark Zuckerberg. You know, he's talked with the likes of Steve Baumer, Steve Jobs as well. And if you just look at Apple and sort of how Steve Jobs dealt with Wall Street, really at arm's length, and the way that Tim Cook, in his time as CEO at Apple, has embraced Wall Street and analysts on Wall Street much more than Steve Jobs ever did. I think, to your point, Charlie, it'll be interesting to see what Zuckerberg does in that role, because that's going to be new for him. Yes, absolutely. And it's a lot different to make decisions where you're negotiating with your VC partners or your mentors or your executives at the firm.

when you don't have to worry about a stock price. What happens to this company if their stock is down 25 percent? The pressure, you can't ignore that. Back to LinkedIn, shares up big on Friday after some blowout earnings. Ryan Gross, you've said before in this room, you know, you look at the Internet IPOs of 2011. That was the one you lean toward because, as you said, they make money. It looks like they're making even more. Right. I do like profits. I do like cash flow. They're doing a nice job. Call me old-fashioned. Revenue's doubled, profit. I think $5 million. dollars for the quarter. So they're making money. They're doing a nice job. They made that little acquisition of slide share, I believe it's called, for $118 million. So they're doing a great

job. And in fact, they raised their guidance, but you can't ignore that it's 144 times cash flow at the moment. So again, as with a lot of these companies, they're going to have to grow into that valuation. And as an investor, you have to buy into that very high growth. Time for this week in tablets. Guys, we started the week with the news. that Microsoft is investing $300 million in Barnes & Noble's Nook tablet business. On Wednesday, Target announced it is going to stop selling Amazon's Kindle devices. And Charlie, on Thursday, we saw this report from IDC looking at the entire industry, and basically the big headline out of it was that Android tablets are really struggling.

They are. This is a great week for tablets. I think consumers are the ultimate winners here to touch on the Microsoft story first. This came out of nowhere, and it's, you know, consumers like the Nook, but I think a lot of people were hesitating about buying them because they were concerned about the long-term viability of Barnes & Noble's business in the wake of Amazon just gobbling up everything books. The Microsoft, they paid $300 million for a 17% stake in the business, which gives them some staying power. From Barnes & Noble's angle, this gives consumers confidence that the Nook is here to stay, gives them some money to invest in the place. platform and expand overseas. And from Microsoft's point of view, it gives them a foothold into the tablet market. The nooks are currently running a version of Android as its operating system, and you could bet that when Windows 8 comes around and you see a new Nook tablet, that it's

probably going to have Windows 8 on it, and that gives Microsoft a much-needed boost. But to talk about the market share for a bit, iPad is dominating. And that's an interesting a divergence from what you see with smartphones, where Apple's iPhone gets a lot of the profit in the industry. But when you talk about unit volume sales, Android is very strong, and they're the clear leader, and they are not seeing that kind of success in tablets. And I'm curious as to why or why not that might be the case. Do you think ultimately, and we've talked about different industries where there's room for more than one winner, it seems like the tablet industry is one of those industries.

one of the winners is iPad, who are we betting on to provide the other winner? Is it the Amazon Kindle Fire or is it, you know, Microsoft, you know, backing Barnes & Noble? I would have a guess that it would be something at a different price point. So less features, probably not more features than an iPad. So in that case, you would probably be looking at something like the Kindle, cheaper, less robust, but still, you know, can do a lot of things. Jason, I ask you with your iPad in front of the phone of the desk. One of those devices. We have the Nook and we have Kindle Fire and iPads in the house.

And I think Ron makes a really good point there. We know the iPad is targeted to a higher price point. So then when you look at the space for the other tablets, it's going to come down to a lower price point. And really, that's where Amazon, to me, stands out to have a tremendous advantage because they can go ahead and make that device at either a break-even or even take a little bit of a loss on it. Barnes & Noble certainly is not in that position. They're in the position of trying to really streamline that business. They can't afford to take much of a loss. And the Nook, while I like it, it's not like it's some mind-bending device.

It's, you know, just an e-reader with some tablet capabilities. Charlie, you get the final word. Yeah, the one roadblock Amazon might be running into. If you look at this Target story, Target is happy to sell the iPad. It's happy to sell the Nook. You're seeing Apple pop up in Walmart right now. And so these other tablets are getting the bricks and more to distribution. That these retailers seem very wary of participating in with the Kindle.

And I think Amazon's on its own. are obviously sick of being a showroom for Amazon. Yes, it's a condition called Amazon envy. Coming up, Green Mountain Coffee Roasters and Whole Foods, two companies reporting earnings this week, two stocks going in opposite directions. Stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money.

Chris Hill here in the studio with Jason Moser, Charlie Travers, and Ron Gross. Guys, what a week for Chesapeake Energy. It started with the company saying that CEO Aubrey McClendon will be stepping down as chairman of the board of director. Then in the middle of the week, Reuters broke a story on a secret $200 million hedge fund that McClendon was running for four years. And the week closed out with Chesapeake confirming, shocker, that an informal SEC investigation is now underway.

Charlie, I know there's a lot there. Yes. We talked about McClendon before. I mean, he's one of those CEOs that pops up on Nell Minow's corporate governance radar all the time for, you know, basically, for basically being on the naughty list. What do you make of all this? Right. So Chesapeake Energy is the second largest natural gas producer in the country, I'm sorry. It was co-founded by McClendon in 1989, and I want to give him full credit for building a big business out of nothing. However, the personality traits that makes one a successful

entrepreneur, the willingness to take risks that others might not see as prudent has also come back to haunt him. You know, I think it's just a successful entrepreneur. I think it's just a successful entrepreneur. The willingness to take a I think it's just the combination of a risk-taking personality along with maybe a lack of humility, which leads people to think that they can get away with things otherwise people wouldn't. Anything from taking out a billion dollars in loans to finance his participation in investing in wells alongside the company to running a hedge fund alongside Chesapeake's operations. So this hedge fund of his, which was in partnership with his co-founder, Tom Ward, ran from 2004 to 2008, investing in natural gas. And this raises obvious conflict of interest.

You've got to stick with your circle of competence, right? And they're running this out of the Chesapeake offices, of all things. Shares down 20% in the past month, Ron. I mean, is this a value play? Is this something where you can look at it and say, hey, look, to Charlie's point, they built a business. There are assets there. They just need a new CEO. So we used to own Chesapeake in a million dollar portfolio back over a year ago.

And we did it with full knowledge of knowing some of the things, certainly not the things that have come out lately. But we felt that Aubrey was a value creator. And regardless of certainly he wasn't perfect, but he was still creating value for shareholders. All these revelations perhaps tip that to the point of where perhaps that's not the case. Now, if he wasn't around and you just had the assets of Chesapeake, would it be a value play? It's possible that it would be interesting at these levels. You know, so the concern was always that he had the board of director stacked firmly in his favor. And the fact that he was removed as chairman and allowed to remain as CEO says that support is starting to crack.

And I would suspect that, you know, his days are probably numbered here and you'll have a graceful exit at some point. Shares of Whole Foods hit an all-time high this week on the company's latest earnings. Jason, same store sales up more than 9%. That's a big number. That is a big number, and it's not surprising, really. They keep on doing this. At some point, they're going to set themselves up for failure just because their numbers keep getting so high.

But, yeah, it was, I mean, comps at, what, 9.5%. They record weekly store sales at 700,000 now, and sales per square foot up to $971, operating margin up to 7.1%. So a lot of good things going on here. They continue to be able to pass along whatever, incremental price increases from food cost inflation may show up. I attribute some of that just to the experience of going to Whole Foods. I think that people tend to go there. They want

to go back because it's a bit more than just a grocery store experience. But it's also a lot to be said for management here. Mackey in the release stated that they are really focused on running this company to be successful for the next 20 years, not for the next quarter. So they do have a very long-term mindset, which we obviously love here at The Fool. I think the biggest challenge for them going forward is just making sure that they open the stores where they're going to be successful so they can avoid closing the underperformers. Because there is still that whole paycheck mentality in some areas. I think, you know, they are getting away from it.

But regardless, it was another stellar quarter. Shares of Green Mountain Coffee Roasters fell more than 48 percent on Thursday after earnings came in far below expectations. is Ron, this is more than just a bad quarter. You lose half your value. It's a nightmare. Two main things. Their inability to forecast K-Cup sales and their inability to figure out why they can't forecast it. They're at a loss for understanding what happened.

Investors do not like that. Stock sold off heavily. So, I mean, who is the winner here? I mean, if there's an opportunity for another company, I mean, we've talked about Starbucks, Duncan Brands with Duncan Donuts. I mean, if the Kourig machine isn't going to be the long-term winner for a company like Green Mountain, is it Starbucks opportunity here? Well, first, let's, the company's still growing. They're still growing nicely.

Just the growth is slowing. Right. So that's another reason the stock sold off. So the company's not going away anytime soon. Probably Starbucks is the beneficiary for the most part. They're the most formidable competitor. So they're probably high-fiving each other not this week. Charlie, do you have a go-to coffee drink?

The darkest roast I can find. Made in a French press. Oh, okay. It's got to be a French press. No K cups for me. Wow. Okay. Ron? Wow. I'm a little not as fancy there. I'll just take a good old Dunkin' Donuts, cup of coffee, and it's fine with me. Does that work for you, Jason? I'm right there with Charlie. Dark Roast, French Press. You cannot go wrong.

All right, guys. We'll see you later in the show. Coming up, Motley Fool co-founder, Tom Gardner shares his thoughts on Warren Buffett, Jim Senegal and what he looks for in a company before investing. Don't go away. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. It was 15 years ago that our flagship website, Fool.com, first went online. Today, the Motley Fool has more than 250 employees, a suite of premium membership services and asset management division and offices in Australia, the UK. And right here in Alexandria, Virginia, where co-founder and CEO, Tom Gardner joins me here in-studio. Good to see you. Thank you, Chris. It's been a while, and I'm really happy to be sitting here. It's the rare in-studio guest on Motley Fool Money.

We're taping this in advance of Berkshire Hathaway's annual meeting. Warren Buffett is someone that you've studied throughout your adult life as an investor. What do you think about when you think of Buffett and sort of his impact on the investing world and sort of the state of Berkshire Hathaway today? I think the number one thing I take away from Buffett's investment career is that he has said, well, I guess I'm saying two things. Number one, the best time to sell is never. and I wish I had started investing earlier than I did, remembering that Buffett made his first investment when he's 11 years old.

That almost seems unfair. Really? It's true. But again, he's right. If the market goes up 10%, if he'd started at 10, he'd have another $5 billion. So that was an expensive mistake, not to start at age 10 for him, but thankfully it exists in the context of a man who has no need for any more wealth. But what I'll say is it's so hard for us to embrace the idea that the best time to sell is never. So few investors, institutional, professional, retail investors are able to understand that idea, let alone to actually follow it. But Buffett has calculated that Berkshire Hathaway would be worth more and he would be worth more if he had never sold a share of any stock that he purchased. You had the chance recently to, I think you flew down to Florida, and you sat down with Jim Sinigal, the co-founder and now the chairman, the longtime CEO of Costco, but he stepped down. He's now the chairman. What was that like?

And what's your impression of the business now that he's stepped away from the CEO office? I'll actually mention that Craig Jelinek was there. Their new CEO started on January 1st, which, by the way, I guess, is Jim's Sinigal's birthday. He's 76 years old now. told me that he wanted to continue working until well into his 80s. Absolutely loves what he's doing. And yet he felt it was best for the organization to have the transition happen now. It was a seamless transition in their quarterly report. They announced that they were changing the guard and that a new CEO was coming in. I think it was like paragraph four of the quarterly

report. So they did it in a very low-key way. I think they did it in part that way because they spend so much time on succession. That's what Jim told me. And overall, there's a match between the Buffett advice and the Costco approach. And I'll just say that one of the things that Warren Buffett has said is that he looks for leaders who are managing their company as if it is the only asset that their family will have for the next hundred years. And again, it's so easy to get excited about what's happening in any given quarter or to think about our investments over a two-year time frame or a three-year time frame, which would actually be quite a bit longer than the average individual investor holds stocks. But the real money is made out there by entrepreneurs,

organizations, and investors who are thinking about being a part owner of that business for the rest of their life, which means not one economic cycle or not one great competitive period, or not one CEO at the helm, but actually continually in that organization throughout their life. And I think mathematically, it's very convincing and provable that that's the way to make the most money as an You mentioned Buffett and the whole notion of the best time to sell is never. Obviously, that's hard for a lot of people and a lot of people don't have the luxury of doing that. What is your criteria for when you sell a stock? What are the decision-making processes that you go through? Well, I like the way you expressed it, Chris, because you said not everyone has the luxury to do that. And I can understand that. Many of us need to, you know, harvest our portfolio for income or cash. to live on. And so that's the time to sell for me. And obviously, a way to do that is to buy companies that are paying dividends and to generate income that way. But if you actually, as an investor, embrace the idea that when I buy a stock, I'm never going to sell it unless I need the

money, you're going to end up looking at companies differently. It's not, you're not going to succeed in finding the great 10 to 20 plus year investments if you're evaluating companies based on their performance in a single year. You have to look at different factors. You start having to look at what's the culture of that organization like? Do employees stay there? Is it a great place to work? Is the turnover of employees that organization lower than at other comparable companies in their industry? That becomes a huge factor because a company can have a great year or two or a great five years. But if it's a terrible place to work, talent will be leaving that organization. And the existing CEO may not care that much because the existing CEO may be saying to him or herself, I'm only

going to be here for another three or four years. So I'm just going to max out everything I can over these few years. And the reality is that some of the decisions that you make to optimize the short term can be very damaging to the long term. And the reverse is true as well. Some of the decisions that you make that could damage the short term are optimal for the long term. And if you start training yourself to find the organizations that make short-term sacrifices in order to deliver the greatest results over the long term, those are the companies that end up being a Starbucks or a Costco or a Whole Foods or a Google or so many other great companies. And the tough thing, I think the toughest thing is to handle those companies when they

have five or six or eight years that are just kind of flat. But if you have that long term perspective, you're going to have enough companies that are succeeding for you. So, you know, you asked a question I didn't completely answer, Chris, but I'll just say, how would I choose to sell? I would personally choose to sell the companies that I think are, their competitive advantages are eroding, and it doesn't feel to me like their leadership team is thinking 10 years forward. I have about 10 other stories to tell on that from, but I won't do it. I'll thank you for a great question and hope that I did a decent job answering. You're listening to Motley Full Money, talking with Tom Gardner, co-founder and CEO here at the Motley Full

You mentioned looking at employee turnover and tenure and that sort of thing. What are a couple other things that you look at in a business when you're thinking about whether or not you want to invest in shares of that company? I believe Peter Lynch's guidance on one of the core factors that delivered the most multi-baggers to him. Again, I'm not particularly interested in getting a 17% return in a single year or seeing one of my stocks do well over two years. Lynch said his greatest investments he held for longer than three years. It took time for that business to play out and have the value be appreciated by the marketplace. But Lynch said, basically, the greatest companies he ever invested in were growing at a 20 to 30 percent clip. That clip was actually sustainable culturally. If you're growing at 118 percent a year, it can be difficult

to hire and keep the values and the principles of what you're trying to do and the purpose in the crosshares every day. But if you're growing at a 20 to 30 percent rate, that's actually culturally sustainable. And if a business can sustain a 20 to 30 percent growth rate for a 10-year period, and there are companies that do that, the market has an extremely difficult time, fairly valuing that business today. Obviously, if you were going to grow 27 percent a year for the next 10 years, what should your price to earnings ratio be? Should it be 27? Should it be the market average of 12. Should it be 54 to take account for longer than a year ago? Should it be 100? So when you actually run the math on that, if you can find a business that's going to grow

25% a year for 10 years, it's a virtual guarantee that that stock is undervalued today. And you can see that in an example of a company like Bedbath and Beyond over the last 15 years. So you start training your eyes for what those, what delivers greatness in the long term. And I think Lynch was right. 20 to 30% growth rate on the top and bottom line is a very fine place to look for great long-term winners. What are a couple of things that you think investors might overrate when it comes to investing? Because certainly, we live at an age where there is no shortage of information, there is no shortage of opinions about stocks, whether you're talking about something as established

as the Wall Street Journal or CNBC or even just stuff that you see on Twitter. What are a couple of things you think investors or the financial media just sort of overrate when it comes to investing? Well, I think that quarterly earnings are overrated, particularly the earnings number on the income statement without the context of the cash flow that was generated during that period. One of my favorite guides in investing is a man named Thornton Oglove, Ted Oglove. He wrote a book entitled Quality of Earnings about 20 years ago. And in that book, he does a good job of articulating this. And then in some interviews I did with him when I was running Hidden Gems, he made it very clear.

He said that he has proven mathematically that companies can announce almost any amount of earnings in any quarter. The classic case would be this. I sell you a bunch of stuff, but I haven't collected the cash yet. And you have the opportunity to call for a refund. But I may be able to work that in the accounting system so that I can call that earnings today, even though I may not have either collected the cash or you may have a big, refund opportunity out there that could cause me to have to eat that sale. So companies will play around with that in the short term to make sure that they hit their quarterly earnings number.

And that's all overrated, in my opinion, because when you take those actions, again, you may advantage yourself in the next three months or a year, and your stock price may reflect that. But you may be really hurting yourself three or four or five or seven years later when, you know, the music stops and there ain't no chair for you to sit in in terms of how you account for your performance and everything, everything unravels at that point. I've seen that happen. At companies where the net income on the income statement looks great and they beat Wall Street estimates, but it's only a year or two before it starts looking pretty bad because they've been manipulating their earnings. Coming up, more with Motley Fool co-founder and CEO Tom Garner

as he talks about the industry he's most excited about. Stay right here. You're listening to Motley Full Money. You're listening to Motley Full Money talking with Tom Gardner, co-founder and CEO of We were talking earlier today in the office about the old adage that gets rolled out every May first, sell in May and go away. Obviously, a lot of people are, in the financial media anyway, are sort of looking at the year we've had so far, which on average has been pretty good in terms of the market's return, but then looking out through the rest of 2012 and maybe raising some questions. Whether it's about a particular company, an industry, or just the market in general, what is sort of the big question that you have when you look

out over the investing landscape right now? I mean, the biggest question I have is whether investors will wake up to the fact that what's happening over the next nine months is inconsequential to whether or not they're going to create wealth in their lifetime. And, you know, I hate to be a party booper like that because, of course, we all enjoy if you're a sports fan, you like watching every pitch of your baseball team. But if you're the owner of that team, you're thinking about larger sort of more infrastructural things about the minor league system that you have in place to develop talent. You're thinking

about the cost of tickets. You're thinking, I mean, you're thinking about so many things that cause you to have to think three years forward or five years forward. If you're going to be a great team, you know, we have a hometown football team here in Washington who's with an owner with a very short-term mentality who over the last sort of 12 years has gone out and bought talent and try to assemble things to win a Super Bowl in a single year. Meanwhile, the Pittsburgh Steelers, you know, just a few hours away. have been demonstrating a simple playbook for building a long-term great team. And so I guess I just, I don't have an useful opinion about what's going to happen over the next nine months. Maybe a

larger concern would be whether or not our country is going to wake up to the reality that we have to have to close loopholes and taxes are going up and we have to control our spending. It's not either or. The political parties are going to suggest that it's one or the other. But the reality is both sides have to commit. If we could get both sides to commit. And some of that's beginning to happen. But if we could get both sides to commit, I think our economic strength over the next 10 plus years becomes an incredible driver to entrepreneurship and success. But overall, I guess I would have a bit of a concern about inflation coming along. But if you've done your historical research, you know that inflation actually doesn't necessarily

hurt equity investors, particularly those who invest in companies that are because of the loyalty of their customers are able to marginally raise prices along the way. So I think that Buffett said that the most important factor that he's found in his career as an investor is whether or not a company can raise prices. And if you actually look at companies that have raised prices successfully over time, they're always raising them marginal amounts. That's why the big concern when Netflix just threw a massive price hike, that was just disruptive to the relationship that they have with their customers, whereas a company like Starbucks will be nibbling those vanilla lattes will be creeping up by a nickel or a dime every year, so you don't really notice it.

But if you look down five years later, you're like, wow, I'm paying a lot for coffee here, but you've stuck with it because there was no shock to the system. But Buffett said you need to find companies that are able to raise their prices. Last question. Just moving away from stocks and into sort of technology and innovation. Is there something, because you're much more of a person who is more on the cutting edge of innovation and technology than I am, is there something going on right now that you're particularly excited about? It can be a particular gadget. It can be an industry that you think is showing great innovation.

What's going on in the world of business that you're excited about right now? I would say video conferencing to me is really interesting. I think that if you wanted to start a competitor to Facebook, or a new form of social networking, I would create it around video. And I would, because I think that the first move on Facebook has been to go from connecting with people you know and providing updates on what's going on in your life to photos and leakage of time spent on Facebook to Instagram and trading photos and having fun with visual side of the internet. Speeds are picking up. It's easier to send a photo. If you tried to send a photo 10 years ago, it was a pain. It's still slightly painful to send videos now. It's not easy to upload a video from my iPhone and send it on email to somebody. But the speeds are increasing, and I think virtually all social networking will be done in video form five years from now. So, you know, I've been using Cisco Telepresence. We have that here at the Motley Fool. And that's a very clean, crisp. high-deaf, high-quality audio video conferencing tool where you can have 15 people in the room

and you can hear a pin drop just about. I mean, it's better than what you're getting on Skype video. And I think that that's going to change a lot. I think it's going to change everything from traffic and commutes in the morning to whether board members fly in for meetings or sit in front of monitors. Is this just one more reason not to invest in airline stocks? I think that is true. I think that is true. I think I think that that's a component of it. But overall, I believe that social networking is a huge thing, that the Internet is mostly about communications, and that that communication is going to turn much more aggressively toward video

now that speeds have picked up. And that's either going to be a great threat to Facebook or a great opportunity for Facebook. I have a feeling it'll be both. Tom Garner, co-founder, CEO of the Motley Fool. Thanks for being here. Thanks, Chris. You know, Tom's going to be heading up an exciting new project here at the Motley Fool.

called Motley Fool 1. You can get all the details online. Just go to tomg.com. That's tomg.com. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you're here. Joining me in the studio once again, Jason Moser, Charlie Travers, and Ron Gross, guys, time for the stocks on our radar. Once again, our man, Steve Broido, on assignment. Last week, Florida, this week, this week, Texas. But fortunately, Actually, our man, Mac Rear, behind the glass, he's going to weigh in with a question because time is a little tight. One question, all three of you got to weigh in, but Charlie, give me your stock first.

Zipcar. I've been long, a happy consumer of their services, and with the stock getting pummeled lately, I think it's time to look at it for a buy-in my own portfolio. Okay, and the ticker symbol? Z-I-P. Z-I-P. Ron Gross. Dolby Labs, D-LB, a company that just called my eye because it shot up 20% on better-than-expected news and an announcement that their digital audio, And coding program will be in Microsoft's Windows 8 operating system, which is a really brand-new thing for them and could actually be a really nice catapult to growth. So stock does look pretty cheap at this level, even up 20%. Okay.

Jason Moser? Yeah, a little bank in Moultry, Georgia that no one's ever heard of. But I've talked about it here before. I own it my RSP. And personally, it's Ameris Bank Corps. And I bought it a little bit over a year ago. And to me, it's, you know, they've continued to perform really well. They're pulling in some FDIC-assisted acquisitions of failed institutions.

of that area. So they've been able to bring up their total deposits and assets up considerably over the past year, year and a half. And on that line, I think that the bank has improved its valuation, so it's starting to look a little bit more tracked. And your RSP stands for your... Rising Star portfolio. And the ticker symbol? ABCB. A B, C.B. Mac Greer, one question for the group.

What's the biggest untapped opportunity for each of your stocks? Charlie? Zipcar has really only started to expand its business model outside of the business model. side of its core cities. It's very profitable in places like Washington, D.C. and Boston, and as it moves across the country, the profitability will improve. Ron? I have to be redundant. Moving into the Microsoft operating system is by far the newest thing for Dolby, and that could be the growth catapult.

Okay, Dolby, betting it all on Microsoft. Got it. Jason? Yeah, I think with Ameris, says they pulled in more of these acquisitions. I think they're going to benefit from more banking fees and service fees and transaction fees from these increased account holders and deposits. All right. We'll wrap up there. Jason Mozer, Ron Gross, Charlie Travers. Guys, thanks for being here.

Thank you. That's it for this edition of Motley Fool Money. Our engineer is Gail Anyo Nuevo. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.