Motley Fool Money - Motley Fool Money: 07.19.2013

Episode Date: July 18, 2013

The Fed Chief ressures investors. Coca-Cola loses some fizz.  And Barbie stumbles. Our analysts discuss thoses stories and share three stocks on their radar. And Motley Fool co-founder Tom Gardner shares some investing wisdom. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill, and joining me in studio this week. From Motley Fool's Supernova, Matt Argusinger, and from a million-dollar portfolio, Charlie Travers, and Ron Gross. Good to see you, gents. How you doing, Chris? Earnings Poulouza.

That's what's happening. We've got the latest from Coca-Cola, Johnson and Johnson, Yahoo and more. This month marks the 20th anniversary of The Motley Fool, so we will sit down with co-founder and CEO Tom Gardner. And as always, we got a few stocks on our radar. But we begin this week with the big macro. The Fed Chief went back to Capitol Hill this week for two days of congressional testimony. He reiterated that tapering of the QE program will occur as economic conditions permit. That's hopefully as dull as this show is going to get. Ron, what did you think of the Fed Chief?

Man, I feel like a proud father whose child has finally done something rational because of how the market responded to Mr. Bernanke. He came out with a very measured statement. If the economy improves, we're going to taper. But you know what? That's not set in stone. We'll adjust as needed. Normally the market still sells that kind of a comment off.

But it didn't this time. The market went up. I'm becoming more and more optimistic that we're at least going to come close to engineering what I'm going to call a smooth takeoff, kind of the opposite of a soft landing. I think things look good. It was interesting because as measured as Bernanke has been all these years, he took what is being interpreted by some, including myself, as a little bit of a shot at the people on Capitol Hill in his written statement,

and I'm quoting here, the economic recovery has continued at a moderate pace in recent quarters, despite the strong headwinds created by federal fiscal policy. That's really a shot across the bow, isn't it, Charlie? Oh, it sure is. And I think for the past few years, he's really actually enjoyed taking shots at Congress. and saying, we're doing all we can at the Fed, and you guys aren't really doing anything, please help, please.

As he gets closer to heading out the door, I think we'll see that step up a bit. Maddie, when you look at how the market has moved to Ron's earlier point about just seemingly flying off the handle one way or the other off of Bernanke's statement, what goes through your mind as an investor? Or is it, do you welcome, in some cases, buying opportunities, or do you just think, you know what, this is noise and I'm not paying the time? Let me just say, I'm glad it's earnings season, because I think that is what's really going to drive the market, not per Nanking over the next few weeks. So, thankful that it's done. I like the takeoff.

I like the slow takeoff. Thank you. Have you brand? Smooth, smooth takeoff. Smooth take. You know, I got to admit, I googled it after I discovered it or came up with it. And I saw maybe possibly it's been used before, so it took the little sales out of it. me a little bit. But I'm still saying that I invented it because I didn't know beforehand.

The patent and trade office is right down the block. We'll go there after the show. Let's get to earnings. Johnson and Johnson's second quarter profit up big on higher sales. 172 percent year over year, Charlie, obviously that is off of a pretty low comp though. What you make of the quarter? Well, I think it's easy to think that a company as big as J&J. It's a $250 billion company, largest health care stock in the world can't actually be a growth company because it's just too darn big. I fall into that trap myself, but that's not the case here. They grew their profits by 18%. And while there was some acquisition growth baked into that, they did have very strong drug sales. Drugs were up 12%. A lot of that was international with the BRIC countries given 19% growth. So overall,

strong performance by J&J. And I do think there's some benefits from an improving economy in the U.S. as people are able to get back into work and get health insurance and go get some of the medicines they might happen to need and stop putting things off. Overall, it's a really good quarter for J&J. Well, and we were talking earlier in the week about how you get to companies of these sides, whether it's a Johnson & Johnson or a General Electric, with all these different divisions, it seems like in some cases all it takes is one screw up by one division can just ruin or at least weigh down the earnings of one quarter.

And I don't want to jinx them, but it seems like a Johnson and Johnson, they've had maybe four, five quarters in a row of no major screw-ups. Right. And that's especially in a pharmaceutical industry where you can get safety recalls on your products, which they have had to deal with, or drugs going off patent and the like. But they've managed this all very well. Coca-Cola's second quarter profit fell 4%. A weak volume growth was part of the picture here, Matt. But the CFO over Coca-Cola making headlines this week for blaming the weather. I mean, Coca-Cola's had bad quarters before. I don't ever recall them blaming the weather. I know. I mean, we expect this from retailers, right?

It always love blaming the weather, but not really from Coca-Cola. I was surprised that, too. I was also surprised that their volume was flat in China, which was surprising to me, given overall Asia was up 2 percent, other emerging markets who was up double digits. But here again, you don't really look at Coca-Cola from a quarter-to-quarter basis. This is a steady grower. It's never going to grow fast, much faster than the GDP of the countries it's actually in. And it's raising its dividends steadily, doing a buyback. I think it's at almost an all-time high. You might be able to get a market beater out of this stock today, but I wouldn't focus on one quarter over another.

I think Pepsi reports earnings next week. Don't you think we're going to know whether or not this weather thing held up? I mean, Pepsi's dealing with the same weather and the same price of gasoline that Coca-Cola was, and yet Coke was trotting out those two things. This is excuses. Pepsi's going to call BS next week. We'll find out. All right. Mattel's second quarter profits fell 24%. It was the fourth consecutive quarter of declining sales for Barbie. So I turned to the expert in the room on Barbie dolls. Ron Gross. I don't even know what that means. In all seriousness, though, I mean, when you're looking at Mattel, we look at different businesses and we think, what is the major economic engine driving this business? And for Mattel, it is all about Barbie. It is all about Barbie. The result, Else were not as bad as the headlines show. The earnings were down about 9 percent. Once

you take out a one-time charge they took four of all things, Polly Pockets, which I know all too well from when my daughter was little. But you're right about Barbie. Certainly, a very strong revenue driver for the company, but I feel a little creepy saying this, but Barbie is being cannibalized by both the American Girl doll franchise and the Monster High doll franchise, from Mattel. So those are growing. Barbie is decreasing. So there is a bit of an offset there. But on top of that, the company is really spending for the future, going into emerging markets, new product lines. That's hitting the current results. But for the future, they should be okay. Yeah. Just to put some numbers behind that, sales of Barbie down 12 percent. All other girl brands

at Mattel up 23 percent. So you've got that 35 percent split. Maddie, we were talking earlier in the week. You look at Mattel. And it seems like they are starting to take a page out of the Disney playbook where you have Pixar movies that turn into characters that show up in games and merchandising and theme parks and that sort of thing. And it seems like at least with American Girl and Monster High, and I guess to some degree with Barbie, they're able to do that with videos and books as well. Yeah, it's the Disney model. It's also the Hasbro model and to a certain extent the Lego model. You know, you have the toys, you reinforce them across, you know, different brand categories. and that, in a sense, reinforces the toys. So it's kind of a positive circular thing that hopefully Mattel can do just as those other brands have.

In the classic board game Monopoly, there is a card that reads, Bank Error in Your Favor. Collect $200. Coming up, one man receives the mother of all bank errors. You're listening to Motley Fool money. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here in studio with Matt Argusinger, Charlie Travers, and Ron Gross.

Earnings Poulouza rolls on Yahoo's second quarter results. Earning's up 46 percent, Matt, but the company missed on revenue, really taking a hit there on advertising. What did you make at the quarter? Well, you know, it really doesn't matter what I make at the quarter only because... Why am I asking you there? Well, because, you know, let's move on. The stock was up after the earnings. It's up 75 percent since Marissa Meyer took over.

or almost exactly a year ago. And to me, the market's given its stamp of approval. It's not really about earnings and top-line revenue growth really right now. It's about making Yahoo more relevant. That's what Marissa Myers is about. She's made 17 acquisitions over the past year, including Tumblr. She's focused on really what Yahoo's good at, which is having a home site, news, sports, finance, as we all know. And so if she can make those more relevant, the rest is going to take her itself. I said to Charlie this morning, wouldn't it be awesome if she just retired? now. I'm done. Thank you. At the top. Thank you. I'm finished. That would be awesome,

but you do raise an interesting point, which is, I don't know of anyone who thinks that she has done anything other than a fantastic job in her first year, but now we enter year two, and the challenges in some ways just get bigger for her. What does she do? And this is just my assumption. My assumption is that this acquisition strategy can't continue in year two. If for no other reason than they had a lot of cash on the balance sheet when she first got there. They now have less because of the acquisitions. I think if this was the year of acquisition, next year is the year of integration. You put it all together. You execute really flawlessly. Make sure everything is lean and you don't get too bloated. And you execute on that strategy and we'll see where

it goes. It's a competitive business though. It's rare that a CEO gets a pass indefinitely unless you're Jeff Bezos. And sooner or later, this bottom line is going to have to turn up. Well, the amazing thing is, Yahoo has almost as many unique visitors per month as Google, and yet it's a tenth of the market size as Google. So that makes me think, you know, there's some upside here, especially as Ron said, if they can integrate well, all those acquisitions they've made. So we shouldn't expect another 75 percent increase over the next year, but you think there's still room to run.

Sure. Market beer, probably. Sales in China for pharmaceutical giant Glaxo Smith-Kline rose 20 percent last year, almost quadruple the pace of growth across its other emerging markets. And Charlie, there may be a lot of reasons that a company would increase sales, but police are saying that this gain was due to bribes and sexual favors. What is going on over here? I mean, this is an amazing story where, I mean, we've talked about stories before involving bribery. We've seen that with Walmart. We've seen that with

other companies, but this seems like a pretty amazing set of allegations being laid out against one of the biggest pharmaceutical companies in the world. Just when I think I've seen it all. You get a story like this. So there are reports of widespread corruption across all of China's health care system. The doctors and hospital administrators are underpaid and apparently more than willing to take a little envelope under the table or something else on top of that. So the allegation is that Glaxo funneled $489 million.

And if it's that specific, I don't know how you can use the word alleged in front of it, but we have to anyways. Through a travel agency to government officials, these are people who regulate whether or not drugs can be sold and what they will be priced at. And so Glaxo was apparently, allegedly, handing money over to get their drugs onto market and sold at a higher price than they would have otherwise. garnered. That does not make the Chinese government happy because it's inflating drug prices for their citizens. And so that's the main story here. As you mentioned, 20% growth in Glaxo's sales last quarter in China. I think the end story here is that a fine is likely coming and going forward, growth will slow down. Yeah, doing business in China is tough. But way back in the day, I was involved in taking a Chinese company public and the CEO was detained by the

the local Communist Party, and I believe never heard from again. So be wary. Nice work. Yeah, thank you. We've talked before about Boeing and the challenges that they've had with the 787 Dreamliner and the batteries and igniting on the runway at Heathrow and all that sort of thing. And one of the things that always goes through my mind at that story is, what are the people over at Airbus, a competitor of Boeing doing about this? If you're Airbus, you have to be on the phone to various companies in government saying, look, look, Boeing's got problems, you should give your business to us.

That being said, what do you do if you're one of the other big pharmaceuticals here? Is there a move that other farmer companies can make in the wake of this? Because at a minimum, I have to believe there are conversations happening where they're saying, how can we take advantage of this and cut into Glaxo's business? Well, the Chinese government is apparently unhappy with all of the pharmaceutical companies, saying their prices are too high, whether it's Eli Lilly or Abbott, and asking them to reduce our prices across the board. So I hear where you're coming from,

but I think they're all in the same boat. Maybe not as big a boat as Glaxo, though. Chris Reynolds is a PR executive who lives in Pennsylvania. He is also a member of PayPal. When he got his account statement for June that was emailed to him, he was surprised to learn that he had a balance of over $92 quadrillion dollars. And if you're scoring at home, that's $15.0.000. zero's people. Obviously, there was an error. PayPal apologized to him. I don't know why

they'd apologize. I would just say, no, that's fine. Just cut me a check. They offered to donate money to the charity of his choice. I don't know, Ron. What would you do with that amount of money or even half that? Because he said... I love what he said. He said, I would pay off the national debt. That is so kind of him. You still have plenty left over. I was going to say, you're walking around with 92Q. You're fine. Yeah, I would have said, just let me keep the interest on that just for for the day that you screwed up, and we're good. We're even.

Maddie, what are you doing with $92, quadrillion dollars? I'd take the Lex Luthor approach. I'd buy Australia. Nice. You're going to buy Australia. Fantastic. Charlie? I'd buy the world. You're right. You're right. Buy the world a thousand times over. I don't know. I kind of like Maddie's approach, because the world, if you own the world, it just runs into problems.

It sounds like an headache. Australia. Particularly if you like beachfront property, that's got to be nice. Let's bring in our man Steve Roydo from the other side of the glass. Steve, what are you doing with 92 quadrillion? I'm buying PayPal. There you go. And firing them all. What are you going to run the business on your own?

Absolutely. All right, we've got a few minutes left. Let's get to the stocks that are on our radar this week. We'll bring Steve back to hit you with a question just to keep you honest. Ron Gross, you are up first. What's on your radar? I'm looking at Lumber Liquidators. Retailer of Hardwood flooring, ticker symbol L.L. Stock we own in million dollar portfolio and have about a four-bagger on it, not too shabby, but we do have it on hold now after that large run-up. large run-up. Stocks pulled back 5 to 6%, 7% lately. They report next week. I want to hear what

they say. Love to hold this company. Can't hold it at any price, though. So I want to hear more about their growth plans for the future. Is there anything, yeah, I was going to say, is there anything in particular you are looking for on the conference call, whether it's pro or con? Yeah. Most recently, they up significantly the number of stores they thought they could own, which completely changes the valuation. I want to hear more about that. All right. Steve, question about lumber liquidators? How does a wood floor company get to be as successful as they have become?

I think about tile or carpet or any of these, and it seems like no one has pulled off this like Lumber Liquidators has. Companies like Home Depot can do it, but it's about putting yourself in the right location almost with any retailer. That's really the key location, location, location. And you sell your product at a reasonable price point to the do-it-yourself crowd, to the homeowners. And a strong real estate market certainly helps.

Matt Argusinger, your stock? Sure, it's Yandex. Stock we recommended on the Rule Breakers Service here. You're making that up. No, it's Yandex. It's ticker Y, NDX. Look it up. It does exist. It's actually often called the Google of Russia. It's Russia's leading search engine. And despite Google's best efforts, literally over the past decade, Yandex has maintained a 60% share of internet search in Russia. They've actually increased that share a little bit over the past year. Raise their earnings guidance pretty big last quarter. They report next week. I'm thinking they might

do it again. So it's one I'm paying attention to. Stock's near a 52-week high. Steve, question about Yandex. Why can't Google be the Google of Google in Russia? Why do we need another company to do this? Doesn't Google serve them like they serve us? Well, it turns out that doing search in Russia is a little different than doing search in the rest of the world.

And yeah, I mean, there's a lot of reasons behind that, which we don't have to get into. But Yandex has had the hold. It's kind of a homegrown company. So, yeah. Charlie Travers, we've got about a minute left. What's your stock? McDonald's reports earning on Monday. Tickr, MCD.

So if you're a dividend investor, you'll like to know that McDonald's has raised its dividend every year since 1976. Current yield is 3%. And what I'm looking for on the call is that for May, that was the first time all year they had positive comps. It was a really ugly 2013 for McDonald's until the spring. And I want to see if I'll continue that momentum. Steve? How many meals is too many meals to give my kid from McDonald's? A week.

A week. Over half a dozen. Okay, good. We're under there. All right. Charlie Travers, Matt Argusinger, Ron Gross. Guys, thanks for being here. Thanks, good.

Thank you. Drop us an email, Radio at Fool.com. Way in on the key questions of the day, including things like, how many meals is too many meals from McDonald's to give your kid in one movie. It is the 20th anniversary of the Motley Fool, so who better to have is our guest this week, the Motley Fool co-founder and CEO, Tom Gardner. He's next.

You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. 20 years ago this month, when the two brothers sat down to bang out the first edition of their 16-page investing newsletter, they probably had no idea that they were helping to start a revolution. But that is precisely what they did. A revolution of individual investors across America and around the world, a revolution that would tilt the balance of power away from Wall Street and back towards Main Street.

And it started in July 1993, when it started in July 1993, Tom Gardner and his brother, David, sent out the first edition of The Motley Fool. And Tom Gardner joins me in studio now. Thanks for being here. Sure, Chris. Happy anniversary. Thank you. Take me back 20 years ago when you and your brother are putting together this idea for a monthly investing newsletter.

At any point, did you – I can't imagine you envisioned anything that has come since. But what were you thinking when you first launched it? Were you thinking, hey, we could do this for a couple years maybe? I definitely personally felt that we would be able to do this as a business. We've said at different times, well, we didn't have a business plan on you. But I definitely felt like we're kind of going for it. And we gathered up all the names we possibly could across all the mailing lists that were available to us. High school gave us the mailing list and all the rest.

Maybe Dave said this at some point. We mailed our cousin's wedding list. Our cousin was married in the state of North Dakota, and we knew almost no one on the list. But, and we had almost no one subscribe. And when that happened, we knew this is probably not a business. But I did think at that point that it would become our work. But then after the first mailing, I thought maybe not. And while this is going on, you and David are early adopters of the Internet as it existed back then,

services like AOL and Prodigy. And I think it was maybe 10 months later sometime in early 94, you guys are thinking about maybe this isn't for us and you post a message like, hey, we'll, you know, we'll give away the newsletter. You're starting to promote it online. And then April 1st rolls around. Walk me through. Long-time listeners and longtime members of the full community have now come to expect that on April 1st, we will pull some kind of prank on our website. But back in 94, I don't think anyone was expecting you guys to pull the prank to you. I don't think we even really it was April Fool's weekend until it was over a weekend until we sort of looked down and saw the date and thought this is unbelievable. So maybe there is a hand of fate moving in so much of what we do, some greater force. But what I'll say is that Dave was the early adopter. Dave was out on different internet services and networks like USA Today had a network. And so Dave was the real early adopter. And when I jumped in to use the technology of primarily AOL, but actually Prodigy

We had a very active stock investment area. You know, the best experience that we had that was similar was call in radio. That's kind of what it felt like to us. And we did a lot of prank calling of radio stations when we were kids. I would say many evenings we were prank calling WMAL in Washington, D.C., and making Ken Beatrice the sportscaster's life a little bit more difficult than it should have been. But we were having a lot of fun doing it. And that kind of fed into what we did in April of 1994, which is that we saw. something that we didn't like. A lot of people promoting penny stocks and low-grade promotional

businesses and hyping them prices higher. And so we decided, let's play a prank ourselves. And we created a company, Zygletics, and Zygletics business was linking sewage disposal systems in the nation of Chad. Most of the penny stocks that we encountered back in the day, probably still true today, I don't spend much time on them, were sort of foreign, big story, unverifiable. Huge opportunity. Huge opportunity for returning Red Army soldiers for steel-framed homes in Russia. That was a penny stock back then, and that was one of the ones that got hyped. And so, you know, we created our fictitious company. We put it on the Halifax Canadian Stock Exchange that doesn't exist. We hyped it up over a weekend, and Dave had a contact

to the Wall Street Journal, and they wrote an article on us, and that really launched the Motley Fool as a business. At that point, we had everything from AOL asking us if we would start a business to the New Yorker asking if they could interview us, to book publishers, asking if we'd write a book. So it was a single act of foolishness on April 1st of 1994 that really created our business. You're listening to Motley Fool Money talking with Tom Gardner, co-founder and CEO of The Motley Fool. By the way, did you dodge a bullet in naming the newsletter of The Motley Fool? Was there a runner-up name that you've... Oh, there were many.

Are you asking this because you know the answer? No, I don't. Is that really true, Chris? You don't? So our third founder, Eric Rydolm, this is probably vulgar and inappropriate, But that has its space and foolishness. I mean, let's read Chaucer or let's be down in the pit of the Shakespeare play and know that, hey, a lot of fun language is thrown in. And I'll just say that Eric, Ride Home, our third partner in 2001, he left to pursue kind of his greater passion. Eric's been incredibly valuable to our company and is still a major shareholder in the Motley Fool. But he went to create what have become the most popular shows on ESPN, pardon the interruption with Tony Cornizer and Michael Wilbaum. and two other shows around the horn and highly questionable highly questionable and dan levittart is highly questionable and those shows have all done really well obviously pTI has been incredible but um eric said you know i think that our member this is like 1990 it's just we're beginning 1993 he goes i think our reader is probably going to be like a guy like in his 50s who's looking at retirement trying to figure out what to do and he's looking at stocks and so i think we should name i think we should name the newsletter

Ruthie. And I think we should name Ruthie because I could just see the guy saying to his wife, I'm going to go, I'm going to go sit on the throne and read Ruthie. It was unclear to me how he put those things together. And I would say that it was not a legitimate runner up to the Motley Fool, but it was cast in the mix. Coming up, more with Tom Gardner right after this. You're listening to Motley Fool Money. Welcome back to Motley Fool Money, talking with Motley Fool co-founder and CEO, Tom

Gardner. Before we focus on the next 10 years, a couple of things I want to touch on from the past, because as I was saying during the break, I was talking with one of our colleagues who's significantly younger than me, who seemed completely unaware of what investing was like for the average person just 15 years ago, the whole notion of conference calls that are held every quarter that were closed off to individual investors. I like to feel like the Motley Fool had a hand in changing that, certainly had a hand in changing that for Starbucks. I think there have been a lot of changes that we've participated in, some of which we've been leaders in. I think the whole idea in a way of talking about your investments online, I mean,

that's obviously a major contribution of our company. We think about breakthroughs. Like, what are the things that we want to change to enable the retail investor to get better results around the world? After all, we're retail investors ourselves. So, I mean, we're kind of like I always love the description of Steve Jobs saying, we're building this stuff because we're using it. I mean, I'm a member of our services. I'm reading our research all the time and looking for stocks in the everlasting portfolio, Motleyful One, with the help of everything that I encounter in our work as a business. So I love what we're doing and obsessed as a customer as well.

So, you know, if you look back at our history at a few things that have happened, yeah, the opening of conference calls, it used to be that the quarterly call was closed only analysts. That was always absurd. It should have been illegal. And we made a big stink about it on our radio show. And we called out Starbucks because they're CFO in response to the sort of drumbeat that we were making in the financial community about this needs to change. It said that Starbucks didn't feel that the call should be open because they didn't feel that retail investors could understand the complexities of their business, to which we said, you guys are doing an incredible job, but it is just coffee. I mean, it's not semiconductor wafer design or some sort of like high power. security technology security or something, whatever. Overall, it doesn't matter. It's not up to you decide whether or not a retail investor can understand it. It's an open market, a public market. And

they agreed. Starbucks changed their tune very quickly on that. And obviously Starbucks has been an incredible business and investment. But I'll just say that was a big one for us. And I'll just say for investors overall, when we started, you were paying maybe $30 a transaction, you know, through your discount broker. And now it's down to less than $10. Research, was very expensive back then. You buy the S&P guide. You pay hundreds of dollars to get something that was updated once a month. Now you get it free on your quote page every day, second by second. So there's a lot of bringing down of costs, increasing of access to information, and that has created a higher and higher priority for getting the right advice and learning the right

framework for becoming a successful investor. You're listening to Motleyful money talking with Montleyful co-founder and CEO Tom Gardner. Tesla Motors has been in the news a lot lately. For many reasons, not the least of which is the outstanding performance. How about the hyperloop? Do you know what the hyperloop is? No, I just know that it exists. No, it doesn't, but I love that. The hyperloop. Elon Moss just came out that he's, oh, it exists in someone's mind. That's true. So you actually, I mean, you got close to pretending that you know what I'm talking about by saying that. The hyperloop is the attempt to allow us to travel by rail equivalent in a tube that would shoot us at an incredibly high rate of speed that would get us from New York City of San Francisco in 45 minutes.

So, wait a minute. I'm just in my own tube? No, you're in a passenger tube. Okay. And that tube is being shot at thousands of miles an hour. So I'll have snacks and entertainment. And you are, you are making your way in 45 minutes from New York and San Francisco. And that's something that, you know, a lot of the great technological advancements showed up somewhere. in science fiction literature 25 years ago. I'm not a big sci-fi reader, so I miss them all. But they always get reference, like, well, that showed up in this, or that was in the matrix. And now we're, you know, so I think that the hyperloop tube idea was out there. And Elon Musk came out this week and said he's supportive of idea and some people are drawing up plans for it, and that's why I mentioned the hyperloop. Was that a waste of time, Chris? Not for me. It wasn't. Maybe for our dozens of listeners.

Back to must, though, for a second. I mean, when you think, about sort of the next generation of great leaders. Over the last 20 years, we've had Steve Jobs, Jeff Bezos, sort of these transformational thinkers who have not just done well in terms of the performance of their stocks, but they have fundamentally changed businesses and in some ways the way we lead our lives. Do you put someone like Alon Musk in that category, particularly when you look at what he is doing just simply with electric cars. I think so, but I'll say that one of the patterns I'm starting to recognize in who these people are and how they're getting it done is that they

actually gain access to capital at a relatively young age. I mean, that's obvious in a way that Mark Zuckerberg, you know, is getting funded while he's a student in Harvard. But I'll also note that Elon Musk sold PayPal and Tony Shea, Zappos. He sold Link Exchange, a business He started for $260 million. So they get capital quickly to be able to go after their bigger ideas. And so, yeah, I mean, I think Elon Musk is brilliant. And I'm happy that my team and Andy Cross, our chief investment officer, have been Tesla fans in our stock advisor, Team Tom. It's been a great stock.

Before we wrap up, I want to get your thoughts on a few of the companies that you follow closely and sort of where you see them going and let's let's start with Facebook the last time you were on the show I think it was a year ago this month Facebook had just been a public company for just a couple of months we're now into year two what do you make of Facebook and its opportunities now well it touched 45 on its opening day and then it fell as low as I think 18 maybe a little lower we bought it in the everlasting portfolio Motley full one at about 24 and a half just a few weeks ago I bought it because I think that culture matters to me and leadership matters to me and say what you will about Facebook, but they have the most highly

rated culture on Glass Door of public companies with more than public companies and more than a few thousand employees. They're a large public company that has an unbelievably high score from their employees, and I think that means that people are passionate about solving problems and figuring out how to gain market share and grow value at Facebook. So I believe in Facebook. I believe in Mark Zuckerberg. Overall, I have questions about it. I'm not blind. I'm a critic of all the companies I invest in. But the last thing I'll say about Facebook is I think they need to really prove that they love their users. They have to prove that. It's much more important to prove that than it is to have a good quarter or a good year of earnings. So if they're trying to prove something to Wall Street and diminishing the experience for their users, they really, really should not do that. But I am a long-term bull on Facebook here at, well, 24 and a half, but now it's about 26 and a half. Another company that we've discussed before, and certainly, again, this is another one of those stocks where it's been a great past 12 months, and that's LinkedIn.

Do you see the growth continuing for them? I'm not saying, do you think their stock is going to double in the next year like it has in the last year, but where do you think LinkedIn goes from here as a business? I think it'll be a five-bagger over the next 10 years. That's a very solid, that's a great return if that ends up playing out. I think that they have the elements. A lot of the elements of the things that I love to see. They've got leadership in Reid Hoffman and Jeff Wiener that are totally bought in with a large amount of capital, a large stake in that business.

They've got the network effect in their business. They've got awesome growth rates. You know, if you look at Starbucks and Whole Foods and go back to when they came public in 1992, their first couple years in the public markets, their growth rates on sales were like 60%. And I think if you want to find a business that's going to generate huge value over a 20-year period, I know not everyone's looking for that. But that is the way to make the most money as an investor no question, that what you want to do is find companies with a very high growth rate when they're coming into the public markets. There are value investments and there are great long-term investments that are steady growers generating. But if you want the kind of results of Whole Foods and Starbucks, which are 19 to 24 percent a year since 1992, incredible wealth creators. They're making millionaires all over the place, and they had very high growth rates.

I think you'll find that for a lot of companies. and LinkedIn has got awesome growth rates and an awesome market opportunity. So, yeah, I'm a big bull on LinkedIn. Where do you think we are with Apple right now as a business? Certainly the stock has struggled over the last year or so, but I don't think that there is anyone who would necessarily bet against them if for no other reason than they have more cash on the balance sheet than any other company out there. Yeah, well, I don't know about that, though, because Microsoft had more cash on the balance sheet than anyone out there in 2000. And that's been a terrible 12-year investment, 13-year investment. I mean, terrible's maybe harsh. No, I was a shareholder for almost that entire time.

It's her. It hurts. Hey, hey, hey, I was totally bullish on Microsoft. You know, overall, I'll say that Apple and Google, those two gigantic technology companies, I start to get a little worried. I'm a Google shareholder, very happily bought around 540 or something in our everlasting portfolio. Now it's around 920. so that's in a year. That's been an incredible year. But that means they got to grow to justify

that valuation as a large company to do that. And the European Commission starts looking in any competitive pricing. Google as the next Microsoft is a worry of mine. And Apple as the next Dell is a worry of mine. I think you have to at least think about that if you're an investor in either of those companies. Google could run into any competitive issues, any competitive practices on pricing and advertising. And Apple could ultimately just be a device and platform company that gets run by by smaller competitors. And Samsung has been a, you know, is a smaller competitor to Apple. But there's that, that business, Apple has to innovate to justify going back where it was from a valuation standpoint in a way that beats the market over the

next 10 years. And at the size that they're at, they run into other complex problems because of that. It has not been a good thing to be the largest company in industry or largest company in the market. going back to the 1950s, if you look at those companies, they're not great performance. It's not that they lose money, and I'm not saying these will lose money for you, but I am saying I would be definitely putting on your skeptic hat when you're looking at those large technology companies. And my worry, as I said, is that Google's the next Microsoft. I'm a shareholder and Apple's the next Dell. I'm not a shareholder of Apple. And overall, I've said it before and I'll say it again. I think that Steve Jobs should have picked a 28-year-old visionary who's maniacally out of control and passionate about Apple and working at

Apple and prove that they're a high performer and have Tim Cook be the right-hand person to that visionary. I think what they did was they picked Steve Ballmer inside of Apple. Now, everyone hates Balmer at Microsoft, but he's probably the greatest CEO in technological history. If he isn't, then Tim Cook is. But I don't think that that means that they are the perfect CEO for those companies. So that's one of the reasons I didn't buy Apple. Last question, then I'll let you go. I know that you are a voracious reader. So whether it is a book, maybe a long piece in a magazine or even just an interesting person you're following on Twitter, what's a reading recommendation?

Well, if you're working, if you're in the workplace, I would say reading a book called Tribal Leadership is a really, really excellent book by Dave Logan, which I think shows how tribes in a company, how a company gets to higher and higher levels of performance. I think it's a great book for any individual to evaluate your career and a great book for any company to evaluate where they are. So that would be one book. I'm going to give three. Second would be conscious capitalism by John Mackey and Rajas Dosaota. That's a wonderful playbook for growing a company and how to assess companies.

Because I think if you want to be a great long-term investor, you need to know that every stakeholder is being served by that organization. Employees love working there. Customers love shopping there. Shareholders are getting great rewards. Communities in the world love that they exist. and I think a company like Whole Foods has proven that, or Starbucks has proven that over time. And the third book, I can't even remember, so I'm just sick with two. That's it.

Well, I only ask you for one, so you can give me more than I ask for. Yeah, well, I think those are two very, very fine books. All right, Tom Garner, co-founder and CEO of the Motley Fool. Here's to the next 20 years. Chris Hill, it's been great working for you. How many years for you at The Fool? I have been here for 16. 16 of our 20 years.

I mean, that's awesome. Hopefully I'll be here for 60 years. I mean, I say this genuinely, I don't want to get cornyer on the radio, but it has been better being your friend, but it has been amazing working with you these 16 years. So those two things coming together have been awesome. Here's the next 16 to 20. It's been a pleasure. That's going to do it for this week's Motley Full Money. Our engineer is Steve Broido.

Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.