Motley Fool Money - Motley Fool Money: 08.12.2011

Episode Date: August 12, 2011

The stock market closes a volatile week on a positive note.  Retailers report stronger-than-expected numbers for July.  Bank of America attempts to reassure investors. Warren Buffett issues a AAAA rating for the U.S. economy.  And European regulators temporarily ban short-selling.  Our analysts discuss those stories and share some stocks on their radar.  Plus, Motley Fool co-founder David Gardner talks about some stocks on his radar and weighs in on the market madness. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Thanks for being here. I'm Matt Greer sitting in for Chris Hill this week. And joining me in studio this week from Motley Full Hidden Jim, Seth Jason, from Motley Full Global Gains, Tim Hanson, and from Motley Full income investor James Early. Guys, welcome. Thanks, me. It's really nice to have you on this side of the table so now we can criticize you. You can't hide behind the glass anymore.

Yeah. Go easy on me. Go easy. Okay, guys, a little later in the show, we're going to talk with Motley Fool co-founder, David Gardner. David's going to weigh in on the Wild Week on Wall Street. He's also going to share a few stocks on his radar. And as always, we will talk about some stocks on our radar. But let's begin with that wild week.

The stock market roller coaster, lots of volatility, James Early. What are your thoughts? Mack, the key is to separate opinion from economic reality. We've had a lot of opinions out this week, or past, we, S&P has an opinion, the Fed has an opinion. France, well, France has issues, not so much an opinion, but there's all these things going on. And people don't know exactly what to make of them. They don't necessarily have direct cash flow implications yet, but people are selling because they're nervous. But this could actually be a good time to buy. If you look at John Temple, this is a guy who in 1939 when Hitler invaded Paul, and markets were crashing, borrowed $10,000 to buy every stock trading below, $100 shares of $100, excuse me, of every stock trading below $1, and he made money on just about all of them, made a big fortune, actually. So history has shown that the times like these are, the negativity washes out and economics rule at the end of the day.

Yeah, there's, I mean, there's still some decent economic news. People tend to conflate stock market moves with economic news, and that's a pretty silly thing to do. I mean, just look at the giant rebound we have had in the stock market and the indexes over the past few years where the economy has just been dragging along. And so you need to keep those two things separate, and you really do need to keep your eyes open because some companies, there was no news and they dropped 20, 30 percent. Have your buy list ready and be ready to act on it.

That's true, but I don't think it's quite as bad as Hitler invading Poland at this point. And while there are some, I think, attractive opportunities out there, I wouldn't say it's as widespread as when Templeton sort of took advantage. Something still look relatively expensive to me. Stocks are up until the last week had been having a pretty good year, and I think people were a little ahead of themselves. So let's bring it down to the individual level. If I'm looking at my portfolio and I'm trying to decide whether to sell,

whether to potentially buy more, or just stand pat, what should I be asking, what should I be considering? I think you want to, you know, the two most important things that it consider in any portfolio decisions, what's your investing timeline and what's your investing risk tolerance? And if you've got a long timeline and high risk tolerance, I think now it's absolutely the time to be buying more. If you have a short timeline and no risk tolerance, on the other hand, now is probably the time to be protecting your money and getting out of stocks because it means you're retired and shouldn't have been invested in them in the first place.

Oh, yeah, I was going to say, I have to disagree with you. Two weeks, two months ago was when the time it should have been out of stocks if that was your case, yeah. But I mean, you know, some people are probably panicking at this point. Know thyself and put yourself on the spectrum of risk tolerance and timeline, and that'll tell you a lot about what you need to do. Just remember what I'm remembering about this week is a tweet that I read from the floor of the stock exchange on one of the days of one of the huge drops. It was, I believe, Monday right after the S&P opinion came around,

and it was a trader saying, well, we've never been through this before, so we don't really know what to do. And so when the market is freaked out, doesn't know what to do. What traders do is they just start selling and ask, questions later. Yeah. When in doubt, do nothing. I think that's the best advice.

And let's move to the world of retail. Seth. It looks like we got some good news on Friday. Biggest gains in July for retail since March. Gains pretty much across the board. What jumped out at you? Well, the headline number looks amazing, but you need to dig a little deeper. So it's a 0.5% increase from the previous month and an 8.5% increase above July of 2010.

The trouble I have with that number is, trying to discern how much of the increase is due to just inflationary pressure and how much is due to actually consumers getting out there and buying more of a given amount of stuff outside inflation. Now, gasoline prices are much higher than they were last year, so that accounts for a big portion of the year-over-year gain. But if you look at the individual components, as you can do just by getting the press release from the Census Bureau website there, you see that building material and garden, you know, the Home Depot types up 7.5 percent, clothing and equipment.

accessory stores 7.7% miscellaneous store retailers up 9.4%. I have an inkling that that's performing a lot better than inflation. I follow a lot of those companies and it doesn't seem like they are passing along that much in price increases. So that may be

some good news. Non-store retailers continue to outperform in the growth category here. So they're up 14.1% year over year. So that's people switching to Amazon and places like that. And I've said for a while that I think those are good places to look for investments.

So let's name some more names. Tim, a retail stock on your radar? You know, I've talked about Walmart a lot in the past on this show, but I'm going to go somewhere else and say Adidas, which a lot of people don't necessarily think of as a retailer, but the company is increasingly opening its own stores to better manage its brand and better manage its inventory, which is an issue that Dogged it a few years ago.

It's a European company based in Germany and is being treated like a European company, but the thesis behind it is that it's actually much more global with lots of emerging markets exposure and U.S. consumer exposure, and so it shouldn't be thrown out with all the rest of those European companies that are struggling. Mack, I'm going with Cato. What's ticker is C-A-T-O. This is a budget-priced women's fashion retailer that tends to be in smaller towns and medium-sized cities at best.

It's a good recession-resistant pick. It has a nice yield. It's an income investor recommendation. Market cap about $760 million. Seth? I have to go to Adidas for a second. really want to like that one, but honestly, a couple weeks ago, I was out running in my Adidas running shorts, and I had a horrible wardrobe malfunction on the trail. I heard about that. Yeah, I can't describe it.

That's not Adidas's fault. So, yeah, so if you go to Adidas, just, you know, buy the shirt maybe. No, I do like that one, too. I'm going to go back to the well on fossil, only because, well, not only because, because they release a pretty decent looking earnings. They're primarily a wholesaler, but they also are managing their brand as Adidas has through new stores and have a lot of room for international growth. But the stock was hammered the past week or so down almost 40% over the last three weeks, I think. So it looks like it's a good time to start buying again, whereas only a few weeks ago it looked like a time to just stand pat. And if you want to get Seth really riled up, just tell them that people aren't wearing watches anymore. No, no, cell phone's all you need.

Cell phone, Seth. I got to, the story checks out. Swatch reported incredible. sales growth in emerging markets and it sells, you know, everything from, from low-end swatch watches to very, very high-end, you know, Pentec watches and that sort of thing. So the trend is, you know, watches aren't going away. They're like a tie. That's the thing. People don't get. Watches are sort of a fashion accessory more than they are a utilitarian piece, and people just

seem to be buying a lot of them. The numbers bear it out. Okay, let's move to China, Tim. Inflation hit its highest level in three years. what does that mean for China and what does that mean for the U.S.? Well, it's an important issue for China because, you know, as we said in the past, China really is a country where there's just a yawning gap between the wealthy and the non-wealthy. And the non-wealthy outnumber the wealthy by quite a large margin in China.

You know, probably a billion people are living at or below sort of lower lower income levels. So rapid inflation for them is a real pain and it points to potential for unrest in China. A lot of this is in food, by the way, which is where it hits people particularly hard. In terms of what it could mean for the U.S., obviously, it's very easy for China to start exporting that level of inflation. Because inflation in China will mean rising wage growth, which means things become more expensive to manufacture, and then when they get shipped over here, they become more expensive for us to buy. And I'll just jump right back in and loop what Tim said back to fossil. Part of the reason that stock drop post earnings was the gross margins had taken a hit,

and a lot of the reason for that was wage inflation in China. Yeah, is it non-fossil, well, actually, Fossil Point 2. Chinese minimum wage is up 20% year today, is that correct? I'm not sure what the minimum wage is doing, but real wage growth is just off the charts in China. I think Fossil said some of their wage growth issues were in the neighborhood of 40% or something like that. It was a big deal. Yeah, I mean, there are a couple of ways that companies are handling that. One is to move their manufacturing facilities from coastal China to inland China, but then you've got issues with transportation and shipping,

and then you're just paying, you know, some of that wage savings that you've made up. You're just paying out in shipping costs and gasoline. And I think we've seen some Chinese manufacturers open manufacturing facilities in places like Vietnam and other lower-priced countries, which don't always stay lower-priced. The issue for a company like fossil or some others is that maybe you can't get quite the workforce you need in another country. Some items take a little more skill to manufacture than others. Yep. You're listening to Motleyful Money, Matt Greer with Tim Anson from Motleyful Global Gaines, Seth Jason from Motleyful, Hinjims,

and James Early from Motley Full Income Investor. Guys, it is the one-week anniversary of the S&P downgrade. News out on Friday that the SEC is investigating the downgrade and whether there may have been some insider trading before the announcement. So we'll keep our eyes on that. That was a poorly kept secret to judge by what happened to stocks on Friday, right? Yeah. And James, it has been a wild week.

So let's talk about the downgrade itself. You've got Bill Gross from Pimco, Bill Gross managing the world's largest bond fund. he says the S&P showed spine and finally got it right. On the other hand, we've got Warren Buffett, who says that he would give the U.S. economy a quadruple A rating and says that he's buying stocks still. How do you land on all this? Mac, the S&P's only tool is really an upgrade or downgrade. That's all they can do.

That's their hammer. So they're going to want to nail everything. And this is more like a screw that they tried to nail. And the screw being the fact, yes, the U.S. has a political problem. The U.S. has a spending problem. We're on a bad trajectory. But the downgrade is not the mechanism. to represent your concern about those two problems.

The U.S. can pay its bills. We're not really in that kind of danger yet. The credit default swap market disagrees with S&P. They still think we're safer than all the other AAA countries. And look what happened on the Monday following the announcement. Treasury's rose. So the market disagrees. Warren Buffett disagrees.

Probably Seth Jason disagrees with S&P. I agree with James. I just don't get what I'm doing with the screw and the hammer, but otherwise I agree with James. I was puzzling on that myself. Yeah, that really threw me. Well, let's talk about the S&P a little more, because on a Monday conference call, an S&P official seemed to minimize the downgrade, and he characterized it this way. He said, quote, it was like going from indigo to navy blue. If the S&B had credibility, Mac, this would be more like going from, you know, spouse to friend or something.

It's a much more serious thing. Fortunately, the market does not take the S&P. Is that a good thing or a bad way? But I got it. I'm saying it's a bigger bump down. I see what he means. S&P is trying to say, oh, oh, oh, we didn't. mean to cause a big spouse.

Got it. I think it's dumb and dumber. You have to agree with a lot of what they said. Our political system, I mean, it looked like a real clown show with Congress unable to agree to pay the bills that it's already racked up. And that's definitely a risk. But the risk of the country is going in solvent is nil. The biggest risk you can have is that you need to print so much money to pay off those debts

that you somehow spawn a huge devaluation and the currency or inflation. But again, you know, the bond market wouldn't be all over U.S. debt if it thought that was happening. Coming up, European regulators are banning short selling. We'll talk about that and give our take on Disney earnings. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. Matt Greer with Tim Hanson from Motleyful Global Gains, Seth Jason from Motleyful Hidden Gems, and James Earle.

from Motley Full Income Investor. Okay, guys, a wild week for Bank of America. The stock had some really wild swings, and on Wednesday, Bank of America's CEO tried to reassure investors, saying the bank will not issue new shares of stock. James, your thoughts. Mack, CEO Brian Moynihan, really, he developed a credibility problem about as quickly as the CEO can

in a number of ways. And credibility is the fundamental problem with American Bank, so it doesn't help. He said they wouldn't have problems with their Fannie Mae securities, and they did. He said they would pay. a dividend at the end of 2011, now they're backpedaling. He said they wouldn't have to raise capital, and maybe they will, maybe they won't. But the point is, you know, nobody really knows what to make

at this bank. With all the uncertainty going around, people are punishing stocks they don't know what to make of. So I wouldn't be a buyer at these prices. Maybe it's a value investment. But I just think that there's, the House of Cards is a lot shakier than everybody thought. You know, I've heard about some investors thinking about buying Bank of America just on the premise that it's still going to be around in 10 to 50. years still in business. And that's, I think that's very likely, but what can happen to investors in an event like this is what James alluded to, a recapitalization where they need more money to be in compliance with relevant regulations. So common shareholders could get wiped out, and the bank,

even if the bank stays in business. Yeah. They can't fail, but they could be broken up. Absolutely. Other things could happen. And Disney posted strong earnings this week, but the stock really got whacked. ESPN was a standout. Theme parks were strong. But Tim, studio revenue was flat. some concerns about the future. What's your take on Disney? Yeah, I don't understand why the market sold this one off so sharply. Disney's obviously got some great properties and very profitable properties in ESPN. And I think the worries just center around the new studio head is a little bit on Proven and didn't come out swinging this summer with Cars 2 and Thor. He was rolling over a tough comp and Toy Story 3 and Iron Man 2. But that's a question a lot of investors have. And the other

thing that people worry about is how sustainable is this business at the theme parks. Obviously, if we get a sharp consumer downturn, those things could suffer, and they have pretty high fixed operating costs. So those are the issues with Disney, but I think the market overreacted. And we close with Europe's ban on short-selling in an effort to protect financial stocks. European regulators have imposed a temporary ban on short-selling in four countries, France, Italy, Spain, and Belgium. Short-selling, Tim, essentially betting on a stock to fall in price. What do you think of the move? Well, I think when you see that effort, I'll predict that those are potential. the next four downgrades looming for the S&B because, you know, when this starts happening,

I think that's a sign that there's big problems ahead. Frankly, it doesn't make a lot of sense. In some ways, you're just, you know, plugging, you're putting your thumb over one hole in the dike, but it's going to pop up elsewhere. Short sales will move and start shorting banks that aren't in those four countries, but just have exposure to those countries. And the fact is that short selling is a, you know, a valuable service in the market. It does liquidity.

It does negative side research, which everybody needs. it strikes me as stupid. And I think the underline point is also these bands have never worked in the past. They never accomplished what they seek to do. Hey, nothing works so poorly that we can't try it again. Over and over. And unhappiness while they're at it. Okay, so in that same vein, let's go around and talk about one thing that each of you would short.

And it doesn't need to be a stock. It doesn't need to be business-related. Tim, on Thursday's podcast, I know you mentioned you were shorting the WNBA. Yeah, I'll go ahead and double down on that. I just, you know, this is such a bad idea, and it is just being completely subsidized by the NBA, which is struggling to be profitable. It seems to me that as those labor negotiations proceed, the WMBA is one of the first things to get the cut. What about the good fundamentals? Everyone likes fundamentals. Okay. James? I might short some of the U.S. airlines just as entities. I mean, having flown to Asian back recently, it's a lot nicer overseas.

The Asian carriers just do a better job, much better job. Fancier food. Everything is just more space. He's a cleaner, better, nicer, sorry, guys. Don't get me started. The captain pulled me off an airplane last weekend on a Delta flight because he asked me, he asked me like if I was okay because I was upset because they had put us through. And so I told him all the problems I was having with his staff. And then he basically pulled me off the plane to kind of shake me down and threaten me. Thanks, Delta.

Wow. He threatened you. Okay, Seth, on that note, what are you shorting? On that note, Delta. Delta. Yeah, sure, Delta. No, I'm going to short fear. Everybody is so afraid, and I don't think that's going to change soon.

But I think people are afraid, more afraid than anything. I'm going to be the optimist. Okay. It's a weird role for you to do. That is. I know. Steve Broido, our man on the other side of the glass, how about you? I would short dramas about police officers and dramas about lawyers on television.

There are about 6,000 shows on TV all about that same subject, and I don't think we need any more of them. That's a high level of anger. Every passion is there. A lawyer with a lot of the United States. I'm not even that angry about the WMBA. Okay. Well, on that note, I'm shorting the fist bump. I'm 46 years old, and I feel like once you're 40 or over, you should not have to fist bump.

And I will tell you that I'm not good at it either. I get the timing wrong. I don't know how hard you're supposed to do it. It's easy to make contact with the wrong part of the fist, too. I don't like it. I mean, just give me a handshake. What happened to the good old handshake? You got the sweaty.

palm of the handshake. You got sweaty pot and germs. Okay, high five. Give me the high five. Also, sweaty. And much more difficult to pull off. I'll take the other side of your fist pump. Sure. I'll be long in the fist pump. I think we're going places with that. Fair enough. What about the hug? The hug. Just the hug. The man hug? Side hug. I'm all

about the side hug. Okay. Tim Hansen from Motley Full Global Gains. Seth Jason from Motley Full Hidden Gems and James Early from Motley Full income investor. Guys, we will talk to you later in the show about some stocks in your radar. Coming up, Motley Fool co-founder, David Gardner talks about this week's market madness and share some stock ideas. Stay right here. This is Motley Full Money.

Welcome back to Motley Full Money. Matt Greer is sitting in for Chris Hill this week. The Motley Fool was founded back in 1993 by David and Tom Gardner. I have had the privilege of being at the Motley Fool since 1998, so I am very, very happy to welcome one of our co-founders, David Gardner, in studio. David, how you doing? Really well, Mac. It's been my privilege to be with you for You and I have spent a lot of time over microphones together over those 13 years. Now, let's talk about this week, because we have seen a lot of crazy weeks, a very volatile market. Your thoughts?

Well, I think that each of us approaches investing differently. And so what I'm about to say, which is my own approach, I don't intend to be relevant to everybody listening because I am 45, not 65. I'm not about to retire next week or had plans that were dependent on my money this fall. So I respect everybody's different viewpoint. Many of us are just entering as 20-year-olds making our first investment seeing a shocking volatility. My answer or my approach, Mac, has simply been that I remain fully invested at virtually all times. So what I lack is that extra mythical amount of cash I can plunge into the market right at the right moment.

I'm basically riding everything up and everything down all the time, and I don't have that awesome opportunity to exploit the downside. What I will say, though, is I have a regular regimen of saving and adding to the market, so I'm never trying to time anything. I just keep adding to my holdings in the stock market. And, David, you just wrote a great piece in the wake of the S&P Downgrade. The title, I dreamed last night, an essay from David Gardner. And I want to spot you up with a few of the points that you make in that piece, beginning with Warren Buffett's wisdom about buying a stock for 10 years.

Yeah, I've always appreciated Buffett's mentality. He says, before you buy any stock, ask yourself, what if I put every last dime that I have in the world in that stock right now? Would I be comfortable? Now, that's not investment advice. Of course, nobody would reasonably ever suggest that. But do you have the confidence? Do you feel like you can see the world in that company well enough? Buffett says, if you don't feel that confidence that you could put everything you have in that and just lock it up for 10 years, then you probably shouldn't have bought that stock.

Find the ones that you can say that about. I took that, pivoted off that, and said, I think we should. feel that way about who we're electing. Whether it's at your local level, which a lot of us, it's a lot easier to get in touch with those people or right up to the national level. I really would love for all of us as Americans. I'm very apolitical, so this was a rare essay for me, but it was really reacting to the horrible downgrade that we've seen and how it's roiled our stock markets. But I really want us to be more, and I'm going to be more careful about wanting to feel like if I were voting for this person, giving them all my tax money over the next 10 years,

Would I feel great that they're managing that? I think we need more financial stewards in government. And next point that you hit financial literacy versus you could be next. Yeah, so I think the biggest message most of us hear from our state governments continues to be, got to play to win, you could be next. Of course, the state lottery advertising jingles. I really believe that our state governments need to focus on financial literacy. I think that the Molly Fool has a hand to play in this.

I think we've done some good stuff here. I think we have a lot more work to do, but I truly believe that we have to become a nation of financially literate people to be an effective democracy in the 21st century. You have to know how money works. And if we have a lot of people who are hoping to win the lottery, and that's the big message from our state government and our servants, our public servants, I think that that's in a suboptimal world. So I think we all should study and understand our finances better. And final point, I want to touch on, less is more. Yeah, I just think that each of us, as we try to navigate our own families toward independence, we try to get our kids through college, we try to retire one day, it's very obvious on that level that we have to spend less than we earn. We need to be saving and we need to be investing. And I truly believe what works for us in our families at that level needs to extend itself and scale to less. levels within government, at every level of government. I'm not an extremist on this. I understand that there can be good reasons for government to borrow just like you and I are grateful that there is a mortgage market out there. So not all forms of debt are bad, but I truly believe

we have to return to a mentality that defaults to saving, to spending less than you earn. And it's so simple to say, but I really feel at a mass level that Americans have forgotten that. And David, with the caveat that it's hard to give advice, blanket advice for everyone, as you touched on earlier, but for someone who's looking at their portfolio after a very volatile week and they're trying to decide whether to buy more stock, whether to hold on to their existing stocks, or potentially maybe whether to sell their stocks, what's one piece of advice that you would give them? From my standpoint, Mac, I think that we should all be trying to, if we're in the stage

of our lives that is not retirement off of a fixed amount of income or a fixed nest egg, I think we should constantly be saving, as I just said, and investing. I have for 25 years as an investor now, never timed the market. That means I'm always the nitwit buying at the top. It also means I'm the genius buying at the bottom because I am regularly saving and investing. I think you should take timing out of the game altogether. And if you're mechanical in the way I just described, you do. And instead, what you're focused on is not, is now the time to sell or now the time to buy. Instead, the big question becomes what? What am I going to buy? Which stocks are going to outperform the others? There's a huge difference between 10 years ago,

people who decided to buy Apple versus Microsoft. One of those stocks has not created value for 10 years. The other has created untold amounts of value. Same thing is true of Walmart versus Amazon.com. Mac, I don't think it's about timing. I think it's about the selection of what you're buying when you do happen to buy, which you should be doing regularly. And let's talk about stocks. You mentioned 10 years ago. You and Tom are the lead advisors on our flagship investment service, Motley Fool Stock Advisor. You're also the lead advisor of Motley Fool Rule Breakers.

But I want to talk about Stock Advisor in particular because we started that service back in 2002. Not a lot of enthusiasm about the stock market back in 2002. your picks are up more than 120% since then, your Stock Advisor picks compared to the S&P, which is up around 10%. So with that in mind, how about a few stocks on your radar right now? Well, I'm more than happy to largely repeat the best buy now list that we made available to Stock Advisor members just a few weeks ago. I'm more than happy to repeat it because it was chosen, as we do every month, looking three years ahead, not trying to guess what's going to work next month or this week. So I'm happy to present to you good companies. The other

reason I'm happy to present this is because I'm not saying a different list of stocks just because the market is about 15% lower than it was just a few weeks ago. I'm not trying to react to markets and pricing. I'm really trying to look past that at the quality of the companies we're buying. So the five stocks that I presented most recently to stock advisor members, alphabetically are Apple, Hasbro, Illumina, Panera Bread, and here comes my Spanish accent, and I am, I took French in high school. Sociedad Comica and Minera di Chile. Those five companies represent a nice mix.

Obviously, Apple, you have the greatest company of our time. Hasbro, the branded toy maker, Illumina, which is making genetic sequencing machines, the future of the human genome, Panera Bread, an excellent company, doing well and doing good, a great brand as well. And then SQM from Chile, representing a best-in-class Latin American company with rich chemical reserves and land holdings that give it a long future in our world, whether they're selling us lithium or the ingredients for fertilizer, which in a world that needs to eat more with more people is a good place to be. So that's a very motley list of stocks, and that's what we do at Motley Fool Stock Advisor.

we're often not concentrating or focusing, we're finding best-in-class companies. And David, what's been the biggest change in your investment thinking over the years? My investment thinking continues to change. So at any given moment, Mac, I hope I'll have a different answer. What I'll answer you this time is from a macro kind of big picture of you, there was a really key moment somewhere back in 1996 or 1997 where something happened to me, and I made clear to myself that that would be the last time that I was. let that thing happen to me. What happened was I was looking at a promising young company

at the time. It's a little company you may have heard called Yahoo, which hasn't been a great stock in the last several years, but let's get back to our 1996 foil hats on. Let's go back in time and remember what the internet, this little thing called the internet, was like back then. Yahoo was beautifully positioned. The stock was at $29 a share. I ran the numbers on it using my own approach to valuation and determined it was worth 25. So I said, you know, if it hits 25, I will buy, but otherwise it's overvalued. And it never went to 25. It went to the equivalent, five or six years later, of 2000.

So I watched a company that was going to rise about 80 times in value, and I had wanted to get it to buy it for 25, not 29. And so rather than hoping for 15% dips to target prices that we set in our alert lists, That was not the first experience I had with that. I made that the last straw, because I'd had that experience enough times. I decided, you know what, I am going to relax my approach here. I'm not going to focus on making it all about the valuation and a certain price I want a stock to hit. I'm going to at least start buying what I believe to be great companies and great franchises and not sweat that too much.

And I've done that ever since, and I'm pretty happy with the results. And I first met you back in 1997, and I remember you talking about a little company back then that sold books online. And I was thinking to myself, this is crazy. And, well, Amazon's worked out okay. I still have my Amazon mouse pad that I got as an early customer. You probably have one, too. Earth's biggest bookseller is what's emblazoned on that mouse pad.

So, you know, these are the companies. Often what you're doing is you're buying not so much a company or a brand at a time, but for these technology companies, you are buying the brilliance of the CEO, the visionary, the team at that company. And when you find those, they are worth far more than their weight in gold. You have just no idea at the time when you're buying just how much value Jeff Bezos can create for a whole generation by expanding his vision constantly and delivering on his promise. Okay, David, so on that note, going forward, how about a technology, development, a company that you're excited about?

I am very excited about 3D printing. It's something that our members at Molly Full Stock Advisor and Rule Breakers are probably well aware of. I think most of the world still doesn't understand what the phrase 3D printing means. But if you imagine a printer that instead of having ink toner in its cartridge, has any one of a number of different materials or liquids, and you start imagining that instead of printing on a flat 2D plane, a piece of paper, you could actually print in 3D and use what's in that ink toner cartridge that isn't ink but maybe plastic in order to build up 3D models and other things like that, or if you imagine that, you imagine that, you know, that you could start, and this sounds funky, I know, but this is happening in our society

today. Printing human skin through a printer in order to help out soldiers wounded on battlefields. If you think about printing everything from organs right through to a much quicker, more effective architectural view that you as an architect are trying to sell a client on by showing them what the next wing of their university will look like. This is what's happening. Essentially manufacturing will start to come outside of the big factories into our home. when it makes sense, and I believe that we'll be living in a world 50 years from now where you're printing food, you're printing all manner of everything from textbooks right through to metallic objects. You can make a toy for your child. If you haven't shopped in time

for Christmas, that night you could print off a toy right from your 3D printer. It's such a powerful technology that's hard to imagine all the different ways it'll be used. But there are a few companies that are behind that right now, and I at least want to say, I'm watching. And how about some names there? Sure. I mean, the two companies that a lot of people are focused on right now are Stratasys, which is a company that we have in Motley Fool Rule Breakers. Jay Leno promoted them because Jay Leno has lots of old cars.

Vintage automobiles is his passion. And if you're trying to find the old pin or the axle that they no longer make because you can't find a 1937 Edzel manufacturer anymore, if somebody has created that very piece in a 3D printer, you can print it off and have that piece to fix up your 1937 automobile with a perfect size-fitting piece that nobody else could manufacture Leno promoted Stratasys and what it does. 3D Systems is another company that's also covered by another Motley Fool service. So those are a couple names of companies.

But, you know, the big players like Hewlett-Packard and others will have roles to play going forward. David Gardner is co-founder of the Motley Fool, and he's also the lead advisor on the Motley Fool Stock Advisor and the Motley Fool. rule breakers investment services. David, thanks for being here. Thank you, Mac Fool on. Money! And for more stock ideas from David, check out our free report, stocksto watch.fool.com.

That's stocks to watch. Dotful.com. Coming up, stocks on our radar. Stay right here. This is Motley Fool money. As always, people on the show 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 stuff. stocks based solely on what you hear. I'm Matt Greer, sitting in for Chris Hill this week,

and I'm back in the studio with Tim Hansen from Motleyful Global Gains, Seth Jason from Motleyful Hidden Gems, and James Early from Motleyful Income Investor. And I want to bring in Steve Broido, our guy on the other side of the glass. Steve, are you ready with your questions? I'm ready to go. Okay, guys, time for some stocks on our radar. Tim, go. The stock is on my radar is Credit Corp, which is a Peruvian bank. It's interesting for a number of The first is that it's just like everything else got smacked this week, and it's now trading approximately where it was when it got smacked after the last Peruvian election, which is proving to be a lot more of a benign event than many had anticipated. I think everybody knows that gold is skyrocketing in price, and I probably am not a buyer of gold at current prices, but if gold prices stay high, there's going to be a lot of mining activity in Peru, very beneficial for the economy, and I think Credit Corp is a very interesting way to play along. Steve?

Tell me something interesting about the Peruvian economy. Well, the Peruvian economy is predicated largely on mining and commodities, gold being one, copper being another. These are all things silver. These are all things that are either useful in industrial purposes or in times of uncertainty, gold and silver become useful for, you know, planet safe. And do you have a question for Steve? You know, Steve, I heard a rumor that you purchased Bank of America this past week. Why the heck did you do that? I did.

Because it looked like it was going out of business, and I didn't think it was going to go out of business. and it consequently did not go out of business, and the stock has gone up since I've purchased it. Ha-ha. How long will you do? You have to wait 30 days to sell. I was going to say, how long will you be holding Bank of America?

Am I allowed to follow-up? Probably until it goes to zero. It seems to be how things normally work for me. Okay, James, the stock on your radar. Mac, in these uncertain times, I like the safety of a good, stable utility stock. So I'm going with Aqua America. This is a water you liked it, didn't you?

What is this, man? The water utility, a $3.6 billion market cap, 2.8% yield. It basically delivers water to people, mostly in Pennsylvania, but it has been going around the country finding poorly managed, underfunded municipal water utilities, and that's like 80 or 90% of most water utilities are municipally run, and municipalities have budget problems, if you guys don't know. They're looking for stuff to sell. These guys go around and they buy these things up, they fix them up. They typically have to raise rates a little bit because the municipality has typically been underinvesting in the water utility. We still have wooden pipes like

the ancient Romans did in some of our, uh, uh, you know, utilities around. And water means water and sewage, by the way. They don't talk about the sewage part, but that's just as much a part of what they do. So I like it. I like the economics. It is an income investor recommendation. The ticker is WTR. Steve? Is it problematic that your company could be confused with a water park? I'm going to Aqua America tomorrow. It's going to be awesome. It's a good point. It does sound like a water park. That'll just bring in more of those momentum investors, those growth seekers. And James, your question for Steve.

When was the last time you went to a water park, Steve? I think last year we went in Roebuth or, yeah, Maryland. How would you, one through ten scale? Delaware, sorry. What was your fun factor on a one through ten scale? Incredible. It was good. Massive fun.

Good times. Love water parks. Okay, Seth Jason. How do I follow up on sewage? Oh, yes, hydraulic valve cartridge valves. Sun hydraulics, ticker symbol S-N-H-Y, makes these hydraulic cartridge valves. They're actuators. They're the things you see in heavy equipment.

Actuators cleared it all up. You don't have to say anymore. The things you see in heavy equipment that make heavy equipment move, you know, to make the scoop shovels go up and down, all of those sorts of things. Okay, got it. Sun Hydraulics makes these down in Florida. They run a really, really efficient operation. For quite a while over the past year, they looked too expensive to me,

but they came out of the recession and went back to peak margins really immediately. They're still doing a great job, but the stock has been hammered over the past month or so. So I think it's a much better potential idea right now than it has been for several months. months. I'm convinced you picked that just to make Steve's life difficult. And I'm buying Steve time right now to come off with a great question. Steve? Who's their primary competitor? Their primary competitor. Wow. Is it moon hydraulics? There's plenty of... That's for that extra time will get you. That's great. That's great. There's competition in the industry, but the thesis here is that these guys do a better job than

some of their competition. They're a little quicker turd around on builds and that there's a rising tied if the economy keeps moving forward will float all boats. And your question for Steve? Can you send me a picture of you from the water park? I hope so. I'll see if I have one in the archives. Excellent. And what were you wearing? Normal bathing trunks or briefs? Probably normal bathing trunks. Okay. And we end the show on a vaguely disturbing note. As always. Tim Hansen from Motleyful Global Gaines, Seth Jason from Motley Full Hidden Gems and James Early from Motleyful income investor. Guys, thanks for being here today. Thank you, Mac. That's it for this edition of Motley Full Money.

Chris will be back next week. Chris has missed some interesting weeks. Just a lot of stuff. Yeah, he knows. This is the guy who just got back from a month in the Philippines. Yeah. Well, that's it. We'll still, Chris.

And we'll be back on Monday with our daily podcast, Market Foolery. We know you have a lot of things competing for your time. We really appreciate you taking time out to listen to our show. And please check out our Motleyful website at Fool.com for the latest market commentary and for investment ideas as well. I'm Matt Greer. Thanks for listening, and we'll see you next week.