Motley Fool Money - Motley Fool Money: 09.24.2010

Episode Date: September 24, 2010

Warren Buffett says the recession isn't over.  Microsoft hikes its dividend. Blockbuster files for bankruptcy.  And Wall Street: Money Never Sleeps debuts at the box office.  On this week's show, we'll tackle those stories, share some stocks on our radar, and talk with Corporate Library co-founder and film critic Nell Minow.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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The best thing in life are free, but you can get them money. From Fool Global Headquarters, this is Motley Fool Money. Welcome to the show. Thanks for being here. I'm your host, Chris Hill, and I'm joined by Motley Fool Senior Analyst, Seth Jason, James Early, and Tim Hanson.

Guys, good to see you, as always. Good to see you, Chris. Wall Street, Money Never Sleeps, opens nationwide this weekend. Coming up, we'll talk with film critic, Nell Minow, and get her thoughts on how Gordon Geck is holding up. We'll give you the latest on Blockbuster, Netflix, Microsoft, and more, plus an inside look at the stocks on our radar. But we begin with the big macro. Guys, some of the headlines this week. Durable goods orders in August increased, but only if you don't count transportation. Sales of

new homes had their second worst month on record in August. Earlier in the week, Warren Buffett said, contrary to what some economists have said, we actually are still in a recession. And Congress passed legislation that provides new tax breaks to small businesses, increases the SBA lending limits, and provides banks with $30 billion in new capital to increase lending. President Obama expected to sign the bell into law on Monday. Boring, boring. It's the big macro. What do you want?

Seth Jason, what's your headline? Well, I'm going to make it more boring. I'm going to amp up the boring. That durable goods report, for some reason the headlines were in Wall Street, was reacted positively, you have to pretend that there's no transportation to make that durable goods number. A small part of the economy. A small part of the economy, yeah, things like airplanes. But actually, if you bother to download the PDF from the website, from the government website,

which apparently some of the newswriters out there may not bother to do, there are a few interesting parts of the economy that are doing a little better, at least according to this report versus last month, those being machinery, computers. So, as always, you need to look at the specifics and sort of forget about the broader headline. If I can just quickly get to the new homes thing, I pointed this out before, always worth remembering that the new residential sales numbers and all of the sales numbers you get from the Department of Housing and Urban Development, the change they talk about month to month is nearly never statistically significant.

And what that means is this month, they say, well, you know, the number of homes sales, is virtually unchanged, but the margin of error is plus or minus 16.7%. That's a huge window. Drive a truck through this. Just keep that in mind when you hear people talking about this. Oh, but they still have a midpoint. It's like saying I weigh 180 pounds plus or minus 20 pounds or 170 pounds plus or minus 20 pounds. You look great, by the way.

Thank you. James, what was your headline of the week? Well, you know, Chris, I will just touch on the durable goods also and say that they are also up 15% over last year to date, I believe. So I wouldn't be too worried about that either. but I would like to cast a vote for the most insignificant declaration of the week, and that is the National Bureau of Economic Research officially declared the recession over as of this past Monday. So, you know, I don't know about you guys, but I'm ready to relax and start shopping in, start wearing tank tops at work, all those sorts of things.

I'm cool. Tim Hansen, what was your headline? Well, I'm doing battle for the most insignificant thing in the week, I think has got to be this SBA, new loan, tax breaks, small business, stimulus package. TARP 2, TARP Jr., whatever they're calling it. And the reason for that is that, you know, the problem for small businesses hasn't really been the availability of funding. The problem has been that... The availability of customers?

The availability of customers, exactly. So the people who can actually get loans from the Small Business Administration, the SBA, they don't know what their customers are going to look like in the next year, so they don't want to borrow. And the people who need the money are the businesses that are really struggling have, you know, significant cash crunches and might be going out of business. but nobody can lend the money because you only get money if you, you know, deserve it. Tim, Tim, shame on you for ignoring that constituency, which will benefit so much from this, which is people who are trying to get reelected. Right, exactly.

Look what we did or look what looks like something we did. So that's the story with that SBA Small Business Administration, tax break, loan, TARP Jr. program, and it's just, I don't know. It's like that hampt loan, home loan program, like there was big fanfare, but like one guy did it or something. Right, exactly. And then he re-defaulted. What a cynical crew we've got here. All right, two interesting announcements from Microsoft this week.

First, the company is raising its stock dividend 23%. Then Microsoft announced a debt offering of more than $4.5 billion. James Early, you're a big dividend guy. I can only guess which was more noteworthy to you. Yeah, Chris, you know, and my favorite line is the problem we're still dealing with these tech stocks. We didn't have a great market reaction per se. Tech stock investors don't like dividends, and dividend and dividend an investor to traditionally don't like tech stocks. That's going to change over time as the investor

base shifts and as people realize that tech is not just tech. There's high growth tech, low growth tech, you know, there's all kinds of different. It's not all high growth like it used to be, but it's going to take time for perceptions to change there. Tim? Well, I thought this debt issuance was fascinating, and the reason for that is because if you look at the details of it, Microsoft borrowed a billion dollars. That's a 10-finger sum due in three years at an interest rate of 0.875%. That's right. 10 figures,

three years, less than 1%. Those are some nice terms. Well, if you look at it, it actually makes them arguably as credit worthy or slightly more credit worthy

than the U.S. government, which given Microsoft $30 billion net cash position, maybe isn't that far of a stretch. But, you know, if they can continue to borrow money at this rate, I mean,

they can repurchase shares, they can up their dividend. It's a pretty good deal for them. Seth? Microsoft's return on equity and return on capital are enormous. So the only The only problem you could maybe find with this is you could actually argue, I suppose, if you wanted, that they should have borrowed more money.

Because at these rates, they're pretty much getting money for free. They borrowed 30-year money for something, what was it, 4% or something ridiculous. And this just shows you how scared investors are out there that some of them are pretty much committing themselves to possibly a negative real return, as long as the person providing that return, or the entity providing that return is Microsoft. James? But, you know, for the most part, the ROE and RYC numbers are going to be driven by actual capital employed. I mean, you can make an argument that if there's any company that already has enough cash, $30 billion on the balance. Because Microsoft, what are they going to do with it? It's like the crazy neighbor who's stockpiling toilet paper, you know, up to the Wazoo. It's just they can't make acquisitions.

They're a little bit too big. Well, they'll buy all of Facebook because it's worth so much. It's worth a lot of money out. Are we going to talk about that? We will definitely get to think. These things are not unrelated. That's true. But I do want to know that James just compared the dollar to toilet paper, which.

Moving on, in a poll conducted with more than 1,400 Bloomberg subscribers, the U.S. now ranks fourth as the preferred place to invest. Brazil is now the number one market, followed by China and India. Tim Hansen, three months ago in this poll, the U.S. was number one. What happened? Well, what happened was that emerging markets started going crazy over the past couple months, and people have been pulling money out of domestic U.S. stocks and putting it into emerging markets. As for what this means for investors, for people listening, I would consider it a contrary indicator.

You know, Brazil, India, and China are not by any means what you would call risk-less nations, if anything. Let's point out to our listeners who may not realize, Tim is the guy in the room and the building who likes these markets the best of all of us. It's true. You've got to be crazy. I mean, you know, you got to be crazy to pay high multiples to get into these markets. You know, we like them because they're volatile and you can be opportunistic. But right now, frankly, when we're looking for emerging markets exposure, we're finding better luck with companies like Walmart and Coca-Cola, domestic U.S. stocks that are cheap and playing in these markets,

rather than in the markets directly where people seem overjoyed to just hand their money off to some Brazilian company, and who knows what's going to happen. And what's even worse, the U.S. may not be the fourth best place to invest, but Denny's was number five. Now, here's the deal, though. This poll was done three months ago also, and back then the U.S. was still first place. So any poll that moves around that much, I have to be a little suspect of.

What's interesting about this to me is that, I mean, it just shows that people, Fads are definitely out there. We talk about it. We say you want to bet on the opposite side of the fad. If you think about it, if you step away from where the money is going and where the hot money has been, you consider the excuses or the criticism of the U.S. is that, oh, with this anti-business administration, you know, the U.S., there's just too much uncertainty here. Well, you know, and I don't think we're that anti-business here.

But even if you say the Obama administration is somewhat anti-business, the unknowns in a place like Brazil or China or India, are much, much greater than they are here. Well, incredibly Petrobras, which is the Brazilian state-run oil company, just completed the largest offering in history of more than $60 billion. And the reports say that there was actually demand for $140 billion worth of shares. Wow. And the reason they did that?

Well, the reason they did that is because a couple months ago, or last year, they found all this oil, and they were supposed to have the rights to develop it, and the Brazilian government said, whoa, whoa, whoa, whoa, whoa, we're going to change the rules. We now want you to compensate us for some of that oil. so they had to go do this offering, why there would be so much demand in a market where they can change rules like that, it's just, it's a little bit ironic. When the government ownership went from 40% to 48% to 48%. And the government actually took advantage of this offering to increase their stakes. So if you're an outside Brazilian shareholder of Petrobras, I'm not sure you should feel so comfortable. Regardless of the order, are there countries in your top four that would replace U.S., Brazil, India, China?

Are there other markets out there that you look at that you would rank in the top four ahead of those? Well, you know, one of the markets that I think people aren't looking at that they should be looking harder at, and it's a very risky market. So I'm not sure it should really be top four, but are some of the sub-Saharan African countries. And the reason for that is that they've got a lot of natural benefits going for them, including the resources that you see in Latin America, the farmland that's becoming very valuable around the world. But they're really suffering from governance issues, generally speaking. But if you can buy a basket of those, I think that's sort of an interesting opportunity. because, you know, as we all know, based on this Bloomberg survey, people with Bloomberg terminals are looking hard at India, China, and Brazil, where they're not looking is Africa. And that makes

sort of an opportunity for the investors. Coming up, Forbes magazine published their annual list of the 400 wealthiest Americans. None of us made the list, but one name in the top 50 caught our attention. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. You can follow the show on Twitter at Motley Fool Money, all one word. And as usual, drop us an email. We want to hear from you. Radio at Fool.com.

Chris Hill here in the studio with Seth, Jason, James Early, and Tim Hanson, as we dig into some of the companies making headlines this week. The exact date for General Motors IPO hasn't been set, but CNBC is reporting that GM is looking to set a low share price with the public offering of its stock, so is to attract individual investors. James Early, you're our resident gearhead. Is this a good move? Well, you know, Chris, there's only one problem, and it's still GM.

You know, for background here quickly, the U.S. gave GM $50 billion in exchange for a 61% stake in a company about a year and a half ago. UAW and Canadian governments also got shares. And the bondholders got, yeah, host. GM has paid back $5 billion to about $5 billion to the U.S. government, but apparently GM would need a market value of $67 billion for taxpayers to break even. That seems like a lot here. I think GM is still being run by and for the unions. just don't see it as a good investment. Anyone else see this as a good investment?

Seth? I have a hard time seeing it as a good investment. And what I think is, how can I put this mildly, despicable, is the way they're trying to, you know, make a, they have to split the shares to get them to a low enough price so the thing is essentially try to sell them to people who don't know enough to know that a low price on a share, in other words, $10, $20,000 doesn't really matter.

It's the earnings power you get for what you pay that matters. So if you pay $120 for more earnings, power, you're doing just fine. So if this is the game they are playing, then I think the U.S. government is sort of triple dipping or it's a triple insult to the American people. Tim? And GM has said explicitly that they want a broad retail investor base. And, you know, that would mean that they don't think they can get an institutional investor base because generally speaking, most companies prefer institutional investor bases because they're more stable. So, you know, this is just one of those things where I think GM is trying to pull on, tug on the

heartstrings of the patriotic American and get them to buy shares of this company, but it's a losing proposition. There's an old saying that says if you walk into the poker game and you don't know which one at the table is the patsy, you're the patsy. Actually, the government is telling you ahead of time now, ahead of time, that you are the patsy if you buy the GM shares. That's rare. On Thursday, Blockbuster filed for bankruptcy. For those who like business news with a healthy dose of irony, Thursday was also the day that shares of Netflix had an all-time high of more than $162 a share. Seth, I know that you're not

bemoaning the bankruptcy and potentially the death of Blockbuster. So sad to have to get out of traffic to drop those movies off at Blockbuster. I made it a 20% portfolio allocation too. What do you think is the threat to Netflix now, or have they vanquished

all comers? I think the threat to Netflix may ironically be Netflix. I still don't know how the online movie delivery business scales because for folks who are not interested in the goofy parts of internet delivery, it's not like broadcast where you send out one stream and it costs the same whether 10 people listen or 10 million. It costs more, it costs a certain amount of money per listener or per viewer. I use it all the time, but I'm not sure Netflix makes a lot of money doing things that way and that's the way direction things are headed.

So I have no idea why Netflix shares are. as pricey as they are, but I know exactly my Blockbuster went bankrupt. Is there another Blockbuster out there? Is a company like GameStop with a lot of bricks and mortar stores? Like are they, if you're at GameStop or you're a GameStop shareholder, are you looking at this and just thinking,

where next? GameStop is still okay because people buying games still want, you know, they want the disc, and online delivery of games. Games are pretty huge now. They take up gigabytes and gigabytes, and it takes a while to download that, so I think they're okay for a while. The Wall Street Journal reported this week that while the NASS

Stack Composite Index has been relatively flat this year. There's been one area that's been on the rise. That's closely held web startup companies. These escalating valuations can be seen in the secondary market where investors can buy and sell shares of private companies like Facebook and blippy. Yes, Tim Hansen, blippy. It just seems like this is dot bomb era all over again with some of these valuations. I mean, you look at it and it seems like the mantra here is the less I know about a company, the more it's worth to me. I mean, I was looking through the survey of results, and they were saying Facebook, where somewhere between 20 and 30 billion, Twitter, one billion, blippy, 50 million.

I don't even know what blippy is. Oh, you're going to know. It's going to be huge. I think blippies like Yelp, isn't it? I don't. Or every other site, isn't a review site? I think it's a review site, yeah. So it's like every other internet site pretty much.

Okay. Well, I'm sure that'll serve them well over the long time. But, you know, this relates back to the Microsoft story we were talking about earlier in the day where these big tech companies can get money very cheap. And what that means is that I think people are speculating that companies like Microsoft are going to go out and start picking up things like flippy, whatever it does, for the purposes of trying to buy growth.

And so I think that these people in the secondary market are trying to play the flip. Well, speaking of Facebook, Forbes Magazine came out with their annual list of the 400 wealthiest Americans. Bill Gates, Warren Buffett, and Larry Ellison were the top three. But checking it at number 35, Mark Zuckerberg, the CEO of Facebook himself. Guys, for the sake of context,

Rupert Murdoch was number 38, and Steve Jobs was number 42. So Mark Zuckerberg at Facebook ranked higher in terms of his personal net worth. Maybe Blubby's not so bad after all. I mean, what do we think of this? It's crazy. Does he have any cash to spend?

Does he just have a pocket full of Facebook shares that don't trade anywhere? Because if that's what he's got, and I'm pretty sure that's what he's got, you got to figure out a way to sell him for cash now before everybody figures out that Facebook cannot be monetized as well as some might hope. Well, his PR people are spinning it as he lives modestly with his girlfriend in a house he rents or something like that.

In other words, he has no cash flow. He has no cash. He holds these magical Facebook shares that are ostensibly worth 20 to 30 billion, or the company is worth 20 to 30 billion and he's worth whatever he owns of that. I mean, it's crazy. If people think we're just making this up for a laugh, we're not, the guy who runs Tesla,

who started Tesla, who was the guy who ran PayPal and sold PayPal as widely known, you know, Playboy Mansion, really rich guy, Elon Musk. Until the Tesla IPO went through, there were newspaper stories about how he was borrowing money from friends and anything because he had no cash. So he's one of the richest people in the country, but no actual money on paper. So that just shouldn't count. Don't you think, Rupert Murdoch agrees with that, by the way.

That should not count. Well, Steve Jobs, I mean, Steve Jobs, most of his wealth is tied up in Disney stock, But you know what? They can actually sell the shares. You can go out and sell Disney stock anytime you want. I think it's also worth noting that four people in the top ten have the last name Walton. So if there's any doubt about the value creation that Sam Walton has. Do they still live in Missouri?

Because the cost of living there is nothing. They do okay, the Walton family. Yeah. The Mars family, too, that famously reclusive Virginia clan, you know, the Eminums and chocolate pet food. I mean, it's funny. You look at the list of all these wealthy people. And, you know, there's obviously some tech people. There's obviously some hedge fund guys like Jim Simons,

but by and large, it's a lot of simple basic businesses. You know, you have the Cook family, which is engineering, you've got the Walton's retailing. It goes on and on. The easiest way to be wealthy is just to have wealthy parents. That's right, yes. The guys will be back later in the show to talk about the stocks that are on their radar. But coming up, Wall Street, Money Never Sleeps, opens this weekend,

and our favorite film critic, Nell Minow stops by to share her review. Stick around. You're listening to Motley Fool Money. Welcome back to Motley Pool Money. I'm Chris Hill. Wall Street, Money Never Sleeps. The much-anticipated sequel to the original Wall Street opens nationwide this weekend. So we figured it was as good a time as any to bring in our old friend, Nell Minow. She's the film critic known as the Movie Mom.

She's also the co-founder of the corporate library, which reviews and ranks corporate boards of directors. Now, thanks for being here. I'm glad to be back. So before we get to the movie, there's a little something from the world of corporate governance that's come up since the last time you and I spoke. And that's Elizabeth Warren. She's been named as a special advisor to President Obama. She's helping to set up the Consumer Financial Protection Bureau.

First, what was your reaction when she was named to this post? I jumped for joy. I couldn't be happier about it. I think you couldn't have a better person. She's exactly right. She knows this industry inside and out. And I think it's fascinating that her background is from studying bankruptcy. She sort of worked her way through backwards to see how people get into financial trouble to understand the instruments that get them there.

And so I think that's just the right energy to bring. I couldn't be more pleased. What did you make of the debate surrounding the announcement? Because when I was reading different columnists and that sort of thing, there seemed to be two camps. and you had one camp that said, oh, the president is going around Congress. This is an end run he's doing, and she's going to have too much power. And then there was another camp that said, you know what? She shouldn't be a special event.

She should be heading up the whole thing. I'd love to have her head up the whole thing. I don't know if that's politically tenable, at least at the moment. It is unclear. I've spoken with people in this nascent agency, you know, waiting to bring it all into place, and they don't know what her authority is right now. So there are a lot of important questions to be asked. I don't think that there's going to be a lot of operational activity going on,

but I think that the overall policy and substance is what's going to be her job. You're listening to Motley Full Money. We're talking with Nell Minow from the corporate library and also The Movie Mom. Wall Street, Money Never Sleeps. When we spoke back in May, you said you were bearish on the movie. We did a buy-seller hold. you said you were bearish on the movie until you saw the trailer, and then you were a hold and sort of leaning towards a by.

Now you've seen the movie. Yes, I have. What did you think? I'm sticking with my hold. But before I get to the movie, I want to just revisit the first one for a second because I think that's helpful in understanding this one. The first one was 23 years ago, and there's a fascinating interview with the custom designer who worked on both movies

in Esquire this month, And she talks about the iconic attire that she created for Gordon Gecko, who was sort of the Uber corporate raider of the first movie. And she said that at one point Oliverstone came to her and said, my friends on Wall Street said nobody dresses like that. She said, this is a movie. This is not a documentary. And what's interesting about it is that now they do dress like that. That movie was a leading indicator of how Wall Street was going to see itself. And in a way, I think it did pour gasoline on the fire.

and was a bit of a contributor. It was intended as a cautionary tale, just like Michael Lewis's book, The Liars Poker was. And in both cases, instead of being seen as a cautionary tale, it was seen as a guidebook. Oh, yeah. I mean, it was one of those. My roommate in college had a poster on the wall that was the epic greed is good speech. Oh, my gosh. And he would, you know, he had that thing memorized.

And I don't know if you saw the movie Boiler Room. but at one point the guys in the pump and dump operation all sit down and watch it together and recite all the lines. It appears to be a frequent ritual from these guys. So, yeah, that was what, you know, it created their dreams. So how do you, as Oliver Stone revisit this, thinking that, you know, you were really putting a stake through the heart of the era, and instead, you know, you created a monster? And I think that is one reason that the second movie has a level of ambivalence, that I found disappointing.

Now, I have to give you sort of two reviews very quickly. The first one I'm going to give as a person who deals with the financial markets, I give it a failing grade there because the characters act in ways that I think real people don't. They do some obviously illegal and obviously foolish things. One character, for example, wants to get revenge on another, so he spreads a bad rumor about his stock. You know what? That's illegal. I was going to say, don't we have laws about that sort of thing?

Yeah, we do have laws about that sort of thing. and he's unaware of them. He learns about them later on. There's nobody on Wall Street that doesn't understand that from day one. And also, you burn your bridges. A lot of, you know, a lot of Wall Street to this day still runs on trust and on who you listen to and who you share secrets with. And all the people that he said, I'm totally solid on this, you know,

that are never going to deal with him again. So I thought that that part of it was unrealistic. And I thought that the point of the movie was unclear. about whose side it wanted us to be on. You know, when the first movie came out, as you said, 23 years ago, obviously we were living in a very different world in terms of media, you know, no internet, no Twitter, that sort of thing. But I think that that film had an enormous impact,

in part because it brought many people, myself included, into a world that we didn't really know much or anything about. Now, here it is 23 years later, and oh, by the way, we've just gone through two years of a financial crisis. Do you think the financial crisis helps or hurts a movie like this? Because on the one hand, I could see it helping because it's been, you know, the main topic of conversation for the last couple of years. On the other hand, I could see people just being sort of sick and tired of it. Well, that's a perfect lead into my second review, which is sort of my mainstream regular movie critic review. and that is, is this movie accessible enough in terms of the financial information to be appealing to a mainstream audience?

And I'm not sure that it is. There's a lot of gobbledy gook in there, and God knows there's no more gobble than CDO's and subprime derivatives. But it doesn't really explain the situation in a way that I think is dramatically interesting. And similarly, the character of Gordon Gecko, he's neither the good guy nor the guy, the bad guy in enough of a compelling way to make it work, I think, just as a straight drama. And I think people are a little bit sick of Wall Street right now, of Wall Street the concept, and they wanted something a little more cathartic than they're going to get from this movie. When you look at big Wall Street firms like Goldman Sachs, J.P. Morgan Chase, Citibank, Bank of

America, what's been the most positive development in corporate governance since the original Wall Street movie came out? more than 20 years ago, and what's been the most negative? I think the most positive has been the raised consciousness in boardrooms and in the shareholder community, and I mean now the institutional shareholder community, that they cannot be asleep at the switch. As I have said to you many times before, when I first came into this business in 1986, O.J. Simpson was on five corporate boards, and he was on an audit committee, and no one was writing about that or caring about that.

day that would be a very big red flag and people would be shorting the stock. And so I think now boards are a lot more active. They're a lot more committed. They are a lot more independent. And shareholders, you know, the idea when I first got into this business that we actually got two figures in support, we got double digits of over 10 percent of support from shareholders for a shareholder initiative, that was seismic. And now we've had this year a number of directors who, have received less than half of the support from the shareholders. Some of the companies have continued to keep them on anyway, but that leads us to proxy access, which I think is a very good development, too. So I think that's been the best thing. In terms of the worst thing, I think

that it is the perverse incentives. And for me, the incentive compensation was really at the core of the financial meltdown because everybody in the system managed to find a way to externalize all the downside and to keep all the upside. And that's a recipe for disaster. You're listening to Motley Full of Money. We're talking with Nell Minow. Right now, before we had to buy seller hold, give me some Oscar buzz. We are officially in Oscar Buzz season. I think it was over a year ago you and I were talking and you were the first person I heard say that Monique was going to be winning best supporting actress for her role in Precious. so I'm looking for another prediction along those same lines.

Well, we're a little early for the Oscar Buzz. I can't tell you that the social network is the hottest film that is coming out this fall from Aaron Sork and David Fincher about the origins of Facebook. I think that two films tremendously help each other the documentary about Facebook called Catfish about a young man who meets with the person he thinks of the girl of his dreams on Facebook. and impulsively drives out across the country to meet her and finds out that things are not exactly what he thought, that the two of those together will create a lot of momentum. So I think that is a definite lock for some nominations. And I'll bet that Inception gets a nomination as Best Screenplay as well. All right.

Let's wrap up with a round of Buy-Seller Hold. Let's start with someone whose stock is on the rise as we head into the midterm elections. Buy seller hold the likelihood that Sarah Palin runs for president? There's no question that she's going to run, but I think it will be a short run. One thing we know about running for president is it really, really ups your pay grade when you are on the elector circuit, and I think that's very important. That is a good incentive. Three members of President Obama's economic team have left, so Buy Seller Hold the likelihood

that Tim Geithner stays on as Treasury Secretary in 2011. I'm going to go hold on that. It's really hard to predict. It depends on who comes in. But he certainly, as I've said before, he has a very, very good communication pipeline with the president, and I think that he's got that job for as long as he wants it. All right. His new movie that he directed, The Town, has gotten some very good reviews. Buy-Seller Hold, The Acting Career of Ben Affleck. Oh, I think he's a strong buy. He has made some terrible. choices in the past, but he has cleaned of his life, and I'm not even going to talk about

Gile. I mean, you know, I'm one of the few people who actually saw the movie surviving Christmas. I barely survived surviving Christmas, and with James Gunnolfini, I was just atrocious. So he's made some awful movies, but I think he has pulled his life together. I think he's a superb director, and I think he chose the right way to come back into acting. He definitely has got a strong career as an actor and a director and screenwriter. And finally, she recently settled her lawsuit with E-Trade, whether or not there was actual money involved in that settlement. I'm not sure. Buy seller hold the acting career of Lindsay Lohan.

Wow, I think she's on the pink sheets. I don't think there's any trade going on there for her. Wow, that's, yeah. I mean, I think if you're on the pink sheets like that, I think it's time to just, you know, delist the stock, is it? All right. Nell Minow, the movie mom and co-founder of the corporate library. Thanks so much for being here. My pleasure.

Michael Douglas won an Oscar for his portrayal of Gordon Gecko, but did you know he wasn't even Oliver Stone's first choice to play the role. Coming up, a Wall Street quiz and a few stocks on our radar. Don't go away. You're listening to Motley Full Money. I've got 90,000 pounds in my pajamas. I've got 40,000 French francs in my... As always, people on the program may have interest in the stocks they talk about. Don't buy or sell stocks based solely on what you hear.

I'm Chris Hill, and back in the studio with me, our trio of senior analysts, Seth Jason, James Early, and Tim Hanton. All right, guys, as we talked about earlier, the sequel to Wall Street opens this weekend. Michael Douglas reprising his role as Gordon Gecko. He won an Oscar for Best Actor. Steve Broito, our man behind the glass, has got a little Wall Street quiz for us. Steve, what do you got? All right, question number one, guys.

Wall Street, the movie came out back in 1987, and Michael Douglas was not Oliver Stone's first choice to play the role of Gordon Gecko. In fact, Douglas was Stone's third choice. I'm going to give you three choices. I want to know who was not offered the role of Gordon Gecko. Again, who was not offered the role of Gordon Gecko? Was it A, Harrison Ford, B, Richard Gear, or C, Warren Beatty? Tim, what do you think? A, Harrison Ford. A. Harrison Ford also. Ford. I'm going Warren Beatty. Gentlemen, congratulations. It was indeed Harrison Ford. He was not offered the role of Gordon Gecko. He's too many good guys. Too young. Too young. Okay. It's against type. I can't believe it was 1987. Against type.

All right, Steve, what's next? Question number two, greed is good. It's one of the most quoted lines from the original Wall Street, but Gordon Gecko never actually uttered the phrase greed is good. What did he say? Was it A, greedy is always good? Was it B, greed, for lack of a better word, is good? Or was it C, greed can be good?

B for lack of a better word. I'm going to say B too. Wow. Seth? Man, I'm going to go with B. Yeah, it's definitely B. Good work, gentlemen. Greed for lack of a better word.

word is good. Those are some expensive sound effects we got there, Steve. The amazing thing about that is that Michael Douglas I think says that Wall Street traders he runs into will come up with oh, you know, it's so awesome. And he looks him and he goes, you missed the point of the movie entirely. You Goldman Sachs

jerk. All right, Steve, what else? All right, our final question. I want to be just like you. The original Wall Street made around $44 million at the U.S. box office, making it the 26th highest-grossing film for 1987. I'm going to read you the name of a movie. tell me whether it made more or less

than Wall Street. Okay. And again, we're talking domestic box office in 1987. So we'll start with the Princess Bride. Did it make more or less than Wall Street? More? More. More? That's a classic. More. It was indeed less. It made about 31 million.

Became famous later. The world is so unfair. The next film, Ernest goes to camp to make more or less. Again, Wall Street made 44 million. Less on principle. More. More because I want it to be. Less because I want it to be.

It is, in fact, less. 23 million for Ernest Goes to Camp. America, Dodgers a boy. Roxanne, starring Steve Martin, did it make more or less than the Wall Street came out in 1988? This is the Cirno DeBersier Act. This is the trick. This one has to be more because we've forgotten it. I think I saw that in the theater, so I'm going to say more.

Were you old enough to see that in the theaters? I'm going to plead the fifth. James? More also. I went with more right away out of the box. Yeah, more. It actually made less. Wow.

Broido was tricking us with the double switch. Pulled in around $40 million. And our final film, Predator, did it make more or less? More. More, definitely more. Huge Schwarzenegger. Come on. Absolutely. It made more.

Predator brought in around, actually almost $60 million. And for the record, the three highest grossing movies domestically in 1987 were three men and a baby, fatal attraction, and Beverly Hills Cop 2. Still a good year for Michael Douglas. A Steve Gutenberg movie was the number one grossing movie of the year. He was big. Tom Selleck was also in that. That's true. Ted Danson. Let's be fair.

All three of them? I think so. All right, guys, let's go around the table, talk about the stocks on our radar. Tim Hanson, we'll start with you. Well, as everyone knows, who's been investing, it's been a pretty dismal decade for stocks. They ended 2009, ended a calendar decade for the first time ever in the red on a total return basis. This has been very bad news for the asset management business. And one of the stocks in my radar is T-Roe Price Group, which is actually our asset managing friends up I-95 in Baltimore.

They've got a nice international business, and my hypothesis is that the next 10 years will be kinder to stocks in the last 10, and that will help rejuvenate their asset management or their asset collecting ways. And the ticker? TROW. I'm a NASDAQ, TRO, TRIO Price Group. James Early? Chris, I'm thinking of a greasy cesspool where one can rub elbows with all manner of humanity. In other words, McDonald's, which just raised its dividend at 11 percent and has my attention.

It now yields about 3%. And much as I don't eat there, I appreciate that a lot of people do. And it is a very strong offering, a very strong brand. 36% return on equity and 18% return on capital. I like it. Again, ticker, MCD. Once again, I have to comment on what I can only assume is just great inner turmoil with you constantly just eyeing these stocks that are the antithesis of the healthy, organic life that you live.

On the one hand, they poison the environment in schoolchildren. On the other hand, the yield is 6%. What a nice dividend. Check out that return on capital. McDonald's should also be one of those companies Tim likes, right, because of all its international exposure. It's true. McDonald's is number one in Brazil for hamburger sales.

They're doing very well there. They've got outlets all over Asia and in Europe as well. It's a popular concept with a lot of staying power. And I think in Brazil, not to, that's a hammer home Christmas point, but I think they chop down the rainforests that can graze cows from McDonald's beef, right? So that sort of... Let's hope not. That I don't know.

That I don't know. I think it is true. Seth Jason. I talked a little at the top of the hour about computers being one of the bright points in that durable goods order report. And so I've got a computer-related stock for you, Logitech, which makes all sorts of peripherals, also fancy remotes. And kind of been smacked around lately, free cash flow yield of about 9.2%. About 9.2%. Historically done pretty well.

Has some room for margin expansion. has already started that despite the kind of lackluster sales environment. And, you know, trading at 15 bucks a share. I think you can do worse. A lot of international exposure as well. L-O-G-I is the ticker. All right. Seth Jason, James Early.

Tim Hansen, guys, thanks for being here. Hey, thank you, Chris. Thanks to our special guest, Nell Minow. Also, a reminder about last week's guest, Carl Kintania. His new CNBC documentary Trash Incorporated, The Secret Life of Garbage, airs this coming Wednesday, September 29th, at 9 p.m., so check it out. If you missed any part of the show, you can find it at our website, motleyfoolmoney.com. You can also get a copy of our free report, the Motley Fool's top stock

for 2010, all that and more at motleyfulmoney.com. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.