Motley Fool Money - Motley Fool Money: 09.30.2011

Episode Date: September 30, 2011

Amazon introduces a Fiery challenger to the iPad.  Warren Buffett announces a historic buy.  Netflix makes a big deal.  And Groupon takes half-off its revenues.  Our analysts discuss those stories and share some stocks on their radar.  Plus, Harvard Business Review Group editorial director Justin Fox discusses his book, The Myth of the Rational Market:  A History of Risk, Reward, and Delusion on Wall Street. Learn more about your ad choices. Visit megaphone.fm/adchoices

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app, which makes it so much easier to stay on track. And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit turbotax.com to get matched with an expert today, only available with TurboTax full service experts. Everybody needs money. That's why they call it money. The best thing in life are free, but you can get them to the pond. From Fool Global Headquarters, this is Motley Fool Money. 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 Hidden Gems, Seth Jason,

from Motley Fool Income Investor James Early, and from Million Dollar Portfolio, Ron Gross. Guys, good to see you as always. Good to see you, Chris. As always. We have got the latest on Amazon, Apple, Bank of America, more, and we've also got a few stocks on our radar. But we begin with the big macro. Lots of headlines this week, guys. We've got U.S. mortgage rates falling to a record low. The stock market's lousy, third quarter, is blissfully coming to an end. And we have the EU and Greece getting one step closer to having a bailout situation. Let's just go around the table. James, I'll start with you. What's your headline of the week? What do you think is most significant for investors?

Chris, to me, this is an employment-based recession. That's oversimplifying it a little bit. there's power and oversimplification. And this week, we actually saw fewer unemployment claims. So one data point is not enough to really make or break anything, but that could be the start of something big, because that's really the thing that separates this from previous recessions is so long after the fact we still have high unemployment. Ron?

Chris, whenever we talk big macro, I always feel like I'm kind of doom and gloom, because, you know, things haven't been that good. Because you are. Right. Maybe you are the doing the other way today. Buffett came out this morning, and he said the chance of a U.S. recession is very, very unlikely. And, in fact, he's bought $4 billion worth of common stock this quarter on the weakness.

And that made me feel just a little bit better. I notice you didn't refer to him as Mr. Buffett. I sometimes do, don't I? Is that the same shirt you had on last week? I'm not sure. I had to be honest with you. I think it is. Not that I noticed.

This is my radio shirt. Ron reserves the phrase, Mr. for just one CEO only, and that's Jim Sinigal of Costco. That's Mr. Sinigal to you. Seth, Jason, your headline this week. I'm a little embarrassed. I got this wrong. I prepared an answer on the Big Marco. No, no, no, no. It's my favorite Italian wrestler. No, no, big macro.

I think the thing that stood out for me was the GDP revision. This is a revision to 1.3% annual rate for a quarter two of this year instead of the previously reported 1.0%. That might not sound like a big increase, but it is. and if things are a little better than they seem, that would be good. We also had a small uptick in consumer sentiment. So these things help. They go with what James said. And remember, recessions are primarily – they're economic events, but they're driven by psychology. Do Italians really have wrestling? Is there a big Marco?

Does it go to Roman wrestling? No, these days, it doesn't seem very European. No, they can – like an Olympic team and all that stuff. Or are you thinking like WWW? Who's that guy that Ray Mysterio? He might be a tell you. He was a mask on your head. Wow.

Yeah, Mexico, Italy. Do we need to have a wrestling segment for Ron now? Let's get Ron straight. Italian wrestling fans, please write us here. What is it? Radio at full.com. Absolutely. All right, guys, the big company story this week on Wednesday, Amazon unveiled its Kindle Fire Tablet,

which comes with a price tag of $199 at the event. CEO, Jeff Bezos, also announced two new versions of the Kindle E-Reader with price tags of $79 and $99. Seth, Jason? Fire. Fire! What do you think? It's pretty amazing that they're going to sell what is essentially an Android tablet for $200.

It lacks some of the bells and whistles, but they didn't really come out and say, here's our Android tablet. They were very clever, I thought, and saying this is a Kindle, but it's a Kindle for more than just books. It's a color Kindle for magazines, obviously books. could be textbooks now. And then for video and other content, which Amazon can now stream or send to you via rental or download. And I think that makes a lot of sense because they can't really compete on the hardware front with higher-end tablets. What Amazon, I think, is hoping to do here is just sort of give you a gateway drug or the gateway razor so that they can sell you the blades. That's pretty obvious.

I'm anxious to see if it works. James? This is still a big gamble, though, because at least according to the Wall Street Journal, they're losing money on every fire that they're making. and I'm guessing the other ones now, too, at these price points. So they're really hoping to make it up in content volume that it might not come. It's really competitive. There's no guarantee that people are all going to get Amazon Prime or whatever they're thinking. James?

I'm right here. Nice to meet you. I read an article this morning that I thought summed it up really well. Amazon seems to be going after the Apple ecosystem like nobody else can. You have the iPhone, the iPad, iTunes App Store. And now Amazon can kind of do that same thing with the fire and go into their – they have music. They have streaming. They have cloud. And they can do that. Like, kind of no one else who has invented a tablet before this has been able to do. And I find that very interesting. And without specifically calling out Apple, you look at it. Not by name. But when you have Jeff Bezos saying things like, we're building premium products and offering them at non-premium prices, that's clearly a jab at Apple and the price tag of the iPad.

I think it is. And I don't think it's going to sway a lot of potential buyers from the iPad, actually, because I think people buy Apple products, not just because they like the product, but because they like people seeing them with Apple products. And so I think this is more a product aimed at people who really weren't considering the iPad so much in the first place. It's for the rest of us. This is an entertainment tablet in its current form. What we see down the road, a year from now, I don't know. To James's point, there is no guarantee that the Kindle Fire tablet is going to be a slam dunk. So what is something that investors should watch over the next six months to gauge to what degree this thing is a success? Is it Amazon Prime memberships? Is it declining sales of the iPad? What do you think, Seth? I don't know that they give away enough metrics.

They didn't break out Kindle sales, for instance, for a long, long. time. So I'm not sure you'll get enough specifics during the calls to really understand. So I would just watch that revenue line because that's the whole key. And it's hardware. It's all the stuff they sell. Watch that revenue line and make sure it keeps going up. James? Yeah, I agree with Seth. They're going to try hard to obfuscate this unless it's some huge success. They're going to make it very murky. So watch the revenue and watch what Apple's doing. You're listening to Motley Full Money. We're here every week. But for daily analysis on the latest money news, you can check out our daily podcast, Market Foolery. That's Marketfulery on iTunes and online at Marketfulery.com.

Sticking with Amazon, earlier in the week, Amazon struck a deal with Fox for more video content for their video library. Netflix also announced a deal with DreamWorks animation that starts, I believe, in 2013. Ron Gross, Amazon, Netflix, both Motley Fool recommended stocks. Netflix down again this week. It's hit a 52-week low. So, what do you think of the deal that they struck? So as far as the stock, Netflix was obviously priced to perfection, and they've stumbled recently. And so when that occurs, the stock trades lower.

They're both doing, both companies are doing what they need to do is build their library up because the winner of this will most likely have the best content. But it's such in the infancy, this industry, this streaming business, that we don't know if it's going to be either one of these guys or the cable companies, the satellite companies, the content providers themselves. It's too early to say, but both companies are doing what they need to do by adding titles. Seth? I think this is kind of a yawner of a deal, which may explain the lack of enthusiasm from the market this week based on this content deal. We don't have a lot of details, so we don't know what it costs. The numbers being thrown around are 30 million per

picture over an indetermined amount of time. But this isn't really a deal yet, or it's not new content yet. It doesn't start until 2013 and it's based on new releases so they will get the Crudes, Turbo, which is a movie about a garden snail and then a spin-off from Rocky and Bullwinkle, Peabody and Sherman. In other

words, the titles we associate with DreamWorks like Kung Fu Panda and Ants, according to the New York Times story, they broke this news. Those will be available over time. So you're not even necessarily getting the stuff you think you're getting when you just hear DreamWorks. And I think that explains sort of

the yawn and the continued decline of Netflix stuff. Who's not looking forward to a movie about a garden snail? I think the same thing. All right. Coming up, big banks doing what they do best. Coming up with new fees. You're listening to Motley Fool Money. Welcome back to Motley Full Money.

Chris Hill here in the studio with Seth, Jason, James Early, and Ron Gross. Guys, Bank of America is planning to start charging a $5 monthly fee for debit card users. Several other banks, including Wells Fargo and J.P. Morgan, Chase are also planning similar fees. James? Are we surprised by this? We are not. Bank of America is the guy who looks like he's coming to help you after you got mugged and beaten up, but he's really just coming to take your wallet. These guys have the nerve to take our bail out on it, and now they're charging these fees. The difference between what they're doing and the other banks, Bank of America's fees are higher and they're going to be more universal. It's more of a pilot program,

ever or else. This Dodd-Frank legislation, and I think specifically this Dick Durbin Amendment is going to raise, excuse me, lower the fees that banks get for debit card transaction from an average of 44 cents to 24 cents, according to the Wall Street Journal. So Bank of America says that's going to cost them $2 billion a year in fees. Actually, it's not because it's going to cost us those fees if we use these cards. So the best thing, I'm just going to take out cash. I don't like Bank of America. I have an account there, but if you just take out the cash, you avoid this, it doesn't apply to ATMs. But the point is it's more just, it's not in the spirit of what they should be doing. They took all this money. They need to be engendering public goodwill.

Not this kind of stuff. Seth? You know, you want to just, ah, you want to grab these guys and club them just a little bit. You know. You just club some just a little bit. You just club them a little. Yeah, orange is in a sack maybe. This is horrible, but it shows you the unintended and easily predictable consequences of a lot of what we might call reform legislation. And this is where we probably ought to grab our politicians and put them in for a little clubbing as well. When you charge a business, a fee, the first thing they're going to do is turn around and look to pass it on the consumer. So you're not actually taking any money out of the business's pockets. You are taking it out of everybody else's pockets. Ron? Just yesterday, my bank sent me a letter,

Citibank, that they would be tacking on $15 monthly fees unless you kept a relatively sizable balance in your accounts. You're a big roller though. I just thought it annoying and the first thing I thought was, you know what, I'm going to go to just one of these local community banks that are regional and are hungry for business and are more into the customer service. And I'm not sure it could really backfire in a lot of these big money center banks. Let's do that. Let's put in a plug. Walk out on the main street in your area and go to one of the small banks there because the only way you're going to free yourself from, I guess, the oligarchy of these giant banks is to go somewhere else.

This week, Warren Buffett announced a stock repurchase plan for Berkshire Hathaway. It is the first time since he took over in the 60s. Ron, why now? Well, it's because the stock has really never been cheaper, at least before he made the announcement. It's popped since. But we own it a million-dollar portfolio. I own it personally. Investors really all over Wall Street have been saying Berkshire represents really attractive opportunity right now. Of course, Buffett is in a position to see that more than anyone. And he said he's interested in buying a backstock. As long as it doesn't get to be 10% higher than its book value, he'll pay up to 10% higher than the company's book value,

which is actually where it is right now because of the pop. But he's really just recognizing value the way the rest of the street has. Maybe I'm cynical, but am I the only one who's noticing that in some time in the future, I don't know how many years, but there's going to be something different in the picture of Berkshire, no more Warren Buffett. Obviously, he's got these guys coming in to take over. There's no guarantee. they're going to manage the company as well as he has.

So I don't think you can just extrapolate like the market is doing and saying, oh, it's just so cheap because things are going to be very different going forward to. Ron, when you look at all of the holdings that Berkshire Hathaway has, obviously Buffett is making a comment on what he thinks about the valuation of his company stock. Do you think he's also indicating something about how he feels about the broader stock market? Absolutely. As he said in an interview this morning, He bought $4 billion worth of stock this quarter in companies that he obviously, I don't

know which companies, that he finds attractive as a result of this sell-off. And he's in the best position to see how GEICO is doing or how the railroads are doing or how much candy sees candy is selling. But he obviously feels confident in those operating businesses as well. And that's a pretty good insight because he owns big chunks of these businesses, and he can therefore, he knows things about other businesses that we may not quite get yet. shares of research in motion hit a five-year low this week as the company denied rumors it is killing off its playbook tablet. Of course it's not.

The Amazon Kindle Fire is killing up. It actually is apparently the same tablet made by the same makers, almost the same hardware specs. Research in motion, I think I've had a thumbs down in our Motley Fool Capsa system for quite a while. I don't think they have a protected end market anymore. They are under attack by Apple in the smartphone business, by Android phones, and by the new Windows phones. The tablet market, that playbook made no impact at all. They don't have the ecosystem there that Amazon has, and they don't have the sort of hardware style that Apple has. I think Research in Motion is one of those companies that's kind of doomed to dwindle away

and then eventually become a value investor's favor as its small core audience produces some cash for it. Ron, you're a value investor. How much smaller does the shares of rim have to get? I would have to see that accelerated, like Seth just said. I need them to come a niche Blackberry business into the institutional corporate market. There's some still diehard Blackberry guys out there. And that would interest me. Of course, it would have to be at the right price. The hits just keep on coming for Groupon. The company restated its revenue to the SEC. Guys, only slightly. It turns out that in the first half of 2011, the revenue was 688 million, not the previously stated 1.5 billion.

That's slightly to you? Potato potato. What's the difference? Is this company ever going to make it to the IPO line, or are they just doomed to stay private? Cheesy moves like this don't help. Just to give you an analogy, if I'm collecting money from you, Chris, for both me and Ron, I just say, give me both of our money, I'll just give him his. Groupon was effectively doing that, but counting that all as its own revenue. Now the money it was going to give to its customers. Now it is being more honest and just counting its own revenue,

you ask why would they bother to do that if they're later going to take that expense later on down the income statement? The idea is that a lot of these companies at this stage are valued on a price to sales basis. So they don't even look at the earnings because, frankly, they don't have earnings. So an investor and an investment banker might sort of mistakenly value them too high if they report a big sales number, which they were trying to do. So it's a little bit sneaky. Ron? I don't know.

C-O-O-Jump ships, same week, and I think a good move went over to Google to head their America's business. Back to Google. So I think, you know, I think I would do the same. I don't know that Groupon seems like a really well-managed company because so the C-O leaves. And then you've got a quote from the CEO of Groupon, Andrew Mason, saying, the chief operating officer is gone and this change won't have an impact on operations, end quote. Well, if it won't have an impact on operations, why were you paying this person all this money to be C.O? This seems like a company that worked hard but got really lucky and probably needs to scramble to sort of sell out now.

That said, I'm on record on the show of saying that when this IPO, I would buy a little bit of it just on the chance that they collect all the marbles in this game. Well, for those keeping score at home, the company lost about $240 million for the first half of 2011. So if it does go public to answer your original question, I think it's going to be at a much more reasonable valuation than we were looking at the three to six months ago. And finally, guys, we have to pay tribute to Arch West, the creator of Doritos. He was buried in Dallas this week. He was cremated, ashes in the urn, lowered into the ground, and then family and friends tossed Dorito chips into his grave as part of the tribute. Pretty amazing guy. Nothing more fitting. Exactly. We talked about this on our daily Marketfulery podcast.

he was the guy who came up with the idea for Doritos. It struggled at first, and now it's doing $5 billion. It's a $5 billion brand for Frito. In other words, Doritos is a much bigger business than half of the small companies we talk about all the time every week on this podcast or this radio show. One thing you would like tossed into your grave when you're eventually buried? Somebody else for crying out loud. No, let's turn it a little bit.

Yeah, let's do the whole Farrow thing. Throw in, you know, a bunch of servants, maybe a few dried up cats and a chariot for the afterlife. Wow, that's a big grave we're talking about. James, what about you? I go simpler. I'm a big conifer guy. So any type of branches from Picea Rubin's, Abe's, Balcemia. These are all my favorite trees. Wow. I got a whole bunch of firewood that I can toss in with you, James. Ron? I'm going for a pepperoni pizza, but not just any pepperoni pizza.

One from Da Vinci's Pizza in Rockland County, New York, the pizza place of my youth. Wow. What are you going to do with the pizza if you're dead? Don't worry about it. It's a little. Ron Gross, James Shirley, Seth, Jason, guys. We'll see you later in the show. As always, you can drop us an email, Radio at Fool.com.

Coming up, bestselling author, Justin Fox, on the myth of the rational market and what it means for investors. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. So what does it mean when people say the stock market is rational? And is there anything to the rational market theory? Here to answer those questions and more is just a question.

Justin Fox, editorial director of the Harvard Business Review Group, and author of the New York Times bestselling book, The Myth of the Rational Market, A History of Risk, Reward, and Delusion on Wall Street. Justin, thanks for being here. Thanks so much for having me, Chris. So what does it mean to say that the market is rational? Well, that brings back this really scary memory when I was just deep in writing this book and didn't know if I'd ever finished.

And my cousin, who's an anthropologist, asked me, what do you mean by rational anyway? And I realized I had no idea. I think in terms of the thing, the term the rational market, which sort of had its moment in the 70s and 80s, is this idea that financial markets are about the best possible measure of how companies are doing, that they pretty much, I mean, perfectly is probably too strong a word. I don't know that anyone ever believed that they were perfect, but that the values on the stock market are the best. possible estimate of what the companies out there worth, what the prospects of the economy are, et cetera.

And I guess the problem with that is just, I mean, at some level it's this truism that who is any individual to know better than the assembled wisdom and guesswork of millions of investors. But at the same time, it's pretty clear in retrospect that, you know, the market is more volatile than the economy is. It's jumping around a lot. And some of that is just because the future is always uncertain, and there's going to be some guess work. But I think it seems pretty obvious that there's just also this role that emotion and changing risk tolerance plays in the market's big moves. You're listening to Molly Full Money, talking with Justin Fox, author of The Myth of the Rational Market, A History of Risk, Reward and Delusion on World.

Wall Street. Whenever the market dips suddenly, the phrase that the media seems to use all the time is market correction, which seems to imply that it's supposed to be lower. Yeah, that it's supposed to be lower. We never hear the term market correction when the market spikes up suddenly. Wouldn't that also make sense? Yeah, it'd make perfect sense. That is so hilarious. I've never thought of that before. And I wonder when that term first became current. It would be interesting to do a nexus search or something to see when that started to be used. Because, I mean, I first started hearing it a lot in the late 90s where I think there was a pretty good argument that Eddie dropped at the market was a market correction. But, yeah, nowadays, either way, could be the correction.

Who knows? I love that. I don't know where that came from, but that's really funny. There's a definite negative bias to that term. All right. The book is The Myth of the Rational Market, A History of Risk, Reward, and Delusion on Wall Street. Street, you profile a bunch of people in the book. I want to talk about a few of them and sort of get your sense of takeaways for investors today. Let's start with Irving Fisher. This is someone

I had never heard of, really sort of the first person to try and impose reason and science on the stock market back in the 1920s. But he also went on to say in the late 1920s that stocks had reached a permanently high plateau. That's a pretty staggeringly huge misfire, isn't it? Yeah, and I mean, even if it hadn't misfired, anybody who's ever looked at a stock chart knows that markets don't really do plateaus. So it was a really weird way to put it.

I mean, I think what it was, and it was just so fascinating to read his work from the 1890s and the first decade of the 20th century, where he's laying stuff out and doing it in a kind of rough version, not putting it all in, well, in some cases, he put it all into mathematical terms, but pretty much every idea of modern academic finance, Irving Fisher laid out there around the turn of the 20th century. And he could see at that point, he'd said, you know, this is my model of how the market works. In reality, it doesn't work like that because people are like sheep and they do silly things.

But I think what happened is things went so well for him personally in the 20th. money's. He invented this filing system. This is basically the precursor for the Rolodex, which I don't know, may not mean anything to anyone under about 35, but it used to be how everybody kept track of address, people's addresses and phone numbers. And he sold that for a ton of money. All of his ideas seemed to be being adopted. He was one of the most vocal advocates of prohibition. That was prohibition all of a sudden. And I just get this, I mean, I don't feel like I know him deeply psychologically. But you get the sense, he figured, okay, everybody followed my advice, so I guess everything's fine now.

And it made him look awfully stupid afterwards. But what was fascinating is even though he was completely humiliated in the public eye, within a couple of years, his economic ideas were making this rapid comeback. And, I mean, one of them is simply what the Federal Reserve has been doing over the past couple years in terms of basically printing money to try to keep the economy. from collapsing more than it already has, that's pure Irving Fisher. And in the early 30s, nobody at the Fed wanted to listen to them this time around they are. I don't, who knows if it's the right decision, but it seems to be working out a little bit

better than the early 30s. And then as time went by, a lot of his ideas about financial markets and the way to think about financial markets began to catch on. Another person you profile is Jack Bogle, who founded Vanguard and is really the guy to popularize index funds. Yeah, I mean, Jack, anybody who knows Jack, he's one of their favorite people, and I loved working with him on this book. I mean, one of the funniest things in the whole process of doing the book is I was sitting

in the library at the business school at Columbia, looking through back issues of the financial analyst journal. And at some point in 1960 or 61, a couple of Chicago grad students wrote a piece, and I'd never heard anyone. I'd never seen this referred to anywhere. They wrote a piece saying, you know, there are too many mutual funds out there. Somebody should just start a fund that owns the Dow Jones average. So it's not quite an index fund since Dow Jones isn't really an index, but same idea. And a couple months later, there's this rebuttal article by, and the byline says by John B. Armstrong, and in the bottom it says this is a pseudonym for an executive at a mutual fund company. And I just

thought about it for a minute. There are a couple references in it. that seemed familiar. And I emailed Bogle. Was that you, Jack? And it was. So in the early 60s, Jack Bogle was writing articles in the financial analyst journal saying what a stupid idea index funds were. And 12 years later or so, he was founding the first one for retail investors. And the story of how that came to be, I can't go into all of it here. But it's just this, and Bogle is wonderfully frank about it all.

It's just a wonderful example of how life happens and it can change your attitudes. I think Bogle never became a big believer in this idea. of the rational or the efficient market, he just thought that the incentives in the mutual fund industry to appear to have great performance for a couple years and therefore gather a lot of funds and also to charge high fees weren't in the interest of investors. And that if you just sort of gave up on all that, even if the market weren't perfectly rational, you were still better off because you were taking less of the investors' money away to start with.

another person that you write about, and rightfully so, is Warren Buffett, who obviously has had amazing success, but really in a very different, taking sort of a different approach from John Bogle. Yeah, and I mean, I don't think they're contradictory. They're two different ways to do it. What struck me as I thought and learned more about Buffett and his career is that there are two crucial elements and everybody to why he's been successful. Everybody focuses on the first, which is that he's a really smart investor and has some sort of thoughts of how to do things

that really work and is willing to stick to them. But the other really important one is the way he's designed his investment vehicle. And basically, he's designed it so it doesn't matter if his investors lose faith in him. I mean, it probably does over periods of decades, but there can be periods like the late 90s when what he's doing is completely out of fashion, and it has no impact on how much cash he has available to invest, because he's not like a mutual fund or even a hedge fund where he's taking his client's money and then investing it. He's set up this structure where the money he's investing is basically the cash flow from the companies he owns and sales of his existing investments. So it's this, the lesson there is basically to be a

truly successful value investor, you kind of need to set up a structure where you don't have to respond to your niniish customers all running away when there's an internet bubble or times are tough or whatever else. You're listening to Motley Full Money, talking with Justin Fox, author of The Myth of the Rational Market, A History of Risk, Reward and Delusion on Wall Street. How do you invest your own money? This is, I mean, it's kind of funny given that this book is the story of the falling apart to a certain extent of this worldview of perfectly rational, efficient markets. And over the course of doing it, I moved more and more into just putting all my money and index funds. And it's not because I think every last person should do that. It's because one of the

things I was doing, well, A, I was just getting, I was suddenly a lot busier than I'd been before because I was trying to write a book and have a day job. And B, I was reading a lot about behavioral finance, behavioral economics, and all the weird traits people have counterproductive in terms of managing money and recognizing, you know, every single one of those in myself. And so I finally just said, you know, I'm just going to give up and sort of adopt a middle of the road, super low-cost strategy and not think about it more than once every few months. And that's pretty much what I've done ever since. All right. Let's wrap up with a round of buy, seller, sell, hold.

Let's start with a new product that was unveiled this week. Buy seller hold, Amazon's Fire Tablet. I'd say buy. I mean, it's funny because I help run a book publishing operation, and a lot of people I work for have been spending a ton of time actually trying to find out more about it and figuring out how it'll work, and they're all very excited, albeit also very curious about how some things will work out. But it seems like the two dominant tablets for the time being, you know, the short-term five years or so are going to be the iPad and whatever the heck Amazon has.

This is a private company that has had a bumpy road on the way to its IPO. Buy-seller-hold Groupon. I just think the thing that's exciting about social media companies is sort of the leverage inherent in their business models. other people to do all the work. Groupon has just massive, compared with any other social media company, just has incredibly huge numbers of employees and incredibly high costs. And it just, it may be an okay business, but I don't see it as being a great investment. And finally, he shares your name, but not your passion for economics. Buy seller hold, Justin Bieber. Hold. I mean, he hasn't gone away yet. So I imagine he will have a long career.

I don't know that it'll be, you know, a Justin Timberlakeish career, which has been full of reinventions and such. But I don't think he's going away. Do I detect in your voice that you wish he would go away? Well, it's this weird thing. On Twitter, every once in a while, I suddenly get a bunch of Justin Bieber followers that they start, like, asking me, are you a singer? And so I just got a couple of those the other day, so I'm irritated. But I don't want to listen to his music, but he seems, as Tina. titles go, less jerky than most of them. So all power to him.

The book is The Myth of the Rational Market, A History of Risk, Reward, and Delusion on Wall Street. It is a New York Times bestseller. It is a great read. Justin Fox. Thanks so much for being here. Thanks so much for having me on, Chris. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool money. It's fun to charter an accountant. 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 ourselves stocks based solely on what you hear. I'm Chris Hillen. Back in the studio with me, Seth, Jason, James Early, and Ron Gross. Guys, before we get to stocks on our radar,

last week, our producer, Matt Greer, did a great job filling in for me and very nicely asked our listeners to email some sinus remedies because I was in, frankly, a great deal of pain. We got a lot of great emails, a lot of great legitimate health advice. How much weird, holistic stuff did we get? You know, not really a lot, but let me just read two emails. You tell me if this is weird, holistic, because these were my two favorite from Claire Augustus, her remedy for a sinus infection. A little antihistamine and a lot of scotch. You won't even know your teeth are aching.

Nice. Wow. Claire, you know me so well. And this one from Dave Hook, I recommend the Hungarian hat cure. You will need one hat, one bottle of whiskey, and one shot glass. Hang the hat off a bedpost, get into bed. continue taking shots of whiskey until you see two hats. At that point, you will probably no longer be feeling the effects of your sinus condition.

We also talked previously, I think it was last week, about Wendy's, and they're changing up their burger. We got some great burger recommendations from our listeners as well because we were looking for, you know, not the national stuff. We want the local insight, Ron. So I know you're going to love these. Eric Marshall recommends the Butterburger at Culvers in the Midwest. Midwestern chain that I've spoken about before. Is there butter like in the middle of it or something? No, no, they butter the bun.

That's the Wendy's is copying here. But Culvers are great. They're just awesome. Michael Ritter recommends the Pigalicious burger at the Pocodot Pig Gastropub in Augusta, Georgia. You know, we have an affiliate down there, and so maybe a road trip is an order. Yeah. Well, they could just mail a few up, right? Oh, sure.

Absolutely. And we got a couple of listeners from Southern California, Matthew Holbrook and Harvey ivory, both recommending a place called Slater's 50-50. And the 50-50 stands for the fact that they make a burger that is 50% ground beef and 50% bacon. And 100% awesome. See, Ron, you're rethinking the pizza. That's delicious. You want that now. All right. Time for the stocks on our radar. Brought to you by Oncor Insurance Services. Do you have life insurance but think you might be paying too much? You might want to check. Encore could help for a free quote. Visit their website at SmartTerm.com.

or call toll-free 1-866-347-5748. They'll compare rates to help you save, and the information's online. It's smartterm.com. All right, we will bring in our man, Steve Brodow, with a question for each one of you about your stock this week. Ron Gross, you're up first. Okay. A company I own personally called Horsehead Holdings, ticker symbol Z-I-N-C. Is that it all related to the Godfather?

No. It does not. It is their maker of specialty zinc products. stocks off 60% on fears of a global slowdown. And zinc prices, the commodity itself, are down significantly as well, which is leading to the downtrend in this stock. The company is currently trading for less than its tangible book value, which is an indication to me that this is quite cheap as long as you're patient and you're able to wait out the cycle.

Steve? Is zinc as useful as I think it is? Have you never seen The Simpsons? Come back, Zinc. Have you perhaps have you heard of the U.S. Penny? not made of copper. So mostly is it industrial use? Yes, it's almost all industrial use.

You like galvanized stuff, don't you? Except for things like zinc oxide with your neighborhood lifeguards. It's a hair loss remedy too. All right, James Hurley, your stock this week. Chris, I'm looking at national fuel gas. The ticker is NFG. It's a former income investor wreck. I'm glad I got out when I did, but they are sort of turning things around.

It's basically a gas company, natural gas company in the Northeast based in New York. and almost a 3% yield, excuse me. And it's nothing really sexy, but it's one of these solid companies that should do well if we continue moving towards our future of natural gas. Steve Brodo, question for James? Sure. Where do you predict corporate yields are going in the next 12 months? Well, that's not really about my stock, Steve, but I'll answer it anyway. You're talking about bond yields or equity?

Corporate stock. Corporate stock yields are decent now. I see them going up gradually because they're still, lot of cash companies have. And there's a lot of sentiment for dividends. Investors want them. Seth, Jason, your stock this week? I'm going to go to the Microsoft. The Microsoft stock has sort of been going nowhere. The value investors have loved it forever. They're disappointed, but that's not because Microsoft is done poorly, but because people just aren't paying up a lot of money for Microsoft. They recently released what I think is a good game changer for them, which is an

update to Windows Phone 7. And it's not so much that, okay, the phone OS is a lot cool. Therefore, it's great. It's that it is much more rooted in getting people to stick with their cloud-based services, especially the office services, and that is now the biggest portion of revenue and profits. So I think that they're going to do better there, and MSFT is the ticker. Steve? Sure. I heard a lot about Windows 8 coming out. I believe it's next year. Yeah. What is your perspective on how that's going to do? It's gotten pretty good reviews right now. I think if the hardware is good enough, it should work out well, they should be able to deliver a simplified tablet experience, but at the same time, you can

sort of click a button and this thing will work more like a regular Windows PC and run actual programs that do work, which is something that all those other tablets out there do not do. Just in the few seconds we have left. One thing you're working on next week in the million-dollar portfolio, Ron? Stock market weakness has created some opportunities. I think we're going to actually have some new trades next week. Stay tuned. Okay, James, an income investor. Doing a lot of valuation work as I move towards my next issue. Sexy. Seth, in Hidden Jems? Trying to keep up, again, we trade with real money as does Ron,

but these 2-3% moves each way every day, they make it very tough for us to get in and get out, but we're keeping at it. All right, Seth Jason, James Early, Ron Gross. Guys, thanks for being here. Thank you, Chris. Thanks to our guest this week, Justin Fox. That's it for this edition of Motley Full Money.

Check out our daily podcast, Market Foolery. That's every day throughout the week at MarketFoolery.com and on iTunes. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.