Motley Fool Money - Motley Fool Money: 10.01.2010

Episode Date: October 1, 2010

The stock market records its best September performance in more than seventy years. AIG announces a plan to repay the U.S. government. Fisher Price announces a massive recall. And Johnson & Johnson admits to lapses in its recall. On this week's show, we'll tackle those stories and talk with filmmaker Charles Ferguson about his new documentary, Inside Job. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill, and I'm joined by Motley Fool Senior Analyst, Seth Jason, James Early, and Ron Gross. Guys, good to see you. Good to see you, Chris. How are you?

Coming up, we'll give you the latest on Microsoft, Apple, and Fisher Prices Recall of more than 10 million toys. We'll talk with Academy Award-nominated filmmaker Charles Ferguson about his new documentary about the financial crisis. Plus, as always, an inside look at the stocks on our radar. But we begin with the big macro. Guys, some of the stores making news this week. The stock market was up nearly 9% in September, making it the best September since 1939. Consumer spending in August was up slightly, and U.S. consumer confidence improved slightly in the latest ABC News survey.

Seth Jason, we'll start with you. What was your headline of the week? Wow, 1939. I don't need to keep an eye on Germany, do I? No. No, back memories. Excellent. That's really good news, 10%.

My headline, I guess that consumer confidence number, the consumer spending number wasn't so bad, but none of this is really up to a level of what we would expect coming out of a big recession, which according to the guys with the green eye shades of the statisticians were coming out of recession. You usually come out of recessions. at a pretty good annualized growth clip for a while, 9% range or something. We're not even close to there. And a decent economy, your consumer confidence number should be 80s, 90s, an overheated economy,

bubble economy you're looking at in the hundreds. This is better than terrible. It's not great. James? You know, Chris, I'm going to mix it up a little bit and say, I noticed that copper is back up past its April highs. Wow, copper? Yeah, copper, Chris. on week dollar and also Asian demand, Asian stocks are writing very high too.

But let's focus on the weak dollar because I would not be surprised to see emerging markets be the ones that pull the world out of recession, not the U.S. after all. So you're just looking to kickback as an American and just let them do the work. I would be totally surprised by that since most of them depend on selling their stuff to the U.S. But anyway. Good point. Ron Gross. What was your headline this week? So I'll grab the stock market performance data. So I hate looking at markets on weekly or even monthly basis, but since it was such a dramatic

increase of 9 percent in September, I think it's important to put it into context and remember that that's coming off of an August where we were down 4 or 5 percent. And we're actually up less than 4 percent for the entire year. Shhh! Shhh! Here we are, Seth, going into the fourth quarter. Why do you hate freedom? So let's put it in context.

September was good. but economy's week. Unemployment's high. Consuperconfidence is low, and we're only up three or four percent for the year. So, you know, let's calm down a bit. I know it's a little early to start thinking about holiday spending and the retail numbers as we head into the fourth quarter. But is that something that you're starting to look at as an investor in the services you run? Are there numbers that you're looking for certain retailers or the retail sector overall to hit? Or is that just too far away at this point? As far away, retail stocks have actually been doing pretty good, both stockwise and in terms of their revenues. So regardless of any confidence surveys one way or another, people are still spending money. But it's a tough thing. You don't know what happens until it's too late. It's impossible to predict that stuff.

So the guys in this room, I'll speak for all of them, since they can't reach me with their fists from where they're sitting. You look at the stock price more than you try to really accurately predict what the future is going to look like. better to be sort of right, vaguely right than precisely wrong. Yeah, and I'll say that when I look at individual companies, as long as we have 10% unemployment, I'm being pretty conservative with any kind of growth rate estimates, at least in the near or midterm, and that'll protect us on our downside if things continue to be weak. AIG and Uncle Sam have agreed to a plan to pay back taxpayers for that $182 billion bailout. The agreement was reached on Wednesday after AIG's board met with government officials.

James Early, I think I speak for everyone when I say, when do I get my check? How's this going to work? Or my 182 billion. Exactly, yeah. Hell is frozen over and pigs are flying, Chris. I mean, I would not have expected the government to actually look like a smart investor, but it does. Let me clarify one thing, though. AIG does not make nearly enough money to actually pay this $180-something billion back in the normal sense of you're paying something back.

They're chopping off arms and legs and selling them and then giving additional ownership to the government, which now owns 92.1% of AIG. So it's like somebody who's deeply in debt buzzing his hair off and selling it to the wig shop to make a few bucks. I mean, maybe it's better than that because AIG does have a legitimate business. It was just swamped by all those illegitimate businesses that they have. But it was, yes. So it is still good. I mean, and the government had very good timing here. Well, here's the thing that I, maybe I'm just not that smart.

It seems to me that the share price of AIG or any predicted share price upon which these, hey, the government might actually make money on this thesis rests, is also based on, I mean, that share price is based on the fact that the government will not let AIG fail right now. So if you're extricating the government and you're getting rid of that guarantee, what are those shares really worth? I think the only reason they trade anywhere near where they trade now is because everybody knows that the thing can't lose any more money because the government's on the hook. Take that away. What are they worth? Who's the America Hater now? Yeah. You're listening to Motley Full Money. We're going through some of the big news stories of the week.

Despite having record sales for the last fiscal year, Microsoft CEO Steve Ballmer received only half the bonus he was eligible for. According to filings with the SEC, Bomber took a hit from Microsoft's slow response to Apple's iPad. and for the unsuccessful launch of the Kin Phone. Ron Gross, you follow Microsoft pretty closely. What did you think of this decision? I kind of like this, actually. In a full disclosure, we own Microsoft in the service I run million-dollar portfolio here at the Motley Fool.

I kind of like seeing compensation committees step up and say, you know, we're going to pull back the reins here on the bonus. We didn't have a stellar year, two years, three years. We've had a lot of missteps. and you're not really eligible for the full amount of what's a pretty spectacular bonus in regular people terms. Let's not be too sad for Mr. Balmer since he did receive $670,000 or so. He'll be just fine. He didn't have been fine if they had given him nothing because he's worth $40 billion or the Microsoft stock.

Yeah, I think we were talking on last week's show about the Forbes annual list of the wealthiest Americans. He's 16th on that list. So nobody's no violin playing for him. No, but I like because there's accountability at Microsoft, actually, and that's a good thing. We don't see that at a lot of companies. I can think of some smaller companies that grossly overpay their executives, even when their executives completely whiff on the growth plans. They give them a mulligan. James?

Let me give you smiley faces a reality check here. So half of the bonus for Steve Ballmer is $670,000 is discussed. Yeah. My number is maybe a low number for Steve Ballmer's net worth, which is $15 billion. This means the percentage of his net. net worth affected is 0.0045%. We just said it wasn't that much. If we take the median baby boomers net worth, which is approximately $125,000, which

is almost a story into itself, but just work with that number, for comparison. This would be the average baby boomer having his or her bonus reduced by $5.62. There you go. Stay tuned for more math wizardry with Professor James Early. Coming up, CEOs think shareholders like you have two. many rights and they're not going to take it anymore. We'll explain why right after this. Stick around.

You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James Early, and Ron Gross as we dig into some of the companies making headlines this week. The iPhone 4 was released in China earlier this week. And just like in America, the lines were massive with some reports indicating more than 1,000 customers waiting outside shops. James earlier, you're an Apple enthusiast. Was this expected? It was expected, actually.

I'm going to say that because Apple's stick is not just making great products. It's making great products sexy and making them must-haves. And the Chinese market is big on must-haves. You know, something with almost like a cult following that demand sort of complete obedience. I mean, that's what we have in the U.S. with Apple. And so I think Apple is going to do very well in China. Do you think at some level Apple is in danger of being a victim of its own success? If they get to the point where it's like, well, yeah, we were expecting there to be riots,

as in fact there were some reports of riots, people rioting to get iPhone 4. At some point, is that going to backfire for Apple? That's interesting. That's interesting. I mean, I think as long as they make good products, they'll get through it. But if they start depending on that cheekiness, absolutely. On Wednesday, the Chamber of Commerce and the Business Roundtable, the lobbying groups representing many of America's biggest companies, sued the SEC to overturn a rule that ends management's exclusive lock on nominating corporate directors. Ron Gross, why are you and millions of individual investors picking on these poor CEOs?

Okay, so, Chris, as a former hedge fund manager who was actually an activist investor in a former life, and I used to run private. oxy contents against companies in order to put candidates on the board, nominees on the board of directors. I'm typically in favor of anything that puts power back in the hands of shareholders and away from management and entrenched boards. I think we have to be a little careful of unintended consequences here. There is some concern that large pension funds, unions will try to use their ownership of companies to push forth their agenda and pack boards. I'm not too concerned about that. I think the market in the regards of voting is relatively efficient.

Shareholders will vote their conscience. And anything that puts the power into the hands of the real owners of the company, the shareholders, I think, is good. Just to be specific about the rule here, I think it only applies to, this proxy access nomination thing, only applies to large shareholders who held their shares for at least three years. Correct, which is why something like a pension fund would be eligible. eliminates most regular investors. Now, back in the old days, you can still nominate someone for a board.

They don't like them. They'll crush you like an aunt. Right. Correct. It's like running in yourself for president or something. So this makes it a little bit easier. Generally, you also want to be very skeptical of the Chamber of Commerce nationally. Not long ago, they were beating the drum on this whole

naked shorting thing. And I think... And it'll believe in global warming either. Yeah, really, really, really foolishly. They... Let's just... Yeah, just you can ignore them safely. On Thursday, Fisher Price announced a voluntary recall of more than 10 million children's products sold in the U.S. Included in the recall were 14 models of tricycles and nearly 1 million high chairs. Fisher Price is owned by Mattel.

So, Jason, you are a father. You are also a cycling enthusiast. Does your little girl have one of these trikes? She doesn't, and I'm looking at one of these Dora trikes right now. There's this tiny little rounded plastic key that is supposedly we, responsible for much injury. Good for Fisher Price, good for Mattel. This is a penny on $1.70s worth of earnings or something. It doesn't mean anything to them financially and it will get people off their back and maybe save a very few kids from getting a bump. But honestly, my house,

anybody's house has hundreds and hundreds of better ways for children to get hurt. Better ways. I like that. Much more likely ways. We have 36 injuries in how many million toys, that's nothing. James? Next time my child rises, death trap, try to go over to his hazardous high chair, I'll think of Fisher Price.

I have to agree with Seth on this, actually. I'm sure there's just statistically a number of injuries on Fisher Price things anyway, but good for Fisher Prize for being proactive here, unlike Johnson and Johnson, which had 40 different kids' medicines that were contaminated with metal shavings and bacteria and cred like that,

and they didn't issue a recall. Instead, they sent the sneaky people out to try to buy it on the sly. So, I mean, it's probably partially a wasteful expenditure on Fisher Price's part, but hey, maybe it's a good move. We've got to give them a thumbs up, though. I mean, it's just, seriously, it's in being a good corporate citizen. Yeah, I wonder if we also just, I mean, Americans are such sissies about everything. Everybody wants to think they're the big, tough American and I'm self-sufficient, and really we are just sissies. If something, if we can blame somebody else for a problem, my kid the other day fell, tripped over my foot and hit her eye and cheek on the edge of a door. I mean, should I, should I? I'm going to be calling social services. Should I walk it off?

You know, should I complain to the doormakers that the edges of their doors are too sharp. She had this bruise line going up and down her face. No, it was my fault. I shouldn't. Let's grow up. Although I did hear that your lovely bride is filing paperwork to have you recalled. I'm still in the truth called me a sister.

I drive an SUV. You're listening to Motley Fool Money. We're going through some of the newsmakers this week. On Wednesday, shares of Green Mountain Coffee Roasters fell 16% after it was revealed. the SEC has made an official inquiry into the company's revenue recognition practices. Ironically, Wednesday was also National Coffee Day. Ron Gross, what is going on here?

The irony just writes itself, doesn't it? It does. So I can't speak to whether the revenue recognition problems are true problems because we just don't have enough information yet. The analytical, the analyst reports I'm reading seem to indicate that people are not that concerned. It's also really boring. Yeah, pretty boring. I was next to. I was next to you. ever a lover of Green Mountain just on its own merits in the sense that, you know, we see profitability on a per cup of coffee basis really not growing, the market affording it a multiple that was really too high, in my opinion. Don't they have that little patent expiring thing coming up?

There's a fad issue. There's a patent expiring issue. They just spent a bunch of money and buying the folders of Canada. That looks desperate to me. I will say I use the Kourig machine pretty much every day. Big fan of the product, just never a big fan of the stock. James? You know, just technically speaking, the issue would seem to be, I think they sell most of their

product to a distributor who then sells it to, you know, the industry. So the question is, I think, was the revenue booked? They would normally book it when the distributor then sells a product versus when they first sell the distributor, which is revenue recognition is a nasty thing if you're actually doing, if you're fudging the revenue recognition. But could it be that the SEC is mad that they missed made off? So now they're going after Green Mountain Coffee, which is a Vermont-based business. Well, I mean, R-Mond is like the Sweden of America. I mean, it's just wholesome in every which way. Are you in their communists? Are you calling Vermont a communist state when I'm in Vermont? I'll say

that. Let's pull back from Green Mountain for just a second. Just as an investor, when you, regardless of what the company is, when there's an SEC inquiry into something like revenue recognition, is this an automatic red flag? Is this a where there's smoke, there's fire thing? It depends. You know, the SEC is very easily pushed around. There's political motivation sometimes can caused the SEC to start an investigation. I don't think there's any of that here. So it's really hard to say. I mean, if this is a symptom of some greater sleagality, then that was slimy. It's copyrighted, though. Yeah. Then you'd have to worry, but you'll never know in time. And that's why people sold it off. And finally, it's time for this week in Swedish retail.

Well, IKEA, the home furnishing giant, said its profits rose 11% over the past year, and fashion retailer H&M posted a 22% rise in quarterly profits. Analysts, however, we're expecting more, and the stock fell on the news. Seth, Jason, you're one of our top retail guys, and you look vaguely Swedish to me. I really, yeah, I love to go to Sweden. So what did you make in the news? Fakly Swedish. You know, IKEA is a really strange story.

It's the first time they've disclosed this information publicly. there was a big economist article on IKEA. It's actually impossible to fully figure out the ownership structure. It's a bunch of small companies and then it's a non-profit for the further of design. So I actually wouldn't trust any number

that IKEA reported. The only reason they're doing this, I think, is to try and deflect criticism that here's this multi-billion dollar operation that is tax-advantaged and not actually telling you where the money goes, yet it seems to have this sort of hip-green feeling to it. If we can turn to

H&M, I thought those results were interesting. A fairly nice profit increase didn't please analysts. And the reason is a reason you're going to see a lot coming up, which is that margins are down. Most retailers out there right now are cutting the prices. And so what they're trying to do is they're cutting the prices on the product. So they're losing gross margin on the product, hoping that they can make up margin, moving more people into the stores. That doesn't always work out. James Early, final word?

Sure. And it wouldn't it be like these are sort of counter-cyclical indicators, too? I mean, these are some of the cheapest retailers you can get. I mean, you can buy a whole stack of clothes and put it in IKEA wardrobe for $200. An H&M wardrobe, yeah. But for $200, you can also fill a house with all of those wobbly CD cases with most of the screws in the box. But about the leftover screws that I have because I can never put them together. And all of those little wrenches.

All right, coming up, the guys will be back later in the show to talk about the stocks on their radar. But up next, Academy of War. Award-nominated filmmaker Charles Ferguson talks about Inside Job, his new documentary about the financial crisis. Just bring me lots and lots of money. Stick around. You're listening to Motley Full Money. Welcome back to Motley Full Money.

I'm Chris Hill. So was the financial crisis an inside job? Charles Ferguson is a filmmaker whose first documentary earned him an Academy Award nomination. His second documentary is Inside Job, a look at the financial crisis. Share prices continued to tumble. The Eamon Brothers was forced to declare itself bankrupt. The largest single point drop. The regulators, they had the power to do every case that I made

when I was state attorney general. They just didn't want to. Charles Ferguson joins me now. So let me start with something, I guess, kind of basic. What attracted you to this story? Well, there's several answers to that question, actually. uh... there's kind of uh... there's a serious answer and then there's a kind of black humorish answer which is all too serious as well actually we're fans of

black humor at the motley fool so uh... okay well there right so first the sober and serious answer is that uh... this is obviously uh... a gigantic event which has affected the lives and and indeed destroyed the lives of uh... tens of millions of people who lost their jobs their houses their life savings as a consequence of this catastrophe. And so explaining it to the world would seem to be a useful and important thing to do.

The black humor answer is I'm a great fan of heist movies, and that's definitely a genre in which I would like to work. I love the Thomas Crown Affair and Inside Man and all those kinds of movies. And here we have a heist, and I made a heist movie. It's a quite spectacular heist, and it was an inside job, hence the name of the film and the title of the film. And it's one in which the robbers spend about $5, 10 billion dollars paying off the police before they committed the robbery. and also continue to pay off the police after the robbery, and they've gotten away with it.

And the amount that they heisted is certainly in the tens of billions of dollars. It might even be in the hundreds of billions of dollars. It's without any question the largest financial bubble and the largest fraud in economic history. You interview over 40 people in this film. One of them is Noreal Rubini, the economics professor at NYU. you. And one of the things you ask him is, why do you think there isn't a more systematic investigation being undertaken? And he says very directly, because then you'd find the culprits. I mean,

that seems to point towards the government protecting the wrongdoers. Do you think that's the case? Yes, I do. There's no question in my mind that that's going on. And while I'm not entirely certain what the calculation is in President Obama's head that has led him to condone such behavior, there's no question that that's what's going on. There's not been a single criminal prosecution, which is quite extraordinary and very different from previous economic crises, financial crises. And after the savings and loan scandals of the late 1980s, there were several thousand criminal prosecutions and hundreds of financial executives, perhaps thousands, certainly hundreds, went to prison.

And even after the dot-com bubble and the collapse of Enron and WorldCom, roughly a decade ago, a smaller number, but still substantial number of people, certainly dozens, went to prison. This time, not a single person has even been arrested, and there's also been no special prosecutor appointed. There's been no equivalent of the Pecora Commission or other, you know, really serious investigative commissions. There have only been a handful even of civil cases filed by the government. It's really extraordinarily shocking. How much of this problem is about the people involved, and in particular I'm talking about executives at the major financial firms like

Goldman Sachs, JP Morgan, Bank of America, and how much of it is the system? That's a good question. It's both. By this point, I think it's both. But the system was, in very significant measure, created by a relatively small number of people, meaning hundreds, perhaps a few thousand, people in the financial services industry, running the financial service industry who made a very concerted effort to lobby the government, to change laws, to weaken regulation, to weaken law enforcement, and by paying off the economics discipline to spread the idea that deregulated and unregulated finance was okay and was even a good idea. Before your filmmaking career, you were a consultant at some of the biggest tech companies in America,

companies like Apple, Xerox, Texas Instruments. So, you know, I'm certainly not suggesting that this type of thing is only contained on Wall Street, because certainly you could be a crooked leader, no matter what business you're in, you could run a crooked lemonade stand. But it just seems like the incentive for wrongdoing is, so much greater at a Wall Street firm than if you're running a major retail business or a major tech company. Do you think that that's the case? Yes, it is. It's absolutely the case. And one sees that in many different ways in the behavior of the two industries. In the first place, the technology

sector is, for the most part, quite competitive. And while sometimes a firm such as Microsoft, say, or earlier IBM has a strong or even dominant position that usually isn't the case, and even when it is the case, it doesn't last forever. It's a very competitive industry. And so if you try and defraud somebody, they simply will stop buying your product. They'll buy other people's products.

And there's a ferocious contest for technological progress and providing value to customers. That's one thing that you see. Another thing that you see that's a remarkable difference between technology and financial services is pay structures and compensation structures and incentives. When I started my software company, I started and ran a software company in the mid-1990s, successfully so. It was a venture-funded startup. The venture capitalists who invested in me sat me down and told me extremely directly, your salary is going to be $100,000 a year. It's never going to go up.

Your stock is going to vest over five years. You cannot sell any of it. So go make your stock worth something. And also no outside activities. And needless to say, the cash in the company was not spent on lobbying or entertaining. It was spent on developing products. And if I had gone to them with the typical, compensation package of a trader or Wall Street executive these days and said, you know, I have this

great idea, please pay me a guaranteed cash bonus of $5 million next year. It would have been a very short meeting. You're listening to Motley Fool Money. We're talking with Charles Ferguson, the writer-director of the new documentary Inside Job. Are you, Charles, time to wrap up with a round of buy-seller hold. Let's start with this company. It's being mentioned as a big threat to Google. buy seller hold the future of Facebook? I would say hold. Why is that? Well, a company, but I tend to suspect that it's going to be difficult for them to move out of their their very big, very successful niche. The people who run Google and other companies with which they might find themselves competing have a very, very deep technical and engineering culture,

which I think is quite different from the way Facebook runs. You did some consulting for Apple in the early 90s, so I think this qualifies you to weigh in on this one. Buy-seller Hold, the future of the iPhone. Oh, I would say buy. Yeah. I'm an enthusiast in fair disclosure. I'm also a shareholder.

I own a fair amount of Apple stock. That's why you're doing this interview, right? It's not to promote your movie. It's just to pump the Apple stock. That's it. I'm a believer that Apple has a very, very good run in front of it. I would say for at least five years, Apple is going to be very successful for two reasons. One is that its products are fantastic, and the second is that those products are undercutting

the entrenched dominant positions of the rest of the technology sector, both the consumer technology sector, like BlackBerry's, for example, and also the likes of Microsoft and Hewlett-Packard, you know, the Wintel personal computer industry. I think Apple is superbly positioned for at least another five years. We were talking earlier about technology company CEOs, and this one is locked in a tight race. The likelihood that former eBay CEO Meg Whitman will be elected governor of California by seller. hold. Oh, well, everything's for sale these days, and I think that she's already spent $120 million of her own money, so I would say that her odds are pretty good, although I can't say that I

think it's the best way to run a democracy. Fair enough. Finally, we've seen this in everything from Avatar to Toy Story 3. It's all the rage these days. Buy-seller hold, inside job in 3D. Ooh. I think we'd make a great 3D movie. You think so? I think it would be fantastic. Yes, those aerial shots of Manhattan. Oh, yeah, yeah. I think that there's at least a half hour of our movie that looks really, really cool, and I would love to see people wearing 3D glasses.

All right, I think Motley Fool gets a special thanks in the credits if that happens. Absolutely. All right, the film is Inside Job. Writer director, Charles Ferguson. Thanks so much for being here. Thank you very much for having me. look at the stocks on our radar. Plus, which is bigger? Don't go away. This is Motley full money. Live for free. But you can give them to the birds and bees. I want money.

As always, people on the program may have interest in the stocks they talk about. Don't buy ourselves stocks based solely on what you hear. I'm Chris Hill. I'm back in the studio with me, our trio of senior analysts, Seth Jason, James Early, and Ron Gross. Time to play, which is bigger. Here to help us out is our man Steve Broido. Steve Broido. What's our first question? Okay, gentlemen, which is bigger? The total number of drink combinations at Starbucks,

according to a 2008 Starbucks ad, or the price in dollars of Berkshire Hathaway A-Shares. Wow. Okay. How many drinks? I know the answer to this. It's definitely Berkshire. Really?

Roughly. How many drinks in combination? $124,000. Yeah. There's no way. There's maybe 30 drinks. drinks and 30, I mean, carry the two.

I need a calculator. According to an ad, so they were probably BSing. Oh, they could have put an exponent. No, no. Ads would never be able. You could get a James Early Math Professor. So what I mean, you think about it. We're going off menu here.

Okay. I'm going Starbucks drink combinations. He's probably right because it's the counterintuitive. Let's go with that. Steve? Well, the correct answer, Berkshire is bigger. See, that's what I said. Berkshire A shares trade around $124,000, strong work we're on.

Starbucks claims to have over 87,000 different drink combinations. Which is ridiculous. That's pretty close, though. Which is how many I have to wait through every time I go to a Starbucks for some weirdo who's got to have 8,000 custom things in their coffee. You're a bitter, bitter man, Seth Jason. Just get a cup of coffee and get out of my way. Steve, what's next? All right, number two, which is bigger, the weight of Amazon's new Kindle 3 in pounds, or the new

total number of Chipotle restaurants currently serving breakfast. Wow. It's the way to the Kindle. It's one Chipotle restaurant, I think. No, wait, in pounds. In pounds. It's under a pound. I just bought a new Kindle.

Full disclosure, just bought it for... Yeah, it's under a pound, and there's at least one Chipotle serving breakfast. Four big apples. Is it lighter than that? It's under a pound. Under a pound. It's the Chipotle's dudes. All right.

Steve, what are we got? Well, the number of Chipotle restaurants serving breakfast is the correct. answer. The Kindle 3 weighs 8.5 ounces, which is around half a pound. Only one Chippole currently serves breakfast. Where is that one, by the way? The Dallas Airport location in Virginia. Yeah. And airports there are required. I'm sorry, restaurants at airports, let me try this again as I'm losing my mind. Airports in Dallas are required to serve breakfast. Or restaurants. Restaurants at Dallas Airport. Can we just roll it like that? It's a lot like that. It definitely is more humorous. Take that. I'll you Steve Broido fans. He messes up to

He does indeed. All right. Steve, what's our last question? Final one, which is bigger? Amazon's market cap in dollars or the combined market cap of eBay, price line, Netflix, and Yahoo in dollars. Good question. I'm going with the combination.

I go to Amazon. You know, Netflix really bumps up that combo. What do you think, Seth? No, I think it's the combo. I do, too. eBay, I guess, is pretty big. As an Amazon shareholder, I'm going to stick by my man, Jeff Bezos, and I'm going to go with Amazon.

Well, everyone seems correct except for Chris. The combined market caps are indeed bigger, but not by much. Amazon has a market cap of around $68 billion. Yahoo is around $68 billion. eBay is around $32 billion. Priceline is around $16 billion. Netflix is around $8 billion, so the combined market caps of Yahoo. eBay, price line, and Netflix are $75 billion.

eBay's going the way of the dodo. All right, thank you, Steve Broido. All right, guys, time to talk about the stocks that are on. on our radar and Ron Gross, we will start with you. All right, Chris, I'm going to hit you with one that we also own in the million dollar portfolio known as a mini Berkshire, Hathaway, Markell Corporation, specialty insurance company. Really fantastic underwriters actually make money on the insurance side of the business, not just the investment side of the business, which is typical of insurance companies nowadays. Tom Gaynor, their investment chief,

has amassed a great track record, a great steward of their capital and has generated some great investment returns. And I think we've got some multiple expansion on the horizon. They're going to continue to grow book value. I like it short term, long term. I think it's a good one. And for someone like me who knows pretty much nothing about insurance, when you say specialty insurance, like they're just insuring sports teams, what are they doing? Everything from ballet studios to dude ranches, anything that is. You had me a dude ranch. That's quite a range. Yeah, it's really niche businesses, which unlike, let's say, car insurance, which is basically a commodity business that competes on price.

These niche things are not so much commodity-based. There's service aspects to them. You need special spreadsheets for those. It makes it much more interesting than your typical life insurance company or car insurance company. And final question, do they have any talking rodents as their mascot? No, they're pretty low-profile guys. No, no rodents. I like them already.

James Early. Chris, when I hear about the metal shavings in children's Tylenol, when I hear about the bacteria and, in fungus or dirt or whatever. I get excited, not because it's a bad, I mean, I get excited because it could be a buying opportunity. In this case, these things are bad, but they're not nearly bad enough to rock Johnson & and Johnson's boat.

This is a very big, stable company. Johnson & Johnson is one of my income investor stocks. It pays a 3.5% yield and it's paid a dividend every year since 1944. So I say, you know, this is bad news and it's unfortunate, but buying on the bad news could be a smart move right now. And the ticker? J-N-J. Seth Jason. I'm going to continue with the callous disregard for our nation's most innocent and say you should look at Mattel. Now, Mattel hasn't really been beat up too much because of this. The Fisher Price. Yeah, the Fisher Price recall. So I was looking at the numbers and I said, wow, a 9.3% free cash flow yield, a 3.2% dividend yield. They sell a lot

of toys that don't maim children. I have a ton of them at my house. And guess what? These toys wear out and they keep finding new markets. It's trading near the back end, the low end of its historical sort of PE ratio. I think you could do a lot worse, especially right now when you can't get anything on money in a savings account. So Mattel, M-A-T. And one of their big brands is Barbie. Does your little girl have some Barbies? I'm going to have trouble with that whole Barbie and princess thing. I'm hoping I can have a girl who likes rock tumblers and race cars. Good luck with that. Let me know how it works out. Barbara's got a little trampy too. I know really. It's not like it used to be. All right. We'll wrap up with Barbie being a little trampy. Seth Jason, James Early, Ron Gross. Guys,

thanks for being here. Thanks for being here. Thanks also to our special guest this week, filmmaker Charles Ferguson. His new documentary Inside Job opens in New York City and Los Angeles later this month. If you missed any part of the show, you can find it at our website, motleyfoolmoney.com. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.