Motley Fool Money - Motley Fool Money: 10.03.2014

Episode Date: October 3, 2014

On this week's show, our analysts discuss the surprising jobs numbers, eBay's PayPal spin-off, and Wayfair's red-hot IPO.   And we talk with John Lanchester, author of How to Speak Money: What The Money People Say - And What It Really Means. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio show. I'm Chris Hill, joining me in studio this week. From Motley Fool 1, Jason Moser, from Motley Fool Supernova, Matt Argusinger, and from Million Dollar Portfolio, Ron Gross. Good to see you, Jens. As always. We've got a hot IPO, a spinoff we've been waiting for, and a proposed merger that we can't make sense of. Bestselling author, John Lancaster, will help us break down the language of money.

And as always, we'll give you an inside look at the stocks on our radar. But once again this week, we begin with the big macro. The jobs report for September is out. We added 248,000 jobs. The numbers for both July and August were revised up. Ron Gross, the unemployment rate, the rate has dropped below 6%. It sits at 5.9. First time in six years we've seen it below 6%.

The big takeaway for me is that more people went back to work here. It wasn't just a function of that fuzzy math we talk about where people left the labor force. We actually have people working. The U6 number we sometimes talk about, which is a more full measure of employment actually dipped under 12% to 11.8. That looks good as well. The economy really appears to be picking up steam. Yeah, and Maddie, there were some people looking at the numbers that we had over the summer, which weren't bad and thinking, well, it's not going to get any better than this. This kind of sets us up for a nice end to 2014.

It does. I mean, the numbers for previous months were revised up, and so far this year, we're averaging over 220,000 new jobs a month. You have to go back to 1999 when we had that consistent number of pace consecutive months with that kind of labor increases. So it's great news. I agree with Ron. Jason, we also had some big macro news from the automotive industry. The September sales were out looking really good for GM, looking really good for Chrysler. Not so much for Ford Motor.

Not so good for Ford. Yeah. It's interesting to see sort of the juxtaposition there. For the longest time, really, Ford has been, you know, sort of holding the stronger hand there. But, yeah, I mean, GM and Chrysler both benefiting from more the higher demand for trucks and SUVs. Ford, you know, conversely, had to get in there and really they actually slashed guidance by around $1.5 billion for the year, which is obviously very significant. I mean, Mark Fields, welcome to the big leagues, baby. Right.

is, you know, he, I think, is benefiting from a company that was really set up for success with Alan Malawi's tenure there. And so I think that he's going to be just fine. It's good to see, I think, with GM, Mary Barra going on the offensive there, really trying to bring that brand power of GM back to the forefront of the consumer's mind. But, yeah, great, great September sales. And Warren Buffett's, you know, he's liking cars, too. He just bought a big car use car business. So, yeah, Ford didn't do well because that's the one I own, of course. But I saw some stuff about how they pulled back on purpose on the F-150, the 2014s, to make room for the aluminum 2015s. Is there truth to that or is that just a bunch of?

No, there is truth. I mean, I think part of Ford's weaker numbers was sort of the cycling out of older models and preparing for new releases. And they were going up against some really tough comp. So a little bit of a victim of their own success. And it's not something that, I mean, I think that honestly, the market overreacted of those numbers. Ford is in a bit better shape than I think the market would have you believe today. Yeah, Rod. This is right wiping my brow.

Shares of eBay hit an all-time high this week when the company announced it will spin off its PayPal business as a separate company in 2015. Jason, this is something that's been talked about for years now. PayPal represents such a huge percentage of eBay's profits. So it'll be interesting to see how it does as a standalone company. Long term, though, I don't know what this does for eBay. Well, I think that really, if you look at this, you compare the two. I think that eBay is the loser here, right? PayPal is definitely the winner.

And I think that e-commerce in general is the big winner from this. For the longest time, I think PayPal really served a wonderful purpose for eBay. It certainly generated a lot of traffic for eBay. It gave eBay a lot of information on its customers. And this really only makes sense for PayPal because PayPal really is playing into that bigger, long-term trend in mobile payments and end e-commerce. Amazon.com will probably benefit from this because I imagine we'll now see PayPal being facilitated into that platform, which it isn't right now. And so, yeah, I think that eBay long-term, you know, when this spinoff happens, I would not be

one interested in owning eBay on its own. I think PayPal is by far away the compelling part of this equation. I agree with Jason. I disagree a little bit about eBay. I think this is one you just, you don't want to forget about it. This is still a giant in e-commerce. And I think eBay now, and a focused marketplace business could make some serious acquisitions. I mean, I think Mercado Libre is a name that comes up quite a bit. They already own 18% of it. I think eBay is going to make some moves here beyond, once they get sort of this, I almost feel like PayPal is kind of a cloud hanging over them a little bit.

I mean, it's a great business, obviously, but getting that away and then focusing really on their marketplace business could do wonders. I love Mercado Libra, actually. I own shares in Mercado Libre. I thought it was very interesting to see that really the leadership will not be sticking around for this. You know, the leadership is going to be changing. That was surprising. That was interesting.

Maybe not a couple of course. coincidence on the spin-off of PayPal and the timing here that this comes in the wake of Apple announcing Apple Pay. I need to quote our colleague in Australia, Joe Mager, who was very quick to defend PayPal and saying, look, if you're sizing up PayPal versus Apple pay, here's a quick summary. One already has massive adoption with merchants and consumers. The other is Apple Pay. So he's right about that, but I don't think there's anyone who looks at Apple and thinks that they can't make a very serious game of this. No, I mean, it's a huge.

I mean, Apple's got the platform. I mean, it's got the hardware platform that can make all this work, and those are millions and millions of people around the world. It does, but let's also remember that Android really is the one that rules the world here. I mean, they own the global market share with their operating system. And, you know, there were some, there was a little bit of bickering there, I think, between Apple and PayPal. And so I think that, you know, PayPal is going to really benefit from the proliferation of that Android operating.

system around the globe. On Thursday, Wayfair became the latest hot IPO of 2014. The retail company describes itself as having one of the largest online selections of furniture, home furnishings, and decor. Maddie shares rose 30% on day one. Is this a stock I want to put on my watch list? I'm not sure, Chris. I mean, it's a $30 billion company post IPO. This is a company that did about 900 million in revenue last year. Probably going to do about 50% more than that. So it's this year. So it's certainly said you're not sure. Certainly growing, but you're paying 25-time sales for a company that, yes, home furnishings. This is not something particularly that people go online to buy.

If you look at the share of home furnishings bought online, it's around 7%. So it's not a great online category right now. If you want to get excited about Wayfair, I think you have to bet not only that people are going to be really buying things like mattresses and cabinets online, not only they're going to be doing that, but Wayfair is actually going to lead that at 25 times 2014 sales. So I'm skeptical. Yeah, Jason. I was going to say, if I want to own shares of an unprofitable online retailer, I can just buy Amazon, right?

I was going to say, just go buy Amazon anyway, because Amazon actually one of their third-party suppliers is, in fact, Wayfair. So you might order something from Amazon that comes from Wayfair. And with Amazon, you're getting not only every benefit of Prime, but you're also getting, obviously, a logistical genius in Jeff Bezos, a distribution model that gets you things in, you know, one or two days flat. I think the biggest weight on Wayfair to date is they don't. don't have that distribution presence. They're going to pay a lot of fulfillment costs, and you're still not going to get those items in a very, you know, it's not going to be speedy process. And one more thing about the IPO. This came, this is Class A shares that they've issued.

Management's holding on to Class B, which have 10 times the voting rights as Class A. So management's holding on to the management ownership of this company. Investment firm Starboard Value has taken a stake in Yahoo. And Ron, their first order of business was to send a letter to CEO, Marissa Mayor, urging her to basically, take the Alibaba money that Yahoo is going to get and spend it to buy AOL. Yes. Well, they actually did something. We'll get to that in a second.

Are you familiar with the reverse Morris trust, Chris? No. Please enlighten me. First, they're recommending that they spin off the Yahoo core business into a separate entity and leave Alibaba and Yahoo Japan in the entity that we now know as Yahoo. Unlocking that value, something like that would normally cost them about $16 billion. dollars in taxes. This reverse Morris Trust gets them out of that. So you save $16 billion, according to Starboard. I haven't run the numbers. I must be honest. So that could be quite a bunch

of savings. An unlocking value of those international components could be quite a boon to the valuation of Yahoo overall. Now, let's get to the AOL part of that. They think about a billion dollars in cost savings and synergies. We hate that word around here. That's what Starboard says could happen from a combination. I don't love the idea. I'd like to see them return a lot of their capital that they now have to shareholders, 50% at least, perhaps more. I'm sure there'll be acquisitions coming. I just don't think the AOL one makes that much sense. Well, and since Starboard sent this letter, it has sort of started this discussion online of should they or should they not buy AOL, but it seems that everyone agrees on one thing,

which is that Marissa Mayer is almost certainly going to have to spend this money. And it seems like there's going to be pressure on her. I'm just curious, at what point does the pressure really start to kick in? When does she need to make a splash? Well, I think she can appease shareholders for a while with return of capital, whether it's dividends and share buybacks. But that won't last forever. So sometimes let's call it within the next 12 months, people are going to start to say,

okay, where is this business going? There's enough financial engineering going around. We appreciate the return of capital. But where is this business going? What are you going to buy? Coming up, former Fed Chief Ben Bernanke is reportedly making $250,000 per speech, but there's one thing his money won't get him. Stay right here. This is Motley Fool Money.

As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So no buy yourself stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here in studio with Jason Moser, Matt Argusinger, and Ron Gross. guys, shares of the Walt Disney Company up on Friday on the news that Chairman and CEO, Bob Iger, is staying on for an additional two years. Jason, this takes him through the middle of 2018 and as a shareholder of the Disney company, I could not be more happy. I was going to say, my daughters are shareholders of Walt Disney, and I know they're going to be thrilled by this news. Do they follow Mr. Iger's work? There's a little sarcasm there, Chris. Anyway, I mean, how good is it? How good is it?

it to be Bob Iager. I mean, this guy is really in demand. I mean, shareholders have won just tremendously with his, you know, CEO position there at Disney. And this is going to help him sort of see, you know, the opening of Shanghai Disney, you know, starting off the Star Wars franchise. And really, he's going to be able to be a part not of only getting that kicked off, but really watching it develop and happen. And, you know, Disney's interesting and they don't have a chief operating officer at this point. And I think they're going to be bringing someone up to actually maybe take that position here at some point to start trying to groom some leadership.

But, yeah, I mean, he's done so well for this company. Just a trifect of awesome acquisitions in Marvel and Pixar and Lucasfilm. And I think shareholders ought to be very encouraged by this. Yeah, that's what you just said it. I mean, it was the acquisitions, which, you know, early on seemed pretty bold. I mean, Pixar in particular, but then Marvel. Bold and pricey. Bold and pricey.

But gosh, I mean, I don't know what the internal return on investment. those acquisitions ever made, but it's got to be tremendous for Disney. Just given all these sort of different ways they can monetize them. You mentioned the chief operating officer reports are that by the middle of 2015, Iger is going to bring someone on, presumably to groom them to be CEO. There are a couple of internal candidates, the CFO, Tom Stags, who heads up the theme parks division. I am curious, though, what are the odds that it is an outsider? Keep in mind. And Eiger himself was promoted from within the Disney Corporation to be CEO. But I think the smart money right now has to be betting on an internal candidate.

Yeah, I think it really does have to be internal. Just because there's not a C.O. It doesn't mean there isn't capable talent working underneath him. And I think that really it's all a matter of semantics at this point. I think to go outside, it would certainly, I think it would be belittling to the talent that they've developed in that company. And so I imagine that odds are betting on that internal hire. Former Fed Chief Ben Bernanke seems to be doing well. He's making a reported $250,000 per speech.

But that is not preventing him from being denied a home loan at a conference in Chicago this week. Bernanke said the mortgage market is so tight that when he tried to refinance his own home loan recently, he was denied by the first lender he went to. There's no way that can be true unless he doesn't have any equity in his home. otherwise, he's got to be a good credit risk. Maybe the conversation went like this. What's your name? Ben Bernanke. What's your job?

I don't have one right now. It's like, well, then we're denying you. Do you think of that? That's how it went down? I guess you'd have to go back to the day where there was those no dock loans where you didn't have to prove an income. Anybody could get one. It could be that.

I'm telling you, I mean, I've refinanced two houses in the past couple of years, and the paperwork that's required now. If you don't have a job, that doesn't surprise me. Just on the site of it. What's your job? I don't have one. okay, you're declined, denied, not going to happen. Then, I think maybe you have to kind of look a little bit deeper and see, oh, wait, this is, you know, maybe he's good for it.

Well, my question is, I mean, why does Ben Bernanke even need a mortgage? I mean, he obviously, I mean, he's trying to, he's an economist, he's trying to maximize his capital. I understand that. But the man makes some, I mean, I think his house, I think it was appraised at $800,000. Just buy, just pay off the mortgage. I will lend him money at 4%. Ben, call me. There you go.

Drop us an email, Ben, radio at fool.com. We'll hook you up. Before we get to the stocks on our radar, I should mention once again, if you were looking to get started investing, we've got a special offer on Motley Fool Stock Advisor, which is our flagship service here at the Motley Fool. It's a great way to get started. And you can find out more just by going to MFMoney.com. That's MFMoney.com. Check out Motley Fool's stock advisor. Let's bring in our man from the other side of the glass, Steve Broydo, as we get to the stocks on our radar. He's going to hit you with a question. Ron Gross, what are you looking at this? week. I got to go back to InvenSense, INVN, a company I talked about a couple weeks ago when Steve was out on paternity leave, I believe.

I recommended it around $23. And from that moment forward, the stock started to fall. And we're about in the $20 per share range right now. And that's on the heels of them actually being in the iPhone 6, which everyone was really waiting to see. So it's a lot of kind of buy-in-the-room or sell on the news going on. But I think it's an even more compelling buy than I did two weeks ago when I recommended it, a company that makes motion sensors, everything from gaming systems to iPhones to digital

cameras. Steve, if you liked it at 23, you're going to love it at 20. Question about Invencent? I do love it because I'm a shareholder. But my question for you is smart watches. Is that where this company is going to shine? I think wearables are certainly going to be a huge business for the motion sensor industry. And generally, this particular eyewatch or Apple watch, I guess we should call it, not going to make or break it in any way. It's more about, as the CEO says, The Internet of Things is coming, and he calls it really the Internet of Sensors, and there's going to be huge opportunities across the board. Matt Argusinger? What are you looking at this?

I'm looking at Solar City. A company, S-C-T-Y is the ticker. This is a company. I'm pushing hard on my Odyssey One team in Supernova to make part of the portfolio. I just look at the market that they're going into. The value proposition of their products of installing and customers having no upfront costs and paying monthly fees that are much lower than utility expenses. Great business.

I expected to be huge in the future. Steve, question about Solar City? If I'm a homeowner, do I really want to rip my roof off? I put panels on. I'm not you personal. Go through this. Do I want to do this? No need to rip the roof off. It's very easy to install these things.

I live in a townhouse. Where am I going to put them? All right. Steve, forget it. You're not getting solar panels. I think we can all agree. Steve's hiring someone to do that job. I don't think he's doing that on us on. I could be wrong.

Jason, Moser, what are you looking at? I'm going to go back to the well on Mobile Iron. I've pitched, I think, mobile iron to you. a few weeks back and tickers M-O-B-L. This is a company that provides the mobile platform for enterprises, both small and large businesses, basically allows these businesses to secure and manage mobile applications, content, devices, gives businesses a mobile presence. So you could, in theory, see the Motley Fool one day as a customer of mobile iron, for example.

But it is playing into bigger the long-term trend of enterprise mobility management. And, you know, for the longest time where BlackBerry was strong there, What we're seeing, obviously, is the employees prefer to be able to choose their own device. And that's what a company like Mobile Iron allows these companies to do is to give employees their own choice. Capital-life business model playing into a bigger long-term trend there. I really do like where this company's going. Steve? Does Enterprise stuff really mean anything anymore?

What does Enterprise even mean? It's just business, Steve. You know, it's just business. No, I mean, this is a market opportunity that's projected to be about $50 billion in the next few years. so it is somewhat significant. Steve, you got one you like? Well, I may go Solar City. I'm not going to take my roof off,

but I believe someone will do that. I think it's a neat idea. All right. The son's coming up every day. Ron Gross, Jason Moser, Matt Argusinger. Guys, thanks for being here. Thanks, thank you. Coming up, we'll head to London

and talk with bestselling author John Lancaster about the language of money. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Best-selling author Michael Lewis calls our guest this week, one of the world's great explainers of the financial crisis and its aftermath. John Lancaster is a regular contributor to the New Yorker and the New York Review of Books.

His latest book is How to Speak Money, What the Money People Say, and what it really means. And he joins me now from Motley Fool Studios in London. John, thank you so much for joining us this week. Thank you, Chris. What got you interested in this topic? It's a kind of spin-off or the publisher wouldn't want me to put it like this, but it's a kind of benign tumour that grew out of a novel I was writing. I was writing a novel about London called Capital. And I was very interested in the way that London has changed and kind of altered over the years.

And it occurred to me that one of the key drivers in that process has been what we call the city of London, the equivalent of Wall Street and finance, which has got bigger and bigger as part of the national. economy and the city's economy. And I suddenly realized we can't actually understand this city and indeed the modern world without getting some sense of how finance works. So it grew really from there from wanting to just understand the world of money and economics and how it works. One of the great examples that you give very early in the book comes out of the financial crisis, which is, and I had to write this down because this is something I would never remember on my own, a financial derivative that played a role in the financial crisis, which is referred to as, and I'm quoting here, a vanilla mezzanine RMBS synthetic CDO.

I know. I mean, I can understand how certain words evolve over time, but, John, this sounds like something where people were going out of their way to create investment vehicles that made no sense whatsoever. That's right, Chris. And I think, you know, it's interesting, whenever you have a book out, you're asked a question you aren't really expecting and that it keeps coming up. And the one that keeps coming up in relation to this is, is it deliberate? You know, I wasn't expecting that to be such a preoccupation, but lots of people are really interested in the fact of whether the kind of obfuscation that you're talking about, you know, synthetic CDS is vanilla metast.

or anything, all that, whether in some sense it's intentional or whether it's kind of accidental byproduct of the complexity of the things they're talking about. And I think my view of that is that it doesn't really matter. You know, someone who's the levels of language of that level of obscurity, you know, super synthetic CDS is made of synthetic CDOs based on RMBS. You know, is that a deliberate attempt to pull the wool over our eyes? Or is that just someone, spouting super complex acronisms. And actually it doesn't matter because if you're bamboozled and, you know, flummoxed and don't know where to begin to get your head round understanding these things,

it doesn't really matter whether the person doing it to you is doing it on purpose or not. The net effect is that you can't even begin to follow what's being talked about. And then, of course, you know, there is a question about whether that the underlying complexity is so great that in a sense these things shouldn't exist. and maybe it's too crude and too simple, but there's something interesting about the idea that if you can't explain it simply, that product is actually too complicated.

Well, this investment vehicle aside, you also write about words that have essentially come to mean the opposite. This is a process that you refer to as reversification. And let's start with the word credit. Credit is the real biggie, I think, because you know, you don't have to be all. that old to remember when there was this really scary, bad, negative thing called debt. And people were brought up thinking that they should avoid it. And they were brought up

thinking that debt cast a shadow over your life. And if you had debt that you were in a form of servitude, you know, you were working to pay off someone else. And that debt was a bad thing and you shouldn't have it. And then suddenly, you know, it's difficult to put your finger on the exact change. But I think it happens probably some point in the 19th. 80s, it turns out that there's this new thing, the financial service industry has a new thing, which is actually really great, which you want lots of, which opens up possibilities and expands your life and makes, you know, impossible to do things you wouldn't otherwise dreamed of. And this new thing is called credit, which of course is just debt. It's just it's magically turned into this other

thing. And debts associations are entirely negative. You know, etymologically, it's linked to ideas about owing, whereas credit is linked to belief and faith and it's completely. positive. And the gigantic explosion in debt, which is, I think, you know, a Martian economist studying planet Earth's accounts would be the thing they were most struck by from about the 80s onwards is just how debt, corporate, financial, and governmental debt has rocketed. And I think a lot of that part is just to do with this, what I call reversification, of the thing that

used to be called debt now turning into this thing called credit. You're listening to Motley Full Money talking with John Lanchester. His new book is How to Speak Money, What the Money People, People, and what it really means. It was this time six years ago that the financial crisis was unfolding. Now that you have six years' worth of a rearview mirror, what is your main takeaway from the financial crisis? I think for a lot of people, the sense I get is that it's actually still 2008.

You know, we're still in that moment. and the various ways in which the system might have changed or reformed to have worked better for ordinary people haven't really happened. I think there's a really, really strong sense that we're like flies stuck in amber, you know, still in that moment. I think that, of course, if you talk to people inside the world of finance, they say that's completely wrong. There are 847 billion new rules.

Everything's changed. It's, you know, there are a plethora of new regulations and marginal changes and alterations and banking is much less fun than it used to be. People keep saying to which I say good for a start. And also, crucially, that the big systemic changes

haven't really happened. I think, you know, the reasons why another version of the crash couldn't come along again next week are hard to seek, really. So the main thing I feel about it, I think about it, is that the kinds of change

that ought to have been implemented not so much at the time of the bailout because I think even with the fully functioning rearview mirror, I think it's hard to see how the system didn't need rescuing. But the reform that should have happened afterwards just hasn't happened. There's a gigantic missing piece, which is that the stuff that states collectively needed to do

to fix this didn't happen. Well, and there also seems to be the ongoing challenge of dealing with innovation in the financial industry as well. We had Michael Lewis on the show recently. He was talking about his most recent book, Flash Boys. And one of the things he talked about was just how few people on Wall Street really understood what was going on with high-frequency trading. So the lack of understanding was extending to senior executives on Wall Street and presumably in London in the city as well. Yeah, it's a strange.

You know, funny thing is, once you educate yourself more about this stuff, things don't necessarily seem less surprising. Sometimes the more you find out about it, the more surprising things that are. And I think that, you know, never fails to, I can't quite get my head around this thing about these gigantic, systemically central, publicly underwritten institutions, the banks, at the kind of director and senior level, literally not knowing what they were doing. You know, it's very hard to process that. You have people in these institutions who literally don't know what their own firms are doing.

And I think it is linked to the question of complexity. And it's also linked to a thing about, you know, what the financial sector means by innovation. You're right to use that word, and it's the word they use. And at the same time, you know, for the point of view of people listening to this show, it would be quite nice to have some innovations that benefit us. You know, the innovations are always of carving out extra pieces of rent or carving out extra percents from the gigantic flows of capital that happen all around the world.

But what about innovations that actually benefit us? And I think it's an astonishing indictment of the sector that thing Paul Volker said. Now, Paul Volker is no bomb-throwing, you know, weatherman slash hippie slash revolutionary Trotskyite. He was a central figure in the global financial system. He's the guy who broke inflation, really, under first Carter and then Reagan. He couldn't be more of a capitalist and the free marketer.

And looking back over his long career, the thing he said, when he thinks about innovations that have benefited ordinary consumers and ordinary customers, he can think of only one, and it's the ATM machine. And, you know, I know it's funny, but it's also really, really dark that that's true, that we sort of half a century of alleged innovation. And all we have to show for it is the ATM. Coming up, more with John Lancaster.

Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill talking with bestselling author John Lancaster. So what is the net effect for people like you and me? Or for people who struggle with being able to speak money or really understand? because I don't want to get too dark here, but part of me is genuinely concerned

when I hear things like senior executives on Wall Street don't understand what's going on with the own systems that they themselves have helped create. But it's also possible that you can't understand them. You know, the guy, there's a director of stability at the Bank of England, which is the equivalent of the Fed. And, I mean, I also, by the way, I love the idea of there being someone called Director of Stability.

I'd quite like to have my own director of stability. We could all do with one. And, you know, you says when you look at some of these derivative, these black box derivatives, as they're called, because of people buying them, don't know what's inside them, and nor do the people selling them. They're designed by the computer geniuses. They have up to a billion lines of computer code.

Now, the thing about that is actually you can't understand that. There's no point thinking that there's no grown-up. up in charge. There is no adult supervision. There's no cop. And I think the takeaway from that is that the regulation, you know, it can't tweak and fiddle and adjust things at the margin. It needs to be much more fundamental. And I think it needs to head in the direction more of something like the drugs business, you know, the medicine business where products are banned until they're proved safe. It's where it's that way around where you have to prove that a product can't implode and cause serious losses, not to the investors, because that's up to them.

Big boys don't cry and all that. But to the people who underwrite the banks, i.e. the taxpayers. And I think a move in that direction towards a much more sort of simpler model for what banking is supposed to do would be, you know, a positive for all of us. Speaking of bankers, your father was a banker. What did you learn about money from him? He was. I mean, it wasn't the kind of go-go, let's use derivatives.

Oh, whoops, we've accidentally blown up the global financial system type banking so popular today. No, it was much more the old deal where, you know, you looked at someone's business plan, you talked to them and decided whether or not to lend them money, which is now, you know, sometimes mocked as what they call the 363 model, where you take deposits at 3%, you lend money at 6%, and you're on the golf course by 3 o'clock. But, you know, that kind of banking seems to me fully defensible. You can see the social utility of that.

You can see what it does for you and me. You know, that's kind of my mortgages. If I had a business, that's the kind of, we'd be lending me money. And you're getting some exercise with the golf. And unless you use one of those really cool cart things. That's true. But, yeah, so he didn't talk much about it. But it did give me a sense that I think a lot of people feel kind of put off this subject in advance.

They've what I call pre-baffled. You know, they've sort of disenfelled. of it, it's impossible to get their heads around it. And because my dad worked for a bank, and therefore I knew it was just, you know, fallible people making decisions for, you know, what seemed like good reasons to them, but might turn that to be mistakes afterwards, that it gave me a feeling that, you know, I could get my head around to it, that it's not sort of inherently too complex to follow. I think that was very important for me.

I think the feeling that I had permission to understand it, because I think a lot of people don't feel they do have that permission. I listened to a previous interview you had done where one of the things you mentioned was your dad's belief that if you don't spend time thinking about money, then you're doing pretty well. Yeah, when I was at college, my dad didn't like talking about money in general, but when I was at college, he once said to me, completely out of the blue, have you got enough money? Which was out of character for him as a question. I remember thinking, because of those days the state paid for education in the UK. So I said, I don't know, I never think about money. And he instantly, in a very heartfelt way, said, oh, well, that means you're rich.

And I often think about that. I've never forgotten it because it struck me as a very profound idea that, you know, what we all want, really, is just never to have to think about it, for money to be, in effect, solved for us. And so I think there's quite a deep, you know, we, as it were, because we're grown-ups, we have to engage with this stuff, because nobody's going to do it for us. And I deeply agree with the whole Motley Fool project in this respect.

I think it's really important to democratize this stuff and give people the tools. And at the same time, in a way, in an ideal world, none of us would devote a second thought to it. How do you invest your own money? I just do what I'm told, actually. I had a financial advisor. Who's telling you to do this? I had a financial advisor from a zillion years ago. The first, I mean, I didn't earn enough money to, it wasn't an issue.

until my first book came out and I had a few quid and I just did what I was told with him in relation to it's a British equivalent of a 401k and I just stuck it in there but I don't

you know I don't follow it very avidly mainly because I have a fairly deep distrust of the industry and also because the way that the rules you know the governments can constantly rewrite rules on savings

and pensions and stuff like that. And I think it's very easy to always underwrite the element, underestimate the element of regulatory risk in these things. So the main thing I think about that is I just keep trying to work hard. So we know there are no real easy answers. I don't think it's reasonable to expect whether it is intentional or not that the people behind some of the language we've discussed are going to cut down in the online.

obfuscation. With all that in mind, what is one thing that our listeners can do to better speak money, to better understand money? Well, I think, you know, most of your listeners are the people who are already taking charge, I suspect, you know, that I think that what they're doing is the right thing to do. And I think the first step, the crucial step, is a psychological one of realizing that you are the grown-up. You know, there is no, no one's going to come along and do it for you. There's a wonderful old Peanuts cartoon from back in the day about that feeling that you have when you're in the back of the car.

You remember that feeling when you're back in the back of the car and your parents are in the front and, you know, you feel completely safe and looked after and you know where you're going and they're taking care of it. And I can't remember who says it to who I think maybe it's Linus or Lucy. And someone says, you know, the thing is the day will come when you're in the front of the car. and there won't be that feeling anymore. And whoever he's talking to just says,

hold me. And the thing about this in relation to money is we're in every single one of people listening to this are in the front of the car. But I think the crucial thing is if they're listening to Motley Fool and following it, that they already know it. And I think that's the main thing.

Before I let you go, I have to ask, because in a previous life, you were a restaurant critic. Now there are a lot of questions. We all have guilty secrets, Chris. You know, there were a lot of questions I could ask you about the restaurant business, that sort of thing. But our producer, Matt Greer, said that the question I really should ask is, if the next time I go to a restaurant, I want to subtly or not so subtly make the people working at the restaurant believe that I am a restaurant critic. And therefore, I may be able to dupe them into getting.

better service, better food, etc. What should I do? The full and complete answer to that can be given in one word, notebook. Because the restaurants are full of people typing away at cell phones and messaging each other and messaging the person who's sitting across the table for them and updating their Facebook status, photographing the food, all that. So when I was trying not to be noticed, because I've been a restaurant critic twice with a 20-year gap, And the thing that changed the second time, it was much easier to be anonymous because everyone spots a notebook.

But if you're typing stuff on your phone, no one can see it. Whereas the only people who write things down in a notebook at a meal time are professional restaurant critics. And I've seen it. I mean, you know, many, many times, and my peers and colleagues in the business all agree that, you know, the one thing you can't do if you don't want to get busted is take notes in a notebook. We have to wrap up the interview. I have to go buy a notebook immediately. The book is how to speak money, what the money people say, and what it really means. It is already a bestseller.

So by all means, go out, pick up a copy wherever books are sold. John Lancaster, thank you so much for being here. Thank you very much, Chris. That's going to do it for this week's edition of Motley Fool Money. Remember, you can always drop us an email. Radio at Fool.com is our email address. That's Radio at Fool.com. Our engineer is Steve Broido.

This week's show is mixed by Rick Engdahl. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.