Motley Fool Money - Motley Fool Money: 11.02.2012

Episode Date: November 2, 2012

Investors react to Hurricane Sandy.   Starbucks serves up big earnings.  Apple announces a big departure.  And Disney makes a big acquisition.  Our analysts discuss those stories and share three stocks on their radar.   Plus,  Motley Fool Asset Management's Bill Mann talks investing and the election.   . Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Motley Full Money. Thanks for being here. I'm your host, Chris Ellen, joining me in studio this week. From Motley Full Inside Value, Joe Mager, from Motley Full income investor, James Early, and for a million-dollar portfolio, Ron Gross. Gentlemen, good to see you as always. How are you doing, Chris?

Well, we had a short week in the markets, but we've got earnings from oil companies, internet companies, and companies that do other things. Princess Leia is now a Disney princess. We will get into that. Do not mock Princess Leia. Never. I didn't know you had it. I think we all had a little thing for Princess Lear back in the day.

And as always, we've got a few stocks on our radar. But we begin with the big macro, and this week, guys, the big macro is absolutely Hurricane Sandy, which caused huge damage in the northeast part of the United States. Obviously, the recovery is ongoing. Worth pointing out that this is a storm with a death toll. And obviously, our hearts and our thoughts go out to the people in New York and New Jersey who are dealing with the recovery. Estimates now are that the damage could cost somewhere in the neighborhood of $50 billion. Joe, I want to start with you because the stock market was closed on Monday and Tuesday.

First time in over 100 years that it was closed for that amount of time due to weather. What did you make of the reaction when the markets reopen on Wednesday? You know, some of it was rational and some of it was a little zany and speculative. So insurance companies are going to take it on the nose from all the claims that are pulled in because of this hurricane. And, you know, that's the line of business that they're in, ensuring risk and risk happens. And good insurance companies will have reserved and set aside money for that. But where I thought there was kind of frivolous speculation was with some companies like Home Depot. the stock pop 3 or 4% when the market opened that day on speculation that they'll sell more flooring, for example, in the Northeast.

That's definitely not a 3 or 4% move for the stock. It's just a short-term blip that might help some sales in the Northeast. James, what do you think? Well, a lot of just point about insurers, a lot of the insurers, well, first of all, they're relatively strong in their capital position now, which is good for them. and a lot of the kind of the front line insurers re-insure, meaning they go to a bigger insurer for their bigger risk, which is kind of weird. But the bigger insurers are also still relatively wealthy,

but long term we are seeing more disasters. You know, I'm kind of an eco-freaks, so I watch these sorts of things. And that's a business. I wouldn't be a disaster above. I'm a disaster above. Yeah, Zania, I think your word was, right? Yeah. Quote by Shakespeare, actually.

With respect to how to kind of play, in quotes, the hurricane, I don't think you do. I think there'll be a lot of traders out there that do. try to capitalize on some short-term movements. For long-term, foolish investors, if you will, I don't think that's the way to go. I think we have to just stick to what we've always done. You buy good, strong companies. You hold them for the long-term.

Things like this will happen every so often as they do, and it's impossible to really predict or time or to say what that will happen to cash flows as a result. Let's just stick to our knitting, I think. Yeah, and if there's a way to play it, it's to use any pullbacks in good stocks as buying opportunity. So something like a Markell or Berkshire Hathaway insurance companies that if they get punched and have a pullback, it's just a temporary thing. It could be a good time to buy the stock. And something else to remember is that disasters like this also end up raising insurance prices, which is collectively good for the industry. Ron, we also had the unemployment numbers for the month come out on Friday.

Unemployment ticked up 0.1% to 7.9. The overall unemployment rate ticked down 0.1 to 14.6. What did you make in the numbers? I was happy to see the better than expected number of 171,000 jobs that people went back to work. That was good. Now, what's going on here is a little bit of the math that we've warned about. As people re-enter the job force, it changes the denominator of the unemployment equation. And so even though people are working more, the unemployment rate went up.

Vice versa happens when people leave the workforce. Right. You've had me until denominator. Right. So you've got to kind of ignore this. noise of the tick up from 7.8 to 7.9. People did go back to work. It was a better than expected number, so I'm encouraged. We also saw the revisions from August and September adding, I think, another 84,000 jobs. So it wouldn't be a month without a revision, would it? No, it wouldn't.

Let's move on to some of the companies reporting earnings this week. Shares of Starbucks rose more than 10% Friday morning after fourth quarter revenue came in at a record 3.4 billion. That is a lot of coffee, wrong. Yeah, they're doing a really nice job, especially after last quarter where the same store sales performance was a bit lackluster. They really made an attempt to improve that this time around, and they were promotional. They did some things to do that. They discounted coffee drinks in the afternoon if you returned. They had a big living social campaign, which is actually quite successful. So good for them. You've got to be careful, though. You can't be promotional forever. That does affect margins. It does affect profits going down the road. But same store sales up 7%. China,

Agent Pacific really strong at 10% same store sales increase. So that's great. They raised their guidance. The company is doing very, very well. Are you a Starbucks fan yourself? The coffee is actually too strong for me. I'm more of just fine with like a Dunkin' Donuts kind of guy, but sure, I drink it, of course. One of the things that surprised me a little bit was you mentioned they raised guidance, Ron. They also announced that they're going to open 1,300 new stores in 2013. That strikes me as a somewhat aggressive number? Or do you think that's a reasonable goal? I think it's reasonable. If memory serves me, I think half of that is in the U.S. and the rest will be overseas, which makes more sense to me.

Europe is struggling, as one would expect. They actually closed, I think, 22 stores or so in the UK. I do think that's a bigger opportunity for them down the road. Europe will take some time to shake out. But again, China, Japan, Asia, in general, India will be big for them. So there's Plenty of growth. Joe? Yeah, they're doing great. If I had any concern, it would just be that they might be chasing growth a little bit, and that was kind of what led them into a path a few years ago where they had to retrench.

And when I hear a 1,300 store opening, definitely raises some question marks. Ron, just to wrap up on the stock, even with the pop on Friday, shares about 15% below the 52-week high. When you look at the stock right now, does it look fairly valid, a little pricey? What do you think? Based on these new results, I think I'll probably have to. look again at it. It was on my radar a few weeks back. I didn't execute on it. This is a stock we sold in a million dollar portfolio much too early in hindsight. Hindsight's a beautiful thing in the investment business. I don't think it's ridiculously expensive, but I also don't

think it's dirt cheap. Some big oil companies reporting earnings this week. On Thursday, Exxon Mobile reported third quarter profits fell 7%. On Friday, Chevron reported third quarter profits fell 33%. James, you know, not great. Chris, in order to sell oil, you have to have oil. And that's been their problem, right? Production has been the challenge for all, really, all the oil companies, these guys both suffer. They also took a hit simply because oil prices were down. So obviously you have less oil, selling at a lower price.

You're going to have lower profits. But investors didn't really react too much. We've come to expect a lot of volatility from these companies. You know, both these guys had actually Exxon. benefited from refining margins. Chevron had issues here and there. They're doing maintenance, but long term, but I don't think this is a problem. I think the real narrative is a multi-year focus on production. Chevron is trailing both the market and shares of Exxon Mobile. You look out over the last year, it's a recommendation in your service. You still like it?

You know, I like its economics. I mean, there's this other issue. It's kind of a big issue, but this $19 billion judgment got levied against Chevron by an Ecuadorian court and the U.S. Supreme court basically refused to hear a motion for rehearing or something like that. I'm probably botching the legal jargon. But this is a... You're not an Ecuadorian legal expert. This is basically exactly. This basically could exhaust all their cash. And now Chevron is dealing with asset seizure. So this is something that was on the horizon forever, but it's certainly another ding to Chevron. Some recent internet IPOs struggle to make money. And then there's LinkedIn. The business networking company's third quarter revenue increased 81% Joe.

So they beat estimates, they raised guidance, 81%. You got to like that if you're a LinkedIn shareholder. Yeah, they're my favorite of all the wildly overpriced social companies. Really, how do you feel? Well, more people are using LinkedIn, and they're using it more often, so the site has gotten a lot more sticky because of improvements. I think they've done a great job with that. Revenue per user is growing so quickly at LinkedIn.

It's 83% higher than it is at Facebook, which is just remarkable, and that gap is actually getting bigger. Like I said, I think the stock is criminal. expensive at around 14 times sales. It is a wonderful business that I can't get comfy with the valuation. The algorithm is creepy, isn't it? Like how these people says, you might want to be friends with so-and-so, and it's like, Joe's wife is watching us here, and she might not know, but every time I log on, it suggests that I connect with you. It's just kind of like, and people, like, the ex-girlfriend from like nine years ago. It wants me to connect.

But purely on a business level, James, just on a business level, that's all. I used to be of the mindset that everybody was kind of on LinkedIn. in, but nobody was paying for it. So it was, you know, what a disaster. I've kind of, I've pulled back on that. I think that was quite short-sighted. I know a lot of people who say, they swear by it, if you're looking for a job. The premium membership, they love. So how do I, if I want to find it, not that I want to find a job, but like, in theory, because we're already linking, I can just talk to you if I have a question, but I would like browse your contacts. Is that the idea? I think if you're a premium member, you would actually see more things like job listings

where companies are actually putting their jobs on the site, where, where you're going to, whereas just a non-premium deadbeat. You've seen none of them. Yeah, I'm a dead. Totally me. Yeah, and headhunters pay for services, too, because you put all this information on there about your background and specialties, and they can really hyper-target people who fit the jobs they're looking for.

I know that our company, among many others, uses LinkedIn and is very satisfied with it. So from a corporate level, I think they have satisfied customers. Just to wrap up on the stock, Joe, I was going to ask, do you think it's pricey or too pricey? But when you use the word criminal. Criminal. That makes me think you. If I was going to own one of Facebook, Yelp, or LinkedIn, it would definitely be LinkedIn.

And if they continue to grow at those growth rates, you know. Yeah, it justifies 14. I read an amazing stat this weekend that Amazon in 98 was selling it 97 times sales, which, of course, I would have said was impossibly high, but the stock's a nine-baggers since then. It's more of a misdemeanor than in LinkedIn's case. Yeah. Coming up, to paraphrase the world's most interesting man, we don't always talk about management shakeups, But when we do, it's about Apple.

Details next. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Joe Maker, James Early, and Ron Gross. Late on Monday, guys, Apple made the surprising announcement that two top executives had been pushed out the door. Scott Forstall, the senior vice president in charge of the iOS software, and John Browett, who was the head of retail,

probably worth pointing out. Browett had only been there about nine months. Forstall dates back to... his association with Steve Jobs back in the 90s. And Ron Forstall was asked to leave after he refused to sign a letter apologizing for Apple's new mapping service. Were you surprised first and foremost? Were you surprised by this news?

Yes, I certainly, it wasn't even something I was thinking about or was on my radar. I will say overall, before Joe jumps down my throat here, that I remain a big fan of Apple, both the company as well as the stock, especially the 15% pullback we've had of late, makes it even more attractive to me. However, I'm not a cheerleader. I am an analyst, and there are several things that I'm seeing that could indicate a pattern here. The maps debacle, they missed third quarter earnings and sales that built on some weakness in the quarter before. iPads were weak.

Mini remains to be seen what happens there. The price point is worrying some people. So not everything is firing on all cylinders, as I like to say. But if you look at the whole big picture, it's still a fantastic company at a reasonable evaluation. Joe? Yeah, I'd agree with all that. I think... Thank you. We'll move on. But, you know, a year ago when Steve Jobs passed away, we talked about the signs that things might be tilting for the worst that would eventually happen. One was pushing products out the door that weren't up to snuff. And I think Apple Macs is pretty clearly that. Another was product delays. iTunes 11 was supposed to roll. out and that got delayed. And another was just unoriginal copycatting with innovations. And I think when you look at the iPad Mini, you know, it's a great little product, but there's nothing original there. It's just kind of a Me Too, you know, Nexus 7 wannabe. I have to agree with Joe. The difference between very, very good and excellent might seem small, but it makes a huge difference in terms

of your brand, in terms of your reputation. I think that's the difference between Steve Jobs and what we've got now. Beam, which is the maker of Jim Beam, Maker's Mark, and frankly, a lot of other alcohol that I drink. Third quarter earnings came in higher than expected. Joe, what did you think? Great quarter, great business. I love that they're reinvesting heavily in their core brands, so promoting makers and beam, and it allows them to cross-sell kind of ancillary products. So just like you've got, say, Coke and Diet Coke, they now have Makers Mark and Makers 46, which I know we both appreciate. We're fans. That said, I think I'm a little worried about their pricing strategy. They've been very aggressively raising price.

on makers mark and Jim Beam too, but a 5% increase on makers. And at some point, you know, I've worked in the liquor industry. It's the family business. And you definitely see distributors go through and push up prices like this sometimes too far. And customers will walk away and try something else. And I think when you look at bourbon, there are a lot of good lower cost options. Like honestly, I think Buffalo Trace is a better looking product. It's a better tasting product and it's much cheaper. Well, that was one of the questions I was going to ask you in terms of their pricing power. Because when you look at Bean, which is about a $9 billion company, and you compare it to Diageo, which is this alcohol conglomerate, 72 billion market cap, is Beam just not at that point where they have the type of pricing power that they want? I think they do. It's just that they don't have as many big gun products as Diageo. Shares of TripAdvisor up more than 20 percent Friday morning after third quarter earnings

beat expectations. Ron Gross, what is going? on. Boom, huh? That's some move. That's enormous. They put up really great numbers. Management said the traffic's to their websites increased by a third. Those are pretty big numbers. This is a company that really benefits from what we call network effects, which is the more people that use TripAdvisor, the better the experience is for everyone. And the more traffic we get, it's really an exponential build onto there, and it's showing in the results. Revenue up 18 percent, and the advertising business, the revenue from there was up 15.

Which is where this company mostly makes money. Let's not forget, it still is an advertising model. They do have some subscription revenue as well. I was going to say this is another one of those internet businesses that I consume, but I don't pay them anything. So if I'm going on a trip, I'll check the hotels for reviews and all that sort of thing, but I'm not paying them a dime. Right, that's common. It's mostly an advertising model. Company needs to work out where they go from here. They need to work out mobile, just like everyone has to. They need to work out international expansion. But for now, they really seem to be increasing the traffic quite a bit.

Is this a rising tide lifting all boats kind of industry? Because it's probably worth noting that price line also beat on their latest quarterly profit. And their shares were up about 10%. When you look at stuff like that, it just seems like maybe people are just doing a whole lot more traveling than I would otherwise imagine. Yeah, I was going to actually talk about price line later. but we can just quickly now. Priceline actually turned in great numbers too. Specifically, people are very relieved that the European business was pretty robust and there were some concern there. I think that might be your stock on the radar. Amazing. Yes, too.

And finally, Disney announced this week. It is buying Lucasfilm for $4 billion in cash in stock. Lucasfilm, obviously, the company behind the Star Wars franchise James Early. What did you think of the news? There's probably the single biggest piece of, news most relevant to people is that there's going to be a new Star Wars movie coming out in 2015 that may or may not have Georgia Banks. I think it's the problem. Let's all hope not. I liked him. I thought the character was likable. Just my opinion. You're the one. Yes, me. So yeah, this is a lot of money, $4 billion. We can't really, it's hard to price the

sort of thing, but we do know Disney has actually done a good job recently of not screwing up characters and sort of brands. Years ago, under Michael Eisner, they had sort of creative problems, but they bought Pixar, they bought Marvel, and they both monetize those pretty well. So I think it's pretty, the idea is that they've got this global reach, parks, branding, you know, whatever you want, Disney has it, so you can drop in this sort of established franchise that maybe was sucking a little bit of wind and make more money with it. Ron, some people saying they overpaid. I thought so too, and then I started to read up on it. And when you think about that, they have a plan to roll out a new Star Wars or Lucas-based

product movie every year. or two, and that can happen for quite some time. They'll move to TV with their Disney XD channel. There's a lot there. There's, you know, all the cross promotions and all the, as you said, the parks. There's a lot they can do here, and the $4 billion can be made back more quickly than I would have originally thought. A lot depends on how good these movies. Sure, of course.

Joe, you get the final word. Yeah, and the cash comes in for a long time. Just remember, Snow White came out 75 years ago, but they're still printing cash on it. Joe Meager, James Early. Ron Gross. Guys, we'll see you later in the show. Coming up, a conversation with Bill Mann from Motley Fool Asset Management. We'll get his thoughts on the impact of Hurricane Sandy and how to invest based on the presidential election. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. In the wake of Hurricane Sandy, a number of industries are under the microscope, including, and maybe even especially the insurance industry.

Bill Mann is the portfolio manager at Motley Fool Asset Management, and he joins me in Studio, now. Good to see you, my friend. How are you, Chris? I'm good. And part of the reason you're here is you know more about the insurance industry than just about anybody I know. And there are a bunch of topics I want to get to. But let's start with the economic impact of Hurricane Sandy, which if you read the news reports, we're looking at a figure somewhere in the neighborhood of possibly $50 billion, which would put it second only to the impact of Hurricane Katrina. It is kind of amazing that since the storm hit New York City, that it's not going to be within, I mean, Hurricane Katrina was $100 billion damage storm. So that just tells you how massive that storm was because for all the things that Mobile, Alabama and New Orleans are, they don't have the property values that a New York City does.

Or the Jersey Shore. Or the Jersey Shore. That's right. Yeah, it really is pretty amazing. That's not what you were going to ask me about. I know. It is worth noting, particularly when you, as you said, when you look at the impact of Katrina and just how massive it was. But for Hurricane Sandy, as I said, one of the industries under the microscope right now is the insurance industry. When you look at events of this magnitude as an investor, because obviously this is a business show, what goes through your mind when you look at.

at publicly traded insurance companies? Well, the insurance companies are actually, the insurance industry, I should say, is set up to handle things like this. I mean, this is what they do. The property and casualty insurers know for a fact that there are going to be catastrophes and there are going to be things that are called super catastrophes. And this will fall under the rubric of a super catastrophe. And one of the things that they do is that they have, the insurance companies have their own

insurance companies. They're called the reinsurance companies. basically where they're laying off some of the risk. And so what you spend your time looking at is making sure as best you can that the reinsurance companies don't have too much concentration in one geographic area or one industry. And when Katrina hit, this was a big problem. Some of the reinsurance companies ended up going out of business because they didn't think having exposure to the oil platforms in Texas. And beachfront property in Florida, those should have been far enough apart. So the reinsurance

companies can get hit, but then also the insurance companies could get hit if the reinsurer can't pay its claims. So those are some of the kinds of things that we look at. But it is important to note that people get nervous about insurance companies now, but this is what they're built to do. I mean, they know that there are going to be claims. from events. On the flip side of that, when you look at the rebuilding effort that needs to take place, particularly along the Jersey Shore, and you look at the auto industry as well. Earlier this week, we had the auto numbers coming out for the month of October,

and you had Ford, probably most prominent among the automakers, saying, yeah, our numbers were down in part because of the impact of Hurricane Sandy. When you look at housing... Already. Already. Already. Yeah. When you're looking at housing, home building, home improvement, and the automakers, is this

one of those situations where it's almost like a balloon being squeezed where as an investor you think, wow, over the next 18 months or so, it's probably reasonable to expect that a fair amount of money is going to be spent in this area on those two industries. Yeah. I hate to say it depends because that's just great radio. Well, it depends. Back to you, Chris. That's cowardly.

I think the thing that's not being talked about here, I mean, obviously there is activity that will have to happen now. I mean, there will have to be rebuilding in on the New Jersey Shore where the building had happened 20, 30, 40, and 50 years ago. So there's going to be a lot of repairs. There's going to be rebuilding. There's going to be redevelopment. I think one of the areas that that you have to think about. And I am not quite sure what the answer is, is are the banks going to finance it? You know, so a lot of, you know, a lot of, you know, of this has to do with the capacity for the banks to lend. And, you know, and banks have not been lending very much money because the banks have had a lot of bad debts on their books. And also there's been some, you know, there, there, there have been some structural impediments to them doing so. But I think the really interesting story over the next, you know, the next year to two years is, does this spur the banks, the regional banks in that area and the national banks to lend more because there is so much more demand for development for redevelopment where it didn't exist before.

You're listening to Motley Fool Money talking with Bill Mann, portfolio manager at Motley Fool Asset Management. The end of the year for most mutual fund companies is October 31st, at least the end of the year. Surprise. In terms of their taxes. Obviously for individual investors, it's December 31st. I want you to sort of.

take off your portfolio manager hat for a minute and put on your individual investor hat. How do you think about the last couple of months of the year as an individual investor? Do you look at it in the way that some do in the mutual fund industry, which is to say, okay, tax time is coming up. It's time to lock up some gains. It's time to sell some of my losses to balance out the gains. How do you approach the end of the last two months of 2012? Yeah, I think that we are a little bit different, I think anecdotally, because we tend to be a lot more sensitive about taxes than a lot of mutual funds.

Mutual funds, basically it's an industry, you know, it's an industry that's based on how'd you do. What is, you know, what is your return? And those returns generally aren't geared on taxes in terms of how they're measured. But obviously for us, you know, taxes are a real cost. And I'm always bemused every October, it seems, towards the end of October, the markets tend to get a little bit volatile. And a lot of it is, you know, people that are, they're rebalancing their portfolio either to window dress to try and hide certain mistakes they have made or, you know, as in our case, to make some tax, you know, make some tax decisions before it becomes too late for the taxable year. I think for, you know, I think looking over the next two months, this is going to be a very interesting year, not so much because of the elections. In election years, they tend, people tend to, you know, add a whole lot of importance and then, you know, and then it doesn't turn out to, you know, to mean that much.

But this year is a little bit different because of the potential for a fiscal cliff and the potential for capital gains tax rates to go up, which they automatically will unless something is done. at the end of the year. So I think that you probably will see a lot more tax loss selling, but you may, especially getting into December, see a lot more tax gain selling, where people say, I've got this long-term position, and it makes more sense for me to lock in 15% tax than to say, well, it'll be 23% or eventually my ordinary tax rate. And so that's a lot of, so I would expect that you might see some more volatility this year. But now that I've said that, it'll probably, it'll probably balance itself out. Well, you know, we already saw that with one company in particular, and that's Wynn Resorts,

where Steve Wynn came out, and they declared this special one-time dividend. They announced they were doubling their quarterly dividend from 50 cents a share to a dollar a share. And it was basically because of the fiscal cliff and saying, you know what, I'm not taking the chances. Right. Here comes now. And I think you might see that. I think, you know, Wynn is one of those companies that is there is a, you might say that this is the kind of thing that they're doing to be nice to their share. shareholders, but it's also bears remembering that Steve Wynn is a huge shareholder. And so some of it might be, you know, for his own benefit. So now that, you know, let's, you know, let's let's think about this and let's come up with a conspiracy right now, which is to say that you might want to focus on companies where the chairman or the CEO is also a large shareholder. And those might be the places where you might see some special dividends.

You always want to see your interests align. That's right. More information can be found at 4. Foolfunds.com, including you write a monthly, essentially an open letter called declarations, and people can sign up for it at fullfunds.com, completely free to do so. Your latest one is entitled Happy Fingers, and you share the story of Paul Orphalia, I hope I pronounce that correctly, who's the founder of Kinkos. And in the book where he describes how he built the business, he had this maxim that you share, which is make customers comfortable. and they will give you their lives.

Yeah. Seems amazing for a copy shop, you know, for... It does, but what astonished me was the story that you share about Costco and sort of how that maxim plays out. And I wonder if you could just share that. Yeah. So Costco has been a very interesting, is a company that we have tracked, you know, both on, both with the Motley Fool and with full funds, you know, for a decade now.

And Costco always gets criticized because they pay their employees too much. they don't raise prices on customers when they could. So their margins are generally very low. But a friend of mine, this is several years ago now, was a young buyer at Costco, and he had negotiated this deal with a supplier. And so basically with every retailer, things don't just show up on the shelves magically. The retailer basically goes to suppliers and determines the price that they will pay the supplier. And so he got a message from Jim Senegal, who was the then CEO of the company, you know, someone who we hear at the Motley Fool just admire almost more than any other business leader over the last century. And Senegal called him into his office. And my friend thought he was going to get, you know, an add-a-boy, well-done. Congratulations for this great deal. You just struck the whole company.

Exactly. I mean, this is so meaningful for us. And instead, Senegal said, you know, I've been looking at this deal. And I don't see how the supply. is going to be able to make any money. I just don't see how, I don't see how this is going to be good for them at all. So what I'd like for you to do is I want you to go back to them and I want you to offer them that we're going to pay them 2% more than we agreed to. And so my friend then, you know, my, then shares the experience of going back and calling a supplier and saying about that deal that we signed with you and the, you know, you can hear the hackles go up on the phone that, you know, that the guy thinks that they're going to try to, you know, get more

money out of me. He said, we'd like to give you back 2%. And the guy, you know, the supplier expresses relief and then basically, you know, expresses fealty that he will always deal with Costco from here on out, that he is a Costco supplier for life. And Costco's stock has tripled over the last decade. So whatever the problems are with their margins or whether they're paying their employees too much. It's worked out pretty well for shareholders who are focused on the long term. Before we wrap up, you mentioned the presidential election. I want to get your thoughts on that because that's obviously coming next Tuesday and you've got plenty of people out there in the market saying that depending on who wins, Obama or Romney, that's going to dictate their

strategy for how they invest. So you're not asking me for my prediction? No, I'm not asking you for your prediction. Because I've heard enough of those. My prediction doesn't matter. But what do you you think about that? What do you think about the whole notion of, I'm going to set my investing strategy based on whoever wins next Tuesday? I'll tell you what we've been hearing. We've been hearing that if Obama wins, you need to sell stocks and if Romney wins, you need to sell bonds. I mean, that's basically the word on the street. And I happen to think that those types of words on the street are demented. I mean, I just think it's crazy to think about about the election of one person having that much of a big difference. Because, you know,

not to go back to civics class, there are a whole lot of different people and a whole lot of different deliberative bodies that go into setting laws and setting policies. The president really can't come in and point his finger and do that much. I look at things like that as being opportunities for us, though, because what I have noticed is, you know, around an election period is that the markets have been somewhat volatile. 2008 was special in terms of that, but 2004, 2000. It's all been the same just because there's been some uncertainty. And usually when there's uncertainty, there is opportunity. So we are hoping that there's a panic somewhere, but, you know, just as long-term buyers of stocks. Bill Mann is the portfolio manager at Motley Fool Asset Management.

You can sign up for his free monthly newsletter, declarations at foolfunds.com. Thanks for being here. Hey, thanks, Chris. You can always drop us an email. Radio at Fool.com is the way to get a hold of us. And if you want our daily take on what's happening on Wall Street, out our daily podcast, Market Foolery. You can find it on iTunes, Stitcher, Tune-in, and MarketFoolery.com. Up next, we'll give you an inside look at the stocks on our radar. You're listening to 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 don't buy ourselves stocks based solely on what you're here. I'm Chris Hill, and joining me in studio once again, Ron Gross, James Early, and Joe McGar, guys. That time, once again, time for the stocks that are on our radar. Let's bring in our man Steve Brodo from the other side of the glass. Let's bring him out. We got time. Steve can ask you a question and you can just fire one right back. Ron, what is your stock? Although there was some foreshadow. It was. I'm going back to price line. PCLN. Really strong results this last quarter. Net income up 27%. Concerned about the European business seems to have been overblown. They're doing really well. Very profitable. Strong balance sheet. 22 times earnings, not necessarily a Ron Gross type stock. But if they're growing at 27 percent, maybe it's something I need to circle back around. Steve, question for Ron about Priceland? My question is, what's going on with William Shatner's character?

Is he dead or not? I thought he blew off a cliff or something. I believe they brought him back. Did they not? I think he's not on television anymore, but they're just using his character and the negotiator online. But didn't they kill him? Wasn't that part of the big news story that he went off a bus or something? All I know is he brought him right back.

Do you have a question for Steve? Yeah, Steve, Princess Leia or Princess Amadala? Princess Leia all the way. Oh, that outfit in that third movie. The job of the HUD one? Yeah, that kind of did it. James Early, what's your stock? It's called Giant Interactive, Chris.

This is a Chinese online video game company. It pays a 5.7% yield. A lot more cash rich in my think. The Chinese stock market has gone down the past couple of years. So has this stock, but revenue has been growing it in double-digit rates. I mean, this is huge. They make money on some of the games you pay to play on the gaming points and little things like that. So I think a lot of potential here, and I like the yield, too.

The disclosure is to American standards in terms of how the company expresses its financials, all that kind of stuff. And the ticker? GA. GA. Steve? Dividends in U.S.-based companies don't seem all that safe right now. Less so in China? Well, these guys have a lot of cash. This is the main thing, and they seem committed.

So, you know, with any company, it's just a matter of, you know, what they can pay out. But, you know, financially it seems safe. James, do you have a question for Steve? Steve, two-men luge with you and one Star Wars character, who would you pick? Oh, my goodness. That is a very complicated question. I think Yoda, because he's very, very small. Yeah. You'd have a lot of room on the two-man lose.

That's right. That's what I'm looking for. He goes in the front of the back. Plus, I mean, let's not kid ourselves. He's got the force. You go with the force every time. Let me just put it this way. In the 2014 Winter Games, if the U.S. is being represented in the two-man-lose by Steve Broido and Yoda, who's not betting on them?

Well, I'd have Yoda do gymnastics or fencing. I hope you I will. Joe Mager. TD Ameritrade. They just raised their dividend 50%, which is pretty hardy. Trading volumes falling off because a lot of retail investors have walked away and they're suffering from low interest rates at TD. They make money on the funds that they're holding for clients. But I think eventually both those things are going to come back and they'll do very well. In the meantime, you get paid to wait. And the ticker symbol? AMTD. AMTD. Steve Broido. Are these businesses basically just sort of commodities thinking of E-Trade versus Scott trade versus TD Ameritrade? What makes TD Ameritrade? What makes TD Ameritrade? There is a commodity-like component to it, and for a long time they all competed on price. But over the last decade, there's been a lot of consolidation. So TD Waterhouse and Ameritrade, for example, coming together.

And I think eventually you're going to see TD Ameritrade acquire E-Trade and kind of consolidate the industry with Schwab and the two of them. But, yeah, there is a component to that. Before we get to your question for Steve, TD Ameritrade, they're based in Omaha, right? Yeah. Berkshire Hathaway, I know because you follow them very closely. Berkshire Hathaway, also based in Omaha. Therefore, they should merge. They just bought, you see the acquisitions today?

They just bought Oriental Trading. The catalog, which goes right into my recycle bin as soon as I get it. The catalog, which just says all these really cheap toys and knickknacks and holiday decorations and that sort of thing, also based in Omaha. First of all, what did you think of that? That makes me respect Oriental Trading a whole lot more that Warren Buffett decided he needed to own them. You know, I wouldn't have bought it myself. Even more impressive is the $500 million he paid for it. Wow.

Yeah. Well, he's been acquiring, Buffett has been acquiring a lot of print newspapers to local papers lately. And he's confident that they can ring money out of that for longer than people expect. It's basically a cigar butt business, though. Well, they need to just start making some of those rubber ducks looking like Warren Buffett and Charlie Munger. We've got about a minute left question for Steve. Steve, do you have like a personal mission statement? Wow.

I have not thought of that. I don't have a personal mission statement, but I can certainly try to come up. Be a good person? How about that? No, it's all right. Not acceptable to him? Do you have one, Joe? No. I was going to take my cues from you. You didn't want to go with the Star Wars name?

You didn't have to. I'm just saying. Two-man luge, Princess Leo or Princess Amadala? I got to be honest, ever since the two-man luge with Steve Broido and Yodo, now I'm just thinking about Star Wars characters representing the United States in the Olympics and what they could do. I think the Ewarks, because they're kind of small, they could be pretty strong in the two-man-louche. Not as strong as Steve Brodo and Yoda. But they come from a warm climate. But people who live in Jamaica live in a warm climate.

And they had a bobsled team. They made a whole movie out of that. You don't think so? That's fair. And a lot of Jawa's around, too. Jolla is also small. Chubaka, what are we thinking for him? Javlin?

I don't know. Yeah, shot, but maybe wrestling. Hi, Jim. You don't get this on other radio shows. You really don't. You don't get this on Bloomberg. radio, folks. You just don't. Ron Gross, James Early, Joe Maker. Guys, thanks for being here. Thank you. That is it for this edition of Motley Fool Money. Our engineer is Steve Broido.

Our producer is Matt Greer. I'm Chris L. Thanks for listening. We will see you next week.