Motley Fool Money - Motley Fool Money: 11.07.2014

Episode Date: November 7, 2014

On this week's show, our analysts discuss earnings news from Alibaba, GoPro, Tesla, and Whole Foods.  Motley Fool columnist Morgan Housel talks elections and investing.  And tech entrepreneur Josh Baer shares some startup secrets. Learn more about your ad choices. Visit megaphone.fm/adchoices

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It's the Motley Full Money Radio show. We've got a rowdy crowd. I'm Chris Hale, joining me on stage from Motley Fool Proin Options, Jeff Fisher, and from Montley Fool Supernova, Matt Argusinger. Thanks for being here, gents. Hey, Chris. We will talk retirement investing with Robert Brubcher. Brokamp, we will talk innovation with entrepreneur, Josh Baer, and we will dig into the

big macro with our man, Morgan Housel, but let's get to some of the big earnings news this week, and we'll start with a company based right here in Austin, and that is Whole Foods. Fourth quarter revenue and profits came in higher than expected. Same store sales up more than 3% and Jeff Fisher shares up more than 12% on Thursday. Yeah, Thursday was like a bite into a fresh strawberry for Whole Foods. Good earnings. turn things around after a couple of week quarters. But what they really have going on, Chris, is they're opening many more stores.

They opened 38 this past year. Their year just ended. And they passed the 400 store count now. And they look to have 500 stores or more by 2017. And so they have a long way to grow, and they're innovating in the new stores that they open. They have, for example, beer bars on the roofs of some stores and wine bars.

actual putting greens next to some stores. So they're not only innovative in the food, but in the experience, because they realize these days you need to have a special experience to get customers in the door. And overall, I agree with their strategies that they're using, and I like the direction Whole Foods is going. It sounds like the direction they're going into is turning into like a really great bar where you can buy great groceries.

That's right. Which I love. I mean, I was in San Diego. La Jolla a couple weeks ago. And inside of Whole Foods, they had actually a craft brewery, Tori Pints. So people were coming there after work, getting a beer, and then going shopping. So that's a brilliant strategy for Whole Foods. Interesting thing from the conference call, though, they actually said they're going to stop providing quarterly updates to their annual targets,

which we applauded the full because we just don't like companies who focus too much in the short term. But that was an interesting kind of move by Walter Rod and John Mackey not to give quarterly guidance anymore. Jeff, when you look at the stock today, is it fairly? value? Does it still have room to run? So, Chris, the interesting thing, of course, Whole Foods is spending a lot of money to build new stores. So when you look at their free cash flow, you have to back out what they spend, that one-time expense of building a new store. And as of earlier this week, before this big jump, they traded around 18 or 19 times their maintenance-free cash flow, which is a reasonable price, I thought, for a business this strong, and that has so much more

room to grow. Now I need to look at results again, and the stock is up 12%, but I'm betting it's still within a range of reason. I had a chance to talk with co-CEO John Mackey at a fool event recently, and I thought, here's my big chance. I went up to him, and I said, Mr. Mackey, I really agree with the strategy that you're using at Whole Foods, and he said, which one? And he has a great point. They have so many strategies, but what I was speaking to is their strategy of lowering the costs on staples to get more people in the door, and then you end up buying some better, more expensive food as well. And that strategy is working, because now you can go there and get things at a lower ticket price. Tesla Motors' third quarter revenue and profits came in higher than expected, but the company delivered fewer vehicles during the quarter and cut back on how many it plans to deliver for the year.

And yet shares up more than 4% on Thursday, Maddie. It sounds like the market has really given CEO Alon Musk the benefit of the doubt. In Elon Musk, we trust. I mean, yeah, if you look at the headlines, lower car deliveries, they actually pushed out the Model X for a quarter next year. I read those early on. I said, this could be a bad day for Tesla. But it actually turned out to be a great day.

And I think the issue is, you know, their supply constrained right now. The demand is there. And if I quote Elon Musk from the conference call, he said, demand is not our issue, production is our issue, and being too perfectionist about future products, which we like. Those are legitimate things to be concerned about, but not demand. We have more demand than we can really address. I mean, if you look at how many cars they've delivered in the quarter, 7,800 Model S's revenue is up 55% from a year ago. Gross margin was 23%. It's going to be 28% in

the fourth quarter quarter. And we've talked about this before. Those margins, they blow away so many other car companies. There are car companies that just can't even get near those margins. And then the big news, I think, that's really propelled the stock today was the fact that he said, you know, Model S production is going to go up 50% in 2014, again in 2015, and probably for the next few years as well. So that's a big statement, big positive statement for Tesla. But you say in Alon, we trust, and it really seems like there's a heck of a lot of trust, because it's pretty gutsy to come out and say, we delivered fewer cars this quarter, we're going to lower next quarter, but don't worry about 2015 because we're going to hit that

$100,000 mark. That's right. I mean, dare I say, could Wall Street be taking a long-term view of Tesla? I mean, because... Harris the thought. I know. I mean, but the letter in his quarterly letter, he said, you know, the supply issue is a legitimate concern of Tesla, but we prefer to go to forego revenue rather than bring a product to market that does not delight customers. He's talking about the Model X. Doing so negatively affects the short term, but possibly affects the long term. There are so many other companies that do not follow this philosophy that may be more attractive home for investor capital, but Tesla is not going to change. So that's a tremendous long-term view. Yeah, and this speaks to the market will really pay a premium for certainty in revenue when you look years ahead. And that's one case where the market does really think long term. It pays a great premium for Amazon because who's going to take away Amazon's revenue? There's no one that's going to step in.

Tesla, too, the demand is there. It's there years into the future. So that revenue is very certain. So Tesla gets a great premium. Elon Musk is a busy guy. He's also the chairman of the board at SolarStrecht. city and shares of the solar energy company falling after third quarter results came in lower than expected. The company also lowered guidance for the fourth quarter, Maddie, and that's a

pretty tough one-to-punch. Solar City, I mean, this, I wouldn't pay attention to quarterly results for Solar City for the next five years. I mean, I know that's a little bit crazy, but yeah, you mentioned Elon Musk. He's the chairman of this company. His cousins, Peter and Lyndon Rive, are the co-founders of the company. Elon Musk owns about 22% of the shares. We just bought this again for Odyssey One Portfolio in Supernova, and we're pretty bold. I actually think this company in 10 years could be the America's biggest utility company, and they'll do that without building a single power plant, because essentially what they're doing is they've gone from about 10,000 customers to 170,000 customers in just the last quarter

installing solar panels on roofs, and, I mean, the growth is just amazing. The operating lease revenue, which is their core revenue, up more than 100% in the most recent quarter, megawatts deployed, is the amount of energy delivering, up 75%. I just want to look at this company, and I see a $5 billion company on its way to much, much bigger things. And having Elon Musk as chairman, I mean, there's just a lot of synergies there between that and Tesla that I'm excited about. And we were talking earlier, you were saying people who look at this as a company that is just creating and installing the solar panels are missing the bigger picture. Right.

So a lot of people think about solar, they think about companies that are making solar panels. And Tesla just, sorry, Solar City just bought a company to make solar panels, but Solar City is focusing on the most valuable part of the value chain, which is the customer experience delivering the power. And that's what they've decided to focus on. And solar power, this is amazing to me, but by 2016, solar power could be competitive with traditional sources of electricity in 36 U.S. states.

Probably by the end of the decade, it's probably more competitive than any other energy source in the U.S. And so think about that, and think about the leadership that Solar City has in that market, and it's a pretty exciting story. Qualcomm is the world's largest maker of mobile chips, but fourth quarter profit and revenue came in lower than expected, shares down more than 8% after the report.

And, Jeff, we talk all the time about China being such a big opportunity for so many different companies, but Qualcomm is starting to sound pretty cautious about their prospects in China. And the room just got quiet. A lot of Qualcomm share owners here. China is a bit of a problem only because Qualcomm licensed, its technologies to hand-held smartphone makers, of course. And believe it or not, unit sales went down last quarter.

Now, how can that be? How can fewer smartphones be sold in this world right now? Travesty. It can't be true. It can't be happening. What's happening Qualcomm claims is some Chinese companies are not reporting every unit that they're selling. So they're actually...

That's hard to believe. You know, I don't understand. They're trying to rob Qualcomm. of its revenue. And so Qualcomm believes it can get this sorted out by 2015. Meanwhile, its core business, its modem modules, and chip sets for smartphones continue to do extremely well. It's a giant company, leading company, leading technology, trades at about 12 times forward earnings, yields more than 2 percent. I think it's going to be fine. Is the valuation of the stock right now a big part of the thesis for buying it today?

I think it's a reasonable price. You could do much worse. And I think it'll do fine the next five years. Alibaba, the e-commerce giant in China, delivered its first earnings report as a public company. And Wall Street really liked what it saw. Sales grew 54%. Some pretty nice growth in the mobile space, too. Amazing. Alibaba has 300 million active shoppers over the past year, and 91 million were using mobile.

So they have really tapped into that. And, yeah, they're doing very well. their price, their share price also reflects that, Chris. The stock trades at about 29 times sales, whereas eBay here, which is the closest comparison, trades at about three times sales. So there's a big difference, even as Alibaba has a lot more room to grow in China and perhaps around the world, it still trades at a rich price. Yeah, I was just looking at the gross merchandise volume in Alibaba this last quarter, up 49% to $90 billion. That's mind-blowing to me. And that's huge, massive growth rate on already massive numbers.

I mean, I'm amazed at this. And 300 million users, as Jeff said, of 52% mobile users in the quarter were up 140%. Does it give either of you any pause whatsoever that Alibaba today is bigger than Walmart? Yes. Apparently, so, yes. I mean, basically, I mean, it was founded, I think about 10 years ago. So, yes, it's astounding. It is.

November 11th is a big day for Alibaba because November 11th in China is Singles Day, and for those not familiar, Singles Day was created by some young people in China years ago to celebrate bachelorhood, bachelorettehood. It is, of course, like all holidays, turned into a massive opportunity for shopping. And Singles Day is, in fact, the biggest online shopping day in the world.

November 11th, it is bigger than Black Friday and Cyber Monday come down. bind. So you guys are happily married. But November 11th, if you're going to buy something just for yourself, not for your wife, if you're going to buy a little something, just for yourself on November 11th, just for you, Maddie, what are you going to buy? Just for me, and I don't have to tell my wife about it? No, you don't. She doesn't listen to this show. That opens up an amazing, I would say a great bottle of Johnny Walker Blue, only because I, you know, I go to a liquor store now and then, and I see the bottle and it's always $275 and I'm always envious.

So yes, I would probably do that. Jeff, what about you? You know, I've always thought it would be nice to buy the most expensive bath towel you could buy in like hundreds of dollars. So every morning when you get out of the shower, you just wrap yourself in that and just... You guys really, you guys really dream of different things, don't you? Coming up, how much should the midterm elections affect your investing strategy? Morgan Housel has the answer, and he is next. This is Motley Fool Money.

Welcome back to Motley Fool Money. We've got a live audience here at the Belmont in Austin, Texas. I'm Chris L. And when he's not busy writing his brand new column for the Wall Street Journal, our man Morgan Housel is helping the Motley Fool help the world invest better. Thanks for being here. Thanks for having me. Mid-Jerm elections earlier this week,

and I turn on the financial television on Wednesday morning, and I'm just awash in all. all of these experts telling me now that the Republican Party is going to control both the House and the Senate, this is how I have to invest. You agree with that? No, absolutely not. And hopefully no one else in this room really agrees with that either. That style of investing where you turn on financial news, not to name any names, CNBC, but they tell you basically what happened in the news over the last 24 hours or the last 12 hours. And how should you invest around that?

And the answer is almost always, almost always nothing whatsoever. And this always happens around, you know, every two or four years when we have a new election. What does this mean that this new party is in charge? What should that mean that that I should do with my investments? And so in 2012, for the 2012 election, I went back and looked at the past four elections. What did the financial news say that because this party or this president was elected, you should do with your money? and every single one of them that I found turned out to be wrong in hindsight. But I think what's interesting about it is that a lot of them made sense.

These investment strategies that they put forward made sense. So in 1992 they said since Bill Clinton is elected, you should short health care stocks because of what they called Hillary Care back then. That was going to be bad for health care stocks and pharmaceutical stocks. And pharmaceutical stocks over the next eight years became some of the most valuable companies in the world. In 2000, they said, you know, when George Bush is elected, it's going to be a big tax cut, and you should buy airline stocks because people are going to use their savings from the tax cut to go travel. And within six years, almost every major airline was bankrupt.

And then in 2008, when President Obama was elected, they said, that's bad for banks because banks are going to get regulated out of business. And then bank stocks went up three or 400 percent after that. And you can go on and on and on. So it's not only that these turn out to be wrong in hindsight, But they make a lot of sense when they're made. So it's really dangerous to be looking at the news and say, what happened over the last week?

Who got, you know, who won this week's election? And what should I do with my investments? It's a really dangerous thing to do, but it's really tempting. And that's why you hear so much about it on financial news, because it makes sense and it's tempting. We are gathering here in Austin for an event, an all-day event we're doing with members of our Motley Fool One service. You're going to be one of the speakers tomorrow.

give me a sneak preview of coming attractions. What are you going to be talking about? Yeah, so what I'm talking about tomorrow is the difference between how finance is taught in schools and how it's actually done in the real world. And I think there's a big disconnect in that in schools it's taught as a math-based subject, where it's math and formulas and accounting and spreadsheets and just dump your numbers into this formula and you get an answer, and that's finance. And in the real world, it's much different in that what really matters the most

are these softer skills of psychology and behavior and history and things like that that are rarely taught in school. It's making its way in a little bit with behavioral finance in the last decade or two. But finance is still overwhelmingly taught as something that is clean and it's taught like physics, where it's just this is the formula and you put in your formula and it gives you an answer and that's your answer. But in the real world, it really doesn't work like that very often. And I think the best investors in the world have much more of an edge. in psychology and behavior than they do things like math or physics or finance. So that's what I'm going to be talking about tomorrow.

The difference between what it's taught and how we do it here in the real world. Was that your experience when you were in college? Were you taking business classes and that you look back on down and say, wow, that was some interesting math, but it didn't actually help me and learn how to invest. It's not that it's wrong. It's not that what they teach you is necessarily wrong. A lot of the formulas and the accounting is really important to know accounting into no compound interest and discounted cash flows, that's all really important. But I think

in the real world, it's a fraction of what you need to know to be a good investor. And you can be not very mathematically skilled, but still be a very good investor if you have control over your behavior. And vice versa, you can be a PhD in physics and be an absolutely dismal investor if you lose control of your behavior. And we see that a lot. That's what happened in 1998. There's a hedge fund called Long-Term Capital Management. They had people on their board who had won Nobel prizes in physics. They were the smartest people you could ever imagine, and they went bankrupt. In 1998, when a

monkey could make money. We got about a minute left. I know we're a little early for New Year's resolutions, but when you think about the end of the year, you start looking ahead to 2015. Do you have sort of a financial resolution or even just a wish for investors in 2015? My resolution

this year was to check my brokerage account less often than I do, and I've failed dismally. Why? It's a bad habit to get into. You haven't mastered your temperament, have you? No, no, not at all. It's a bad habit to get into,

especially if you're checking it more when the market is going up, which is a tempting thing to do. There have been a lot of studies between E-Trade and T.D. Ameritrade. They show that when the market is going up, people, the logins to their brokerage accounts

are off the charts. And when the market is going down, no one wants to look at anything. And it's a bad cycle to get into, but I think a lot of people do, and I'm one of them. And I wanted to do it less this year. So maybe I'll try next year.

Better luck next year. All right, thanks for being here. Thanks. No disrespect to Silicon Valley, but we're going to spend some time talking about the startup scene right here in Austin, Texas. We've got entrepreneur, Josh Bear coming up, so stay right here. You're listening to Motley Fool Money. Welcome back to Motley Full Money coming to you from the Belmont in Austin, Texas.

A city that's become a hotbed for technology companies and entrepreneurs, and our guest this week is one of them. Josh Bear has founded several tech companies and invested in numerous startups. He is the co-founder and executive director of the Capitol Factory. He also teaches a class at the University of Texas for entrepreneurs. Josh, thanks for being here. Glad to be here. Welcome to Austin.

Do you ever sleep? You sound like a really busy guy. I get a good night's sleep every night and work the rest of the time. Give me the elevator pitch for the Capitol factory when you're at a barbecue or a party or something. And someone says, what do you do and you tell them? What do you tell them about the Capitol Factory? You know, Capital Factory is all about being in the right place at the right time. Austin's the right place. It's in our fastest growing city in the country, and it's just a great time to be here.

And it's the right time for entrepreneurship, for entrepreneurs and startups and technology. And so Capital Factory is the entrepreneurial center of gravity of Austin, Texas. It's a place where entrepreneurs come together, where they meet their co-founders, where they work, where events happen, and where they find investors. So I don't want to ask you a question that is the business equivalent of which is your favorite child, but that's kind of how this is going to come out. What are a couple of the startup companies that you're working with that you're particularly fired up about either because of the people behind it or because of the idea that's driving it? Sure. Well, you know that you appreciate a long perspective. And startups have a long perspective, too.

It takes five to ten years for a typical startup to mature and really start to become worth something. So we've been doing this about five years, and we've now just started to have some of those first companies really get interesting. So one of them is called Sparefoot.com, and they are revolutionizing the self-storage industry. It doesn't sound super sexy, but it's actually a pretty big market. It's about a $24 billion industry, and they have owned the whole internet front end to that. They're like the online marketing. If you want to book a storage unit, if you want to buy one and you go to do it online, you're probably going through them. They've raised about $30 million from Insight Venture Partners in New York.

They've got about 200 employees. It's a really strong business. They're going to be worth hundreds of millions of dollars if they don't IPO. I love that because, as you said, that's not even remotely assessed. sexy business. And I think when people think about young entrepreneurs, they think about, you know, Mark Zuckerberg starting Facebook, something transformational. In this case, it's like finding a new way to tweak an old business. What are some of the things that you look for in the people, in the entrepreneurs themselves? Because I have to believe there are certain qualities that really help

these people succeed. Yeah. So, you know, when we're investing in a company or an entrepreneur, we're typically the first investors very, very early. The product is early. The concept is early, and we have so little data compared to the types of information you look at with public markets. There's no history. They probably don't have any revenue. What do you look at? So it starts with the person. It has to be somebody you really believe in and you want to get behind, and they have to be in a market in a space that seems really exciting and interesting. And at the same time, you have to kind of take it with a grain of salt that things are probably going to change. It's not going to look exactly like what they start out with when it matures. And so one of

the best signals that I look for early on, believe it or not, is just that they can say they're to do something and then do it. It sounds so simple, but it's the same thing kind of the public markets want, too, right, as predictable revenue and predictable performance. And it's very, very hard. It's very hard for an entrepreneur to predict what's going to happen even the next month or two months. So I want to meet with an entrepreneur, have them talk to me out of their business, tell them what they're going to do, meet with them a month later, and see that they've been able to execute on that and make it happen. And that's a really good starting point. You're listening to Motley Full Money talking with Josh Baer, co-founder of the Capital Factory.

You have a partnership with Google as one of Google's nationwide network of technology hubs. Austin is getting Google Fiber, and the Capital Factory, as I understand, is going to be one of the first places to get it. For those who are unfamiliar, other than the fact that the name Google is attached to it, what is the excitement behind Google Fiber? Google Fiber is a big deal for Austin, and it's a big deal for our community. You know, to start with, it's just faster Internet, right? And everybody likes faster Internet. That's a pretty easy assumption that everything works better when things are faster. But Google Fiber is really about access.

It's about getting that fast Internet, not just to the rich people, but to everybody, to the community, to the educational centers, to the community centers, and to the lower-income families that maybe couldn't normally afford that type of thing. And that's one of the things that's so exciting about how Google approaches this and where they bring it out. So one thing is it means a lot more people having access and having access to the latest, greatest technologies. The second thing is about competition.

and what that does for the market. And Google Fiber actually hasn't even launched yet. It's in the works. It'll be coming soon, but we don't have it yet. Yet we've already seen a significant impact on the Austin market, where AT&T has come, and they have released gigabit service, and it's in the market now. And it's not that expensive.

And I have time Warner at my house overnight. It just magically got twice as fast. Wow, it's like magic. I don't even have to pay anymore, right? And that's the effective competition. And I know that's part of Google strategy as well. They're trying to instigate the market, and it works. It's really having a significant effect.

The last thing is deciding about it is it means that because Austin now has access to this high-speed internet, Austin is going to be a launch pad for other companies and other technologies all around the world that need to use that kind of bandwidth. And it means our consumers are going to get access to that. They're going to spend marketing dollars launching them here, and Austin will continue to be an innovator on the forefront of these technologies. All right, let me ask you about Tesla Motors, which we touched on earlier in this show, but I know you're a fan of the company.

I know you have a Model S. You also live in a state that has effectively banned the sale of Tesla vehicles. So when you look at the business of Tesla Motors, what do you think the biggest challenge the company faces? Because I can't imagine it's state legislatures continuing to keep them out. I just don't see how that's sustainable. Me neither. Yeah, and I don't even think it's very effective.

I thought it was particularly funny when New Jersey banned it because it's like all they have to do is drive across the border and buy it in New York or somebody else. New Jersey is not stopping any sales. They're just missing out on the tax revenue they could have gotten. And, you know, it's kind of similar in Texas. We can't just drive across the border. But it's easy to order these cars over the Internet or other ways. It's not stopping anybody from getting any cars.

So, you know, to me, honestly, I think the biggest challenge is that Tesla becomes a big company. And big companies slow down, and it's hard for them to innovate and be creative and keep the kind of control that Alon's been able to keep of the company. and have that long-term vision. So the biggest thing I worry about is that Tesla gets bought by another car company or becomes more like a traditional company and it kind of slows down under its own weight. You're on Twitter. People can follow you at Joshua Bear.

Where do you see that business right now? Because it seems like Twitter hasn't really answered all of the questions that it probably needs to, at least in terms of proving its ability to act in. a profitable manner quarter after quarter. Yeah, I'm very bullish on Twitter. I think it's an incredibly powerful technology and a powerful network. And I don't think they've even really begun to tap all of the revenue potential that could come out of that.

I've got a very long-term view on it. And I feel like the way they've been managing the company has also been with a long-term view. And they've been able to create incredible value and lock themselves in as the authoritative source of real-time news and information. And I think that's an incredibly valuable place to be that will sustain them for a long time. So I hope they don't too quickly just focus on their short-term revenues and other things, but they keep locking in the value of that business. While we're here at the Belmont, it appears that Dell computer has effectively taken over the rest of the city of Austin because Dell World is happening this week in Austin. It was just about a year ago that Dell was taken private by founder Michael Dell.

I get to sense you're happy for him. I am. He's like a role model and a hero, I think, for a lot of us here in Austin, both having started his company in his dorm room right up the street at UT. and then I think, you know, pretty ballsy move to go take that company private and really, you know, for all the right reasons, I think, to give them the flexibility, to innovate, to think long term, to take bolder moves. And I think that's the only thing that could have gotten Dell pointed in the right direction. So it still seems a little early to tell if it's really working, but it seems, I can't imagine what else they could have done that would have pushed them in the right direction more than this. All right. Last question about a public company, and that is the company behind what everyone is saying is the must have gadget. at this holiday season, and that is GoPro. Are you buying?

Do you want one? You know, I might buy one. I think it's a cool toy, but I'm not so bullish on that. I think they have done an excellent job with execution. It's a brilliant business. They've done super well. But in end, I can't help thinking that it's another flip cam. You know, in the

end, it's somewhat of a fad because that technology is going to become rapidly commoditized. There's no network effects. There's no platform or layer on top of it. And pretty soon, my phone is going to be able to do everything that GoPro can do, and it's already pretty darn good. And so I just don't see where the long-term future is for it.

Well, if it's the next flip cam, I think we both know that just means that someday in the future, Cisco systems is going to radically overpay for it and then shut it down. Exactly. Before we wrap up, what is the best thing about being an entrepreneur? What is the worst thing about being an entrepreneur?

Wow, that's a great question. You know, I think the best thing is really getting to kind of chart your own path, feeling like you, you know, every day is an adventure and you get to find your own way and explore that. And for some people, that's terrifying, for other people, it's really exciting, for some people that's both at the same time. And I think the worst part is the emotional roller coaster that goes with that. It's really challenging, and you don't have that security, you don't know what's going to happen. Sometimes in the same day, you'll have something really great happen and something really bad happen. And that's

really, it's kind of hard to deal with for a lot of people. So it's, you know, very emotionally challenging, but some people get their energy for me. For anyone who is thinking about starting their own business, one piece of advice, knowing what you know now with all your years of experience, one piece of advice to help them. You know, I get a lot of people coming to me saying, I want to start a company. I know I want to be an entrepreneur. I don't have the idea yet. I don't know what to do. And I've got three tips for them. First of all, work really hard at something. Don't just sit around procrastinating and wondering what you're going to do or prognosticating. You've got to go do something because operational.

opportunity comes from activity. And one of the things, the second thing is one of the ways to do that is go learn a lot about something. It just picks something to become an expert in and passionate about. And that thing might lead you to other things, but become an expert at something. And the last thing is meet somebody new every day. Talk to a lot of people, meet a lot of different people. And I'm confident if you do those three things, if you work really hard at learning a lot about something and meet a lot of different people, you'll find that opportunity. You'll get, you'll find that problem, that, that thing that you're passionate about, the thing you've got to go, all, and that'll set you on your way to entrepreneurship. One more reason to be on Twitter so you can follow people like Josh Bear. Thanks for being here. Hey, welcome to Austin. Up next, Robert Brokamp's going to help you rule your retirement. Stick around. This is Motley Fool Money.

People on the show may have interest in the stocks they talk about, so don't buy or sell stocks based solely in what you hear. Do your own homework and make your own decisions. And remember, in the words of that immortal Texas philosopher, Willie Nelson, you will never find happiness until you stop looking for it. Welcome back to Molly Pool Money coming to you from the Belmont in Austin, Texas. I'm Chris Hill. That was our man behind the glass.

Steve Broido with the disclaimer. And words of wisdom from Willie Nelson. Does Willie Nelson deliver any other words but words of wisdom? No, absolutely not. But he doesn't give good tax advice, as you may know, because he got in a lot of trouble several years ago. Willie Nelson, great with the lyrics, great with the guitar, not so much with the taxes.

Robert Brokamp is our retirement. retirement expert here at the Motley Fool. Before we, I know you've got a little quiz prepared for us, but before we get to that, you and I were talking recently about the old saw that the closer you get to retirement, the more you have to be in bonds. And that just seems like something that the older I get, the more false that seems, the idea that, well, once you get to 65, if you're going to go the traditional route and retire when you're 65, you need to be almost entirely in bonds. Right, and to some degree it makes sense, right? When you decide how much you want to put in the stock market, people ask, well, you know, what's your time horizon?

How long do you invest? And long time horizon, 10, 20 years, stock market, right? Well, if you're retired, your time horizon is zero, right? You need all your money, so you shouldn't have money in the stock market. But what people need to understand is when you retire is 65, you need some of that money in those first several years. but according to Social Security Administration, you're going to live till your mid to late 80s, a quarter of 65-year-olds may get into their 90s.

So for some of that money, they don't need it for 10, 20, maybe 30 years. Over that time horizon, stocks have historically beaten bonds. And the other important thing about that is, if you stay all in bonds, you're going to get what they called fixed income. That's what they call it fixed income, which means it's not going to grow with inflation. You talk about the purchasing power that will be lost on your money over 10, 20, 30 years. It will cause a siren to go by because it's such an emergency.

Well-timed. Thank you very much. Let me ask you the same question. I asked Morgan Housel, which is, as I mentioned, we're here in Austin, Texas. We're doing a full day of investing strategies with our Motley Fool 1 members, breakout sessions, et cetera. You are one of the featured speakers. What are you going to be talking about tomorrow? I'm going to be talking about foolish family finances. We're going to actually start with talking about teaching your kids how to invest because we all know that the longer time you have to invest,

the better. You get someone interested in early. They're going to learn a lot when they get into the workforce and they start making money, contributing to 401K. They're going to have a great head start because they're going to already be a great investor. Then we're going to move into things like how you keep wealth in your entire family. So you, of course, care about your own family's finances, but what about your parents' finances, your siblings' finances? Because the truth is, if they're not doing something right, you might have to pay for it. So how do you get everyone on board to get all their legal ducks in a row, their financial literacy to where it can be, and how you can help people who maybe aren't doing the best job of getting things in order?

We have kids that are of similar age. I've found that one of the easiest ways to get them interested is to just start connecting them to the companies that are around them all the time. You know, the company that makes the iPad, guess what? You can be a part owner of that company. Exactly. I think that's one of the most important lessons you can teach a kid or anyone, that when you own a stock, you are a legitimate part owner of that company.

So when I take my kids to Starbucks, I say, let's go to our Starbucks because we're part owners of that company. They then go in and try to take the coffee for free and all that. I have to tell them, no, that's not one of the benefits of ownership. And same with Home Depot, and they understand that we are part owners. All right. As I mentioned, you have a quiz, a little Motley Fool fact or fiction about retirement, and we have a contestant, one of our longtime members, Julie Peek.

Julie, how are you feeling? You feeling confident? Yeah, I'm feeling great. I don't know why you picked me for the retirement. All right, Robert. What are you got? I think myself is pretty young. I just want to tell Julie that if you answer two of the three questions correctly, you will get a choice of many full prizes.

I mean, it seems I think that one of them will be the world's most expensive towel after Jeff Fisher gets out of the shower and uses it. Right, a used towel. Great. Okay. What's the other prize? One of the many fabulous choices that I will make up after this show. Okay, so we're going to play Fool Factor Fiction, and it's basically a glorified version of true or false. So let's go with the first one. Full factor fiction, the average annual Social Security retirement benefit is $34,000, $24,286.

Average Social Security benefit. False. You're absolutely right. It is false. All right. The average benefit is only $15,528. And it's even more sobering when you know that for 65% of retirees, that is their major source of income. And for 20% of retirees, that's pretty much their only source of income.

So obviously, a lot of people need to do a better job of planning for retirement. All right. Next question. It is. The National Endowment for Financial Education surveyed U.S. adults who combined assets with a spouse. Full factor fiction, 58% of these adults. said they had withheld or hidden cash from their partner or spouse. 58%

You are absolutely right. Yes, according to the survey, 31% of adults surveyed said they had been deceptive about money. 58% said they had hidden cash. I thought it was interesting during our previous segment that when you asked what Matt would want, the first thing he said was, does my wife have to know?

In fact, 40% of adults in another survey have said that they care more about financial honesty than sexual fidelity. So it is pretty important. So, and I might be outing some people, but I have talked to Motley Fool members who will say to me, my spouse doesn't know about this account and that I'm buying these stocks. And it's partially because of the differences in risk tolerance among spouses. It's probably better to just be honest about it, have your own other, you might call it you're investing a round account that you're allowed to have. Any more, or are we done?

We got one more. One more, hit it. And that one more is, a Pittsburgh man was sentenced to 18 months in prison this past January for continuing to receive his dead mother's social security benefits, and she died in 1983. Julie, we got about 45 seconds left. Full fact or fiction? I'd like to phone a friend. What do you think?

It's true. It's true. It's false. Oh my God. She died in 1973. She's been receiving those Bennett's for 40 years, and the joke's going to be on him because anytime you're in prison

for more than 30 days, you don't get your Social Security benefits. So he's going to lose all out. Do I still get the towel? Julie P. got two out of three. She still gets to use Jeff Fisher, a million-dollar towel. Thank you for playing, Julie. Robert Procalfe, thank you for being here. Thanks, everyone,

for coming out to the Belmont. That is going to do it for this week's edition of Monty full of money. The show is mixed by Rick Engdahl. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.