Motley Fool Money - Motley Fool Money: 12.12.2014

Episode Date: December 12, 2014

Costco hits an all-time high.  Abercrombie & Fitch's CEO steps down.  And LendingClub has a big debut on Wall Street.  Our analysts discuss those stories and share some stocks on their radar.  Plus, Motley Fool columnist Morgan Housel takes stock in declining oil prices.     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, and joining me in studio this week. From Motley Fool 1, Jason Moser from Motley Fool Income Investor, James Early, and from Motley Fool Supernova, Matt Argusinger. Good to see you, as always, gentlemen. Good to see you, Chris. We've got the latest from banking, energy, retail, and more. Columnist Morgan Housel is our guest this week.

And as always, we'll give you an inside look at the stocks on our. radar, but we begin with the big macro. It was just two months ago. The price of oil was around $95 a barrel. This week, the price fell below $60. And James, you got to go back more than five years to find oil that low, and there are a lot of ripple effects. I'm curious which one stands out to you. Chris, normally I would be tempted to celebrate these cheap oil prices by going on some long, pointless road trip. But now all stocks are down. It's not just oil stocks. It's affecting the whole economy. So in other words, it's not just a supply issue. It's not just the Saudis trying to choke Iran, choke Russia. It's a demand issue. And that's what's got everybody

concerned. Maddie? Well, you know, I think it is OPEC, though. And this might be a stretch, but I do feel like it's OPEC trying to choke out a little bit of the U.S. oil industry. I mean, because the shocking thing to me, and James alluded to it, is if this had happened 10 years ago. Oil prices dropping this fast, far and fast. I feel like it would be celebration mode for the economy, for the stock market, but the reality is we've actually become a pretty big energy producer, energy exporter in this country. And so this actually has a real effect. And I think the OPEC's reaction to not cut their production was a way of them saying, you know, hey, we're still the top dogs in the world of energy. And we don't want the U.S. and other countries

to impede that. It's true, by the way, U.S. in 2015 will be the world's leading producer of oil. We don't have the biggest reserves, but we're already the world's leading producer of natural gas, even though Russia blows us away. We're now going to beat Saudi Arabia

to become the leading producer of oil just because we're doing that. But I don't know. I mean, I hear what you're saying, and I think Saudis wouldn't mind taking out some of the higher cost shales, but if you look at a country like Iran, they balance their budget,

a $135 oil. Russia is a little bit over $100. Saudi Arabia is about $93. And this is balancing the budget. This is not the same as extraction costs. But the point is the Saudis have more money than those countries proportionately. So I think they want to choke them out. I think we're hearing a lot of the kind of the U.S. media say it's about knocking out U.S. production.

I think that's a side benefit. But I think overall it's more politically motivated than economically motivated. Yeah, I mean, we feel a lot of questions over the week about if oil prices are low and gas prices are low, isn't that a good thing? I mean, why is the stock market getting hammered? I mean, I think it's sort of a, you look at it either short-term perspective or long-term perspective. There are a couple different ways to look at there. And it's a short-term perspective, yeah, lower gas prices in theory mean that the consumer has a little bit more money in their pocket to spend, perhaps. And it seems like the numbers are bearing that out to a degree, at least.

These November retail sales were strong, and consumer sentiment is obviously up. But when you look at it further down the road, I mean, the longer-term implications of lower oil prices can have a dramatic effect on our economy here, domestically speaking. we have, what, 10 million or so jobs that are tied to oil and natural gas here, and lower oil prices mean that companies are going to ratchet back their capital expenditures. They're not going to spend as much to go get that oil, and that means fewer jobs down the line. So there are implications there that you have to at least keep an eye on there. And with the market being forward-looking, OPEC notwithstanding, I think there are some domestic concerns at least exist today.

There might be a little bit of a panic, too. And I'm not just saying it, because my income investor portfolio, which has a lot of energy, has definitely taken a beating. But it seems like anything energy down, if you make it is down, like if company makes energy drinks or energy bar, anything that's automatically down, right? I think there's not entirely rational thinking dominating. Well, yeah, and I think James makes a great point. I think there's also a technical aspect. If there are investors out there that are worried about the stock market dropping so much, it's possible that you have a lot of institutions, money managers, hedge funds out there who have had a lot of energy exposure. They've been beaten up, you know, with a lot of those names, and they've

been forced to liquidate other portions of their portfolio, that could be another reason the stock market's getting hit. James, give me one energy stock I should put on my watch list, possibly because it's been hit. I'm going to have some more from my stocks and my radar, Chris, but for now, I like Chevron. It's a diversified, integrated oil company. I think it's a good play right now. All right. Let's move on to earnings. Costco's first quarter profits rose 17%. Same store sales up 7%. Jason, we probably shouldn't be surprised, given that, relatively speaking, the most recent quarterly reports we see. saw out of Target and Walmart were pretty strong. Yeah, and Costco is just quarter in and quarter out. They just continued to perform on every level.

I mean, it's really amazing to see, you know, this is a business that at the beginning of 2012, we were putting on their microscope because of the leadership change there with cynical stepping down and Craig Jelinek, the C-O-O stepping into the CEO role. And, you know, this is just a great example of a leadership transition that was executed flawlessly. I think the keys to it were two. Number one is Jelinek was being groomed to do this, right? The CEO is very familiar with the business. It's an intimate knowledge of the levers to pull there. And then second, he just keeps on doing what they've been doing from the very beginning, right? I mean, it's not the most exciting business. It's not the most complicated

business in the world. It's all about their customers, their members, keeping low prices, offering plenty of choices there. And you've got to love that membership model that just, they've just priced it so well. It keeps people renewing year in and year out. It was a really strong quarter, but shares at Costco down a little bit this week. Is that because at least some people think the stock's getting a little pricey? You know, we were asking that question back at $100, maybe a year ago. And I think that Costco's stock rarely looks cheap. But the main reason for that is it is just a very quality, company. Quality leadership, you know, and they've proven themselves very resilient in good times

and in bad. And I think that membership model really gives investors a lot to look forward to. So it's never one that really looks cheap. And I think that when you do see the stock take a hit, it's definitely worth keeping an eye on. Shares of Lulu Lemon Athletica up more than 15% this week on third quarter results, the maker of high-end yoga apparel, lowered guidance for the holiday quarter mat. And and usually guidance Trump's results, was the third quarter that great? No, I don't think it was at all, actually. And it's been a bit of a downward dog year for Lulu.

Oh, come on, all right. I prepped that one. You did that. It was like you just see this, man. Okay. No, I thought the results were pretty poor. I mean, granted, the top line revenue number was up 10%. But same store sales down 3%.

A lot of the newer stores are underperforming. They reduced guidance for the year. I guess, maybe this is a bit of a stretch. Oh, I just... That was too much. Move along. But, you know, this could have been just one of those quarters where, you know, the news was just okay, and it wasn't bad.

And I think everyone was expecting, given what's happened to the brand and, you know, where they are with year-over-year comparisons, they thought it was going to be a lot worse than it was. It wasn't relief, you know, kind of a relief rally in the stock. Maybe with Chip Wilson down, too, we can look forward to a bit more transparency. It does seem, though, that their direct consumer, it seems like those things. sales are going in the right direction, and by that I mean they're going up. That's right. That particular segment was up 27 percent.

And growing and becoming a larger portion of the overall revenue, but I still think this is really an in-store local concept that needs to play out, and it's not playing out very well. On last week's show, Jason Moser said Abercrombie and Fitch CEO, Mike Jeffries, quote, is not fit to run a company. And I think someone on the board of directors might have been listening, because on Tuesday, The shares of Abercrombie and Fitch rose 5% when news broke that Jeffries is retiring effective immediately in what I like to think is a leading candidate for understatement of the air. Jeffries said, I believe now is the right time for new leadership to take the company forward in the next phase of its development.

I don't know why, given how terribly the stock has performed under his leadership, I was still genuinely surprised that he walked away. Well, Chris. Or was pushed. Did I have something to do with this? I suppose we'll never really know. I like to believe that, you know, the world is listening when we speak. Now, that being the case, you're right. This was a bit of a surprise from the perspective that it just didn't seem like it mattered what he did.

He was going to keep steering this ship and just running it into the ground more or less. But, yeah, I mean, this is good. I think we were talking about this earlier. This is not a broken company. It's a company that is in dire need of a new image of sort of a rebranding of sorts. And maybe now they will be able to get leadership in that can do that. You got to envy whoever is going to be the next CEO because talk about an easy act to follow. Coming up, a hot IPO and a potential merger that is just crazy enough to work.

You're listening to Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser, James Early, and Matt Argusinger. shares of AutoZone hitting a new all-time high this week. The leading auto parts and accessories retailer came out with some pretty strong first quarter result, James. Profits up 15%. Same store sales up 4.5%? They're looking good. Chris, I went to Google Finance, and I took a little peek-a-boo at the performance of AutoZone.

Actually, O'Reilly Automotive and Advanced Auto Parts, all three of them are kind of similar. Over the past 10 years, they're up about 600% each compared to like 60%. for the S&P. It's a factor of 10. I guess I've been sleeping, but I feel like a schmuck for missing these companies like all these years. The lower gas prices are kind of the official catalyst. People are driving more. That means, you know, more wear and tear. But that doesn't explain this long-term trend. It's just amazing because you would think that in this day and age of high-tech cars, people are just not working on their cars as much at home. And AutoZone doesn't have a strong commercial business. Well, and it's interesting when you look at the management at AutoZone,

which made the decision 20 years ago, we're not going to split our stock. They've only done it twice. The last time was 1994. And I think that for some investors, they just look at a stock at $600 a share and just think, I don't want to. And that by itself sort of weeds out the pool of potential investors. Yeah, it's interesting. I mean, it's obviously not hurting AutoZone too much in the long term. I think they used to, they probably still do have a negative networking capital balance. which means a supplier, AutoZone does not pay its parts suppliers until they sell the part to the customer. It's sort of like a free loan of that inventory. It's just a very well-run company.

And it is the time of year where people are getting their vehicles ready for winter. Have you done something to winterize your car? You know, I used to be all over that, and then I just got lazy. I just don't do it. My air pressure is low in all my tires. And that's one of the biggest things people can do is a former mechanic. Just keep your tires properly inflated. See, you're not getting those kind of tips on Bloomberg Radio.

No, sir. Right on. Club, the peer-to-peer online lending service went public on Thursday, shares up 56% opening day. Mattie, you buying? You interested? Oh, well, hey, I am, as a rule breaker investor, I am absolutely interested in the model and the concept. And this is one I've been kind of weighing to see how it would do. And obviously, the market likes this a lot. It likes it enough to be worth about $9 billion, which is incredible to me, considering Lending Club did about $175 million in revenue over the last

12 months. That's quite a multiple to sales. But granted, I mean, they've done $6 billion in loans since 2007, basically since they were founded. And this is a model that we were talking before the show. Small banks particularly should be worried about because the process of getting a loan, especially a consumer loan, can be very onerous, tedious, can take a lot of time. If I have reasonably good credit and I can go on a lending club or Prosper or some of the other

competitors and get a loan in a few days. It's remarkable. I think it's disruptive whether or not lending club is a stock that's going to beat the market from this price, given where they've all the excitement around it. I'm not sure. Would you feel comfortable making a loan to one of us over this lending club platform if we applied? You know, if I could get like a 15% return just to cover the risk of lending 20 guys? Let me just get a letter from your employer. Jason, do you think the efficiency factor is the big differentiator here?

here, when you think about the traditional way you get a small business loan, it can take a lot of time and there's a lot of paperwork involved. It seems like with Lending Club and similar services, that's one of the selling points is you can get this turned around in just maybe a few days. Yeah, not having gone through the process with Lending Club, but my understanding is that it is a simpler process. It is more streamlined and more efficient. Having worked at a bank for a few years and actually giving out some SBA loans, I can speak to the tedious process that is, it is not easy. And certainly the folks looking for the loans, you know,

it's just not a very enjoyable process. And so if this is something that can displace that or disrupt it, you know, I'm all for it. And I'm sure that small business owners will be as well. Yeah, just one more quick fact on Lending Club. It is now valued higher than all but 13 U.S. banks at its current value right now. I don't know why you think it's pricey. Let's move on to the sexy world of office supply retailers. This week, week, the Starboard Value investment firm disclosed. It's taken a 5% stake in Staples. This is on top of the 10% stake that Starboard already has in Office Depot. Reports out there, guys, that Starboard Value is looking for these two businesses to merge in 2015. And Jason, someone's

optimistic about this happening because shares of Staples hitting a one-year high this week, Office Depot hitting a four-year high. You interested in this? I'm not interested in it as an investor. I think it's an interesting story. It's very telling of the shift in the retail environment here of the past couple of decades because it wasn't all that long ago where merger like this was actually, I think, declined. Yeah, the FTC stepped in and said no. I mean, you look at these two companies today.

We've been looking at them and thinking, wow, you guys are just getting displaced by e-commerce. The alternatives out there are just really difficult to run a business like that with this huge physical footprint. So, I mean, from that perspective, consolidation makes sense. There's, there are plenty of costs, I think, can be whittled away. I think one of the most interesting things we were talking about this earlier was the online presence that Staples already possesses. I mean, if you look at these two businesses, Office Depot brings in close to $16 billion in sales annually, and it's a $4 billion market cap. Staples brings in close to $23 billion in sales, and it's a $10 billion market cap.

Those aren't lending club multiples. Those are not lending club. But the interesting part about Staples is that $11 billion of that $23 billion is from online sales. I mean, they have a very significant e-commerce business already. And I think that's very encouraging. I mean, people who think office supplies are a dwindling market. I mean, I'm just thinking, like, we work in an office and you need supplies. I mean, right? There's all sorts of stuff to make an office run.

And to that point, Staples is actually the third largest online seller in America after Amazon and Apple. Solitaire of anything, which is a... That's remarkable. I think there is a tremendous opportunity there for these two businesses to merge, whittle away a bunch of extra costs, become more streamlined. And yeah, maybe there is some opportunity there. Oh, go ahead. Well, I was just going to say, the one thing I...

If that is true about Staples, I don't know why they need Office Depot, because, I mean, if they've got this really great online brand and can you even investing in that, I'm not sure except maybe at the office level what Office Depot really does for them. It's just consolidation. I mean, the brand... If the brand is that powerful. But that's probably the point of the activist investors take at this point. Maybe that's the only thing that really gets this to happen.

That's probably the catalyst. So if office supplies themselves were stocks, give me one that you think is overvalued, one that you think is undervalued. Anything in the vast world of office supplies, from pens to staplers. Undervalued, I'd say, Post-it notes. Because they've been around forever. I feel like I use hundreds a day. Well, not hundreds a day, but I use hundreds a week for sure.

Overvalued, I'd have to think about that. James? Overvalued the plastic report cover. This is the lamest brown-nosing invention in the history of mankind. Nice. You know, some little snot at school would always have like a report. The content would have been like luke, always something like B-minus content, but then you would put it in some fancy report cover, and, hey, here's my report.

I mean, it just irked me. Undervalue, I'm going to say the professional label maker, which sounds kind of ironic, But having, I'm a big David Allen fan getting things done and having like a professionally made label. Like you pay 60 bucks for the thing, but it's worth it. You stick it on your folder. It just feels like so official and you kind of like relax. Jason? I just bought one of those plastic covers from my daughter's report last night, man. Overachiever.

Overachiever. Undervalued is the staple remover. I mean, you get those things out with your fingers, you tear them up. Boy, that staple remover. Nice one. There you go. I think overvalued. I'm going to contradict James here.

I think label makers are way overvalued. I mean, we got these things upstairs that are labels where they're forks and knives. I can see it. I can see it just fine. Label makers break. I don't like them. I talked with our colleagues, Diane Morris, and Shannon McClendon.

They said, white out, overvalued. Oh, yeah. Post-it notes, undervalued. Steve Broido? Undervalued is the ruler. Can't go wrong with the ruler. And overvalued, I have to say white out. I was going white out as well.

It's gunky. It's useless. All right, guys. We'll see you later in the show. Coming up next, the conversation with our man, Morgan Housel. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill, joining me in studio. It's my favorite financial columnist Morgan Housel. Thanks for being here. I didn't even pay you to say that.

You know what? Maybe buy me a cup of coffee sometime. Would it kill you? I want to get to some of what you're working on, some of the things you've been writing about recently. But let's start with energy. Next week, we're going to do our year-in-review show. And I think when all is said and done, one of the big business stories of 2014 is going to be energy, and in particular, oil, when you look at a barrel of oil dropping down to $60 a barrel, the price of gas falling the way it has. I mean, there are some cities in America now where it's less than $2 for a gallon of gas.

I'm assuming we're going to have yet another parade of people predicting, well, this is the end of oil. Yeah, that seems to happen. It goes in a big pendulum. It's either peak oil or this is the end of oil. And, you know, the phrase black swan, I think, is way overused. The idea of a big event coming out of the blue that nobody predicted, it's way overused. It's sort of like the phrase perfect storm that seems to happen like once a week, right? But I really think if you look at oil in the last. six months, that truly is a black swan. One in a million event that nobody saw coming. If you pulled the best economists in the world in January and asked them, what are the odds, oil is going to fall 40% inside of four months? And the price of a gallon of gas is going to fall by more than a dollar. Nobody would have predicted that. But it's what's happened since June. And the impact of that is really extraordinary. If you think the average American household in the last year has received a raise

from working, from their wages after inflation of about $100 per year. It's basically flat. They've gained $100. But the average savings that the American family is going to save now from the fall in the price of gas is close to $800 a year when you factor in heating oil. And when it's $800 a year. So the savings that they're getting from this gas crash in the last four or five months is eight times the raise that they've gotten in the past year from working. It's extraordinary. And it's real money, $800 a year to the money.

median family. That's a big boost. You can do something with that money. Part of what's gone on to contribute to this is U.S. production is up. U.S. exports just spiked this year. I'm not saying it's the end of oil, but the phrase that gets thrown around, particularly in political circles from time to time, is we're addicted to foreign oil. Are we seeing the end of that? I think it's, well, for one, I think we have to acknowledge that when we're talking about dynamics in the oil market, that nobody could have predicted six months ago. And then we turn around and try to make a prediction of what's going to happen in the next 10 years. It's really difficult to, we have to be humble about, well, we really don't know what's going to happen to oil market going forward.

But I think what you, it seems reasonable based on the trends that are going on in U.S. oil production, that in a reasonable period of time, five or 10 years, that U.S. could be independent on North American oil, including Canada, and, you know, if you want to throw in Mexican oil and U.S. oil, maybe that could be something that could sustain U.S. demand. But really what's going on with oil right now is that OPEC, in particularly Saudi Arabia, it makes them uncomfortable how much U.S. oil production has exploded over the past five years because we're taking market share from them. And for the last 40, 50 some odd years, we've really been beholden to OPEC. And they kind of have us around the neck and we have to kind of do what they say. And it's created all these geopolitical problems and wars and whatnot. And I think when they look at the U.S., the odds of them of the U.S. becoming oil independent, it makes them nervous. So a lot of the fall, most of the fall, I think, in the price of oil in the last couple months,

is because OPEC is willingly trying to drive down the price of oil. to put shill oil producers in North Dakota and whatnot, more or less out of business. And they might succeed in that. If the price of oil would have fallen to $40 or $50 a barrel and stay there for five or six years, the big oil bonanza that's gone on in the United States over the last five years would dry up very quickly because those people just can't make money with oil at those prices. So maybe that's what's going to happen. Maybe we will have very cheap oil for the next five years.

And the other side of that, it's great for drivers, it's great for airlines, but the other side of that is that the big oil boom in North Dakota kind of goes away. What do you think the shakeout is for investors? Certainly with the holiday shopping season, one of the narratives we're seeing increasingly is this is a boon for retailers. Yeah, so I think so many of the dynamics in the economy for the last decade has been gains for the 1% while the 99% stagnates. And I think what's interesting about the oil boom is that it's the other way around.

with the oil boom and when energy prices fall, that's really bad for maybe 1% of the economy. You're an oil company or you work for an oil company. You're driving an oil truck in North Dakota. The crash in oil prices is very bad for that 1% of people. For the 99% of Americans who don't work for an oil company, it's a huge boon. It's great news for them because they're going to save money at the pump. If you look at what trends correlate with good, strong economics. growth. It's hard to say, you know, if A then B, it's hard to really pin down. But one trend that you

see consistently over the last hundred years is that when oil is cheap, the economy does great. And when oil is expensive, the economy does terrible. That just seems to be a big driver of overall economic growth. So, you know, the last 10 years, oil prices have been pretty high and the economy pretty much stagnated. If we are heading into a new era where oil prices are cheap and are going to stay cheap, that could be fantastic news for the U.S. economy. When you think back on 2014, when you think about investing in 2014, what stands out to you? And has anything surprised you this year? We're now at, I think, the fourth longest run in history of the S&P 500 not falling 10%. The longest since it's been, we've been since the 10% correction. It's been more than three years. I think it was August 2011 was the last 10% correction.

and it's extremely rare that you would go that long without having a big market dip. And a lot of people at the beginning of the year, including myself, said it's pretty much inevitable, and it still is inevitable that the market's going to have a big pullback that's just a normal feature of markets. But I think it's pretty astounding that it's been so long since the market has fallen 10%. And of course, Molly Full CEO, Tom Gardner made a bet with our members that if the market did not fall 10% in 2014, he's going to walk five marathon. He's going to walk a marathon a day for five days. So he's got about two or three weeks left on that bet before he's going for a long walk. You're listening to Motley Fool Money talking with financial columnist Morgan Housel.

You write, obviously, for Fool.com. You also, as we talked recently on this show, are writing a column for the Wall Street Journal. Something you had written for the journal recently was entitled 16 rules for investors to live by. And the one that struck me was your rule that says the phrase, I don't know. I don't know are three of the most underused words in investing. Why do you think that is? Is it just simply a matter of pride? Is it just in no one's interest?

Because I understand that for children who just don't want to admit that they don't know the end. For school children, I understand that. But it seems to me, the older I get, there's almost a comfort in saying, I don't know. And someone that you and I both enjoy and admire a great deal, Robert Schiller. Three most common words that come out of his mouth. Yeah. He's very quick to say that. I think for most professional investors, professional analysts, there is, obviously if you're being paid to know, you're being paid to have an answer.

You can't say, I don't know. And the danger in that is that there are a lot of things. things in investing that we cannot know. No matter how smart you are, we just can't know. But when you're paid to know, when you're paid to give an answer, you end up, I think, just making stuff up. Or not in a bad, malicious way. You might fool yourself into thinking that you actually know. But there are things that we just can't know, like what the market's going to do in the next 10 years. We just will never be able to know that because it's driven by human emotions. And it's driven by these granular events that are unpredictable, like Lehman Brothers collapsing. in 2008.

So it's, but I really think if you're, if you're an individual investor, this is, I think, something that you have a big advantage of on over Wall Street. Is that a Wall Street analyst has to know. They have to give an answer. If you're an individual investor, you can say, I don't know. And if you're, if you're a Wall Street analyst who's paid to follow the retail sector, you need to have an opinion on every single retail stock. If you're an individual investor and you don't understand retail companies, that's fine.

You can just say, I don't know what's going on here and I'm going to walk away. And that's a big advantage for most people. But not even for professional investors, though. I think there's a tendency for individuals, too, maybe to flatter their own intelligence, they want to come up with an answer for things that really can't be known. So they make up an answer. And they convince themselves of it, and it sounds good, but it's often wrong, and it's dangerous. Well, one other advantage I think individual investors have is timing.

If you're a Wall Street analyst, you need to have an opinion. You need to be certain about that opinion. and oftentimes that opinion is focused on the next three, six, 12 months. Whereas if you're an individual investor and you have time on your side, you can just be directionally correct about a given business and owning shares of that without worrying about what's it going to do in the next four weeks. Yeah, absolutely. We all know these statistics about the percentage of mutual funds that underperform the market.

Over a 20-year period, it's 70, 80%. The huge majority of them will underperform. And there are a lot of questions as to why that is. Most of it is fees. You just, and, you know, because a big group of investors like mutual funds will earn the market's return minus fees. So the average one has to underperform the market. But I think there are a lot of very smart, capable people running mutual funds.

But they end up underperforming because they're held to short-term time periods. And if you let those mutual fund managers actually think in five or 10-year terms, they would do well as investors. But when you're beholden to 90-day returns, how are your return turns over the last quarter? What have you done for me over the last two months? It's nearly impossible to beat the market if you're held to those standards. What are you working on now? So about a year ago, I got this idea for a book called 500 things you need to know about investing. It was just going to be 500 sentences, quips, aphorisms. I can see it now at the checkout counter at Barnes and Noble.

Something like that. It's like, right, it's a little book. It's fine. I'm buying. Yeah, and it's... Impulse buying. Those kind of books I like

when you don't need to dive deep into it. You can just kind of scan the pages. And I really like those things. So I got this idea and I thought it was, I thought it was a good idea. After about 160, I realized 500 is a little too ambitious. So it's just been sitting on my computer

for the last year. So I finally thought, I'm going to go ahead and publish that 160 things. So that'll be out. Radio at Fool.com is our email address. We got a question from one of our listeners that I thought would be perfect for you, from Jamie Braswell in Dublin, Ireland, who writes, a couple of decades ago, there was a great book called Built to Last

that compared and contrasted good companies with great companies. It seemed to have a similar message that The Motley Fool seems to espouse, long-term strategies, doing the right thing for all stakeholders, etc. Do you have any recommendations for more current books that have a similar mindset? I'm hoping to drop hints for a Christmas gift. You read more books in a given year than anyone I know. A great question. Jim Collins wrote the bestseller, Bill to Last, followed it up with a couple of other books. What are some more recent books that sort of follow that same vein?

Yeah, that's a really good question. I have three good book recommendations. The first is called Outsiders. It's by Bill Thorndyke. This is one of Tom Gardner's favorite books, too. It just looks at this list of really successful. companies over the last 50 or so years and just said, what characteristics do those companies share in common? What do they do differently from others? What makes them outsiders? And it's a really

fascinating book that dives into these business models and the personalities of the CEOs that ran them. And I don't want to give too much away because I think everyone should really, if you're interested in investing, I really think you should read this book. But it just goes into what these companies share in common and what they do differently from the crowd. And it's a fascinating look. there's a book about personal investing, so not companies, but personal investing, called Simple Wealth, Inevitable Wealth by a guy named Nick Murray. It's one of my favorite financial writers. It's really, really cool guy.

And it's a really simple book, but I really think that even if you're a professional investor, you can learn a lot from it. Just talking about the value of a long-term time frame and how to think about market volatility. And it's just simple, common sense, but it's really well done and really well written. And my last is, this is another, after my first failed book idea for 500 things about investing, I got an idea that I would like to write a book about the science of long-term thinking. I thought that would be a good idea. I think that would be a fun book.

And in a little bit of research, I realized that a guy named Frank Portnoy already did that. He wrote a book recently called Wait. It's the science of long-term thinking. And it just talks about why long-term thinking is so hard for us to do if it's the best decision in so many things in life, whether it's investing or your career or whatnot. The most rational thing to do is to think long-term, but it's so hard for people to do. So he talks about the science behind that and different ways that you can train yourself to think long-term. So all three of those, I think, are good books in that same vein.

I've got your next book idea. It's 160 things you need to know about the science of long-term thinking. That might work. Morgan Housel, thanks so much for being here. Thanks a lot. Coming up, we'll give you an inside look at the stocks on our radar. 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, don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. I'm Chris Hill joined in studio once again by Jason Moser, James Early, and Matt Argusinger. Guys, before we get to the stocks on our radar, a couple of housekeeping notes. First, we are looking for interns for the summer of 2015. So if you are a college student or you know a college student, who might be interested in interning at the Motley Fool, send them to this website, culture.fool.com.

That's culture.fool.com. We're looking for investing interns, interns for our tech department, business intelligence, all sorts of listening. So check it out. Secondly, guys, a small business story to share with you before we get to radar stocks. Samantha Hess has opened up a shop in Portland, Oregon, called Cuddle Up to Me. So for $60, you can get an hour's worth of spooning. And if you think this business is not a hit, you're wrong. Hest was quoted as saying she gets as many as 10,000 inquiries a week. Business is booming. I'm just wondering, and we'll get our man Steve Rida from the other side of the glass to weigh in here. But like, if this company goes public, I don't know. They're off to a great start, Maddie.

That might get a lending club kind of multiple on that. So let me get this straight. I can go on there and sign up and someone will come to my house and cuddle with me. Oh, go to the shop. You go there, right? Oh, you're just going to get some. You pay to Spoon-Hur. You're going to get hugged. You're going to get some affection. There's no at-home option? Not yet, but maybe that's up.

Growth. Growth Avenue. For 70 bucks, I'll come to your house. Let's get to the stocks on our radar this week. Matt Argusinger, what do you got? Okay. I'm going, I'm shaking it up a little bit this time around. I'm not going with an actual stock.

I'm going with an E-T-F, SLV, which is the I-share Silver Trust. I am a... We've seen what's happened with commodity prices. Oil's been down, but a lot of commodities prices are down. multi-year lows. Silver is at about a five-year low. And silver is one of the biggest components in solar panels. I happen to think solar is going to be pretty big over the next few years. And silver, I think, is a great way to play it. Steve, question about a silver E.TF? Silver coins. Do you recommend? The American Eagle? Absolutely. Don't buy them on eBay, though. You'll pay a huge premium.

James Early, what's in your radar this week? The oil crash has been pretty brutal to Spectra energy. This is an income investor recommendation, actually a buy-first recommendation. Although, ironically, it's not an oil stock. It's a natural gas company. It's down 13% in the past month. So I think now could be a good time to buy. And the ticker symbol? S.E. Steve, question about Spectra? The question is more about oil in general, which is that how much lower can we go? Steve, you own some oil stocks. Is that correct?

Unfortunately, yes. That is a very big question, Steve. I think, as we said in the beginning of the show, it's a demand issue that's going to decide that ultimately. But I think the Saudis think OPEC is going to start cutting production if prices go too much lower. So I think it rebounds within a year. That's my guess. Jason Moser? Yeah, you know, I love all the pessimism out there on Twitter today.

I mean, I think that having gone through that recent analyst date presentation, I walked away very encouraged with where the business is headed. I think any problems that they may have or that are perceived are certainly very fixable. But I think that it's basically, I just don't think it's being looked at really appropriately. I mean, Twitter is a tech company that captures a tremendous amount of data in their fabric, their software development kit, is going to, I think, allow mobile developers to develop robust apps. I think we're going to see a lot of consolidation in this industry in the future here, and Twitter's

going to spread its presence, so to speak, through this fabric SDK. And, you know, I think as far as questions of leadership, I mean, certainly those are solvable if people feel like Costolo is really not the right man for the job. I personally like the costolo-nato combination. And so I'm encouraged with the future there. I think that the pessimism today is overhooked. That sounds like an ice cream. Costolo-nato.

Well, and now that Mike Jeffries is no longer at Abercrombie and Fitch, he's available. The ticker symbol? Tickr symbol is T-W-T-R. Steve? Can Twitter sell anything besides ads? Absolutely, yeah. I mean, one of the strategies they're pursuing is their syndication strategy, which is essentially monetizing the content that is all over Twitter.

They sell their data to a few hedge funds, right? I think it's only two or three. I'm sure. Well, I don't know about hedge funds in particular, but I know that there is a relationship they have now with IBM in order to sort of call that data and make something out of it. And I think I mispronounced Nato's name. I think it's Noto. Steve, you got one of those three that you like? The silver one sounds kind of fun.

I do like coins and commodities and such, so. Right on, Steve. Guys, thanks for being here. Thank you, Chris. That's going to do it for this week's show. We will see you next week.