Motley Fool Money - What the Market Volatility Means for You

Episode Date: August 28, 2015

The stock market has a wild week. What does the latest volatility mean for you? Our analysts discuss that question and share some stocks on their radar. And we revisit our interview with Stephen Dubner, co-author of When to Rob a Bank: And 131 More Warped Suggestions and Well-Intended Rants.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Thanks for dinner. I should get going now. Not without dessert. Done. Ordered on DoorDash. Delicious, but tomorrow's Juan's graduation. Then let's bake him a cake. I'll order ingredients. No, no, no, no. For every reason to stay together, I door dash in la Casa. Everybody needs money.

That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Full Money Radio Show. I'm Ron Gross sitting in for The Vacation in Chris Hill. joining me in studio from Motley Fool Income Investor James Early. From Motleyful Pro and Options, Jeff Fisher, and from Motleyful 1, Morgan Housel, gentlemen. How are you? Very good, Ron.

Hi, Ron. Good start. It's been a week. Thank you, sir. I appreciate it. It's Ron's first time hosting, if you're just listening. And I'm looking forward to it. Thank you for all for joining us. And, guys, thank you for joining me to talk about what's been a pretty crazy week on Wall Street. Lots and lots of volatility, I think, would be the word to categorize what we've been through. And I wanted to start off by going around the table and getting thoughts from each of you on the week's volatility.

And Morgan, I'll start with you. Yeah, I think if you're going to be a long-term investor, weeks like this are going to happen, and you need to accept that as a long-term investor. And two, there's a really good chance that in five years, ten years, even two or three years, you won't even remember this week. You know, this same thing happened worse than this, actually, in 2011. Most people don't remember or care about that anymore. Fair. Jeff, what are you like?

And last September, too, stocks fell about 10, 11%, just like now. So my thought is the reason stocks give you outsized returns over the long term is that they can be volatile in the short term. What you have to make sure of is that you're not using margin, that you have your own money in the market, that you own things you like. And that you, what was going to be my last point? It was going to be a good point. Just tell the look in your face. Anyway, that you like what you own and you buy more when you get opportunities too. And you have a long-term outlook and you'll do fine.

term, I think, is crucial, and that allows you to ignore the short-term volatility, hopefully, although recognizing that everyone gets nervous. I second Jeff's point. You can't have the yen without the yang. We make money, I often say, by capitalizing on the emotional weaknesses of other people. That sounds kind of like mean, but they're trying to do the same thing to us, and it doesn't have to be mean and an aggressive sense. It's just a structural thing, and these are the types of situations that make the stock market, profitable. We don't live in a plastic theme park type of world. We live in the real world, and this is going to happen. And Morgan, the markets really started to show some weakness

over the last couple months, I would say, but this week specifically, wow, the train came off the rails. And I wanted to get your thoughts on what you think caused it to happen this week. Well, I think what's funny is when you look at, when you're asking what causes a big market decline, you start going out and reading different newspaper articles and online articles. One will say stock market falls on China worries. The next one will say stock market falls on Fed worries. The next one will just say global jitters. I think when it's so it's not obvious what causes these things, but you can make up a story based on what you want to believe. It was caused by this, was caused by that. I think most declines in the short run, particularly if they're not that big, five or 10 percent,

are very difficult to pin down exactly what caused it. It's different if it's 2008, the market falls 50 percent. We can say that was caused by that. the financial crisis. But when we're talking, why did the market go down 3% yesterday or the day before? It's really difficult. China would seem to be the clear catalyst, at least initially, right? I mean, they suddenly devalue their currency. China has been responsible for 50% of the world's GDP growth in recent years, right? It's directly and probably indirectly through a lot of the kind of ripple effects buying commodities from emerging markets. We could also ask, you know, why is the S&P 500 flat the last 12 months if we were to extend our eyes?

outlook or why is it up 86% the last five years. We don't have time for all those questions, Jeff. We've got to move on. But I will stick with you. And I would want to know, you're the guy here that manages a hedge portfolio. You're long and short, at different varying degrees at varying times. What's it like to manage a hedge portfolio going into a period of time where things perhaps aren't cheap? And then when you come in on Monday, and boy, things are getting a little bit hairy. Piece of cake, because we're already set up. Well, seriously, it's, We set up hedges ahead of time because the hedge is just a position that you take against

uncertainty, against the unknown. So you don't wait for bad news to strike and then say, oh, I need to hedge. You just set it up well ahead of time. We've been setting them up for years. We use in Pro and Motley Fool Pro low-cost or no-cost hedges using options that will kick in if the market falls generally 7, 10, 20 percent or more. We space those out over the ensuing months and at various price drops, they'll kick into place. Does that help you sleep at night? Definitely. I sleep well. I'm glad to hear it. So yeah, it's, it's, you just, you rather have to keep cash on the sidelines if you're not hedging and you're concerned about volatility or hedge ahead of time, or don't care and ride it out. Right. Sounds good. James, so I've heard a lot

of talk this week about dividend stocks. All of a sudden, they're back in vogue after having kind of a difficult year. People say move into solid dividend-paying stocks. during turbulent times. You're the dividend guy in the room. You agree? Well, I think that the notion of the Fed postponing its rate rise has been sort of like a mini-catalyst, but that's not something that I would tell a long-term investor to invest based off of. I'm more excited about the fact that they've been pummeled in anticipation of a generally rising interest rate environment, which we're going to see. Rising interest rates are sort of like shots at the doctor. A lot of times the anticipation is worse than the actual thing, right? So the damage gets done first. The academic

evidence showing stock price movement, even dividend stock price movement during rising rates is kind of mixed. It's not very clear what the result is. Some studies show actually positive returns. There are not enough periods really to get good data on that. So anyway, I think the damage is done for dividend stocks, at least a lot of it is. So I would be a buyer. Now I'm obviously an advisor of a dividend stock newsletter, but even within that ambit, I still think it's a good time. Good. All right. So gentlemen, around the table, take yourselves back to Monday. Things are going crazy. Things are really dropping.

One or two industries where you first came to mind and said, oh, I'm interested. There might be bargains here. I'm going to dive in. James? It's not really an industry, Ron, but I think emerging markets, a lot of the quality emerging market names that are traded in the U.S. have really gotten smack down because of the China thing, right?

All the commodities are down. That's one thing. And certainly you can't not say oil. Oil stocks are very, very cheap. been there are a lot of, we're really separating the men from the boys now. You can see who was prepared and who wasn't, and that's useful information for the future, too. Jeff? Hey, Ron, my tune didn't change. I've been interested in technology and financial stocks for many years because they're among the cheapest on the market, and that still remains true.

So some of them really fell sharply Monday as well, and that was an opportunity so far. Morgan, I know you're not an individual stock guy, but did any sectors jump out at you? Maybe not sectors, but I would echo what James said. If you look at you outside the United States, you see stocks that are significantly cheaper than you can buy here at home. And granted, Europe and China and Japan have their own economic problems. So it's not a slam dunk. But if you're looking for cheap stocks, that's where you can still find them these days. Yeah, for me, when we get a little shock. And getting cheaper. Yeah, true. For me, when we got a shock to the system, my mind immediately goes to blue chips. What can I buy that I normally

wouldn't buy that our bargain? That's on sale. And I was lucky enough to take advantage of several of those kinds of companies on Monday. And when we get their stocks on our radar, for yourself, perhaps I will share one of that. For myself. This is a person. Okay. For yourself. Okay. We bought some deep value stocks as well, which I was really happy about. So just again, once around the table, were you a buyer either in practice or in theory

on Monday, buyer or seller? I don't buy very much. I don't do much at all in my portfolio. I just automatically buy, but I was a buyer in theory, definitely. Jeff? Same. We put on some bullish positions this week in pro and options. Morgan? I bought on Friday, last Friday. Very nice, and I did buy. I did some buying on Monday as well.

Okay, let's turn to a bit of the historical context here. And Morgan, I'm going to definitely turn to you here. How often do we see things like this occurring? How common is volatility? Does it matter? Do we need to really worry about it? Should it affect how we're actually investing? Well, if you look at the last 100 years in the S&P 500, we have a 10% correction roughly once a year on average.

There have been some periods where we've gone two, three, four years without one. But roughly on average, about once a year, you have a 10% pullback. And the S&P just fell 12.5% from this recent high. Right. And if we're talking 20% pullbacks, it's two or three times per decade, 30% about once a decade, and a 50% crash. That's happened twice in the last century. So it's a lot more common than people think.

If you look at the whole period over the last 100 years, stocks have been at an all-time high on 7% of days, and they've been somewhere below that the other 93% of the time. So I think this is much more common. than people think. As we moved to the time of this taping, the stock market had basically rebounded to where we were last Friday. So does that matter? This whole week didn't really matter, and now we're still due for another correction?

Well, I think most people, if you let these kind of corrections get under your skin emotionally, it's better that you don't pay that much attention to the market's day-to-day movements. And if you check the market once a week, last Friday and today, you would Rip Van Van Winkle think that nothing happened. And maybe that's how most investors maybe should go about investing. They should go, but for a lot of people this week was a disaster. If you use stop loss orders, or if you didn't check your emotions at the door and you were selling. But I have a list of, let's see, six stocks here, all blue chips, Apple, Bidu, Disney, Facebook, Gilead Sciences, Visa.

Their low price on Monday was 25 to 50% below the current price. Wow. And every single one, their low price on the day was an even dollar amount. 92, 109, 70, 76, 60. What does that mean? No pennies. someone had set stop loss orders at an even dollar amount and those triggered when the market fell. That's very interesting. You mentioned emotions. I do want to spend some time on that.

Warren Buffett famously said be greedy when others are fearful and vice versa. I wanted to get your thoughts on emotions and how they affect the individual investor. James' thoughts? It's a very broad question, Ron. Let me rephrase, James. Do you think that managing one's emotion? are something that an individual investor can do, and you can learn to manage your emotions and be a better investor. Yeah, I think the probably easiest thing is to somehow set yourself up structurally.

Like you're only going to check your stocks on certain days at like once a month or once every two weeks. I mean, it's hard to do that because we're watching the financial news and we just can't help what's going on. But if we choose to involve that part of our emotions on our investing, we're going to lose because it's just hardwired to make the wrong choice. is we have activity bias. We want to do something. We want to take action. And that's usually the wrong, almost always the wrong thing to do. And Morgan, do you think Buffett's right?

Do you think we should be greedy when others are fearful? I think if you can, yes, but this is something I was talking about with Matt Greer, one of our producers recently. You don't need to be greedy when others are fearful. If you just keep your head on straight when others are fearful or when you are fearful, you'll do just fine over time. So people don't need to go out and start buying more on weeks like this. If they can, they have the emotions to do.

that. That's great. Just as long as you don't throw in the towel and sell, you'll do okay over time. Sounds good. I think that's a good time to move to maybe some of the stocks on our radar that we are looking at in perhaps good times and bad. So Morgan, perhaps you'll have a question for the gang here as we go through our stocks. James, I'll kick it off with you. I'm going to go back the well with a stock. It's a double recommendation to income investor Copa Airlines. This thing has been pummeled. It's an emerging market airline based in Central America and you think, oh my gosh, that's, you know, Panamanian airline. It's in Panama. It sounds

sketchy, but their labor costs are typically a third as a percentage of a revenue compared to paying 10 or 11 percent compared to 30 or 40 percent for a U.S. airline. So it's much cheaper. It's the most profitable airline in the world by profit margin, wins all kinds of awards. They're just having a rough period because Latin American traffic and economics are down right now, but that will come back in time. CPA is a ticker, sorry. How much competition do they have in a small country like that? Here's the deal. It's a good question. They like to compete with a million population cities, which are big enough for one carrier, but not big enough for two. So an American Airlines United,

those guys don't have the motivation to go in. So Copa sort of has a mini-monopoly, sort of like being the one hot dog stand on the street. It's not big enough for two. Jeff, what do you got? It may be a bit boring, but I'm going with Disney, D-I-S. It's down about 16% this month, mostly on concerns surrounding ESPN and lower subscriptions, but I think those concerns are overblown. Meanwhile, the Star Wars franchise really kicks off in December. It's going to be new movies all the time, a constant stream of new Star Wars movies. And Shanghai, China opens in the spring of next year. And overall Disney is executing extremely well.

Are you worried? I'm going to jump in here, Morgan. Are you worried, let's drill it in the ESPN? Are you worried about the movement away from the typical pay model that cable is happening and what that could do to the ESPN business? That was a conversation, a big conversation in the last conference call. And I think I agree with management in that they'll be able to manage it. manage it and remain the number one sports network in the country and keep the profits.

All right. Sounds good. So earlier I mentioned that I look at blue chips when things get tough. I was happy to have that opportunity this Monday. And one stock that I did buy personally was Costco, ticker symbol C-O-S-T. That's a new one for you, Ron. I've owned Costco forever. I recommended it back at the inside value days, and I haven't had the opportunity to buy more, but I took the opportunity to pick some up on weakness. The stock is still off 11% from its high. I think that's a nice jump-in point. As most people know, it's a warehouse company, great management, great culture, cash flow generation off the charts, plenty of growth ahead of it.

So I was really happy to be an owner, and I hope to own it for years to come. What do you got for me, Morgan? Ron, if a stock falls 10%, and you buy, and then it falls another 10%. Do you feel like you made a mistake, or is that just a normal part of investing? I used to feel like I made a mistake, to be perfectly honest with you. But over time, I realize you can't call the bottom. You need to buy what you think are great companies at solid price. at fair prices, and if you're able to buy a steak on Friday for cheaper than you bought it on

Monday, as Mr. Buffett says, you should be a happy person. So I think it's part of investing. All right, guys, thank you all for joining me. I appreciate it. Thank you, Ron. Coming up, Freakonomics co-author, Stephen Dubner. You're listening to Motley Full Money. Welcome back to Motley Full Money. Ron Gross, sitting in for Chris Hill this week. And if you're missing Chris, have no fear, because for the rest of the show, we're going to revisit Chris's interview with Freakonomics co-author, Stephen Dubner, who joined us recently from Freakonomic Studios in New York City. Chris kicked things off by asking Dubner about his latest book, When to Rob a Bank, and 131 more warp suggestions and well-intended rants.

Let's just start with the title. When is the best time to rob a bank? I'm asking for a friend. All right. Tell your friend, Chris, easily the best time to rob a bank is never. Bank robbery is a crappy crime. Now, this may be because the typical bank robber is a pretty crappy thief. So, you know, the date on this turned out to be pretty interesting. If you look at the most successful time, for instance, to rob a bank, there wasn't that much variance in days of the week. Friday was kind of a bigger day. But there wasn't that much variance in days a week. But time of day, there was a lot of variance. So it turns out that you're much more successful robbing a bank if you rob it in the morning. And yet, the majority of bank,

bank robberies take place in the afternoon. And as it turns out, most bank robbers, a bank robber will get caught on average after three robberies. And since the average take is not very much in this country, you know, let's say maybe $1,000, it's just a stupid crime to do. But the interesting part in there for us then became, well, if mornings are better, why so many in the afternoon? Maybe they just don't know, right? Whenever you're analyzing data, you have to figure out there may just be a lack of knowledge. Or it could be that, you know, the kind of person who gets to bank robbery gets to bank robbery because they can't get up in the morning. And if they did, they'd have a, you know, regular job like the rest of us. Do you think Hollywood is to blame? It does seem,

you know, you look at some movies. It does seem, it can be kind of glamorous. Bank robbery? Yeah, you know, the image of the gentleman bandit, that sort of thing, Butch Cassidy and the Sundance kid. Yeah. Yeah, I think that, you know, I'm trying to think. think, you know, if it were I, I would much rather embezzle than rob a bank. It's just too obvious, you know, it's like, like the famous Willie Horton quote, it's where the money is. It's like everybody knows that. And therefore, banks have had hundreds of years to come up with ways to minimize. I mean, look, when you walk into a bank, you'll notice there isn't a whole lot of machinery in place to prevent bank robberies. Why? Because not that many people rob banks. If there were

a lot more robbing them, we'd see a whole lot more invested in that. But the fact is, is that not that many people do it and get away with it. So, yeah, if you're looking for a real crime, this post about Wendorov Bank actually began, was related to this woman that I'd heard about when I was visiting in Iowa. She lived out there, and she had embezzled from the bank where she worked. It was actually owned by her father. And the way she did, it was basically by keeping two sets of books.

And then when she was ultimately arrested and she helped prosecutors, figure out how to stop this kind of crime in the future, she realized one insight of hers was that if you're keeping two sets of books like she was, you can never take a vacation because there's the risk that somebody else is going to discover that. And so one great metric to look for, for embezzlement, let's say, or any other kind of crime, is when people are not using up their vacation days. So for those of you out there who are for whatever reason not using up your vacation days, you've been put on notice. Coming up, more of Chris's conversation with When to Rob a Bank co-author Stephen Dubner.

You're listening to Motley Fool Money. Welcome back to Motley Full Money. I'm Ron Gross. Let's get back to Chris's conversation with Stephen Dubner. There are several themes that you explore in the book, and one of them is cheating. You're a sports fan. What do you think it is about cheating that we generally find to be so captivated? Well, I came to a conclusion that's probably a bit counterintuitive for most people and quite possibly totally wrong, which is that maybe cheating is really great for sports. And what I mean by that is cheating is really, you know, one step over the line, sometimes. Maybe it's five steps sometimes.

But it's one step over the line of really, really wanting to win within the rules. but you want to win so badly that you go beyond, right? So what cheating really is is a manifestation of desire to win, which is what sports is about. Now, the reason that the ninth circle of hell is reserved for people who cheat to lose, right, who throw games. And why does that upset us so much is because it goes against the nature of sport. You don't cheat to lose. You don't throw a game to make money for yourself. You cheat to win.

And so when I look at the obsession we have, I mean, if you read the sports pages on a given day, it could be like half the articles are about some form of cheating depending on what season you're in. So right now my son, Solomon, he's 14. He's a soccer nut. He won't let me call it soccer. So I'll say a football nut. And when you just look at the different, you know, the whole play site, the way football's played on the pitch, you know, flopping would be. one of the most drastic forms of it, you know, trying to get away with a foul, trying to pump up a foul, trying to deak and create an off-sides or avoid one. You know, cheating to, trying to get

an advantage, even if it's not quite within the rules, I think we love it. And then it goes up the ladder all the way to performance-enhancing drugs. And, you know, we kind of wring our hands and Nash-R-T say, that's terrible, setting a bad example for kids. On the other hand, you say, first of all, we're fascinated by it. And second of all, you say, man, here's a guy or a gal who so badly wants to kick somebody else's ass that he's willing to put some crazy medicine in him that's going to shrink his testicles and probably, you know, end his life prematurely. I can get behind that. I love how badly he wants to win. I wouldn't want to do it. So I think that there's, I think that we kind of secretly applaud cheating.

You're listening to Motley Full Money talking with Stephen Dubner, one half of the Freakonomics team, the new book, is When to Rob a Bank and 131 more warped suggestions and well-intended rants. And it's the well-intended part of your title I want to focus on for a second because one of the things you write about is one of the early blog posts that Stephen Levitt wrote that generated a very quick and very angry response from readers. And it was Levitt posing the question, if you were a terrorist, how would you? you attack? Yeah, that was brilliant, wasn't it? So... Brilliant is one word, I suppose. All right, so let me give you a little bit of the context in that. So we had been having, we'd been running our blog for maybe two years or something like that on our own. Our first book had come out, and now we're working on our second book, Super Free Economics, which actually had a, we were working on a,

story that involved a pretty complicated algorithm trying to catch terrorists, where we were working with a British bank trying to catch terrorists. So we were thinking a lot about terrorism generally. And after we'd had our blog independently for a while, we were asked to bring the blog over to the New York Times and to live on their site, which was, you know, nice for us. I used to work at the New York Times. It was a nice homecoming. It was a big deal for us. And I think it was the first time they brought an outside blog within their site. And I was asked for an article published, I believe, in the New York Observer that day, you know, why do you think you guys were the first blog that, They were willing to bring in. And my answer was something like, well, you know, because I used to work there, I know their standards and they know us. We'd written a free economics column in the New York Times magazine. And I said, and it's not like we're going to issue a fatwa or something like that, right? That's what I said.

And then the next day, on the first day of our blog on the New York Times, Leavitt writes this post, if you were a terrorist, how would you attack? And it was, I swear to God, a really interesting, thoughtful, thought-provoking, obviously, post. basically saying that, you know, there aren't that many bad guys out there, but they can cause real havoc. So wouldn't it be good to know as much as possible about their possible methodology? Well, if we ask them, they're not going to tell us, even if we know who they are. But why don't we just open, you know, open thread, essentially? Here's a couple ideas of how one might think about creating the optimal terror, the maximum terror for minimal investment, let's say. But what are some other ideas you might have? So it really was meant to be, you know, I don't know about a public service move, but it was meant to be an open thread that could produce some information and ideas that law enforcement and scholars, researchers and others could think about. But I will say that the majority of our especially brand new readers on the New York Times did not take it that way, Chris. Were you at all surprised by the response? And did Levitt run this by you before he posted it?

Yeah, I mean, honestly, I don't really remember how much now, but back then, yeah, I was kind of the de facto editor of the blog, so he would write things, and then I would take a look and maybe edit it a little bit and then post it. So, yeah, so I mean, to this day, I will still absolutely defend every word he wrote in it. There's nothing, quote, wrong about it, but it was incendiary because, look, our whole style of thinking is that, yeah, you can get in line and think the way everybody else does and try to solve problems the way everybody else does and come up with the same four ideas everybody else does, even though that none of them have worked. Or you can really suspend your need to sound, quote, smart, or your need to be, quote, polite or whatever, and really try to have some new ideas. So I'm all in favor of that. And in terms of the response, whether it surprised us, I think what surprised us was just the magnitude because, you know, the New York Times website gets a lot. of traffic. It should go without saying. And it was getting so much, not all of it negative, by the way, but getting so much at the Times itself, the people who were responsible for

kind of shepherding our blog, they just hit the panic button and turned off the comments, which only all that did was it made everybody email to us directly. You just alluded to something that you and I talked about the last time you were on the show, and that is this idea of thinking like a freak. And now that Freakonomics is 10 years old, I'm curious what's been the biggest shift in your thinking when it comes to thinking like a freak? Is there something that you very firmly believed 10 years ago that you no longer subscribe to? You know, I like that question. I like to ask that question to people when I'm interviewing them.

I think it's, first of all, I think it's a hallmark of a healthy mind is to be able to change your mind when you're confronted with facts that contradict a long-held belief. But I think it's a very hard thing to do. the idea that lately I've really, really, really changed a lot on is not so much a freakish idea. It's a much more mainstream one. That's what we generally call income inequality. And you know, for many years I've thought that, and I guess I still do think this part, I've thought that capitalism is obviously imperfect, sometimes wildly imperfect, but it sure beats every other system, economic system we've had before it. Maybe that's not as defensible anymore, but it still feels to be ultimately, ultimately truthful that capitalism has done a lot of things in a lot of dimensions that have lifted more people out of poverty and into prosperity and wealth and on and on.

That said, it's not so much the gap between someone who has a whole, whole, whole, whole lot and someone who has a lot less. See, that's what bothers us. It's the gap, it's the marginal relation to other people around us that we don't like. So like if you're making 50 grand in a job and I'm making 52, you know, I'm happy. If you offer me 53 when everybody else around me is making 55, I'm less happy, even though I'm making $1,000 more. We are really relative animals in that way, not as much absolute animals as we'd like to think. That said, when you look what's going on around the, world and around this country, it just seems like the mechanism for people to work hard and live well

is a lot stickier than it used to be. It's a lot harder than it used to be for a lot of people to find jobs and or careers or professions that are going to guarantee them and their families a secure life. And that, you know, maybe looking back, maybe there was just a kind of brief golden era of a few decades in our history where that was true and that it wasn't before that. But I used to really be more of an advocate or more of a defender of our form of capitalism as it exists now. And I think that now I give a lot more credit to the people who have have been amplifying the flaws because I think those flaws are substantial and I think they'll hurt us all in the long run.

Coming up, more of Chris's conversation with Freakonomics co-author Stephen Dubner. You're listening to Motley Fool Money. Welcome back to Motley Full Money, Ron Gross, sitting in for Chris Hill this week. And now more of Chris's conversation with Stephen Dubner, co-author of Wenteraba Bank and 131 more warp suggestions and well-intended rants. One of the things that comes out in this book, I think a little bit more than the previous Freakonomics books, has to do with your personality, Stephen Levitt's personality, beliefs that you have, interests that you have. And one of the things that comes out that I did not know about you that comes out loud and clear in this book is, boy, you really hate the penny. I mean, if you get the magic wand, you are eliminating the penny from our monetary system.

If I get the magic wand, I will definitely eliminate the penny, but only if I have like 20 wishes and that's number 20, all right? So I know I sound like an anti-penny zealot, and I am, but only because I don't even know how it got started, Chris. I think I just casually wrote about, you know, throwing away pennies when I get the change because who on earth, you know, the penny is just a ridiculous. thing. Inflation has rendered it literally almost valueless, plus which we're paying taxes to our government to make the penny, which costs a lot more than a penny to make. And when you look at who are the biggest defenders of the penny, one of the biggest organizations is a group called Americans for Common Sense, C-E-N-T-S, which tells us how great it is for the penny, how great the penny is that children do penny drives to raise a lot of money, to which I say, why can't they do a dollar drive and raise more money, you know, is the penny. some magical thing. They tell us that if you round up to a nickel, think of how much more expensive things would be for people, which is totally idiotic in my view. And it turns out that the biggest lobbying group for the penny is basically funded by the zinc industry,

which supplies the raw material for the penny. So to me, it's a slam dunk. There's no use. The only reason we still have the penny is because of tradition and inertia. If you look at other, you know, modern countries, they routinely eliminate their smallest currency that inflation invalidates and why we haven't is beyond me. But I have to say, I've stopped caring because I had, it was too, it was just too much. It was to care so much about something so stupid was just a waste of my time. So I give up to anybody out there wants to take up the anti-penny baton power to you.

You can read everything I've written about. I'll give you some ammunition. But, you know, I'm off that train. But it's nice to know that if I'm behind you in line and there's a take a penny, leave a penny, you're not taking it. You're the guy who's only leaving pennies in the little dish. I'm definitely leaving pennies. I love the leave a penny thing because it's stupid to have them, but I'd much rather leave a penny in a bowl than have to throw them away. But I promise you, if you are behind me in the line and I get pennies, I do, I mean, I feel bad about it.

It looks un-American. It looks, you know, it looks crazy. but what I just do is when I get the change, I will put the receipt, if I use cash, I will get the receipt and the change in my hand and I will just sort it. And then I will drop the receipt and the pennies in the bag, which doesn't look so bad. And then I'll put the silver change in my pocket. Honestly, I throw away nickels too. So I'll throw the nickels and the pennies. I'll leave them in the bag.

And then when I get home and I take out the groceries, the whole bag goes in the trash. But I do put the coins in the recycling because I'm a good citizen, damn it. We have just a couple of minutes left, and I want to ask you about a couple of topics that I know are near and dear to your heart. And let's start with football, because I know you are a diehard Pittsburgh Steelers fan. But I'm curious as someone who looks at the world a little differently for a living when you look through the lens of freakonomics. What do you see in terms of the future of professional football? Gosh, I wish I knew the answer to that question. I wonder a lot.

I remember when I first started reading about people suggesting that football was going to disappear because of the various problems, most of them having to do with injuries to players, Malcolm Gladwell, whom I know and admire very much, saying, you know, football could go the way of boxing. We happen to be talking, you know, on a week when we have the so-called fight of the century. There's, I don't know how many fights of the century. There have been this century already a lot. but, you know, Pakeau, Mayweather. And it's true that boxing was a mass sport. Now, if you're at the very, very, very top of that pyramid,

you make a whole lot more money than the rest. But as a real mainstream sport, you know, it absolutely isn't. Could football, you know, follow that route, not necessarily the business route, but become, you know, much less popular because it's seen as too brutal? I think it could, but I think there are so many more elements to football that make it exciting. It's not the violin.

of football that I think is a central component. I think it's the playmaking. I think it's the pace. It's the perfect TV sport. I mean, there's a play that takes five seconds, and then there's like a reset where you need 30 or 40 seconds to get it going. And that is the perfect time to show the replay from eight angles, which are all awesome to watch while you're eating potato trips and drinking beer.

It is fantastic entertainment. So as much as I love watching football, soccer, on TV, because it's nonstop. the actual stopping of American football is fantastic. So I think, plus, you know, having spent a fair amount of time among some teams and players in the league, these are pretty, it's a very substantial group of people with a very substantial industry and a lot of very, very, very bright people with a sport that a lot of people love, at least in this country. So I don't see it going away, but I do see it changing quite a bit in ways that I can't predict.

You worked for the New York Times. I believe your father was a newspaper man as well. He was indeed, yeah. When you think about the future of newspapers through the lens of free economics, what does it look like? Definitely not as good as it was in the past. No one, no one I think would make that argument. It is the fact that collecting and presenting the news in the very labor-intensive, handmade way that an institution like the New York Times did and does, is expensive. And if you can't capture the value, then it's going to be hard to support that. And that's what we're in is now as this cycle.

You know, so look, I think the New York Times and Wall Street Journal, a lot of other great newspapers will survive in a very different form. Probably they will not be on paper like a lot of people predict now. But I also know that a lot of predictions, you know, we've written about this a lot. Predicting the future is just close to impossible. You know, I'm a guy who I used to be a musician. I used to be in a band and collected tons and tons of records. And, you know, I'm the guy who, when I moved to New York City, gave away my entire record collection, like 2,400 records.

Because why vinyl was gone and the CD was here. You know what? Now I have to go out and buy another turntable and start buying vinyl again. So does it mean that the printed newspaper will disappear? Maybe, maybe not. The one miscalculation, I think, that the New York Times made, along with a lot of others. And look, I revere the New York Times, not just because I work there, but because I think the quality of the paper is still very good and has been often in its past great. The miscalculation they made from a business perspective, I believe is that for many, many, many, many years, they were essentially a local monopoly in certain kinds of advertising and didn't really understand that the reason they made so much money was through an accident of history of that advertising monopoly in real estate and help wanted.

and a few other things. And then when those things began to go away, it wasn't initially an indictment of their journalism at all. It was just the business model changed, and they weren't there with it. The New York Times was online very early. I was there. I was working as an editor at the Times Magazine.

We put one of the first multimedia packages on the web. We did a special issue of the magazine on jazz, and we put up, you know, links and clips and audio files and stuff, and it was considered revolutionary. We were there pretty early. But they made a decision to have it all free all the time, thinking that there'd be a great IPO for NYT digital, which there never was because the bubble burst. And then it took them a lot of years to finally get to the point where they were going to start charging for their content online, unlike the Wall Street Journal, which charged from the outset and therefore was healthier because of that. So it is not a business.

I would like to be, I would not be, I would not like to be charged with, quote, rescuing the business side of newspapers right now. because that's a really uphill battle. But I think that the value provided, especially by the kind of high-end elitish ones, New York Times, Wall Street Journal, the economists and so on, I think they do provide value that even if they end up being only niche elite products, so they can still be very profitable. The book is Wendoraba Bank and 131 more warped suggestions and well-intended rents.

It's available everywhere, so pick up a copy. Stephen Doener, always so good to talk to you. Thanks for being here. Ditto, Chris. I really enjoyed it. Thanks. Thanks very much. And that's it for this week's Motley Fool Money. It's been my pleasure to sit in for Chris Hill.

I'm Ron Gross. Thanks for listening, and we'll see you next week.