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In this podcast, Motley Fool senior analysts Ron Gross and Jason Moser discuss topics including:
In addition, we revisit our conversation with Scott Galloway, author of the best-selling book Adrift: America in 100 Charts, and discuss a potential rebranding for nuclear energy, as well as which CEO has created the most shareholder value.
Finally, Jason and Ron share two stocks on their radar: Ametek and Taiwan Semiconductor.
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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Chris Hill: A Thanksgiving tradition unlike any other. Motley Fool Money starts now.
Danny DeVito: Everybody needs money. That’s why they call it money.
Chris Hill: From Fool global headquarters, this is Motley Fool Money. It’s the Motley Fool Money radio show. I’m Chris Hill. Joining me in studio, Motley Fool senior analysts Jason Moser and Ron Gross. Good to see you as always, gentlemen.
Ron Gross: Hey
Jason Moser: Hey, Chris.
Chris Hill: It’s our Thanksgiving special. We will give thanks for some stocks, we’ll call out a few turkeys, we’ll revisit a conversation with best-selling author Scott Galloway. Yes, we got a couple of stocks on our radar. But it’s our Thanksgiving special, which means only one thing, Dan. That’s right. It’s the one show per year where we actually break out the special effects.
Ron Gross: Gets me every year. I don’t know.
Chris Hill: Let’s start, Jason, with a serving of humble pie, because what’s Thanksgiving without pie? What is a stock or a business story this year that you were wrong about?
Jason Moser: Well, we all need this. I think that you’ve made an incredible leap as an investor when you can appreciate and actually look forward to making mistakes because you know that you will get better from them. Chris, my humble pie this year, AppHarvest, a company that I’ve talked about before on this show. A company that I own, a company that I’ve recommended. It has been a very, very disappointing performer since I recommended it and purchased it. To be clear, and I want to make sure everybody understands this, I am still keeping my shares, but this is one I clearly got in on far, far too early. For those who are unfamiliar, AppHarvest is in the business of controlled environment agriculture, ultimately growing or building these indoor farms in order to try to solidify and stabilize our food supply.
We saw that really take a hit here over the last few years. I do like what the company is doing, but this was a company that was brought to the public markets via SPAC and we know how many of those SPACs have turned out. SPACs brought companies to us at a far earlier stage in their life cycle than probably we would normally see them. It was exciting, but it was also very easy to become a bit separated from the potential of where the business could go in time versus where it actually was at that present day moment. For me, the lesson learned, recognize where a business really is, what reasonable financial expectations look like. It’s not to say can’t or won’t work out, but it typically will take a little bit longer. Chris, SPAC me once, shame on you. SPAC me twice, shame on me.
Chris Hill: Ron, what form does your slice of humble pie take?
Ron Gross: For this one, I’m going to humbly choose the worst-performing stock in the Instant Income portfolio, which is a portfolio of dividend-paying stocks that I put together each year for our Total Income service. Walker & Dunlop, WD, is down about 40% since this portfolio was created only eight months ago. It’s likely, I think, to be fine over the long term, but this year has really been brutal. They are a commercial real estate financial services company with interest rates increasing and real estate falling. They’ve just taken it on the chin quite frankly. As CEO Willy Walker said on the most recent earnings call, in this rising rate environment, every deal is under pricing pressure, mortgage servicing has been hit especially hard. As I said, I think it’s going to be fine. Again, as Willy Walker said, the pricing pressure is solely due to interest rate increases and it will abate the moment rates stabilize. Only 12 times forward earnings, 3% yield, I humbly suggest, I think we’re going to be OK.
Chris Hill: My humble pie is it’s not one stock, it’s really just the idea of am I being very wrong in 2022 about former CEOs returning to their original jobs. This happened earlier in the year when Howard Schultz came back to Starbucks. I was saying no, that’s not going to happen, and recently, when Bob Chapek at Disney came under fire, one of our coworkers said, do you think Bob Iger would ever come back and be CEO? I said no. He said no, what percentage chance would you give? I said zero percentage.
Jason Moser: Do you know that he found you?
Chris Hill: Bob Iger is coming back? Yeah, fortunately it’s pie, it tastes delicious. Flipping from humble pie to stocks we’re thankful for. Jason, what do you got?
Jason Moser: Well, I’m thankful this year gave me the opportunity to buy shares in a company I have long admired, the Home Depot. We always talk about our trips to better our homes. Home improvement is a massive market. Nothing really, I think could get in the way of that. Near-term macro concerns, I think, have hit virtually every corner of the market in some capacity. Even the biggest market leaders are feeling the pressure. When you look at Home Depot, those shares are down close to 25% year to date and trailing the market. But I actually think that has represented an opportunity. There are big tailwinds, obviously, in an aging, existing housing market, you get over half the homes in the U.S. today are 40 years or older, housing supply that still needs to catch up with demand. Home Depot, to me, just stands out as, it’s an investment that I’m going to enjoy owning for many, many years to come.
Chris Hill: Along those lines, Ron, I am also thankful for a stock that I finally bought this year.
Ron Gross: Yes.
Chris Hill: Actually two stocks that I finally bought, Berkshire Hathaway and Nike.
Ron Gross: A shares.
Chris Hill: Not the A shares.
Ron Gross: It’s still worth it. Still the same, it’s all good.
Chris Hill: My pockets are not that deep. But finally, after years of listening to you talk about Berkshire Hathaway finally bought some B shares. Jason, for all all of the times you’ve talked about Nike, when it took a hit earlier this year, I thought this seems like an opportunity and I’m not going to let this one pass me by. Ron, what about you?
Ron Gross: I wanted to pick a stock that I’ve recommended at the Fool and that I also own personally. When I scanned down the list of my stocks to see what my biggest winners have been, Costco jumped out at me with a 1,000% return for me personally. Listeners will remember that I’ve spoken about Costco many times, even recently on this show. Lots of admiration for former CEO and founder Jim Sinegal, created an amazing corporate culture. Current management has continued that legacy, they’re relentless about the value proposition for their customers, especially that $1.50 hot dog and drink, which isn’t changing anytime soon. I love the membership model, I love the pricing power, I love the 90% retention rates they enjoy. I first bought Costco back in 2008 when I first recommended it in our Inside Value service for those that remember Inside Value. Lots of nostalgia here for me, plus not too shabby of a return.
Chris Hill: Bill Mann mentioned recently on the show talking about Apple and just obviously, when you think long term about Apple, you’re thinking about Steve Jobs. But Bill pointed out, you look at the stock appreciation under the leadership of Tim Cook, and it far outweighs what the stock did in terms of Steve Jobs and his leadership. The same thing with Costco, Jim Sinegal set the tone, did such a great job leading that company. Craig Jelinek.
Ron Gross: Yes.
Chris Hill: Under his leadership as CEO, the performance of Costco shares really pretty phenomenal.
Ron Gross: Yeah, he took over something that was already at this wonderful business model. He didn’t screw it up. He took it forward. We always say the stock’s not cheap but yet the stock keeps moving higher. Perhaps we’re even underestimating where a company as great as Costco is should be trading.
Jason Moser: Ron, quick question, just use your personal take on the matter.
Ron Gross: Yes.
Jason Moser: I’m sure probably you saw the headline recently where Sam’s Club is taking the price of their hot dog and soda down to what? $1.38, I think.
Chris Hill: $1.38.
Jason Moser: They’re one-upping Costco’s $1.50.
Ron Gross: I would need to do a taste test. I bet the beef is inferior.
Jason Moser: If it is even beef, maybe they’re turkey dogs.
Chris Hill: More of our Thanksgiving special after this, put down the leftovers and stay right here. You’re listening to Motley Fool Money.
Chris Hill: 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. Don’t buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here in studio with Jason Moser and Ron Gross. It is our Thanksgiving special. Thank you for listening. Thanks for spreading the word on social media for rating and reviewing Motley Fool Money on whichever platform you’re listening. It’s the thing that helps other people find the show and we appreciate it.
Thanks for doing that. Thank you to our radio stations across America that broadcast our show every week and we’re thankful for listeners like Rich Smith who dropped an email to say the following, “Thank you for all the content you provide. It means a lot more to me this year because I’m currently serving overseas. I’ll be spending Thanksgiving 2022 with my military family. But seeing the new episodes of Motley Fool Money show up in my podcast feed helps to pass the time a little more easily. Shout out to everyone else serving our great nation and away from their loved ones. Be safe, take care of each other, and stay connected. Sincerely, Rich.”
Jason Moser: Such a great note, thank you, Rich.
Ron Gross: Thank you so much for your service as well.
Chris Hill: Absolutely. Let’s get back to using the sound effect more with turkey stocks. This is more forward looking. This is a stock to avoid and I want to point out, I looked at the list of stocks we talked about on last year’s Thanksgiving special. We did right by the dozens of listeners because last year we said stay away from Peloton, stay away from Zillow, and Avis Budget Group. All three of those stocks down in the past 12 months and down worse than the S&P 500. I feel like we did our listeners are solid. Ron, a turkey stock that people should stay away from?
Ron Gross: It’s got to be Bed Bath & Beyond, Chris. This is a stock you and I have owned on and off over the past year or 18 months or so, I think we may even have made some money on it.
Chris Hill: A little bit.
Ron Gross: Thanks to the WallStreetBets crowd perhaps.
Chris Hill: Thank you. Shout out to the Reddit community.
Ron Gross: But now I think it’s permanently impaired and I think it’s time to stay away. I know it’s tempting to take a shot at a stock when it’s $3 a share when it was at 30 sometime over the last year. Even if it gets back to 10, you’ll hear people say that’s a triple. How hard could it be to get back to 10? Well, Chris, I think it’s likely more of a zero than it is a 10. The meme-stock folks, notwithstanding, I can’t predict that. My original hope was that new CEO Mark Tritton was going to turn this around. He did not. He went in all-in on private label.
He did sell some off some non-core assets, which I appreciated, but his merchandising strategy, which he was really famous for over at Target, just really fell flat. He is no longer at the company. They’re closing 150 stores. They’re reducing costs. Moving thankfully to a national brand merchandising strategy, trying to firm up relationship with vendors. But most importantly, it’s trying to firm up its balance sheet so it has time to execute the turnaround, $3.4 billion in debt; bankruptcy is not out of the question here. It’s a real challenge. We have to keep an eye on it. It’s too risky for me. I think I’m going to stay away. I recommend others do as well.
Chris Hill: There was so much there, Jason. Yet I think the pull quote for people online is going to be, “I think the business is permanently impaired.” It is tough to bounce back from permanently impaired. What about you? What’s the stock to avoid?
Jason Moser: Yeah, I know this will probably incense a few of the diehards in my direction, but I don’t know, to me, Tesla is one, I’ve never owned Tesla shares before. I mean, obviously it’s had a tough year, stock’s down somewhere in the neighborhood of 50%, but it seems like everything is down 50% this year. I looked at Tesla. The valuation for me has never really fully made sense to me, it’s 10 times the market cap of Ford, for example, yet Ford brings in double the revenue. Now, I understand, of course, that will change. Tesla is growing. But we always talk about, well, is it a car company? Is it a battery company? Is it a power company? Maybe it’s going to be a metaverse.
Ron Gross: It can’t do that. It’s a gum.
Jason Moser: I personally, this really boils down for me to leadership. It really boils down to I just do not feel good about all of these things that Elon Musk is doing, the Twitter purchase. He got him SpaceX, the Boring Company, whatever else he wants to do. Most recently testifying in court that he doesn’t want to be a CEO at any company. Like it seems to me very difficult to have any faith that you can really trust what this guy is going to do. I’m not saying that Tesla is permanently impaired. Don’t get me wrong there. But it does feel like to me there are a lot of catalysts on the horizon in the near term, at least, that could take this stock lower. Again, it’s not to say don’t own it if you like it; great, good on you. But it just feels like things are going to get worse before they get better.
Chris Hill: First of all, I love the voice that you did because that is the voice I always imagine when people like you don’t get it man, you’re not looking at this company the right way.
Jason Moser: Bitcoin. I didn’t get Bitcoin and you just don’t get it.
Chris Hill: Second of all, on a more serious note, I’m just looking at my own notes and I just jotted down before coming in the studio, I just wrote down for a stock to avoid, I wrote Tesla, and then a hyphen and then I just wrote, the CEO is very distracted. On a more serious note, I have to go back to something Bill Mann said recently on the show about management. He was talking about small businesses and how he looks at management and how important that is when a business is smaller.
Then as the business grows, he continues to look at management, but he looks more at, well, what is the team underneath, in some cases, a founder, a CEO, that sort of thing and that’s the thing that I look at when I look at Tesla. There are other companies, too, I don’t want to just single out Tesla, but there are. Tesla is one of those companies when I just look at and I think, well, what is the bench strength? Who are they relying? Because, it really is true Ron, as we begun, we were talking earlier about Apple. Part of what enabled Steve Jobs to do what he did was he had an amazing operator in the form of Tim Cook, who he could rely on for all of the operational parts of the business. Tesla, I think one of the best things Musk could do, not necessarily step down as CEO, but just set up a structure where he’s delegating a lot more.
Jason Moser: Delegating for sure, but make no bones about it. This is his company and all you have to do is listen to the trial going on now about his pay package where they basically said we needed to figure out what we’re going to do to keep him because he’s the company and if he walked away, we’d be in trouble.
Ron Gross: Maybe if he steps down, they can bring in Bob Iger.
Chris Hill: Where do you think we go from here? I know we are a month away from our 2023 preview, but just thinking about management, it really does seem like everything is on the table, both in terms of the question of whether or not we go into recession and what challenges businesses have, what the leaders of these businesses are dealing with. It seems like, I guess where I’m going with this Ron is it seems like a particularly rough time to be a public company CEO.
Ron Gross: Oh, yes. Taking away guidance, hurting people with poor guidance, not having good visibility into your own business. After all, who should have more visibility than the leader of a company. It’s a rough time for sure. Supply chain disruptions notwithstanding, that even makes it even worse.
Chris Hill: All right, before we go to break, something we started doing a few years ago. A little something I like to call it not at the table. Just a business or investing story you’re just hoping does not come up this holiday season, Ron.
Ron Gross: All things crypto. Now, last year when everyone thought they were a crypto genius making money on everything from Dogecoin to digital pictures of apes. I especially didn’t want to talk about it then. I don’t want to talk about that now, even though those same people have wringing their hands saying, oh gosh, what happened? There is a lot of real people losing a lot of real money. It’s not that funny, but I just don’t want to go there. Leave it off on my table.
Chris Hill: I’m looking at my notes, Jason, I just wrote down one word, crypto. What about you?
Jason Moser: Well, crypto definitely comes to mind. It’s not something where I consider myself an expert by any means, but I sure as hell, don’t want to talk about it either. People are going to think I’m piling on here, but maybe not Elon Musk just for a day? He bought Twitter, they closed the deal, he owns it now, he’s tweeting all the time and that’s great and even more so than usual. I think there’s probably a relation.
Chris Hill: There is.
Jason Moser: How many tweets he offers out a day versus a decline in Tesla shares.
Ron Gross: Crypto link and they were there with him as well.
Chris Hill: All things lead back to Musk.
Jason Moser: I’m sure he’s going to do something in the next couple of months. It’s going to warrant another headline and us to talk more about, oh, can you believe what he’s doing now? But let’s just, one day, let’s give it a rest.
Chris Hill: Yeah. I don’t know that your wish is coming true.
Jason Moser: At my house, it will.
Ron Gross: We just got to turn all things over to Charlie Munger. Charlie, what do you think about crypto? Charlie, what do you think about Tesla? Charlie, what do you think about Musk? Just whatever Charlie says.
Chris Hill: Is there a chat? He’s not on Twitter, but is there someone who’s just like tweeting out Mungerisms?
Ron Gross: Pretty sure there is.
Jason Moser: Yeah, there’s other Mungerisms.
Chris Hill: All right, Jason Moser, Ron Gross, guys, we’ll see you later in the show for stocks on our radar. But up next, we got a conversation with best-selling author Scott Galloway. Stay right here. You’re listening to Motley Fool Money. Welcome back to Motley Fool Money, I’m Chris Hill. Scott Galloway is a professor at the NYU Stern School of Business, host of a popular podcast, and the author of several best-sellers, the latest of which is Adrift: America in 100 Charts. Earlier this fall, I caught up with Galloway and started the conversation by asking how he got the idea for his new book.
Scott Galloway: Well, I’m fascinated by charts and trying to communicate information with images and visuals. We’ve had an alphabet for 1,500 years, but we’ve been interpreting actions and taking instruction through images for tens of thousands, whether it’s paintings on cave walls, or trying to figure out when to plant the crops based on the height of the sun in the sky. We can process information communicated through visuals 6 to 60 times faster. I’ve always overinvested in everything I’ve done in finding someone exceptionally creative to help display information visually I would say with everything we put out — a podcast, well, that’s actually not true, a podcast — but a book, a video, I would say, can we say this with an image as opposed to words? We produced several thousand images across our body of work over the last decade, and I thought if you were to try and pick the 100 most illuminating or shocking or insightful, and then group them or cluster them into themes that told a story, how would you do it? There’s a narrative, it’s basically, the book is laid out, a chart then a page of narrative, then another chart and tries to tell a story around, A) some of our biggest problems, and then I saved the last chapter for what I think are some potential solutions.
Chris Hill: The process you just described reminds me a little bit of a documentary filmmaker who has, in some cases, 70, 80 hours of footage and tries to distill it down to maybe 90 minutes or two hours. How challenging was the process of getting it down to 100 charts? Because certainly, if I was your publisher or your publicist, I would very much be focused on a nice round number like 100.
Scott Galloway: Yeah, it’s definitely the phenomenon. If I had more time, I would have written you a shorter note. The hard part wasn’t what to include, it was what not to include. We literally have several thousand charts. I sort of backward integrated, and I said, what do I think are the biggest issues facing America and the people aren’t, or they’re underreported or if you will, many of them. Then, which charts best illuminate the issue? But the hardest part is finding that narrative in that arc, that story arc that tells a story with them, and then trying to bring it all together, that’s the hard part. The hard part is a clustering and the sorting. You can find the ingredients, but somebody really intelligent figured out, oh, chocolate and peanut butter actually go really well together.
That was the hardest part. This was fun, this stuff is fun. Writing a book is the hardest thing I do professionally. There is supposedly a hormone that comes over women right after childbirth that gives them amnesia, otherwise, they would never have more kids because it’s so painful and unpleasant. I think there’s a similar process with writing a book, this is my fourth book, about halfway through every book you think, why the heck did I agree to do this again? Right now is the euphoria stage, you get to the end of the book, like never again, I get to speak to smart people like you, I get to have fun, people are nice to me on Twitter and LinkedIn, and all of a sudden I can feel that amnesia washing over me, and already we’re like, “What’s the next one?” We’ll see.
Chris Hill: When I think about your first book, which is about Amazon, Apple, [Meta‘s] Facebook, and [Alphabet‘s] Google, as you were writing this one, I don’t want to say a North Star but was part of the process of putting this book together, looking back at that first book about big tech and essentially saying, I want to update what I wrote before?
Scott Galloway: There are some similarities, for example, in The Four, my publisher didn’t want charts. The conventional wisdom when you put charts in a book, it feels like a textbook, and it won’t sell. We said no, and I think we have 30-50 charts in The Four. Just think sometimes it’s just much more illuminating to show the dominance of these companies graphically. The major contrast though versus The Four is, I started The Four as a love letter to these companies. They are the largest recruiter out of my class at Stern. I have a decent amount of economic security because I’ve owned their stocks for a long time. I love their products, and then as I really dug into the research and marinated in the data around these companies, the book turned more often to a cautionary tale. By the end of writing the book for a moment, the day you finish the book, you feel for a few minutes, you know more on that topic than anyone in the world and then a few minutes later you don’t, because things change.
But I felt like I was the kid who could see dead people and that is I thought these guys are scary, people don’t realize. You people don’t remember when I wrote The Four in 2017. The only debate about The Four was who’s going to be president, Jeff Bezos or Sheryl Sandberg? The general assumption was Sheryl Sandberg was the lock on for governor of California and then going to be Bloomberg’s running mate and then going to be president. We were just all so enamored with these companies, including Mark Zuckerberg. I generally, for a moment, I’d like to think I saw the externalities a little bit sooner than some other people just by looking at the data. This book, Adrift: America in 100 Charts, I started out very pessimistic, polarization, failing young men, income inequality. There’s just some rise of the shareholder class, decline of the middle class.
But by the end of the book, I felt much more optimistic because I think one of the major messages I’ve tried to get across in the book is the biggest problems we’re facing are of our own making and we can absolutely unmake them. I have a chapter in the book called “The World We Made.” If you look at the things we have faced down, if you look at the things we have pushed back on, if you look at the things, really bad ideas that we have defeated, there’s nothing we’re facing now that we can’t defeat. There’s this great photojournalist, I think her name is Maria Amolo. She’s colorizing World War II photographs, and there’s this wonderful photograph of landing craft, an Allied landing craft that it’s front gate has just dropped, and there are a couple of dozen young men, their average age was 26, their average wage was $800 a month after inflation, wading toward Omaha Beach.
Two of three of those men would not leave that beach alive. I imagine them turning around and somehow through some sort of space and time, looking like metaverse, wormhole, can see what’s going on in our lives. We said, “Oh my gosh, we’re facing income inequality, we’re facing polarization in our media.” Them going, I can’t imagine they wouldn’t say, “You can’t fix that? Look what’s waiting for me on the beach.” Look what I’m about to sacrifice and overcome, whether it’s coming up with vaccines that saved 1 [million] to 2 million American lives by most estimates, no one’s waiting in line for Russian or Chinese vaccines. Whether it’s 50% of global philanthropy is sponsored by American organizations, and we’ve taken world poverty down. The World Health Organization in 1970 said, “Let’s commit to cutting in half in 40 years.” They cut it in half in 20 years, and then they cut it in half again. Most of this has been American-led. I actually came out of this book, started at half empty, started at half-full, come out of the book actually quite optimistic about America and our ability to face down these challenges.
Chris Hill: I was going to say you end this book on a very hopeful note. For anyone who might be thrown off by the word “adrift” in the title. You end the book with I think a great deal of optimism. As you touched on recommendations for specific remedies, things like simplifying the tax code. The one that really caught my attention was rebranding nuclear. I’d love to have you share a little bit more about this because I think this, among other things, relies on your expertise as a professor of marketing. But when I was reading that, I thought, oh, yeah, nuclear power really could use a rebrand.
Scott Galloway: Well, think about Hollywood and how it portrays electric vehicles or wind and solar. These are generally like the ultimate boyfriend in a Hallmark Channel movie is a guy who owns a solar farm or installs solar panels. So our heroes are innovators coming up with electric vehicles. Think about Hollywood and nuclear power, start with Monty Burns and the Simpsons, the evil guy who owns the nuclear power plant. Or there’s that incredible docudrama, Chernobyl. Or there’s The China Syndrome with Jack Lemmon where we’re going to burn a hole through. Hollywood has done a great job of basically like Nazis, then South Africans during apartheid. They always find a bad guy then the Taliban and nuclear. Nuclear is the corporate bad guy, maybe only second to tobacco executives.
I’m not an expert on energy, but it strikes me that if you look at the fact that one power plant or one reactor can power a city the size of Philadelphia, when you look at the actual number of fatalities stemming from 50 or 60 years of nuclear, when you look at the fact that we are arguably funding a war in Ukraine with fossil fuel dependence, then you also quite frankly, just look at the relative efficiency or inefficiency of some of the cleaner, sexier technologies, wind and solar. Just how much of it we’d have to build to replace fossil at the rate we want. I would argue that most data leads you to any serious conversation around the type of pace and cadence we need to establish to turn back climate change has to involve a sober conversation around nuclear. That’s not to say there aren’t risks.
That’s not to say there aren’t externalities, but the emissions, I think the total nuclear fuel spent from US nuclear power plants could be put in some encasing six feet high and cover a soccer field. Now it’s dangerous stuff and you got to be really careful with it, but that’s nothing, I believe, compared to the emissions of most other, especially fossil fuels. Some very bright people including Bill Gates and some people I really respect are saying, yeah, let’s start calling it elemental energy because there’s some interesting conversation now around whether we put up plans to mothball some plants in California, Germany’s is thinking maybe they don’t unplug their plants. But I think nuclear and the advances in nuclear are really interesting given some of this new technology where you can have a mini plant the size of a Winnebago that can power a fairly sizable town, or even something the size of a backpack that can power a neighborhood. I’m actually really excited about nuclear. I think it offers a solution. Sometimes the most obvious solutions are right in front of you.
Chris Hill: Bill Gates is someone you referenced in an article you wrote recently for The Atlantic entitled “America’s False Idols,” really about tech entrepreneurs and one of the things that caught my attention in the article was the number of times a company founder lists his name in the S1 filing, which seems like it might be a new exercise for investors to just go through the S1 and see how many times someone like Adam Neumann lists himself in the IPO paperwork. I’m curious though, Scott. If you look at the follow-on leaders of companies differently, if you look at someone like Tim Cook, differently than Steve Jobs or Andy Jassy, different from Jeff Bezos because they don’t have everything that comes with being a founder attached to them and instead they are an operator.
Scott Galloway: Yeah. There’s a lot there, the idolatry of innovators. By the way, if I wrote that article again, I probably wouldn’t include Bill Gates in that imagery because actually Bill Gates is doing really good work and I have a lot of admiration for him and I think we could do worse than have the wealthiest people in the world with the same foci as Bill Gates. But anyways, having said that, the charismatic storyteller leader has been a key component of any of these companies that have accelerated from zero to half-a-trillion dollars or more. That is their ability to articulate an incredible vision, whether it’s Steve Jobs and his showmanship or Jeff Bezos, 1997 investment letter where you read the thing and you just want to buy shares. Or Adam Neumann, who I’ve been on stage interviewing before, who’s just incredibly charismatic. You just want to be around him and a part of what he’s building. That ability, that competence of a CEO to articulate a really compelling vision such that they attract cheap capital.
Basically, to use another World War II reference, overwhelm the enemy with just brute strength. That’s what capital is. Typically, the company in any sector that has access to the most capital, the cheapest capital, that’s the odds-on favorite to win. A really compelling CEO who can raise a lot of capital well ahead of the curve and pull the future forward with that capital to combine amazing things, plans, property, IP, people, wins. What’s unusual about, you brought up Tim Cook, he’s an exception and Tim Cook has added more shareholder value than any individual in history and people might say, well, Steve Jobs did take a company from 0-300 billion was more difficult, but nobody has taken a company from 300 billion to 2.5 trillion.
Tim Cook has added $2.2 trillion in shareholder value. No one has ever done that, accomplished that. He’s a supply chain guy. I don’t know if it says as much about the difference in CEOs because I still think at the end of the day they are spokespeople. When you listen to Tim Cook in his own way, he just reeks of credibility and integrity and the performance is just so outstanding. I think the jury is still out on Andy Jassy. I don’t know if he brings the same level of compelling vision storytelling as a Jeff Bezos. I think that’s still TBD. But I think Elon Musk weaponizing or leveraging whatever the term is, Twitter with 90 million followers and as a result, spends almost zero on traditional marketing and General Motors has to spend $2 billion. The storytelling visionary, charismatic CEO has become the criteria for a CEO.
They’ve become our new heroes. We have an idolatry and specifically tech CEOs, every third year Times‘ Person of the Year, just picks the richest tech person. I think it’s a phenomena talking about the book, the Idolatry of Innovators, whose nations become wealthier and more educated. Their church attendance and reliance on a superman goes down, but we need new idols. We need to look to people who can answer the unanswerable. Technology is the closest thing we have to mysticism or magic or spirituality because my iPhone can do amazing things. I have no idea how it works. Steve Jobs is the information-age Jesus Christ and I would argue, Elon Musk is taking that mantle. It leads to some very unhealthy places. These firms aren’t regulated the same way other firms are regulated and these individuals are given a wider berth than any leaders in history, unfortunately, I think it wallpapers over things such as teen depression or organizing insurrection. My last point, I’ll stop.
There’s an illusion of complexity that’s fomented by these companies that these are big problems we can’t figure out and yet, you remove one account from Twitter and 30%-60% of election misinformation goes away in one night. Amazon gets critic bombed on their Lord of The Rings series where people are showing up and making incendiary comments and fake comments. They close the comments section down, they use AI, they enforce identity. They post it 48 hours later and the comments are legitimate and have more veracity, so they figured it out in 48 hours. But Meta and Google throw up their arms and say these problems are too big. No, they’re not. We’re not talking about the realm of the possible, we’re talking about the realm of the profitable. They create this illusion of complexity to try and stave off what are fairly obvious solutions and actions they should take.
Chris Hill: The book is Adrift: America in 100 Charts. It is out now and available wherever you find books, so pick up a copy. Scott Galloway, always great talking to you. Thanks so much for being here.
Scott Galloway: Chris, thanks for your good work.
Chris Hill: After the break, Ron Gross and Jason Moser are back with a couple of stocks on their radar. This is Motley Fool Money. Welcome back to Motley Fool Money, Chris Hill here in studio with Jason Moser and Ron Gross. This is our Thanksgiving special, we have just enough time for radar stocks. Dan is not going to hit you with a question. That’s how little time we have. Ron, what’s on your radar?
Ron Gross: Going back to Taiwan Semiconductor, TSM, pure-play semiconductor foundry. Shares are almost 25% cheaper versus the last time it was on my radar stock on March 18th. Big news is that Warren Buffett’s Berkshire Hathaway disclosed the purchase of $4 billion of Taiwan Semi stock. China global economic slowdowns are the main risks here, but it looks cheap to me. Plus you get a 2.2% dividend yield.
Chris Hill: Jason Moser, what are you looking at?
Jason Moser: Yeah. It’s the $30 billion market cap company you’ve never heard of: Ametek. That’s right, ticker A-M-E. Ametek is a global manufacturer of high-tech industrial solutions that play an important role in many important and growing markets. They generate revenue through products marketed and sold via electronic instruments and electromechanical. Think thermal management systems, Dan, think things like precision manufacturing systems. They serve industries like semiconductors, aerospace and defense, healthcare. Their primary strategy is growth via acquisition: identifying small leaders in small niche markets, acquire them, bringing them under their umbrella and maximize those efficiencies, grow the business.
Ron Gross: I’ve never heard of this company. Dan, what do you want to add to your watch list?
Dan Boyd: I’m not entirely sure that Jason’s company is real. So I’m going to have to go with Taiwan Semiconductor.
Chris Hill: That’s going to do it for this week’s Motley Fool Money radio show. The show is mixed by Dan Boyd. I’m Chris Hill. Thanks for listening and we’ll see you next time.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Chris Hill has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Ametek, AppHarvest, Inc., Apple, Costco Wholesale, Home Depot, Nike, Starbucks, Taiwan Semiconductor Manufacturing, Target, and Walt Disney. Dan Boyd has positions in Amazon, Berkshire Hathaway (B shares), Costco Wholesale, Walt Disney, Zillow Group (A shares), and Zillow Group (C shares). Jason Moser has positions in Alphabet (C shares), Amazon, AppHarvest, Inc., Apple, Home Depot, Nike, Starbucks, and Walt Disney. Ron Gross has positions in Amazon, Apple, Berkshire Hathaway (B shares), Bitcoin, Costco Wholesale, Meta Platforms, Inc., Nike, Starbucks, Taiwan Semiconductor Manufacturing, Target, and Walt Disney. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Bitcoin, Costco Wholesale, Home Depot, Meta Platforms, Inc., Nike, Peloton Interactive, Starbucks, Taiwan Semiconductor Manufacturing, Target, Tesla, Walker & Dunlop, Walt Disney, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool recommends AppHarvest, Inc. and Walker & Dunlop, Inc. and recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), short January 2023 $92.50 puts on Starbucks, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
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