Chris Hill: It's Monday, November 19th. Welcome to Market Foolery! I'm Chris Hill.
Joining me in studio today, it's the Monday crew, it's Jason Moser and Taylor Muckerman.
Gents, how are we feeling? Ready for Thanksgiving?
Hill: We're going to get the dozens of listeners ready for Thanksgiving. We were looking out
over the headlines today, and this is one of those days where there's nothing that leaps out as,
"Oh my gosh, this is the thing that we have to talk about. Here's the big earnings story,"
that sort of thing. So, we thought, you know what? Let's help the dozens of listeners
get ready for Thanksgiving. What do a lot of people dread about Thanksgiving? The conversation.
The conversation, because you're going to sit down at the table, and someone's going
to bring up politics. Taylor Muckerman: After a little bit too much
mead before dinner. Hill: Exactly. So, we're going to arm the
dozens of listeners with some things to talk about that aren't politics. These are things
that could conceivably come up, because they're somewhat timely.
Let's start with Facebook. Facebook over the last week has become more and more interesting
as we have these articles coming out in The New York Times last week, we've got various
op eds coming out. We were talking right before we started taping, Jason, it really seems
like the curtain is being pulled back on particularly the executive suite at Facebook, as we have
these reports of, "Here's what they knew, and here's when they knew it." There are definitely
some competitors, and probably some investors out there, who smell blood in the water.
Moser: Yeah, I would imagine. I certainly look at Facebook, from an investor's perspective,
as a company where I've certainly changed my tune on leadership significantly.
For a long time, I felt like Mark Zuckerberg and Sheryl Sandberg were a dynamic duo that really
had a good idea of where they wanted to take the business, how they were going to get there.
On the calls, they were always on point, painted a very good picture of a long-term strategy there.
Not just based on these articles that are out during this news cycle right now,
but just based generally on what we're coming to find out about the company, and what we
know about Facebook in general, and what social networking is doing to society on the whole
... I've lost all confidence in this leadership team completely. I trust them zero. Not at all.
And Facebook was not a company I was ever going to own anyway, it's just not something
I'm a fan of. It's a pure advertising play. I get it. If I'm going to invest in advertising,
I would rather own Alphabet. But for Facebook, it just seems like this dream of a more connected
world being some sort of utopia has been flattened on its ass so severely here in 2018.
It's very hard for me take a step back here and understand exactly how they change the narrative
to get back towards this "the connected world is such a good idea." I think what it does ultimately,
it exposes how we just fall back into tribalism. Everybody just falls back
to what they really want to believe in anyway! I don't know.
Muckerman: Yeah, and they prey on that. Engagement is the #1 metric that these companies like
Facebook are gearing towards. They're great at keeping you on the site. But if things
like this keep coming out, to where you don't ever want to go back to the site, that's the
end of their business model, in my mind. They do all the marketing for other companies to
leave the site of Facebook. Where do you see advertisements to go to Facebook? Unless it's
in your mind, you don't go to Facebook. I think with things like this popping out -- and
Jason's right, I'm on the same page of social media and the engineering of people's attention,
and only giving you articles that they think you're going to believe in -- I think that's
moving in the wrong direction. We're such a far cry away from Sandberg being discussed
as a potential presidential candidate in 2020 or 2024. And now, you see the struggles behind
the scenes here at Facebook. Hill: You look at shares of Facebook over
the summer, getting close to $220 a share. Now, it's down in the $130s. It's basically
down 40% from its high. I'm glad you mentioned that, Taylor. One of the most striking things
to me over the past week has been -- I don't know if there's a rift between Sheryl Sandberg
and Mark Zuckerberg, but it certainly seems like the spotlight is on the two of them in
a way that it really hasn't been before. When I think about this business, and I think about
Thanksgiving later this week, one of the things I'm interested to talk to younger people in
my family about is Instagram -- to what extent they are using it, dropping it, all that sort of thing.
When we talk about things within a company
that are rising and falling, we first and foremost look at the numbers.
When I look at Facebook, when I think about what's rising, it has nothing to do with numbers. It's the
drama of the company and it's the scrutiny on the company.
Moser: I'm going to have to hold my nose when I say this. Ultimately, I do think that
from an investor's perspective -- and that's our angle here, of course -- you're pretty hard
pressed to look at Facebook from today's levels and see it as a bad investment opportunity.
Again, I'm not going to be going out and buying shares myself. I just don't like the company,
don't like the leadership. But you don't amass a user base of that size on accident.
They, better or worse, have figured out a way to connect billions of people on this planet.
And they've got a number of different ways that they do it. We talk about Facebook proper
having maybe hit its peak moment. That may be. We're certainly seeing more advertisers
going over to Instagram. But you still have Instagram, you have WhatsApp, you have Messenger,
you have a lot of different ways the business can still make money.
You have to resort back to human behavior. And I think, generally speaking, people are narcissists.
That probably sounds bad to say, but the fact of the matter is,
there are a lot of people that like getting out there and showing you what they had for lunch.
I'm not sure why. They feel like it's important. Hill: Hey, sometimes lunch is delicious.
Moser: It is. I get it. I know, I understand. I don't think that's going to stop. I also
think there are so many people where their behavior is already ingrained, and that Facebook
and its properties are part of their everyday life and communicating in one form or another.
So, I don't think you're going to see meaningful disruptions to the network. You may see meaningful
disruptions to leadership. And I wouldn't be surprised at all to see Sandberg say,
"You know what? I'm out." I think Zuckerberg needs her more than she needs him.
Hill: Yeah. For her to come on in 2008 and completely turn that business into a revenue
and eventually profit-generating machine ... I don't think Zuckerberg was doing that on his own.
Moser: Politically, with Google,
she has a lot of different ways that she can go about her future. And obviously, he's tied to this business.
I think if you're an investor, you probably have to be looking at Facebook and thinking,
this might be actually a pretty good opportunity. You just have to be aware
of what's in store. You have to know your line, as to whether this is the type of company
that you want to own. Hill: After Thanksgiving, of course,
we've got Black Friday, and all the focus that happens on the retail industry. Something that we're
starting to see evidence of is, I'm not taking a victory lap here, but I feel like we called it.
Moser: Go ahead, take a victory lap.
Hill: I feel like we called this out earlier in the fall. Late summer, early fall,
we always see large retailers coming out with their announcements of seasonal hiring.
And one of the things we talked about on this show and on Motley Fool Money was, this will be
interesting to see, and I'm not picking on Target, but, when Target comes out and says,
we're going to hire 100,000-125,000, seasonal workers, Macy's makes the same announcements,
so does Walmart, etc. And at the time, we were saying, "This is going to be interesting.
It's not 2010. We're now in an environment where unemployment is incredibly low,
and wages are on the rise." And now, it really seems, Taylor, like, yeah, companies are having
a tough time hiring. Among other things, some businesses are throwing hiring parties
to try and get people in the door. Muckerman: It's wild to think, with unemployment
as low as it is, under 5%. It's going to be harder to find and more expensive to find
seasonal labor. Companies are going to have to bump up that potential $8 an hour up to,
$10-15. Amazon saying they're going to advocate for that $15 minimum wage across the country.
I think that goes to a couple different points, maybe some competitive points, of Bezos trying
to flush out some people that can't afford $15 an hour. Either that, or, just because
he foresaw a tighter seasonal employment market and was like, "Hey, here's our $15. If you
can beat it, go work there. If you can't, we're going to give it to you." This will
be the first season that they hire their own delivery drivers for seasonal delivery.
There's a lot more competition out there. It's going to be a little bit costlier. You'll probably
see a lot more younger folks. Maybe this is the chance for some high schoolers to go out there
and make an extra buck, because they might not have traditionally been hired for seasonal work.
Moser: I feel like the conversation has always
steered around autonomous driving, robot cars, all that stuff. To me, this is by far and away,
at least in the near-term, the more significant opportunity. I don't understand
how all of these fast food restaurants to this point are not fully autonomous.
It's not like they're offering bespoke menus. Generally speaking, you're getting what you want based
off a pre-fixed menu. I don't know how many years left we have of these types of restaurants
maintaining these big human workforces. To me, it seems like we're going more towards
the automated direction anyway with them. It's astounding that they haven't gotten there quicker.
It's food. It's not cars. It's not like you have to worry about burgers crashing
into each other. You just make another burger. Muckerman: I've seen some robots flipping
burgers that were pretty fascinating to watch.
Muckerman: It does, it's incredible. Moser: You see the soft drink carousel, for example.
Those are fairly automated now. I have to believe it shouldn't be that big of a leap.
Hill: It's certainly been a tough year for
the restaurant industry. In terms of the stocks, we've seen plenty of restaurants be taken
private this year. But to your point, Jason, I do feel like the bar is higher for retailers
than it is for restaurants. You would need to have a really bad experience at a
fast food restaurant to not go back there at some point in the future. Whereas when it comes
to retailers over the holiday season, they almost don't have the option about employing
seasonal workers. If go into a Target, and you're looking for whatever's on your list,
if you find someone who's helpful to you, that's going to stick with you, you're going
to go back. Whereas, otherwise, you're going to hold a grudge. I know people who have had
bad retail experiences at Retailer X and they say, "That's it. I'm done. I'm never going there.
I have other options." Muckerman: At least in my perspective, you
expect a little bit more curt service at a fast food restaurant. Like, "Hey, here's what you want.
Here's what you got. Thank you, see you again in a day." It'll only take
five minutes to get to your food next time. Whereas retail, at least in person, definitely more personable.
You'd like environment to be a little bit more structured, so you can actually
find what you're looking for, since you have to search for it. At a fast food or dining chain,
it's all laid out for you right there on the menu.
Hill: By the way, I know that there's a science behind this, but it just occurred to me,
the whole thing where, you know how grocery stores will change up which aisles things go in?
People get into a routine when they go to a grocery store. I don't know if it's every
12 months. Whatever it is, I just know it happens, because I go to the grocery stores
and I'm like, "Wait a minute." Muckerman: The Twilight Zone.
Hill: "You moved the spice aisle?!" Muckerman: McCormick!
Hill: And that appears to be a phenomenon that only happens in grocery stores. The Target
down here on Route 1, everything's the same, in terms of the location, which is good.
If Target ever decided, "Let's just screw with people. Let's break up their routine,"
people would lose their minds. Muckerman: Move the beer aisle.
Moser: I think it's related to the size. I will say, when I was in the golf business,
part of the golf business is running a golf shop at the country club. You can imagine,
that shop is significantly smaller than something like a Target. And we would switch that thing
up all the time. But I also know that it takes maybe five minutes to walk through that entire shop.
Whereas if you go to Target, you're like, "Man, I've got about five minutes."
If it takes me five minutes to even figure out that they changed where things were,
you've got a problem. I think consistency in that regard is something that they almost have
to rely on. It has to happen. Hill: Programming note. This weekend on
Motley Fool Money, we've got out annual Thanksgiving special. And it is special, because it's the
only show that we have during the year that has a sound effect. We blow the entire sound
effects budget on the one turkey sound. Also, on Friday's episode of Industry Focus,
it's the return of Kyle Pounders. Kyle Pounders, the man behind Excaliburger. Dan and I and
Dylan Lewis met him earlier this year at SXSW. I talked about him on Market Foolery.
Dan and Dylan put together a great special episode of Industry Focus earlier this year talking
with Kyle and the business of having a food truck.
Muckerman: A pay-it-forward burger. Hill: Yes. And Kyle came to Fool HQ.
Did you get a chance to partake? You were out of town.
Moser: I had just gotten back. It was funny. I was pulling out of the garage that evening leaving,
and I saw him park there on the side. He was having a little car trouble, and I
was able to stop and talk with him. I tried to give him a jumpstart, but I think maybe
it was a little bit more than was needed. Super nice guy. Really enjoyed talking to him.
Hill: Great guy, and a fantastic burger.
Here's one more thing folks can talk about at the table at Thanksgiving if the conversation
turns to politics, and that is entertainment. Most people like entertainment. From a business standpoint,
you pointed this out earlier today, Jason, the trend that we've seen over the
past few years continues. More and more people are cutting the cord.
Moser: It's not surprising. I certainly remember not all that long ago saying, "I want to keep
the cord." I like having that optionality out there. And it came at a price. Our Verizon
bill every month for that option was going on, $150. For me, what really changed my mind
was when Hulu came out with this skinny bundle offering. YouTube has one, very similar.
We're seeing more and more now that not only are these modern content providers coming out
with those options, but we're seeing that the legacy providers are having to do the
same thing. It's changing the bundle. But we are getting to a point where it feels like
now, that cost justification doesn't quite exist like it used to, unless you're willing
to make sacrifices. And some people are, and that's fine. Some people are very happy just
to have that Netflix subscription, and that's all they really want anyway.
But it used to be that it was either Netflix or cable. You had to choose. Now, it's not so.
It could be cable or any number of different apps and services that you want to piece together
if you like sports, news, entertainment, whatever it may be. From the perspective of a consumer,
it's really nice. You can get what you want, when you want. But you're starting to pay for it.
And I'm telling you right now, Netflix ain't lowering that price. They are not lowering
that price, no. You're going to see more and more, whether it's ESPN+ or Disney+ or
HBO or Netflix or Hulu -- thankfully, Amazon is able to build their streaming service into
the Prime relationship, and you don't really think about it. The prices are going to up
because that's just the direction that this goes. So, we get back to where we started.
[laughs] I'm not sure I'm not sure what to make of all of that. But that's where we are.
Muckerman: The one cord you're not cutting is your internet cable. That's the base of
all of this. You still look at companies like Comcast and Verizon and Time Warner that are
providing this internet service, I think that portion of the bill is probably going to go up
a little bit more if people continue to cut the cable or the telephone portion of
the bundle out. Maybe once Netflix or these other companies bump up against a little bit
of a subscriber growth issue, they can partner with Verizon. Instead of selling an internet-cable bundle,
you sell an internet-Netflix bundle or something like that. I'll be interested
to follow the whole Comcast-Disney situation here with Hulu. Disney bought into the Sky Network
with Fox, and now they own 60% of Hulu. Comcast still owns 30%. A little bit
of a competitive market there, owning the same bundle service. It'll be interesting
to see if Comcast holds onto that, or maybe ships it for a few billion dollars to Disney
to give them 90% control, and see how that plays out. That's one of the more interesting
situations in this whole cut-the-cord bundling situation.
Hill: What are you watching these days, in terms of entertainment? I'm assuming it's
streaming as opposed to a traditional broadcast TV show?
Moser: I saw that the new season of Narcos is out on Netflix. That, frankly, is the only
series on Netflix I've ever felt like I wanted to watch. I'll probably catch up on that.
And then, another one. I went digging back last week on Amazon and HBO. They have an
old HBO series called Carnivàle. It only went on for two seasons.
Hill: Oh yeah! I remember that. Moser: I had read some really good reviews
about it, so I gave the first couple of episodes a shot. It's pretty compelling.
I want to watch the story play out. Muckerman: Narcos, I just started the new season,
it's also a new direction. It's in Mexico now versus South America and Colombia.
Two episodes in. That's one of the few shows that I'm watching. Ozark is over for the season,
Billions is over until the spring, so I'm all in on Narcos.
Hill: I just started re-watching the first season of Goliath on Amazon Prime, just because
I so enjoyed that series. Muckerman: Is that Billy Bob Thornton?
Hill: It's Billy Bob Thornton, down and out. The first season, as you said before, Jason,
a little dark. Second season gets a little darker. But that that first is just phenomenal storytelling.
Moser: Speaking of phenomenal seasons,
the one that stands out to me to this day, an HBO series called Boardwalk Empire.
Season three of Boardwalk Empire may be the best season of anything I've ever seen.
The story that it told, and it incorporated a character -- Bobby Cannavale is the actor who played
Gyp. Man, great story, good series. Season three of Boardwalk Empire is on-point.
Muckerman: One of those shows where you have to watch --
Hill: I was going to say, I'm a little bummed that you said season three. I have to go through the first two?
Moser: You could probably watch season three
and it would stand on its own. I would recommend the whole series. With that said, each episode
is exhausting. It's like watching The Untouchables every time you watch it. It's great, but you
have to commit like a year to it. Hill: That's good. I feel like those are
the types of things that you need to hear from friends who recommend series. What people
often hear is "Watch this! It's great!" And the second level of information is, "It's
a comedy, it's a drama," that sort of thing." But I always appreciate when it's like,
"Look, it's a great show, but you're going to need a nap after each and every episode."
Moser: "How much time does this guy think I have?"
Hill: It's draining to watch this show. It's great, it's phenomenal storytelling, and it's exhausting.
Taylor Muckerman, Jason Moser, guys, happy Thanksgiving!
Muckerman: You too, 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, so don't buy or sell stocks based solely on what you hear. That's going
to do it for this edition of Market Foolery. The show is mixed by Dan Boyd. I'm Chris Hill.
Thanks for listening! We'll see you tomorrow.
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