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That's why they call it money. From full global headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Chris Hill joining me in studio this week for Million Dollar Portfolio, Jason Moser, and Matt Argo Singer and from Motley Fool Pro and Options.
Jeff Fisher. Good to see you as always gentlemen. Hey, we've got the latest earnings from Wall Street. We will dip into the full mailbag and as always we'll give you an inside look at the stocks on our radar.
But we begin this week with the social network. Facebook's Second Quarter Revenue topped $4 billion for the first time, but spending increased more than 80% Jeff. At least in terms of the stock, which is down a little bit this week, that seems to be what investors were focused on the amount that they are ramping up their spending. It seems to be, Chris, and it reminds me of Google in its early days when it really ramped up spending.
And you need to. Facebook is serving more than 1.4 billion people monthly on the site. It's not that experience to be top-notch. And so they're investing in server farms and technology and people, of course.
They're serving almost a billion people who use Facebook daily. And it gets about 20% of all time spent on smartphones on Facebook properties. So I actually think Facebook is the best positioned website property in the world right now. And I never thought someone would supplant Google, but I think Facebook is best positioned.
It has a lot of traffic to still monetize. It has great properties, great loyalty of users. And I own shares. I would still be a buyer now as well, too.
And I've been talking about there. We don't really get a lot of light on the numbers that Instagram and WhatsApp. Facebook Messenger. Facebook Messenger.
Exactly. You're looking at 300 million on Instagram, like 700 million on Messenger now, 800 million on WhatsApp. And that's all traffic that really hasn't been monetized yet. It was to the degree that they feel they can.
True, Jason. And 450 million people are using events. 850 million using groups. So what I love about Facebook, they have so much optionality to build into the site.
Search is starting to take off, too. 1.5 billion searches a day on Facebook. Now, this sounds really simple. I know someone at Facebook is listening.
You can make it even more integral to your daily life. If that becomes the place where you go to check your weather in the morning to get news, which I know they're working on news, Facebook has a chance to really become your home hub online for not just your social network, but almost everything you do. Shares of LinkedIn falling on Friday despite second quarter sales rising is 33%. That seems like a nice number to me, Mattie.
It's a very, very nice number. The overall member count is growing very nicely as well. Up 21% to 380 million members. The one thing I'll say about LinkedIn though that has me a little concerned, in a lot of social networks though, is in LinkedIn particular is that the member counts nice, but the active user count as a percentage of that member count is actually declining.
If you look at it in the past quarter, 97 million of those 380 million members are about 25%. We're visiting LinkedIn about once per month. In the same period last year, it was about 27%. That's not the direction you want to be going.
One area where they are growing very nicely is China. I noticed in China that they reached about 10 million members. That's almost triple where they were a year ago. The key for LinkedIn, of course, is the business.
It's the talent solutions business. That's up 33%. It's a 443 million. Display Arts doesn't know, has been weak.
And one thing I noted is that they recently purchased Linda.com, which is an online training video tool. They almost doubled their overall revenue projection for that business, but they didn't really raise their overall company revenue guidance by the same degree, which suggests that, okay, take out that acquisition. LinkedIn's business isn't actually not performing as well as it should be. It's in a way.
It's almost a little unfair because we've talked before about how acquisitions are tough to pull off and execute well. They shell out $1.5 billion for Linda.com, which is this video library where you can learn and develop new skills. They do really great integrating that into the business. In a way, they kind of got dinged for it.
It's like, well, you've made more money off of that than we thought you were going to make. So we're going to sort of sell you off because you're not making more money in the basic underlying. Right. And again, it was almost the same conversation we're having with Facebook.
These businesses, these platforms are investing so heavily in themselves. I think in LinkedIn's case as well, making good acquisitions. The problem is that you expect LinkedIn's profit or revenue to really, really take off the way they have been, that you're going to be disappointed. How concerned are you that for the second quarter in a row, they're lowering guidance?
It's a little concerning. I'm more concerned about the usage factor of the platform. They're not really talking about in the street. If that continues to decline as a percentage of total members, I'd start getting to get really worried.
I agree with that, Mattian. Facebook has it in one way easier because they still have relatively few advertisers. I mean, they have 40 million small businesses advertising on Facebook, but that's tiny compared to the market out there. So their ad revenue goes up 74%, mobile ad revenue jumped 74% this quarter.
Once you have traction, once you have a good ad platform, your ad revenue can grow quite quickly if you have the sales force to drive it. LinkedIn, in contrast, is mainly selling enterprise software, which is a longer sales cycle, bigger ticket item, takes more time to grow your revenue, and yet they're spending to grow rapidly at the same time. So they need more time to make that work. That's right.
Twitter's second quarter revenue rose 61% but the company lowered guidance for the third quarter and shares down around 10% this week. And Jason, we were talking about this earlier. As investors, we always want management to be as open and honest with us as possible, but in this case, the honesty from Twitter's management about their future prospects is largely what sent the stock down. It was brutal honesty, indeed.
And as a shareholder, I'm actually okay with that honesty because I feel like they've done a pretty good job of trying to kind of cupcake their quarters up at this point. This quarter was a mixed bag. Revenue growth, as you mentioned, was strong and user growth was not. And really, that's, you know, Wall Street is going to focus on user growth here.
And when Anthony Noto spoke in the call and mentioned that they did not see any turnaround coming really quickly, you know, that's when the stock really plummeted in the concern is valid. Twitter needs to gain users. And I think that management's correctly identified the fact that the companies failed to communicate why people should use Twitter and the value in Twitter. And so, you know, the actions that they're going to be taking here for the second half of the year should reflect trying to communicate that value more.
They're hiring a chief marketing officer, which I think is good. The two catalysts that are coming up right now really, the project lightning, which will roll out here at the end of the year. And I think that'll be something they can use to focus on big events coming. Think about a presidential election coming up, the Summer Olympics, things like that.
And then really the key for them right now is they need to get a CEO in that seat, a permanent CEO to help steer this business in the right direction. Because this temporary CEO is just at least everything in the question right now. And you can't be confident that the strategy they're talking about today will be the strategy in place six months from now. And that's what we need to know.
I think you told, you talked to me after the last thing of the call that you thought you got the sense that Jack might be sticking around. He did not sound like a temporary CEO. He sounded like he wants the word really removed from his title. He just sounded like he was thinking about this business in terms of years and not just kind of filling a role.
And honestly, I would be okay with him being the CEO there because he's a co-founder and he's a user of the product. He obviously helped develop it. And I think that's what they really need is someone who can think from that perspective. So it wouldn't shock me if he ends up getting that job, but still the question is out there and nobody knows.
Shares of Baidu down more than 10% this week. Second quarter profit for the Chinese search engine giant was lower than expected. And they lowered guidance for the third quarter and Matty, they are spending an awful lot of money. Another story where we have this incredibly popular huge platform that is just investing in itself a lot.
And so it's going to make short-term profit really look pretty bad. But look at the top line for Baidu. We kind of remember how big this company is already. But revenue was up 38% in the quarter of $2.7 billion.
The amazing thing about that is 50% of that revenue is coming from mobile. Where you go back just a few years ago and the company really didn't have much of a mobile presence at all. And so what they've invested is really paying off. They have 629 million monthly active users, mobile search.
That's an incredible number again. 600 and 29 million. That's roughly what? Twice the size of the United States, I think.
You know, 590,000 active advertising customers. That was up 21% a year. But really it's all about the profitability. You look at the operating income for Baidu.
It was actually down year over year, which was troubling. But this is about a company I think that's investing heavily not just on mobile, but it's moving to, it recognizes that the world is moving towards an app world where, you know, it's not much about search. If you think about we talk about TripAdvisor, Priceline all the time. I don't need to go to Yahoo or Google anymore to search for hotels in Hawaii.
I can use those apps and live within those apps. I think Baidu is recognizing that. So they're making a lot of investments in traveling one. They've got, I mean, I'm going to really butcher this.
But Ice, which I think is there, it's a new video streaming service, kind of like Netflix. They're building that out. All that takes a lot of money. It's hard to move from a search course search to app world.
You know, so we've talked about LinkedIn, Facebook, and now Baidu all investing heavily in themselves. And I just like to point out it's great to hear that. For years on the show, we've been talking about companies sitting on cash and not spending it. This is good for the economy.
Of course, it may only be partially offsetting all the energy companies that are pulling back the reins and not investing. Well, but to that point though, I mean, you can look at what Baidu is doing as an expensive bet. But if it pays off, then nobody's going to care about this, you know, the stock drop. No, no, no, no, exactly.
It's the same thing that Jeff said about Facebook. They have these 629 million multi-act users. They want them to have a great experience. They're having a great experience and spending and using Baidu apps.
That's going to be a huge. Up next, Priceline is not the only online travel stock putting up some big numbers. Stay right here. You're listening to Motley Full Money.
Welcome back to Motley Full Money. Chris Hill here in Studio with Jason Moser, Matt Argo Singer and Jeff Fisher. Guys, shares of Expedia hitting a brand new all-time high this week after second quarter profit came in higher than expected. The online travel company also raised their dividend.
Jason, this looked pretty strong all the way around. Yeah, it was strong. Absolutely. I think the most attractive part of this industry is the actual size of market opportunity, more than $1 trillion.
And so these online travel agencies are obviously chasing after a lot of money that's still out there. Very strong performance international hotel bookings. They continue to grow their network of hotel rooms. Gross bookings ended up growing 28% after currency effects.
They recently sold their interest in e-long, Chinese interest in May. They did clarify and call it. They still intend to pursue that China market. It's obviously a much more difficult market to gain entry into.
But they are continuing on with the orbit acquisition that should close by the year's end. And again, when you look back to the market opportunity, the way they're managing this company, Priceline isn't the only way to win in this business. You mentioned the numbers that they're putting up despite the currency effects. And I'm wondering if investors should, I don't know, should we be rethinking companies that cannot say, well, the strong dollar hurt us.
And I get that that's a very real thing. But on the other hand, you have companies like Expedia that are still knocking it out of the park despite that. Well, I mean, we look at currency effects generally speaking as sort of a long-term net net. We don't really see it as a major part of the thesis in any kind of case.
And so I think when we look at how much more global we are today in the investing world, I think that currency effects are just always going to be a part of these reports. And so as long as you have a company that's not too terribly exposed one way or the other, then I think we just kind of keep on moving forward. Third quarter profit and revenue for Whole Foods both came in lower than expected. And same-store sales rose just 1.3%.
Jeff, Whole Foods co-founder and CEO John Mackie sits on our board of directors. It was tough to find some optimism in this quarter. It was. And one thing that really hit the company and the stock was the problems with pricing in New York City, in New York State.
So, but Whole Foods is saying that was inadvertent human error. It happens that every grocer around the country is what they say. Whole Foods has, for some reason it went viral. This news went viral.
It was at a small set of stores and they are correcting the problem or have corrected it. But they really now need to get out there and let people know and repair the damage that has been done to trust. Whole Foods has already viewed, for better or worse, as an expensive store. And you take away some trust and it's going to hit them hard.
Same-store sales were running around 3%. Their average result, most quarters. And it just fell through the floor when this news went viral. So that's what really hurt them.
Well, we were talking about this earlier. I mean, I think part of the reason it went viral is because it does play into that fairly or unfairly. It does play into that preconceived notion that this is an expensive place. And when they have this issue where there is pricing that is not accurate based on pre-packaged food by weight.
And sometimes it works out in the customer's favor. That just totally gets lost. It's so much easier for people to just wrap their head around. Well, it's expensive.
It's ripping me off. It's our cynical society too. Like, oh, they're trying to rip me off. Sometimes it went to the customer's favor.
This happens everywhere. John Mackie said in the conference call, well, we'll try to be perfect. We are trying to be perfect. But, you know, weight can be off by a tiny bit.
Yeah, and I think where this perception hurts the most is among millennials who obviously don't have huge amounts of spending for groceries. And they're just probably not going to hold foods anyway. So they're launching this new concept next year or later this year. But what was kind of be funneling was the way they're calling it, which is 365 by Whole Foods.
Which, you know, I just thought I thought they were going in a different direction there. So I'm curious about how successful that's going to be in light now of the pricing issue. Yeah, Mackie. So Whole Foods, the flagship stores, they have 424-hour-hour in the country.
They expect to have 500 in 2017. And they still aim to have 1,200 Whole Foods in the long term. But these 365 smaller urban-centered stores start to open soon as soon as next year. And small footprint value quality equilibrium they're trying to offer.
I like the name because I like the Whole Foods 365 brand. I'm not sure why, but I was taken by it right away. I'm like, it's a value, it's good quality. So I look forward to going to the chat.
We'll see how they do. Cybersecurity company FireEye's second quarter results were overshadowed by the fact that Chief Financial Officer Michael Sheridan is leaving the company. He's been there five years, Mattie. And it always seems like all things being equal, it is a slight negative when the CFO walks out the door.
I know, but I mean, just before we get to that, look at this. Revenue was up 56%. They raised guidance deferred revenue for which for a lot of companies is kind of a backlog of orders. Up 77% operating cash flow turned around from a loss of $61 million last year to $39 million.
Overall, the results were really great for FireEye, but none of that matters. None of that matters because their CFO, as you said, Chris, Michael Sheridan is leaving to pursue an opportunity at another technology company. Sometimes I think this is a bigger deal, but for this situation, I mean, here's a guy he's not a founder of the company. This is according to Forbes, his seventh company over the last 15 years.
So two years he's ready to move on. Right, and so I just don't think this is a big deal. I know the stock is sold off because of it. But given the quarter, I just think, if you're interested in coming to FireEye and the Cybersecurity space in general, this might be an opportunity.
Well, I was going to say, I'm bullish on hacking. I think hacking is your bullish on hacking. If I could buy a stock in hacking, I would buy it. So it seems like there's a future in Cybersecurity.
I hear I. I think there is F-E-Y-E, correct? That's right. Boston Beer's second quarter looked pretty good.
Profit's up. Sales volume on the rise. So Jason Moser, why is the stock falling a little bit? So it was a decent quarter.
They beat expectations. They're seven percent growth in barrel shift. I'm a little surprised by the markets reaction. I really thought this thing was going to sell off, which it hasn't sold off nearly as much as I thought it would.
And the reason why is because depletion, which is a metric we use to see how they're doing in volumes, you know, quarter in quarter out. It's the distributor sales to the retailers and the company's beers. Depletions were a little weak for the quarter and actually guided full year depletions down. That's a metric.
That's kind of like same store sales. The market sees that as same store sales. That's the depletion's metric. And when the weak guidance comes over that, usually the stock gets hit pretty hard.
It didn't get as hard as I thought because they reiterated earnings guidance for the year. This is one we have on the watchlist in MVP. You look at the stock, they announced trading around 30 times full year estimates. So it's starting to look a lot more attractive now given the long-term growth prospects.
We're going to be digging into this one next week. So you're actually hoping it gets knocked down further. A lot of the love is making it knock down further, Chris. We've got about 30 seconds left.
You have a beer recommendation for anyone thirsty out there? Wow. Boy, this is just so many out there. I'm going to go ahead with Sam Adams though.
I mean, just because I think their cold snap here is really good. I think they're going to go ahead and do it. Oh, somewhere else. Just wow.
All right, Jason Moser, Matt, Argus, singer, Jeff Fischer, guys. We will see you a little bit later in the show. Up next, a conversation with MarketWatch senior columnist Chuck Jaffe. Stay right here.
You're listening to Motley Fool Money. Silver and Gold. Welcome back to Motley Fool Money. I'm Chris Hill.
For many Americans, their first investment is a mutual fund, whether buying direct or a 401K plan at work. And it adds up. The United States has the largest mutual fund market in the world with somewhere in the neighborhood of $16 trillion in assets. It is a subject extensively covered by our guest this week.
I'm going to say that you're going to be a senior columnist for MarketWatch and host of the Daily Podcast. Money Life with Chuck Jaffe. Chuck, thank you for taking time out of your busy schedule this week. Chris, it's always great to chat with you.
Let's start with the biggest company out there. That's Apple. The stock dropped a little bit after its recent earnings report. I know what that means for people who own the stock.
But what kind of ripple effect does something like that have for people who own mutual funds? Well, ideally, most funds wouldn't have noticed. But if you wanted to go to the charts, your portfolio every day on the Motley Fool site or the market watch site or wherever, and you looked back when Apple was announcing and you saw, wow, my portfolio is down a couple of percent. There's a good chance that you've got too much Apple.
It's not that you have too much Apple necessarily in any one portfolio. It's just that Apple fits a ton of mutual fund profiles. I mean, obviously, any large gap fund, any index fund, those sort of things are going to happen. But you find value managers who have Apple stock.
You find growth managers who have Apple stock. And it's all that for fund managers who not have Apple because it's basically going to mean that they don't perform like their peer group if they have anything with large-scale stocks. So the folks is, they have a lot of overlap. There's a lot of Apple and a lot of different funds.
You might think you're diversified and it might be a little more Apple since then. Last time you were on the show a couple of years ago, the market was already doing well. It's up about another 40% since then. And there does, however, seem to be this skepticism sort of in the air out there.
Is that simply a function of the fact that we are now in year six of a bull market? Well, I ask this question to us all the time and people are a lot smarter than me. And yes, there is something about it where people have gotten to where, well, this can't continue. And since it can't continue, I'm not going to buy in right now.
And if the market were a coin flip of 50-50 proposition, then you might have some gambler's fallacy going in. The gambler's fallacy is that, oh, well, we just had five times where the coin was thrown and it was heads five times in a row. So that either means that the six times it's likely to be heads because we're in a hot streak, or the six times it's likely to be tails because it can't stay heads forever. Well, in each case, every throw is a pure 50-50 proposition period, end of story.
So I think a little bit of the fifth-plus that you can't keep going on forever. But I think the bigger side is that bull markets really don't tend when so many people are skeptical. And if not just me that says that, it's guys like Jeremy Granthone or Bob Dahl from New Bean or whatever. You can put plenty of experts out there who will tell you that bull markets end when everybody is thinking, wow, this is great.
I can't wait to get in. I wish I had more money to throw in. It's all easy. And you're not hearing that now.
And so until you get to that optimism, you couldn't have downturns and everything else, but you're not likely to have the market roll over and have the major crash. You mentioned Jeremy Granthone. He was one of the featured speakers out in Chicago recently at the Morningstar Investor Conference. You were out in Chicago for the conference.
What was your headline? Well, when it comes to Jeremy Granthone, everybody missed the headline. And I didn't actually write about it, but I'll be happy to tell you about it, which is that Jeremy Granthone, the headlines for his speech were that Jeremy Granthone sort of thinks the market's about 40% over values. I believe the number of users was 42.
And when Jeremy Granthone says, hey, it's 42% over value, that means he thinks that you could blow off that much. So everyone heard that and said, you know, Granthone sees bubble building and what have you. But what Granthone actually said was, yes, the market's overvalued, in my opinion. And I do see things building bad, but as I just pointed out, you don't wind up seeing a bull market end until everybody is optimistic.
So since that's the case, he was suggesting that people continue to invest, right? It understands what may be coming, but take advantage of what's there right now, which is conditions that are going to make the market keep going in the right direction. You're listening to Motleyful Money, talking with Chuck Jaffe, senior columnist at MarketWatch. One of the things you wrote recently, and we're obviously just past the halfway point of the year, but you wrote something recently, five easy to answer questions about your portfolio mid-year.
And the one that leaped out at me, Chuck, was a question that I had never really considered before. And it's, did anything in my portfolio make too much money? I guess I never thought of that as a problem. But the more I think about it, like, yeah, that is actually a question you want to ask.
Well, you at least want to know, I mean, you want to look at surprises, and you want to look at surprises in both directions. And it's sort of akin to, you know, if the market tomorrow goes down a thousand points, you're going to be talking about it, your site's going to tell that it might set up a thousand points, oh my gosh, the market lost a thousand points. But if the market gained a thousand points tomorrow, it's the same amount of volatility, it's the same percentage move, but nobody's going, wow, the market moved up too much, this is a bad time. You want to be aware of surprises, you want to be aware of them in either case, and sometimes when you get a positive surprise, if it's beyond your expectation, that's a good sign that maybe you want to take a little bit of profit, not you want to sell necessarily, but hey, if the market's going to reward you beyond your expectations, maybe block in some of those profits, and see if you can put it someplace where you think maybe you haven't got to head up perhaps what you expected as a broker.
One of the things you wrote about recently was sort of the fine line that money managers have to walk between what's best for them, what's best for their clients, how fine a line is it, and do you think it ever becomes a problem? Anyone can be on an equal opportunity offender, I hate them all, but the truth is that financial services companies are definitely best for the financial services company. They're not always best for the investor, and that includes a lot of the new products and everything else. And there are times when you as an investor, if you decide to try a new product, you're basically the crash test dummy who has muckled in for this thing, and maybe it works out, and maybe it doesn't.
And sometimes these products die from lack of interest, and you're left with, gee, I suffered significant opportunity costs, and I got hit with a tax bill for my pleasure, and didn't really get much of anything to get the performance, because all the public would have taken notice. So the fact that they can do things, those are always making them good for the public, and the truth is we have significant sort of kill-off, the fund industry, but particularly the ETF business, is throw it up and see if it's fixed. And you know what that means? That means that you can be covered with goo, whether it's fixed or not.
So I'm not always a big fan on it. Yeah, somebody's new idea, I don't mean it's a great idea. New is not always improved. Well, it's interesting, because if you think about the technology industry, it's almost like they're covered because they get to use the word beta.
Well, this is just the beta version of this app or this software or that sort of thing, whereas I feel like if the financial industry threw the word beta on top of any new funds ETFs, whatever that they were putting together, that would help reset expectations for the clients. Well, it's in there a lot. It's called Smart Beta. It has its own set of meetings, different from the one that you're talking about with the technology industry.
I mean, the real issue with this, we are left with a variety of products where people are basically saying, hey, I can make something from scratch today and it can be better than what's out there. And I think in some cases, they're actually telling the truth. And if you think about what we're talking about, Apple stock. I don't really understand why anybody would like to have a market cap weighted index, which says, hey, because you're the biggest, we'll make you the biggest.
It's a meeting. It makes much more sense because people really want to buy the 500 companies that make up the F&P 500 to do it and people will wait it. And that way, you have to be sold into the thing of stock and wait in your portfolio regardless of their weight overall. So that way, if a little company takes off and does great, you benefit from that more than you would in a market cap weighted index.
So sometimes you're getting products and they are real improvement. But they're not such a grand improvement that you have to say, well, let me sell what I've got, especially if there's a tax involved, to move into whatever the new Fangled product is. And I think that's the side. And by the way, whatever we create today, they're going to create something new tomorrow and they're going to tell you what's better tomorrow.
And some of it might be, and a lot of it won't be. All right, last question. And then I'll let you go. Donald Trump is very much in the news this summer.
I'm not asking what you think about him as a presidential candidate, but I'm curious, what is your opinion of Donald Trump as an investor? Well, okay. If you read his, that is different from what I did in a column. I wrote about him as a neutral fund investor, and I simply looked at his fund portfolio.
And in his fund portfolio, he's way too concentrated in the funds of another brash, New Yorker, that being Ron Barron, which was not being, if I was going to invest in one fund company, the Barron funds would not be hit. So he was heavily invested in the Barron funds, and then he had a few others, much smaller fund holdings. As a fund investor, he's not exceptionally diversified. He is at least by management company and management style.
And the funds he owns are expensive to their peers, even if he's got institutional share classes, he's not getting institutional share prices perhaps, it's the way it is. So from the standpoint of a fund investor, you know, Donald has been into Donald. He's paying up to get what he wants, but that's not necessarily the most physically responsible way to invest in funds. That's for the rest of his portfolio.
It's really tough to judge. You're talking about over 300 names of investment, including lots of overlap where he owns Apple stock, or Microsoft, in multiple portfolios. He is, he's definitely favors big name companies who understand that the rich are much different from the best of us in terms of if Donald Trump makes a mistake, whether it's his fund portfolio or anything else, he can afford it. Now here I'll also tell you one other thing.
After I wrote my column on Trump and his fund portfolio, a whole bunch of people said, well, how come you haven't written anything about Hillary? Well, I haven't written about Hillary because at least at this point, she's never written books on, you know, hey, follow me and I make money, you're part of the deal. So I hadn't done it, and I may or may not write about her portfolio, but you know what? Hillary's portfolio, according to her most recent disclosure, includes two funds, two publicly available mutual funds, and they both invest in the same thing.
It's the S&P 500. And by the way, the famous investor who suggests that, hey, you know, if you wanted to, you should just go off and buy an S&P 500 index fund, that would be worrying about that who suggested. So I think Hillary's strategy is interesting, not from a political standpoint, other than the fact that it kind of makes it that in Trump's case, you look at all those companies and you start to wonder whether it ever be consulates of interest or anything else. In Hillary's case, you look at it and you go, now she's invested in the Vanguard Index 500 funds money, and so she's getting it cheap and easy and nobody can really save out.
You have a lot of individual stocks. So that's my take on it. You got a little bonus on Hillary's talk about it, but that's where she stands right now. You can read more from Chuck Jaffe at MarketWatch.com and also check out his daily podcast, Money Life, with Chuck Jaffe.
It's available on iTunes, pretty much anywhere you can find podcasts. Chuck Jaffe, thank you so much for being here. Okay, thanks for having me, Chris. Stay thirsty, my friend.
Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Full Money. I need $1.00.00. What I need.
With my greenback. As always, people on the program may have interest in the stocks they talk about in the Motley Full Money have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. Welcome back to Motley Full Money.
I'm Chris Allen, joining me in studio once again. Jason Mozart, Matt Arguessinger, and Jeff Fisher. Guys, before we get to the stocks on our radar this week, let's dip into the full mailbag. You can always drop us an email radio at full.com is our email address.
Question from Seth Smith, who writes, I'm a long-term investor, but when is it time to cut bait with a stock? I like and own Invencents, but the performance has been subpar. Is it time to sell if I have better ideas? We can't really give these specific advice around Invencents, but Jason, the question of when to sell is one we get a lot.
Do you sell when you have a better idea? I think that's one reason I recently wrote about this. I'll just give you four reasons why you might want to consider selling. One is the thesis is broken.
That's not always so easy to determine in Invencents. We're the more, I think, the jury's still out there. But yeah, if there's a better opportunity for your money elsewhere, that's another reason. Or number three, if you need the money for something.
And number four, if you feel that you're too overweight and you're actually losing sleep at night, that's when you might want to ratchet back a little bit. Well, I think Seth nailed it in his question. I mean, I think the number one reason you should sell in one of Jason's is if there is a better opportunity out there. I mean, if you look at a range of companies that you're interested in buying and you say, you know what, I've owned Invencents, it's disappointed me, it's not living up to expectations.
I just think I'm going to get a better return out of XYZ, always, always invest in XYZ. Question from listener number 349. No name, just a number. I make monthly contributions to my discretionary portfolio and at times my cash position gets pretty big because I have this aversion to adding to position significantly above my cost basis.
This is a shorter term portfolio with more conservative dividend payers. Could you discuss the pros and cons of monthly cost averaging into positions, winners or losers, versus building cash to wait for pullbacks? Do you have a preference of those two that you use as a strategy, Jeff? Strong preference for any long-term portfolio would be to add on a regular basis, a monthly basis, rather than wait.
And several reasons for that. One is, over time the market on average does go up. The value of a good company goes up steadily. Number two, if you're waiting for a pullback, what do you define as a pullback?
3%, 5%, 10%. And then how do you know that you're going to actually act and act in a smart way during that pullback? Are you actually going to invest your money? Too many people wait for stocks to fall.
They finally capitulate and they put their money in after stocks have risen for years. We may slowly be seeing that happen right now with this market. So it's better to be on a steady program and keep investing now. This will mention that this is maybe a shorter-term portfolio.
So you got to weigh that in when you need that cash and don't invest it, of course. I would just look at today as an example. We've been looking at a lot of thoughts out there about the market. You know, rate for pullback here and it still hasn't really happened.
A lot of people have been waiting have missed out on a lot. Alright, let's get to the stocks on our radar this week, Jeff Fisher. What are you looking at? OpenText.
It's a Canadian software company ticker. It's OTEX. They sell enterprise information management software, so it helps you manage all of your data and your processes at your business. The company has been hit the last couple quarters as license sales declined in favor of cloud software sales.
The thing is cloud software revenue will be larger than license revenue over a number of years. It's just smaller right at the upfront. So it's kind of an optical illusion that the business is suffering a bit. It really isn't.
So this quarter numbers look better again. The stock was up on earnings, but I think it's still inexpensive. So OTEX, it's one we've owned in Pro for many years. Alright, Jason, what's up?
Sure. We're going to go back to the well on US Ecology, E-C-O-L. This is one I have on the watchlist in NDP as well. Going back to the well as well.
This is a hazardous waste disposal specialist. They made a big acquisition about a year ago of this company called Environmental Quality. They basically doubled the size of its business and the integration has gone very smoothly, which is encouraging. They make their money a couple of different ways in a base business and an event driven business, and the acquisition gives them 25% share in the hazardous volume industry capacity.
So I like this business because there's such high barriers to entry and very high switching costs, and it's just a little company. I think they're still a lot of growth out there for it. Really people aren't looking to start their own hazardous waste company? We've got about a minute left.
Okay, I'm going with the company we discussed earlier, BIDU. I just think they're making a lot of smart investments to move away from diversify their core search business into e-commerce for one. They also announced a $1 billion stock buyback after the earnings came out. They're recognizing the value in the company and I see a $60 billion company that should be a lot bigger in the future.
Historically, do they have a pretty good track record with stock buybacks? Not everybody does. Good question. They do a lot of stock based compensation, so I'm probably going to doubt that, but I'll have to take a look.
Well, at the very least, it was smart that they announced it after the stock had fallen. I mean, on the day itself, it had fallen about 19%. Right. Alright, Jeff Fisher, Jason, Moser, Matt, Argyse, your guys.
Thanks for being here. Thank you, Chris. In addition of Motley Fool Money, the man behind glass this week is Dan Boyd. So thanks to Dan for helping us out.
Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We will see you next week.