It's Motley Fool Answers' third annual Loofie Awards! Hosts Alison Southwick and Robert Brokamp are joined in the studio by Motley Fool contributors Matt Argersinger, Aaron Bush, and Tim Hanson to highlight their picks and pans in the investing arena.
Find out which cryptocurrency is the worst, the best non-Fool financial podcast, the Foolish Stock of the Year, the analysts' favorite unsung CEOs, and more. Plus, Robert awards the Lifetime Achievement Loofie to Jack Bogle, the founder of Vanguard.
A full transcript follows the video.
This video was recorded on April 3, 2018.
Alison Southwick: It's the third Annual Loofie Awards. Cue the music, Rick. Celebrating the best and maybe not so best in the world of personal finance and investing. Featuring Matt Argersinger and Aaron Bush with musical performances from Tim Hanson and the Falling Knives. And now your hosts for the third Annual Loofie Awards -- Robert Brokamp and Alison Southwick. -- Yay! Woo hoo! Applause.
So, some of you might think the name for the Loofie Awards comes from Fool backwards with an "ie" stuck at the end, but that's not true. It's actually weirder than that.
Robert Brokamp: It's just more immature. In a previous episode we talked about The Villages, which is a retirement community in Florida known for all kinds of wonderful things including that if you are into a swinging lifestyle, you put a loofah on your golf cart. And there you have it. That is the source of the Loofies.
Southwick: Were you guys aware of The Villages?
Matt Argersinger: No.
Tim Hanson: Yeah.
Southwick: Yeah, there we go. Tim knows.
Brokamp: The highest rate of STDs in Florida.
Hanson: Is that audited?
Brokamp: That's a good question. I don't know. I should say I've been there a few times. I've only seen a couple of loofahs on the golf carts. I think most of the press they got was in 2014, so a lot of people have been scared into hiding.
Southwick: Living the dream in The Villages is somehow how we've come to name our awards show. This year we decided to do things a little differently and try to get as much feedback from people who are not Bro and me into the show. We received a lot of great suggestions from listeners about what categories we should award Loofies in. Unfortunately, we can't do them all, but today we're going to crown a winner in cryptocurrencies. Kind of a winner, I guess.
Aaron Bush: The grand loser.
Southwick: The grand loser. Foolish Stock of the Year and much, much more. Let's just get started, shall we?
Brokamp: Let's do it.
Southwick: So, cryptocurrency was all the rage this last year as everyone and their cab driver make a mad dash toward the latest digital gold rush. Joining us to present the Loofie for the category of Cryptocurrency-Most Likely to Lose You Everything in 2018 is Aaron Bush. -- Yay! Woo hoo! Applause.
Bush: Well, I'll just kick it off and say that not everything about this movement is terrible, but most things that are out there are absolutely terrible. I think it's worth maybe noting some of the worst of the worst.
You could take a crypto dartboard, throw a dart at it, and have a really good chance of going broke, but if we were to look in 2018 at some of the cryptocurrencies that will give you the highest chance of going broke, I have a few nominations I'd like to read out.
Southwick: Please, yes.
Bush: There's the Mao Zedong token. There's PonziCoin, which is a literal Ponzi scheme and...
Southwick: Be honest, shall we?
Bush: .. .owns up to it. There's the Jesus Coin if you're into salvation through the blockchain. There is the Useless Ethereum Token, which is a useless Ethereum token. But I think the one I want to highlight as the winner today is PotCoin.
Southwick: Yay!
Bush: Yay, woo! Yay! Congrats, PotCoin! They were created in 2014 with the gold becoming the digital bank for the marijuana industry, so maybe there's a slight use case in that...
Southwick: Yeah! I can get that!
Bush: ... in the sense that they can't use banks...
Hanson: You are very enthusiastic about that.
Southwick: You know. Well, it's hard to be a local pot dealer and not having a place to put your money. Banks won't want to deal with you.
Bush: Actually earlier...
Southwick: Come onboard. Where should I take my money?
Bush: So as of three months ago, they hit $100 million in their market cap or network value. They've fallen pretty substantially from there, but I think they can fall even more substantially.
I think there are a few key problems, here. For one, no one uses it. That's kind of a problem.
Brokamp: That is a problem.
Argersinger: Alison's thinking about it. You've got one user.
Southwick: Only.
Bush: Well, one person uses it. Strike two. If you look at their GitHub, no one has touched this code in years. Not only has no one used it, but I don't think there's any plans for anyone using it.
And then strike three. Maybe there's a little bit of capital allocation issues going on. This past summer they had the grand idea of sponsoring Dennis Rodman's trip back to North Korea wearing a PotCoin.com t-shirt for the purposes of... No one really knows. So that happened. I just have a hunch -- I just have a feeling -- that as great as Dennis Rodman is for the short term, the price skyrocketed. I don't know how great of a long-term strategy that is. I suspect that PotCoin will have a rough time.
Southwick: There you go. PotCoin is the winner of the first Loofie today. Congratulations! The idea for doing something about cryptocurrency came from a couple of listeners -- Alexander and John -- except they wanted to know the best cryptocurrency, so sorry. Start your own awards show.
The next category is podcasts. We assume you love them since you're listening to this one right now. But what should you listen to after you're done with Motley Fool Money, Market Foolery, Industry Focus, Rule Breaker Investing, and Motley Fool Answers? Well, joining us to award the Loofie for Best Investing Podcast, Non-Fool Related is Matt Argersinger. -- Yay! Woo hoo! Applause.
Brokamp: Yay!
Argersinger: Yay! Thanks, Alison! Let me read out the nominees. The nominees for the Best Non-Fool podcast... And why would you listen anywhere else? I don't know.
Southwick: How do you have enough hours in the day? I don't know.
Argersinger: Well, we've got "Invest Like the Best," "Odd Lots," "Planet Money," "Freakonomics," and "How I Built This," which is interesting.
Southwick: All the nominees came to us from The Motley Fool analysts pool. Or what do you call you guys?
Argersinger: Group. We're a pool, sure. This year's Loofie Award winner is going to "Invest Like the Best." -- Yay! Woo hoo! Applause. -- It's Patrick O'Shaughnessy's roughly weekly podcast that he does. You can read more about it if you go to InvestorFieldGuide.com. Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. He's been an investor for roughly 10 or 11 years.
What I like about the podcast, in particular, is with investing, we tend to think of it as a bunch of guys reading 10-Ks, conference calls, doing models in a spreadsheet and buying stocks. Well, there's just a lot more to it. There's investor psychology. There's emotional fortitude. There's looking at the future. Being flexible. It's a lot of mind games with yourself and I think Patrick, with his podcast, takes a very investor-psychology approach to it. He interviews a lot of interesting people ranging from value investors to people who do cryptocurrency investing, or entrepreneurs, or venture capitalists. You get a really broad range.
There was a podcast recently where a guy who works in private equity came on the show. It was a great interview, but they spent about 15 minutes of it debunking Porter's Five Forces, which if you're an investing business nerd, you know Porter's Five Forces and it's podcast gold. Just go listen to it.
It's wide-ranging topics. It's made me a better investor. I think anyone who listens to it -- if you have time after The Fool podcasts -- give "Invest Like the Best" a listen.
Southwick: You also can listen to David Gardner's interview with Patrick O'Shaughnessy.
Argersinger: That's right. You can.
Southwick: Even if you don't want to stray too far from home, you can listen to David Gardner and also Morgan Housel. Didn't he interview Morgan, as well?
Argersinger: I think Patrick O'Shaughnessy and Morgan Housel are almost like the same person, in a lot of ways, in what they talk about and write about.
Brokamp: Interesting.
Argersinger: If you like Morgan Housel, you'll probably like Patrick O'Shaughnessy.
Southwick: Listener Katie came up with this category. Like I said, the winner was chosen by a vote committee from Motley Fool analysts, but if you listeners have any other podcast recommendations, let us know and we'll share them with the world. [Academy Awards theme song]
[...]
Southwick: Now it's time to pause and take a somber look back at the people and things that came to an end in 2017. It's our "In Memoriam" segment.
Martin Shkreli. You'll remember him for his brave portrayal of the "oh gee Pharma Bro" who profited off increasing the price of an antimalarial drug from $13.50 up to $750, and then spent the money on things like a $2 million Wu-Tang Clan album. I know we all remember him fondly. He was sentenced to seven years in prison for securities fraud related to two hedge funds he ran along with his former drug company Retrophin. He also has to forfeit $7.4 million and the Wu-Tang Clan album.
Brokamp: He can't keep that, huh?
Southwick: Maybe he can. Maybe he can financially figure out a way to do it. In most of the articles he had to give up the album.
Argersinger: Anyways, that needs to be shared with the world.
Southwick: I mean, come on! Really. Chipotle queso 1.0. You'll remember queso 1.0 as Chipotle's (CMG +1.61%) brave portrayal of melted cheese. Three months after the failed launch of queso at Chipotle, the company secretly changed the recipe. Initially described as a crime against cheese, the new version is less grainy; however, The New Yorker still described it as if someone added Kraft Mac & Cheese powder to milk and didn't let it dissolve. Have any of you guys actually tried Chipotle's queso?
Bush: I have.
Southwick: And?
Bush: I did it.
Hanson: Better or worse than PotCoin?
Bush: I'd give it a solid 3.7 out of 10.
Argersinger: Out of 10?
Southwick: Are you guys surprised at how Chipotle hasn't really bounced back the way people expected it to? Or do you think it's still coming?
Bush: I think restaurants can be fixed, so it's coming. The question is just a matter of how long it will take. I think they probably moved in the right direction getting a new CEO, but it takes time.
Southwick: Next up. You'll remember the black turtleneck from it's ubiquitous, brave portrayal in many Steve Jobs features. The black turtleneck had a comeback, recently, thanks to Elizabeth Holmes of Theranos as we talked about a couple of weeks ago; only to be laid to rest once Holmes's massive fraud was uncovered. The downfall prompted The New York Times write, "Will black turtlenecks ever be looked at in quite the same way again?" So sad.
Hanson: I'm kind of shocked that to date she's gotten off easier than Shkreli.
Argersinger: Yeah. I mean, he didn't get to keep the Wu-Tang album. I mean, she's not even going to prison.
Hanson: Well, he's going to jail for like seven years.
Argersinger: Well, I know that. She didn't have to give back an album.
Hanson: I think at the end of the day all his investors who were defrauded actually got their money back; whereas she cost people billions.
Southwick: She's not getting that back.
Argersinger: I mean, some of them made a ton of money. The ones who went into the Retrophin after the hedge fund.
Hanson: He defrauded them, but them got lucky and made up for it.
Southwick: That's true. And she's still walking around, and still pitching.
Hanson: I think maybe there are criminal charges coming. Maybe it will come after.
Southwick: Ooh, all right. Well, be patient. We'll circle back on that. You'll remember Dr. G. Raffe for his brave portrayal of a giraffe who encouraged children to not grow up by getting their parents to buy them toys. He was born in the 1950s as part of a marketing campaign for Children's Bargain Town in Washington, D.C. It wasn't until the company changed its name to Toys "R" Us that Dr. G. Raffe changed his name to Geoffrey the Giraffe. He'll live on forever in Bro's heart.
Brokamp: Oh, he will. I'm so sad about Toys "R" Us going out of business.
Southwick: Was Toys "R" Us the same mecca for you guys as it was for me growing up? Like the idea of going to Toys "R" Us was just like [gasps].
Argersinger: Oh, yeah! When I was a kid once every few months was just like the greatest day ever. Just sad.
Southwick: Now you're just going to go to Amazon (AMZN 0.41%) Prime.
Argersinger: I guess.
Brokamp: I guess. Like really? What will kids do? The toy section of Walmart is just not the same thing.
Southwick: No, no. And finally, let's take a moment to remember everything that millennials killed which, according to headlines, includes lunch, beer, Applebee's, cereal, motorcycles, fabric softener, diamonds, football, straws, doorbells, bars of soap and so much more.
Brokamp: Bars of soap? Why did they kill bars of soap?
Southwick: Because they like loofahs? And Scrubbies.
Brokamp: Really?
Southwick: I think so. I don't know. You guys are more millennial than me.
Hanson: I take that back.
Argersinger: Yeah. And fabric softener? What's the alternative?
Brokamp: They like it scratchy.
Southwick: I think the headline was they just don't know what fabric softener does.
Hanson: One of those complicated naming conventions.
Southwick: Oh, why did they do that?
[...]
Southwick: Let's get back to awarding some Loofies, shall we? Every year The Motley Fool makes, I don't know, hundreds of stock recommendations? Thousands? Millions? I have a feeling Tim Hanson knows roughly how many.
Hanson: I've even lost track.
Southwick: We make a lot of stock recommendations for our members around the globe. Some work out -- some maybe don't -- but some really work out. So, joining us to award the Loofie for Foolish Stock of the Year is Tim Hanson. -- Yay! Woo hoo! Applause.
Hanson: Thank you. Yes. Happy to be here to do this. This is a purely quantitative award. Just added up some numbers. The nominees are all well-known Foolish stocks: Apple, Amazon, and Netflix. And what we did is we looked at the database where we keep all our analyst opinions and we just tried to add up which stock contributed the most to the total return of that database over the past year. In order for it to contribute, you had to have a lot of people who had a rating on it, a lot of people who had big ratings on it, and then obviously the stock had to go up quite a bit.
And what's impressive about this is not who the winner is, but by how much the winner won. The winner was Amazon, which added 52% of performance return to our database over the past year. Second place was Netflix at 34%, and the distant third was Apple at 11%. It's just a massive, widely owned winner and congratulations to everybody who owns it.
Southwick: Yeah! Right. Everyone!
Argersinger: I'm loving it.
Southwick: Yes, let's all applaud ourselves. Do we all own Amazon in this room?
Bush: Yes, I do.
Brokamp: I own shares in The Motley Fool which owns Amazon.
Southwick: Womp womp. But that's a good way to look on the bright side there, Pollyanna.
Brokamp: There you go! Thank you! Thank you very much!
Southwick: Our next category was chosen by you, the listeners. We asked for your nominees for Best Episode of Motley Fool Answers and the idea came from John from Queens. Here to award the Loofie Best Episode of the Year, Series is Robert Brokamp. -- Yay! Woo hoo! Applause.
Brokamp: Here we go. So, the first nominee is "Judge Bro: Court is in Session" featuring Robert Brokamp and a gentile Southern lawyer, as well as a few other voices. No. 2 is the "Invest Like a Fool" series featuring the Industry Focus folks. No. 3 is the "When to Sell a Stock" series featuring Jason Moser and No. 4 is Morgan Housel joining us for "The History of Market Crashes Series." And the winner with 57% of the vote is Morgan Housel and our series on "The History of Market Crashes." Ended up winning. -- Yay! Woo hoo! Applause. -- Judge Bro had 22% of the vote.
Southwick: Yes! Yes! So, even though the Judge Bro episode was quite divisive among our listeners [I don't expect that you guys heard it], it was borderline offensive to people from different parts of our nation. You don't need to know why. It's fine. Judge Bro was giving Morgan Housel a run for his money there for a while, but in the end Morgan Housel and his series on "The History of Market Crashes" did end up winning. It's funny because we didn't get much feedback on the episodes at the time.
Brokamp: No, we weren't quite sure how well they went over.
Southwick: Yes, we had no idea, but apparently you guys liked it.
Brokamp: They're timeless. If you haven't heard them, go back and give them a listen.
Southwick: They're quite good.
Hanson: What was the best market crash?
Brokamp: Well, we started with the Great Depression and then we moved up from there.
Hanson: That was a good one.
Brokamp: That was a good one. It was, perhaps, the greatest.
Argersinger: A good place to start. You didn't go back to the tulips? Or basically 20th century on?
Brokamp: It was pretty much the 20th century.
Hanson: A brief modern history.
Southwick: A brief modern history of the market. It was very U.S. centric.
Hanson: Just like Morgan.
Brokamp: Yeah.
Argersinger: The Nikkei had a kind of a crash, too.
Brokamp: And it's still down like 70% from its 1989 peak.
Argersinger: Inflation adjusted, it's like the worst ever.
Brokamp: Yes, that's true.
Southwick: So, joining us for our next series on market crashes is going to be Matt Argersinger...
Argersinger: Global crises.
Hanson: Asian Contagion.
Argersinger: Yes.
Hanson: There are lots of places to go to play that.
Argersinger: West Indies? What was the one with the ships?
Brokamp: The South Sea.
Argersinger: The South Sea one. The South Sea bubble.
Southwick: I'm not joking. I will rope you in if you don't do this series.
Argersinger: No, come on! Someone else knows a lot more about those.
Southwick: No, no, no, no, no.
Hanson: Top 10 obscure market crashes.
Southwick: And now we're going to bring everyone back onstage to award the Loofie for Best CEO You Maybe Have Never Heard Of. Each one of our guest presenters has a CEO that they would like to put up for nomination and then I guess we'll rock, paper, and scissors.
Argersinger: Why don't we pitch it and you and Robert pick it.
Southwick: All right, let's do it. Again, the whole episode is like...
Hanson: I like the methodology.
Southwick: It's a plane. We're building the plane while we're flying it, here. Matt, would you like to go first?
Argersinger: Sure. My nominee is the most unheralded CEO. A great CEO no one knows about. My CEO is Richard Liu. He is the CEO of JD.com, which if you don't know, it's the second-largest e-commerce company in China. A lot of people don't pay attention to JD because Alibaba is the big juggernaut of China and everyone thinks they're going to gobble up the world, and they kind of are.
But JD has built a really nice retail business. They're the No. 1 retailer in China direct-to-consumer. They've also built this distribution system that's very much like Amazon. It spans all of China. They can get goods to you within two days pretty much everywhere, including same day in big cities.
This is a guy who essentially ran a small electronics shop in the early 2000s, transitioned it online and then built this e-commerce powerhouse that now does about $50 billion in revenue a year. He's my nominee. He owns 17% of the stock and he's much less exciting than Jack Ma, who's now starring in Kung Fu movies, I've heard. He's a guy you can trust, and I would certainly nominate him as my CEO of the year for 2017.
Southwick: Tim?
Hanson: My nominee is Kent Taylor, who's the chief executive officer of Texas Roadhouse, which for people who haven't been there is a chain of fast casual, sit-down steakhouse-type restaurants known for its cocktails and country singing. The steaks are supposedly pretty good, too.
What impresses me about Taylor is the fact that it's been a pretty rough go for the restaurant business over the past five to 10 years. We've seen high-profile highfliers come down to Earth like Chipotle and people struggling with declining mall traffic and more people getting delivery at home; yet, Texas Roadhouse just finished an eighth consecutive year of same-store sales growth.
They're really highly rated on Glassdoor as one of the best places to work and definitely one of the best restaurants to work at. I think that combination of outstanding performance in a tough industry [and it's been a great stock for investors, as well] is what sets Taylor apart as a lesser-known but really great CEO.
Southwick: Aaron?
Bush: My nomination is for Marcos Galperin, who is the CEO of MercadoLibre, which is essentially the Amazon or eBay of Latin America, so maybe a little bit of competition, there, with JD.
What he's done is incredibly impressive. They were founded in 1999 and they went public, I think, in 2007. Since then the market has about doubled, but they're up about 10X. And given the fact of how volatile Venezuela, Brazil, and all the different nations in Latin America have been, off and on over the past decade, for them to create this kind of performance and dominate e-commerce in Latin America I think is incredibly impressive, and it's largely because of him.
Brokamp: Wow, that's a tough one!
Southwick: It's tough.
Brokamp: If the category is Unsung CEO or CEO People Haven't Heard Of, I have to go with Richard Liu.
Argersinger: Richard Liu.
Brokamp: I was more familiar with the other companies -- the other two -- but I was not as familiar with Richard Liu.
Southwick: I'll back that. I'm good with that. Also, if you say anything like the "anything of China," I'm going to be like, "Tell me more!"
Argersinger: That's usually a cop-out for weaker analysis, but yeah. Yes, I appreciate that. It is kind of the Amazon of China. I'll take it. JD.com.
Southwick: All right, so the winner of the last Loofie, as we leap across the line is Richard Liu, founder and CEO of JD.com. -- Yay! Woo hoo! Applause. -- Fun fact about the name.
Argersinger: Oh, yes. I should have mentioned this in the pitch. Apparently, he named his company JD. I don't know how to pronounce it, but it's named after his high school girlfriend who dumped him. So, they're not together but, apparently, he decided to name his company after her, anyway.
Southwick: So, when you wrote me this note, I thought he named it JD for "just dumped." But then I was like, "This is in Chinese, so that doesn't make any sense."
Argersinger: No, it's her name, but I don't know what it is.
Southwick: I was very confused for a little bit, but now we're good. So, to close the show, we have a Lifetime Achievement Award to give out.
Brokamp: We do.
Southwick: And that is the honor of Bro.
Brokamp: It is. In considering who should win this award, I considered who devoted their whole lifetime serving investors and whose influence would go on for years after this person passed away. For me, the easy answer to this is Jack Bogle, the founder of Vanguard Group and the father of the index fund. -- Yay! Woo hoo! Applause.
Early on, Bogle recognized the difficulty that the average mutual fund would have in beating the market. He wrote his college thesis about how most mutual funds don't beat the market.
He graduates. Joins a company called Wellington. Becomes its CEO but gets fired in 1974 because of an ill-advised merger. He said it was embarrassing and he was immature to make that decision, but if he hadn't been fired, he wouldn't have gone on to found Vanguard.
Which he did in 1975 with 11 actively managed funds. It started off without an index fund, but the index fund came in 1976. They were hoping to raise $150 million. They only raised $11 million. The folks who were helping him launch it wanted to close the fund, but he said no and that he wanted to stick with it. Years later, he we are. Right now, Vanguard manages $4.5 trillion dollars, second in the world behind BlackRock. About 30% of global assets are indexed nowadays.
But the other thing I like about Jack Bogle in terms of lifetime achievement is that he's remained very active throughout his life. I found this interview with him from 2007. Someone asked him what someone should do if they're going to retire in 20 years and his reply [and this was back when he was 78] was, "People are retiring later in life. I'm 13 years past 65 and I still have plenty of energy to work every day. I got up at 05:30 this morning in New York and was ready for an 08:30 meeting in Philadelphia. If I can do it, I don't see why everyone else can't, either." Now he's 88. He has a little more trouble traveling, but that didn't prevent him from having a front row seat at last year's Berkshire Hathaway Annual Meeting.
I will conclude a little bit about Bogle with something Warren Buffett wrote about Bogle in the 2016 Annual Letter. Buffett wrote, "If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle. For decades Jack has urged investors to invest in ultra-low-cost index funds. In his early years, Jack was frequently mocked by the investment management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me." And I would say to many Fools, as well.
So, congratulations, Jack Bogle, on winning our yet-to-be-coveted Inaugural Lifetime Achievement Award...
Hanson: Named after swingers.
Brokamp: Named after swingers. [Academy Awards theme song]
Southwick: Geriatric swingers. It's perfect for that.
Argersinger: Swinger Villages. When is he going down there?
Brokamp: That's right.
Southwick: He has tons of energy, it sounds like.
Brokamp: Oh, boy.
Southwick: All right, good night, everybody. That's the show. I want to thank our special guests once again -- Aaron Bush, Matt Argersinger, and Tim Hanson -- for joining us. Thanks, you guys! I really appreciate it!
Argersinger: Thank you!
Bush: Thank you!
Hanson: Thank you!
Southwick: I also want to thank all our listeners for your feedback on the categories, the nominees, and the winners. Many of you emailed us like Katie, John, Sean, Jose, Alex, Jason, and many more of you who will rename nameless, but you voted in my slapdash Google polls that I kept posting on our Facebook group all the time. Thank you, everyone, for your feedback to help makes this Loofie Awards yet another barely on-the-tracks episode, but we kept it rolling on.
The show is edited award-winningly by Rick Engdahl. Our email is [email protected]. For Robert Brokamp, I'm Alison Southwick. Stay Foolish, everybody!
