In this episode of Industry Focus: Financials, Rory Carron, head analyst of Rubicoin, sits down with host Jason Moser to talk about the present and future of fintech. Plus, Moser and Fool.com contributor Matt Frankel, CFP, discuss Robinhood's recently announced bank accounts, and Frankel dives into some disturbing results from a poll on retirement readiness. Finally, learn which three stocks Moser and Frankel have their eyes on right now.

A full transcript follows the video.

This video was recorded on Dec. 17, 2018.

Jason Moser: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. It's Monday, December 17th. I'm your host, Jason Moser. On today's show, we'll talk about Robinhood's latest offering for consumers. We'll, of course, tap into Twitter and give you One to Watch.

We begin this week with another installment of Between Two Fools. Rory Carron is head analyst with Ireland-based Rubicoin, the maker a financial investment tools and apps, including Learn and Invest, which are designed to transform anyone into an informed, confident investor. On this week's Between Two Fools, Rory and I talk more about the evolving financial space across the pond and the companies that he and his team see playing the biggest roles.

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Moser: Rory, tell us a little bit about yourself and what you all are doing over there at Rubicoin these days.

Rory Carron: Hi, Jason! I'm the head analyst at Rubicoin. Rubicoin a financial mobile-based education company. Our goal is to create a new generation of successful investors. We have two mobile apps available on both Apple and Android. Our first app, Learn, is a free app, it's a collection of short lessons. It's designed to bring someone from knowing nothing or having no experience in the stock market to having a basic understanding of it and being able to start investing competence. What we tried to do with that is summarize the teachings of some of the world's greatest investors into a format that's understandable to the novice investor. We're looking to impart a common-sense philosophy, in terms of the kind of businesses people should be looking at to invest. It's probably got a crossover between ourselves and The Motley Fool in that regard. We want people to invest in businesses that they understand, perhaps that they're customers of or have some connection with. We like passionate founding CEOs, talented managers, and sustainable competitive advantages. And, of course, want to highlight the importance of diversification and having a long-term outlook that's not driven by news headlines or short-term volatility.

Moser: There's definitely a lot of overlap, I would say, between Rubicoin and The Fool. It's worth mentioning again that The Motley Fool has an investment interest in Rubicoin. We've been partners for a number of years now. One of the more enjoyable parts of my week is us being able to do our stock chats, to talk about what's going on over there on your side of the world, and what's going on over here.

Now, in regard to payments, this is the Financials show for Industry Focus, and payments is a really big part of that world these days. We know what the landscape looks like over here domestically. I thought it would be an interesting point to get our listeners a little bit more perspective of how things are looking on your side of the pond in the payments space. Talk a little bit about that.

Carron: We've got the same big U.S. players over here as you guys have over there. PayPal has obviously got a massive footstep online. Square just recently launched in the U.K., so we're interested to see how that expansion is going to work out for them. I suppose the real Irish success story so far has been a company called Stripe. They were founded by two brothers about seven years ago. Their offices are just down the road from us. Stripe's offering was that with seven lines of code, pretty much any start-up could start taking payments. 

I think they were originally funded by Peter Thiel and Sequoia Capital. Now, they're valued at about $20 billion. Last I read, there's no IPO plans in place, but it's a company in the payments space. If you're invested in the payments space, it's a company you really should know about, you should be keeping an eye on it. 

One of the bigger changes in Europe recently has been the adoption of what's called the Payment Services Directive. That's a legislation that's come across all EU countries with the aim of leveling the playing field, in terms of payments and banking, and moving to what's called open banking. Now, consumers can authorize third parties to access their banking information and even make payments on their behalf. You could arrange payments through any third party you wish. I don't know why you'd want to, but you could use Facebook or WhatsApp for your payments in the future. That's a very interesting development. We're watching to see what kind of disruption that's going to close over the next few years.

Moser: Fast changing space, for sure. You mentioned banks. You and I have talked a bit recently about what we were calling app-based banks, this new evolution, mobile banking, and it's how money is moving around these days. There are some companies over there that are similar to PayPal and Square, which we're more familiar with here. Talk a little bit about these app-based banks. I think there were three companies that we were talking about specifically, right?

Carron: Yes. There's been a big change in terms of how people are using payment cards. One of the things that's caused that is the rise of these app-based banks, or what's called challenger banks. They're app-based, no brick and mortar locations. The real big appeal to customers is that they've been built from the ground up with a real focus on customer experience, which is something that I think traditional banks have been very slow to adopt. 

The biggest player in the space at the moment is a company called Revolut. And they've got over two million customers. Largely focused in the U.K. and Ireland, but expanding across Europe. They just offer a prepaid debit card. You can have multiple accounts, you can them in different currencies, and through a single bank, you can monitor your spending, you can instantly transfer funds to friends, very similar to what Venmo and the Cash app is doing in the U.S. But you can also take out loans and insurance and change your money into different currencies very easily. 

They're very popular, particularly with people who travel a lot for work. They've also recently announced they're expanding into wealth management. They're looking to get a brokerage functionality set up, possibly offering free trading in a manner similar to Robinhood. They're the biggest by far.

You've also got a company called N26. They're a German-based company. It's a very similar offering, but they're actually a licensed bank. Revolut are in the process of becoming licensed. They're going to launch in the U.S. next year. I'll be keeping an eye out for them. 

And finally, the third big player is company called Monzo. Again, it's a very similar service. It's app-based and very much focused on delivering a great user experience.

Moser: Remind me again really quick, those names again. The first one was Revolut, is that right?

Carron: Revolut, N26, and Monzo.

Moser: Are any of those publicly traded today?

Carron: None are publicly traded. Revolut's the biggest in terms of valuation. Last time I checked, they were looking a $2 billion valuation. It'll be exciting to see whether they start looking to IPO anytime in the future.

Moser: What are your thoughts there? You feel like there's a chance one or all of them would? Or are they perhaps going to try to take a little bit more the path that Stripe has taken to grow?

Carron: It's so hard to tell in this environment. There's so much private capital running around, especially in the payments space. You look at a company like Stripe getting a $20 billion valuation, still no signs of an IPO, you wonder how long these companies are going to just keep plugging away at the private markets. We'll see what happens later on down the line.

Moser: Yeah. It's interesting, we talk about that a lot. On the one hand, it's neat when you see these companies go public. On the other hand, you can understand why they don't because all of a sudden, you're really thrown into this public forum, and you're under the scrutiny of Wall Street and retail investors and us, and every bit of financial media under the sun. It's just more difficult to live life as a public company. So, I can certainly understand why these companies would want to put that off for as long as they could.

You were recently in London for six months. We were talking about this a few weeks ago, about how the banking and payments system over there is evolving so quickly. Talk a little bit about your time in London, and what you saw there. How is that landscape changing? Maybe some similarities to what we're doing here, some differences. Talk a little bit more about that, please.

Carron: Certainly the biggest changes I've seen for people in their everyday lives is centered around the move to contactless payments. That's taking off very rapidly across Europe, particularly in the U.K. and Ireland. I used to travel to London quite regularly about 10 years ago. One of my lasting memories was getting a train into the center of London and being met with this total bedlam at Victoria Station or Liverpool Street Station. People queuing to buy tickets for the London Underground -- which, of course, is the main mode of transportation in that city. Six months ago, I went back to London for the first time in a while. And that's all changed rather dramatically with the introduction of contactless. Now, you've got no train tickets, no queuing in that kind of sense. You simply tap your payments card on a reader as you go through the turnstiles, and the payment is automatically taken out of your account depending on where you tapped on and where you tapped off. Really, that change was quite dramatic. 

I think you're seeing something of a big jump forward, something that you've been talking about for quite a long time, the war on cash.

Moser: Ah, yes! [laughs] 

Carron: Yeah, your favorite topic. There's plenty of London coffee shops and bars now, even news agents on the side of the street, that flat-out refuse to take cash because it's so much simpler for them, from an operations standpoint, in terms of accounting, even in terms of security, just to have everything automated through contactless payments. 

That was a big shock to me. If you can implement those kinds of systems in a city the size of London, it really shows that it can be done anywhere.

Moser: That's the beauty of technology, right? It brings that convenience everywhere. It's extremely scalable. I think that the contactless payments are pretty similar to what we do here in D.C. with our Metro system. You have what's called your Metro card, and you just load money onto it, but you go in and out of the gates by tapping that card on the little sensor. You tap in where you tap in, you tap out where you tap out, and it tells you how much your fare was and just deducts that. You need to reload your card every once in a while. But, it sounds like, to me, perhaps what you're talking about in London, you're actually using your payment card, whether it's a Visa or MasterCard or otherwise. Is that right?

Carron: Yeah. In London, they had a Metro card system, it's the Oyster card system. Similar to what you were describing there, you top it up, you put $30 or whatever on to it, and you wear it down as you travel. The cards are still there, but I haven't seen anyone using them anymore. People are just tapping their usual debit card or credit card on some machines and it's all done through that, which is great for a city that has so many inbound travelers and tourists. They don't have to queue up and get these cards that are probably going to run out, or they're not going to use the full amount on. 

Moser: Yeah, it seems to save a step. When you don't have to deal with that extra part of the transaction, that's a smart thing. 

Our listeners love stock ideas, Rory. Everybody loves stock ideas. What names are you guys kicking around over at Rubicoin these days? I know we have a very similar investing style. What names in the financials space do you guys have on your radar here these days?

Carron: Obviously, we're big fans of PayPal and MasterCard. I know you talk about those companies pretty regularly. We're very bullish on both of those. I think the culture of innovation at both those businesses means that they're well deserving of the purview and valuations they typically trade at.

Another company we're very bullish on long-term is Markel (NYSE:MKL). The specialty insurer often referred to as baby Berkshire (NYSE:BRK-A) (NYSE:BRK-B). We're big fans of Tom Gayner, their chief investment officer and co-CEO now. Love his investing philosophy. I know he was interviewed by your Tom, Tom Gardner. So, Fool fans will be familiar with him. I think they're beating the market by 2% every year on average. That's a great person to be managing your money for you. We really like his long-term thinking philosophy. It really rhymes with what we're trying to do here at Rubicoin.

Now, saying that, the current economic climate has been very good to Markel. We know that's not going to last forever. But I think if you've got a good long-term outlook, you can keep a cool head in times of volatility, Markel is a great holding. 

Another business that wouldn't normally be considered a financial company, but I think it's moving more and more into the finance space, it's one I'm very fond of, MercadoLibre. They started off as the Latin American eBay, but now very much focused on building out their payment system, Mercado Pago. If you look at the market opportunity, there's plenty to be excited about. You've got e-commerce accounting for only about 2.4% of retail vs. 8.6% in the U.S. Latin America also has a high non-banked population, standing around the mid-60% in some countries compared to like 90% in North America. There's a big opportunity for a company with that kind of brand awareness. MercadoLibre captures significant market share as the region catches up in terms of things like internet adoption and a broad move away from cash. 

Finally, a company that's been our watchlist for quite a while, we haven't really pulled the trigger on just yet, has been the CME Group, the Chicago Mercantile Exchange. That's a business we really admire in terms of the way they've diversified the revenue streams through acquisition. It's a high margin business. It's got a nice wide economic moat and terrific management. It's a bit richly valued for our taste at the moment, but on any pullback, we'd love to get involved in that business.

Moser: They facilitate futures and commodities trading, is that right?

Carron: Yeah. Futures, derivatives, interest rates. Pretty much any kind of financial contract you want to buy, you can do through the CME Group.

Moser: We've talked about that one here a little bit now and then. It'll definitely be worth digging back into. I'm not going to lie, we saw last week, there was a little bit of a snafu there with Markel with a little part of their business, the CATCo business, where there are some questions regarding reserves and whatnot. The stock got hit to the tune of about 10% in one day, which you never, ever see with Markel. I actually took advantage and bought a few more shares when it took that little dip there. I think that's a great holding, and certainly one that should resonate with all of our listeners and Foolish investors. You can really plan on holding on to it for a long time. 

Rory, tell our listeners how they can learn more about Rubicoin, and perhaps even start following you guys?

Carron: You can find us online at rubicoin.com. You can download one of our two apps on the App Store or the Google Play Store. Just type in Rubicoin, you'll find both our apps on there. And follow us on Twitter. We're usually talking about market news and keeping up with what The Fool is doing on Twitter, too. Loads of ways to get in contact with us and try us out.

Moser: I will say, personally, as a user of Rubicoin, I'm subscribed to the Invest app, that the Learn app, which, as you mentioned, is free, strictly educational. I don't know that I've seen a slicker mobile experience that can help educate new investors. I just don't know that I've seen a better app out there. The changes that you continue to make in both of those apps are really great. Love what you guys are doing there.

Of course, listeners can follow Rory on Twitter @RoryCarron. Make sure to give him a follow, because he's always talking stocks and he's always got a good answer to some of those questions out there, too. Rory Carron, thanks so much for joining us this week! Really appreciate it!

Carron: Thanks so much, Jason!

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Moser: Joining me in the studio this week, as always, is certified financial planner Matt Frankel. Matt, how's everything going this week?

Matt Frankel: Pretty good! It's an uneventful week down here. It was raining all weekend, so we weren't able to do much with the kids.

Moser: Yeah, that was contagious. It was raining up here all weekend, too. How about your Eagles? That was a big win last night.

Frankel: I know! I was even able to stay up late enough to watch it!

Moser: [laughs] That was a good game, I tell you! Those guys aren't out yet. You can't count them out. 

Matt, we wanted to get into our main story this week. We were talking about this at the end of last week. I think most of our listeners are probably familiar with Robinhood. You and I really wanted to jump right into this Robinhood story and kick this around a little bit. I want to get your take here. You look at Robinhood, what that is today, a no-fee stock trading app. They're talking about rolling out some traditional banking services. I think they were promising a 3% interest rate on deposits, talking about checking and savings. Essentially, it sounded like they were making a lot of promises based on this concept of a no-risk type of account for checking and savings, expanding their offerings thanks to more people, I guess.

But, we've seen since then some pullback because there are some concerns there in regard to Federal Deposit Insurance and even the SIPC. Talk to me and our listeners about this. What's Robinhood doing here? And should we be excited about this or concerned?

Frankel: For starters, I'll say that I love the idea of Robinhood's business, the fact that investing should be free. The banks shouldn't be the ones making all the money. The bulk of the yield should go to savers. 

Having said that, at the end of the day, first of all, a business needs to make money. So, I have to wonder how sustainable this is. And the reason that I bring that up is, now that we find out that these so-called savings and checking accounts are not FDIC-insured, and it looks like not SIPC-insured, either, because the SIPC said, "We never heard anything about this until Robinhood made the announcement," that's concerning coming from a start-up that has a business model that, probably, at this point, isn't making any money.

The first point I want to make is, on the open market right now, reputable banks, like Marcus by Goldman Sachs (NYSE:GS), Synchrony Bank, you can find savings yields in excess of 2% pretty easily. I saw 2.15% earlier today. The trade-off between something like that and a 3% yield is not worth giving up FDIC or SIPC insurance over. That's No. 1. If you're going to do that, you might as well just buy high yield dividend stocks or something that's not guaranteed not to lose value. 

The second thing is, start-ups don't always last. Insurance of an FDIC nature is so much more important in this case because there's no guarantee that Robinhood is going to make it long-term at this point. This is not a Bank of America or Wells Fargo. If Wells Fargo, for example, came out and said, "We have a 3% yielding savings product without FDIC insurance, but backed by the full credit of Wells Fargo," that's different than something that's being backed by a start-up.

A savings product is only as good as, one, the insurance that it has, and two, the company that's offering it. And while I love Robinhood as a company, a 3% yield, in my mind, does not justify taking a leap of faith and giving them my savings.

Moser: To me, the first thing that comes to mind is, when I talk about a checking account or savings account -- a savings account is a little bit different, I guess. But really, either way, these are not accounts that are meant to garner a lot in the way of interest. Perhaps a savings account, in some instances -- obviously, everybody wants a higher interest rate on their savings account. I would think checking is less important. I've tried to make the argument here for some time now that the savings account as we know it is almost dead and buried. I think at this point, before you start with a savings account, I would rather see someone open up a brokerage account and just start investing on a dollar-cost average basis into the S&P 500. To me, that makes more sense. Over the long haul, you're going to get a better return than that 2-3% or whatever. And even if it's not necessarily guaranteed by the FDIC, the chances of the S&P 500 going away are pretty slim.

Frankel: Right. In my mind, the whole purpose that the average American would use a savings account these days, it's not for yield, it's for safety. It's where you would put your emergency fund, the money you can't afford to lose. So, yes, it's nice to be able to extract a little bit of yield off that. If I have a $10,000 emergency fund, a 2% yield gives me an extra $200 a year. It could help my emergency savings keep up with inflation, for example. But it's not an investment vehicle. This is not where you would put money that you are planning to retire on in 30 years. Like you said, I would much rather see people dollar-cost average into a brokerage account, a mutual fund, something of that nature, rather than trying to get every little teeny bit of yield out of a savings account with their long-term investment money.

Moser: If you think about it, I would venture to guess that probably, Robinhood's typical user skews a little bit younger, probably not quite as sophisticated an investor. I don't mean that as a pejorative, I'm just saying that they're younger and they don't have as much exposure to the investing world. Probably not looking at having that big of a deposit base anyway. I think there can sometimes be a little bit of a disconnect if someone sees that 3%, but then doesn't quite do the math to actually understand exactly what that 3% might end up being at the end of the year. You see it and I see it. You look at your interest-bearing savings account, for example, where maybe you have $5,000 or $10,000 in emergency funds there. And you see at the end of the year the amount of interest you've earned in that thing. It's negligible. It's inconsequential. Whether it's 1%, 2%, or 3%, it's going to essentially be more or less meaningless.

We've seen a lot of data here recently that says that most people don't have that kind of a nest egg set aside for emergency funds. It sounds like a lot of people are having trouble putting that kind of savings nest egg together. That's another thing to consider. 

I want to talk to you for a second here in regard to Robinhood's business. I agree with you. I like the idea of what Robinhood stands for. I want to get your opinion on the sustainability, their potential here. I looked at TD Ameritrade and looking through their 10-K here recently. Over fiscal 2018, they ended the year with 11.5 million funded accounts. That's up considerably thanks to the Scottrade acquisition. It's worth noting that TD Ameritrade and Scottrade are together now. That was part of that. But my point is, when you compare that 11.5 million funded accounts vs. Robinhood, where there's a few hundred thousand, maybe, what kind of potential is there for Robinhood to make it on its own? Or, do you see this as a start-up that ultimately gets taken out by a bigger player and rolled into their family?

Frankel: I see them making it long-term, but not necessarily in their current form. At the end of the day, a business needs to make money. I could see their platform getting wildly popular. It already is getting very popular, especially, as you said, among the younger crowd. But they need to figure out a way to monetize their customers. And it hasn't happened yet. There's not that much money in free stock trading. They're making a little bit of money off things like margin interest, for example. There's not a lot of money in giving a 3% savings yield when the best you can get off the Treasury isn't even 3%. I get that they're making money in certain ways. With the checking accounts, they said they're going to make money off swipe fees from debit cards, for example. They're splitting the revenue with MasterCard. They have an agreement. But that's not a ton of money, and it's not enough to sustain this as a big business. 

Eventually, I see them getting acquired. I don't see them surviving in their current form without figuring out a better way to monetize their customers. The latest start up valuation for them is somewhere in the $5-6 billion range. I have trouble arriving at that number, to put it mildly. A start up's valuation, you need to be able to eventually see a path where they're earning enough that valuation makes sense. And right now, I just can't get there with Robinhood.

Moser: That's worth noting. We hear there's news of a potential Robinhood IPO at some point. You can be sure that if there is one, we'll be covering it. But typically, in the finance space, with the exception of some of these fintech names like Square, even PayPal to an extent, they can garner some loftier valuations because of the potential that's out there. But for the most part, these financials are judged on the earnings that they bring in, the return on the assets that they hold. They're fairly transparent in understanding the valuations, at least, from that perspective. Robinhood, you certainly have to take a bigger leap, especially knowing that it's not profitable. Not necessarily sure what the top line revenue for that company is today. Do you know, is there an advertising component to that business? Do they make any of their money from advertising?

Frankel: I don't know the figures, but they have to be monetizing advertising in some way. I would think they're spending more on advertising than they are making right now. But I'm not sure the exact figures. That's one of the small revenue streams they have coming in.

Moser: Yeah, I think you're probably right, they're probably spending more on advertising than they're making on it. 

Regardless, definitely one to keep an eye on. Certainly we'll be watching it in 2019. A neat story. Thanks for all that you've done to look into that, Matt! I know our listeners appreciate it, too. 

Now, we want to tap into Twitter, as we do every week. Matt, I wanted to do something a little bit different this week. You sent out a tweet yesterday. Sunday morning, I saw this tweet. I thought it was great. I voted, of course, and a lot of people voted. It turns out, almost 5,000 people voted. The question that you asked, this was the Sunday Personal Finance Poll, you asked @TMFMathGuy. You said, "Do you feel like you're on track to have enough retirement savings?" Fairly cut-and-dry question. I like the choices that you had there to vote for. You had Absolutely confident, I'll probably have enough, I'm a little worried, and I'm in panic mode. 

The thing that stood out to me the most here is that when we look at those last two, I'm a little worried and I'm in panic mode, of the 4,700 plus votes we got, close to 40% accounted for those two suggestions, those two ideas right there. There are plenty of people out there who feel confident they'll have enough, or they feel pretty good about it. But there was close to 40% of people out there that are either a little bit worried, or they are in full-blown panic mode. And it stood out to us both as perhaps an opportunity for you, as a financial planner -- I mean, this is what you do. Maybe you have a couple of words of wisdom for these folks who are feeling a little bit on edge here, especially as we get ready to kick off a new year.

Frankel: Yeah, sure. I'm pretty confident that most of the votes I received were as a direct result of you tweeting this out on The Motley Fool's feed. 

Moser: [laughs] Well, that's OK. I mean, it's still the same audience, right? It's just more followers on that main feed.

Frankel: Sure. The reason I'm saying this is, the fact that 38% of the people said that they're either a little worried or in panic mode is especially concerning because most of these are people who follow The Motley Fool. These are people who are interested in investing.

Moser: That's a good point.

Frankel: So, I would say that this actually skews toward the more prepared crowd. That's one thing that concerns me. 

Just reading through some of the comments of why people are a little worried. One person, he's talking about in the U.K. but I'm pretty sure the same thing applies to the U.S. He said that a lot of people's retirement plan, it used to be that owning a home was a big part of it. I think, to some degree, that was true in the U.S. up until recently, as well. And he said, because of student loans, a lot of people can't afford to buy houses until later, so they're not starting to build equity until later in life, and therefore can't count on their home equity as retirement savings anymore. I think that's also a concern in the U.S.

But a lot of the comments... well, some people were just panicking for the sake of panicking, it sounded like. But some definitely had good points. One person, this is Carmichael Reed @CarmichaelReed, tweeted, "I'm confidently panicking," which was my favorite response. He said that he is debt-free now, but hasn't really saved yet. He said, "I'm debt-free. Now time to climb Mount money." That's also a very popular strategy these days, especially with the student loan debt hanging over people's heads. It takes them until age 35 or 40 before they're out of debt and confident to start saving. So, then, it becomes panic mode.

My advice there is, every little bit helps. A lot of people say, "I don't have thousands of dollars to put away, so I don't have money to invest." You'd be surprised how much $25 or $50 out of every paycheck when you're in your 20s can add up over time. If you're feeling burdened with student loan debt, every little bit helps. You don't need a ton. You can find commission-free ETFs with most online brokers. A lot of mutual funds waive their minimum investment if you agree to a periodic investment. So, there are a lot of ways to start investing with very little money. Don't underestimate the long-term potential of relatively small amounts, is what I can say.

Another thing is, don't pay attention to all this market noise. When the market is doing what it's doing now, a lot of people get afraid to invest. Bradley Smith replied to my tweet, @BWay79. "Hard to be absolutely confident with all the market factors and unpredictable environment. But I'm sticking to my plan and adapting when situations are presented." I thought that was perhaps the best answer to this entire poll. 

It's impossible to be absolutely confident that you're going to have enough retirement savings, unless you're outstandingly wealthy. But, do the best you can. You want to put the odds in your favor by dollar-cost averaging into investments, like you said earlier, by gradually investing over time, by using time to your advantage. Things like that can put the probabilities in your favor. So, while you can't be absolutely confident, you could raise your confidence level pretty high by just doing those few things.

Moser: Yeah. Those are a lot of good words there. The one thing that stands out to me, and I remember the feeling vividly, when you're younger, you don't think about that advantage of time. You're not geared to think about when you're 50 when you're 22 years old and getting out of college, and you're trying to figure out what you want to do. The first thing on your mind is not "Well, I need to make sure I'm prepared when I'm 50 or 60." So, consequently, a lot of people get out there, they start working, they do whatever they're doing, and they don't necessarily prioritize saving. 

I would say, whatever you're doing as far as work goes, when you get that job, go ahead and sign up for that retirement plan offering, if they have it. Have that money automatically deducted from your paycheck. It's easy to sit there and say, "I don't make enough," and just go ahead and opt out of it. But really, you can adapt your budget to what you're actually bringing in every week, every two weeks. If you can go ahead and sign up for that automatic deduction, that automatic deduction is really powerful. You can alter your behavior a little bit to accommodate it. Over the course of 20 and 30 years, it can make a profound difference. It's just easier said than done.

Frankel: Yeah, definitely. Saving for retirement is a big undertaking if you want to get to the point where you're really financially comfortable later in life. But it can be done, and it's a lot easier to do the earlier you start. Your money will never have the power it does right now. Keep that in mind every time you get a little bit of extra money on the side, even if it's, like I said, $20, $50 at a time.

Moser: Absolutely. For listeners, you can always reach out to us via email at industryfocus@fool.com. Of course, you can follow us on Twitter @MFIndustryFocus. Always happy to answer your questions or just read your take on things. Perspective is a wonderful thing, and everyone's got it. 

OK, Matt, as always, let's wrap this week up with One to Watch. Matt, it sounds like you're taking this in a little bit of a different direction this week. You've got more than One to Watch. Our listeners are getting a little bit more bang for their buck here.

Frankel: Well, this is the financial sector show, and the financial sector has been absolutely hammered over the past few weeks. I wish I could spend 20 minutes talking about all the stocks I want to buy right now. But I'm going to narrow it down to just two.

The first one, Berkshire Hathaway, has climbed to the top of my watchlist. The reason is that Berkshire's new buyback plan says that Warren Buffett and Charlie Munger have to agree that the stock is trading at well below its intrinsic value to be able to buy back shares. Well, they did that at a price of $207 for each B share. Right now, as of this morning, Berkshire is under $200. If they thought Berkshire was well below its intrinsic value at $207, at $198 or whatever it is right now, it looks like a steal. So, that's No. 1.

No. 2, I have to say Goldman Sachs again. The news came out this morning that they're worried about Malaysia taking legal action against them. Well, that happened this morning in relation to a bond fund that went bad a few years ago. The stock took another leg down. It's in the upper $160s, trading for about 15% less than tangible book right now, which is very cheap for any bank. So, I have to rerecommend you take a look at Goldman Sachs now. Hopefully, one of these days, I'll be able to shut up about it long enough to actually buy some.

I love a lot of the bank stocks right now, but those two financial sector stocks, Berkshire Hathaway and Goldman Sachs, have climbed to the top of my list recently.

Moser: Two good ideas there. I'm going to go with one this week. I'm going to go with a name that everybody probably is familiar with, Markel Insurance. Recently, we saw a very unusual sell-off in the stock. It was down around 10% last Friday, or Friday a week ago. It was in regard to inquiries into their Markel CATCo business, in other words, the catastrophic side of the business, Markel CATCo Investment Management, which is focused on reinsurance, retrocession -- which is essentially a type of insurance where a reinsurance company takes on part of the risk assumed by another reinsurance company. There were some concerns in regard to the reserves that were being set aside for this CATCo business. And that is important, of course. Setting aside reserves is the name of the game in insurance. 

But I do feel like this was a bit of an overreaction on the part of the market. The reason why, ultimately, is because when you look at this Markel CATCo investment management side of the business -- and that's what this investigation is regarding, no other part of the business -- that was only responsible for $28.7 million of the $7.5 billion in revenue that Markel generated over this past year. Really, it's a drop in the bucket. That was the ultimate point I was trying to make. It's not that it's not something that shouldn't be attended to, or investor shouldn't at least be aware of. But I feel like that 10% sell-off was a bit more than how reality should ultimately play out on this stock. It's still a very good business. 

The stock is trading at about 1.5X book value today. Maybe a little bit on the higher side, but it's the type of business that you can plan on holding for the next 10 to 20 years. Full transparency here, I bought a few more shares myself on the day of that dip. I felt like it was a good opportunity to add to that position. I think that our Financials listeners would benefit taking another look at that one. 

One quick housekeeping note here. We're coming to the end of the year here, holiday season. We will be off next week. The Financials show will be off next Monday for the holiday season. But, do stay tuned for our year-end holiday shows. We've got a series set up for you for Wednesday, Thursday and Friday, December 26th, 27th and 28th. We all got in the studio here and had a little fun talking about the year that was and the year that's coming. Be on the lookout for those.

Matt, as always, it's great to talk with you, buddy! I always enjoy having you join me on Skype here and talk to our listeners. I hope you have a great holiday!

Frankel: Same to you! Always great to be here!

Moser: 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. For Matt Frankel and Rory Carron, I'm Jason Moser. Thanks for listening and Fool on!

Jason Moser owns shares of AAPL, Markel, MA, PYPL, SQ, TWTR, and V. Matthew Frankel, CFP owns shares of AAPL, BAC, BRK-B, Markel, and SQ. The Motley Fool owns shares of and recommends AAPL, BRK-B, CME, FB, Markel, MA, MELI, PYPL, SQ, and TWTR. The Motley Fool owns shares of V and has the following options: long January 2020 $150 calls on AAPL, short January 2020 $155 calls on AAPL, short January 2019 $82 calls on PYPL, and short January 2019 $80 calls on SQ. The Motley Fool recommends EBAY. The Motley Fool has a disclosure policy.