Industry Focus: What We're Thankful For

In this special Thanksgiving edition of Industry Focus: Energy, The Motley Fool's Nick Sciple and Jason Hall share some things they're thankful for -- investors and investments they've learned from, financial personas that don't get enough credit, products and services that make life so much easier and better, college football teams and players that fans can't not be thankful for, and more. And thanks to you for tuning in!

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This video was recorded on Nov. 21, 2019.

Nick Sciple: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. Today is Thanksgiving, and as is appropriate, we're giving thanks. I'm your host Nick Sciple, and today I'm joined by Motley Fool contributor Jason Hall via Skype. Jason, what's up?

Jason Hall: Nick, thank you for having me on today, and happy Thanksgiving!

Sciple: Thank you for joining me and happy Thanksgiving. And just so our listeners know, we're not crazy people. We're not at work on Thanksgiving. We're prerecording this on November 21st. But we thought it'd be fun to give you all a nice little Thanksgiving show. Jason, you just moved into a new house. What are your plans for your first Thanksgiving in your new home? Are you going to be there? Are you going to the grandparents? What's going on?

Hall: My plan is to get out of this house and to get out of this state and find my sanity. Moving is horrible. Moving with a three-year-old is especially painful. So I will be, thankfully, in the beautiful little coastal town of Panacea, Florida -- about 45 minutes south of Tallahassee for anybody that's not familiar. It's kind of in the elbow of the Gulf Coast. We're down there with family. Some family goes every year, and we try to go every other year. Very excited about that, to be on the Gulf Coast for Thanksgiving.

Sciple: Going to God's country, the Gulf Coast, man. As a Mobile, Alabama native, really, really jealous you're going to make it down there. This will be the first year, actually, I haven't made it down to Alabama for Thanksgiving. Going to be spending Thanksgiving with my girlfriend up here in the D.C. area. Excited to do that, but also going to be missing family a little bit. I hope you enjoy the Gulf Coast as much as I enjoyed growing up there.

We're going to run through some fun little list of that stuff we're thankful for. The first one that I want us to do is, Jason, what is the product or service that you are most thankful for in your life?

Hall: Disney+, buddy. It's changing lives, I'm telling you. Disney+ is changing people's lives every day. OK, all right, no, I'm sort of kidding. As a consumer, Amazon (AMZN 3.43%). There's no doubt about it. It is truly something that has given me back hours of my life. As someone who hates going to stores, it's so much easier just to flip open the app and just buy whatever I need, and know that it's going to be at my house the next day or the day after that. That's fantastic.

I'm going to do one more. You know me, I can't just do one of anything. Professionally, Stock Advisor, the Motley Fool stock-picking service that was launched by Tom and David. I can truly say that this changed my life. I started with The Motley Fool as a paid subscriber to Stock Advisor. Got really involved on the message boards. This service played a huge role in helping me develop as an investor, and is actually the thing that opened the door to me ending up on this podcast with you right here. It's truly changed my life.

Sciple: We didn't pay him to say that, folks. [laughs] I would say for me, to echo your sentiments there, The Motley Fool podcasts. I mean, that's why I'm here. That's how I ended up here at this company. But my product that I will say is Google (GOOG 9.96%) (GOOGL 10.22%). I don't know how my life would be like without Google. It changed the bar conversation forever. There's no more debating anything anymore. I've got the answer right at my fingertips. I can't tell you the number of things I google every day. Google probably knows more about me, and probably every person that's listening to this show, than I know about myself. I get so much value out of it. The way I picture Google is, the internet has every bit of information you could ever think of in the world, right? Before the internet, where you needed to go to get that information is, like, your local library. Now, imagine if you walked into that library, and nothing was in order. You couldn't find anything. Well, that's what the internet's like without Google. The internet's really not that useful without a search engine that can let you find what you need in this massive pile of information, quickly. I think it's brought so much value to me and lots of folks around the world. So, I'm going to go with Google.

Hall: Did you watch the Matrix movies?

Sciple: Of course.

Hall: To me, in my head, even to this day, I imagine that Google is actually just a white room with a person that's inside of it. It's the Oracle. That's Google. That's it. It's not computers. It's the Oracle.

Hall: That's quite possible. All right, our next thing we're most thankful for. We're going to talk about, what is the investor you're most thankful for, Jason?

Hall: Charlie Munger. Absolutely Charlie Munger, no doubt about it. I don't think he gets anywhere near enough street cred. He is a huge reason Berkshire has created so many billionaires. I still don't think he gets anywhere near enough credit for Buffett's evolution as an investor. I still read these articles to this day, and it makes me cringe when somebody calls Buffett a value investor. Buffett hasn't been a value investor in 30 years. Buffett likes to pay a fair price, but because of Charlie Munger, Warren Buffett's focus for years and years has been more on buying high-quality businesses that have competitive advantages and have these real durable strengths, the moat that he talks about, something that's going to allow them to continue to grow their business and generate an adequate rate of return over the long term. And Charlie Munger, I think there's a good chance that the Warren Buffett would have remained a cigar-butt investor if it wasn't for Charlie Munger.

Sciple: Yeah, absolutely. Charlie Munger would be my 1-B here. When you talk about that, moving away from value investing, I think what Charlie Munger really did is moving Buffett from value as a quantitative methodology to value as an analytical style, of thinking, paying less for what you buy than what it's worth relative to saying, because of this number, this company is undervalued. I think that's been transformational. And that's a much more scalable style when you get to tens and tens of billions of dollars than it is trying to find cigar butts, as Buffett did coming up.

Hall: Nick, you know, also, Charlie Munger is an attorney.

Sciple: Yeah. We have a theme here. I was going to say, we have a theme here. My investor I'm most thankful for is also an attorney, Peter Thiel, at for a few reasons. The first is more personal to me. When I first got started in investing, I was in law school, doing that sort of thing. And one observation Peter Thiel had, I think was super influential to me. He went to law school at Stanford, went to work at a big firm in New York. Famously made it three months, and he said, from the outside, the law firm was a place that everybody wanted to get in. And from the inside, it was a place that everybody wanted to get out. I didn't really realize that that was explaining my observations until I'd really read that observation, and it really just clicked with me, and is a big part of why I'm here doing what I'm doing right now.

In addition to that, on the more investing side of things, I think Zero to One is probably the best investing book I've ever read. Really kind of transformed the way I think about companies. One of his conceptualizations is, where most people would say competitive advantage, he says monopoly. I want these companies that have a monopoly on their brand or a monopoly on this asset, versus having a competitive advantage. What does this company have that no one else has? Another analytical thing to think about is, what do you believe that most people would disagree with you on? I think, if you're an investor, you really have to disagree with most people to find any sort of value in the market. If you're not doing something contrarian to the market, you're just getting the market's return. So, that has been super valuable to me.

And then one other thing, it's exposed me to mimetic theory. For folks that haven't been exposed to that, read up on it. Really, it's a theory of everything. I can't really explain it to you here. But, read up on. Has really changed the way I view the world in a significant way. We talked on this show a while back about T. Boone Pickens. I think Peter Thiel shares some of the political controversy that T. Boone Pickens has. But, like T. Boone Pickens, an incredible number of lessons, an incredibly clear thinker, and I think everyone can learn from him about his observations both on life and investing.

Hall: Yeah. I want to just tie this together real quick. I think it's really interesting, you think about Munger, you think about Thiel, think about you, and think about, I'll include in this, John Maxfield, one of our colleagues that rights for The Motley Fool. You're all attorneys. And, other attorneys I've known in my life -- I have an uncle -- if you want to learn how to really ask good questions, make good friends with an attorney. You will become so much better at asking the right questions, to get to not the answers that you want, but to learn. So, I'm going to mix you in there with Mr. Munger and Mr. Thiel, too. Something about that law training that teaches you really how to get to the crux of things. It's so powerful.

Sciple: So what Jason is saying is, everybody be nicer to lawyers.

Hall: Well, no. You don't have to be nice to them.

Sciple: [laughs] All right, let's move on to, what is the investment you're most thankful for, Jason?

Hall: It's an investment that has cost me a substantial amount of capital over the years. In terms of dollars invested, it's one of my largest. Bought my way out of a really ugly position. It's Clean Energy Fuels (CLNE 8.00%). And the reason I'm picking Clean Energy Fuels is because I've learned so much. This is one that, I look at the capital losses I've taken over time as a great tuition. It's a great education. It's taught me a lot about how to analyze companies. Also, I've learned some really valuable lessons. Even great ideas don't always work out exactly as you planned. And sometimes, things work that you expect to work, but other things prevent them from necessarily being profitable investments. I think this is a great case for that. That's why I picked it. I didn't pick the one that's made me the most money. I didn't pick Netflix or Amazon, that have made me the most money. But I've learned more about being a good investor from Clean Energy Fuels than any other stock I've ever owned.

Sciple: Jason, I'm not as enlightened as you. I picked the stock that's been my best performer since I've owned it, and that's Dexcom (DXCM -9.90%). It's not just because it's been my best performer, although, of course, that really helps. But it's one of those cases where observing what happens in the world, I think, was more valuable to me than observing what had happened in the market. When I bought that stock, it had just sold off pretty significantly because one of its competitors, I believe Medtronic, had come out -- for background, Dexcom makes continuous glucose monitors. These are, for someone with Type One Diabetes, will be typically an implantable sensor that will go in your upper arm usually, and it measures your glucose over time to track to make sure you're not too high, not too low. It was a pioneer in that device, and they continue to be one of the leaders in the space. Well, the stock had really sold off significantly because Medtronic had introduced a continuous glucose monitor that was the first one on the market that didn't have to be calibrated every day. You didn't have to stick your finger and draw blood to make sure the sensor was measuring properly. The market came out and said, basically, they're going to take away the market, and all these other competitors are gone.

Well, the reason I bought Dexcom, I talked to several people who had the sensor and said, "Are you going to switch over to this new product?" And they said no. They said no for a few reasons. The reason why I think Dexcom still a great stock today, they have the most accurate sensor on the market. When it comes to keeping yourself in the proper glucose range, the more accurate you can be, obviously, the better, going through highs and lows. They also were the only product on the market, at least at the time, that had the seamless integration with your iPhone. So, you could easily monitor your glucose and those sorts of things through your phone. If you talk about parents who have young children that have Type One Diabetes, it lets them get alerts whenever their child would hit a high or low. So it really adds a lot of utility to folks there. And then third, that competing product that I mentioned to you, you could only use that CGM with their insulin pump. What Dexcom really is, it's a product that is agnostic. You can use all kinds of different pump options with them. So, it's one of those things where the market really overreacted. But, talking to people and learning how people actually used the product was able to make a decision that led to a great investment, which was particularly valuable.

Hall: A little Peter Lynch here. Let's go ahead and bring it a little One Up On Wall Street here, talk about using what you observe in the world to identify potential opportunities. Nick, good job, buddy. Well done!

Sciple: Yeah. The other one would be Phil Fisher, the Scuttlebutt method. I think there's a lot of scuttlebutt there involved in that thesis. I really encourage folks when they're making investment decisions to talk to people who actually use these products. Pay attention to the world. When you go to a restaurant and there's a line out the door, maybe that's a good sign. Or, if you go to a restaurant, and maybe it looks really cheap from a valuation point of view when you look at the numbers, but there's nobody in the restaurant when you go there, you don't like the product, and that sort of thing ... trust the people who actually use these products when you make these decisions, and I think you'll be rewarded over time.

Hall: Well done!

Sciple: OK, for this last one, I want to talk about, every time I have you on the show, Jason, we like to talk about a little bit of college football. Thanksgiving is a notoriously big NFL day. And, that Saturday is always the biggest rivalry weekend of the year. I know I would always have to build my Thanksgiving plans around, how can I get back to Tuscaloosa or Auburn for the Iron Bowl that weekend? So, in that vein, Jason, what or who is the college football player you're most thankful for?

Hall: You know me, I can't do just one of anything. I'm going to say the strength of Georgia's team this season by far has been defense. I'm going to go with J. R. Reid. Safety. One of the true greats. Georgia strong safety. Just got nominated for the Bronko Nagurski award for the best defensive player in college football. That's pretty big deal. Did you know that Georgia's defense has not given up a single rushing touchdown this season?

Sciple: I know now.

Hall: Through 10 games! Not a single one. On offense, I'm going to go with Andrew Thomas, the superstar blindside offensive tackle. Probably going to be the first offensive tackle, probably the first offensive lineman drafted this year. He's a junior, I'm sure he's going to leave early. He's an Outland Trophy semifinalist for the best offensive lineman. I also want to point out that, did you know that the University of Alabama did not have a single offensive lineman nomination for the Outland Trophy? I don't think that's happened in like six or seven years. That's a big deal. Auburn's got one.

Sciple: Well, darn...

Hall: [laughs] OK, so, Georgia is also ranked higher than Auburn in the college football playoff standings.

Sciple: That is accurate. That is accurate. All right. [laughs] I have a few. I'll give you some honorable mentions. A. J. McCarron, huge part of my early college career. From my hometown? His tattoo choices, I don't know about that. Folks who are unfamiliar with that, maybe Google that.

But, I think, a college football player I'm really most appreciative of, and I don't think there will ever be a moment that will match, the National Championship a couple years ago, Tua Tagovailoa. It's very rare that someone is one of the best at what they do and also one of the nicest people that do what they do. I think Tua is one of those people. It's really unfortunate, his injury that happened a couple weeks ago. He dislocated his hip. But I think he's just one of the nicest, most genuine people, and also probably the best quarterback to ever play at Alabama throughout history. Again, I was at that National Championship game. Second and 26 is probably the greatest football moment of my college football career. Jason may not agree. Really, so appreciative of what he stands for and he's represented the University and just college football in general. Really thankful for Tua.

Hall: Yeah, I think it stinks that his college career could have ended on a fluke, weird kind of thing like that. And there's risk to his professional career. Here's the question I have. I agree, great choice. Tua Tagovailoa. Do you think there's any chance, if he's healthy, he comes back for his senior year?

Sciple: There's always a chance! I don't want to get my hopes up too much, but there's always a chance. The factor that I've seen some folks talk about is, he does have an insurance policy if he falls in the draft. So, there's not a significant economic reason for him to do so, as some I think. But, we'll just have to see. Whether he does or doesn't, super thankful about how he's represented the University and, like I said, college football in general.

Jason, all our listeners, I hope you have a happy Thanksgiving. We will see you next week.

Hall: Happy Thanksgiving, everybody!

Sciple: As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against the stocks discussed, so don't buy or sell anything based solely on what you hear. Thanks to Austin Morgan for his work behind the glass. For Jason Hall, I'm Nick Sciple, thanks for listening and Fool on!