In this episode of Motley Fool Answers, Alison Southwick, personal finance expert Robert Brokamp, and Motley Fool contributor Brian Feroldi take on some listeners' questions. Learn which companies investors are most curious about, why you should keep your lizard brain out of the investing process, and when it will be "safe" to invest. Finally, some recommendations to keep on your watch list.
Our hosts also share some recommendations to keep you busy while you're maintaining physical distancing. Find out what they are and much more.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on April 10, 2020.
Alison Southwick: This is Motley Fool Answers. I'm Alison Southwick, and I'm joined, as always, by...nuts! I didn't think of a name to call you this time, Robert Brokamp, personal finance expert here at The Motley Fool.
Robert Brokamp: Just call me Old Nutsy, that's it.
Southwick: Old Nutsy?! [laughs] Anyway, hi, Bro. In this week's episode, we're joined by Motley Fool contributor Brian Feroldi. He's here to answer the most common questions he's hearing from concerned individual investors on how to act during the financial fallout from COVID-19. All that and more on this week's episode of Motley Fool Answers.
Well, how we've been starting our episodes lately is to talk about the week that was, because there has been -- always a lot of interesting financial things going on. And so Bro is actually going to take the lead, but before he starts, open up his yap, let's introduce Brian Feroldi. Brian, how are you?
Brian Feroldi: Guys, I'm getting called up to the big leagues. Motley Fool Answers? What? How? I get to chat with Alison and Bro.
Southwick: You flatter us. And, Bro, whatever.
Brokamp: That's the way most people feel. Alison! And Bro... and for a good reason.
Southwick: Brian, where are you coming to us from today?
Feroldi: Sunny Rhode Island is where I call home base.
Southwick: I had no idea you were from Rhode Island.
Feroldi: Does that make me better or worse in your mind?
Southwick: Bro, I think we should have talked about this beforehand. I don't know, do we have people from Rhode Island on the show?
Brokamp: Sure. Some of my favorite people are from Rhode Island, so I'm happy to have Brian Feroldi.
Southwick: Guess what, Brian? You're my only "people" from Rhode Island. You're the only person I know.
Feroldi: Your only one?
Southwick: Yeah, you're the only person I know from Rhode Island.
Feroldi: So longtime Fool Selena. Selena Maranjian.
Brokamp: Selena Maranjian, that's right, she lives in Rhode Island. Seth MacFarlane of The Family Guy, of course.
Feroldi: Seth MacFarlane, yeah, Chuck Saletta, another Fool, and of course, Tom Gardner went to college at Brown in Providence, Rhode Island.
Rick Engdahl: But do we have any postcards? That's the real question.
Southwick: Yes, I'm sure we have some postcards that have come in from Rhode Island; I'm pretty sure. Well, I think. I would like to talk about anything other than what the markets did today, if we're spending this much time talking about Rhode Island, [laughs] but I guess we should get to it. But, Brian, why don't you first tell us a little bit about how you came to become a contributor with The Motley Fool?
Feroldi: Sure. So I've been reading The Fool's content for about 15 years or so, got started off with just, you know, the old The Motley Fool Investment Guide back in yesteryear. And then I became a paying subscriber myself about 10 years ago, and I was just spending pretty much all of my free time [laughs] on The Motley Fool's discussion boards, this is where my passion lies. And then five years ago, I was afforded the opportunity to become a writer, and I've been doing that, kind of, ever since. And they brought me on because my expertise was in the healthcare space, I worked for a medical device company for 10 years. So I kind of help with the healthcare side of things. And I personally invest a lot in technology stocks, so I hang my hat mostly in healthcare and technology-land.
Southwick: Right. Very apropos, probably, for our conversation later on. So Bro, why don't you take it away and tell us what happened this last week? Because again, I don't understand the stock market, apparently.
Brokamp: [laughs] Well, I can understand why you'd say that, because I'm going to begin this by quoting Dickens: "It was the best of times, it was the worst of times." So just a reminder, everyone, we're coming to you from the past. We're taping this on Friday, April 10, so who knows what the helicopter is going on by the time you're hearing this, dear listener.
But as for this week, it was quite a good week for the stock market. So the S&P 500 was up 12.1%, its best week since 1974. Looking at just since the peak of the market on Feb. 19, the S&P 500 is down just 17.6%; for the year, it's down just 13.6%. And I know, in most years we would say being down by that much is disappointing, but considering that we were down 34% on March 23, it's quite surprising.
Looking at the Nasdaq, Nasdaq is down 16.9% since the peak but down just 9.1% for the year.
Going to Russell 2000 Index of small caps, small caps got hit pretty hard, they're still down 26.5% since the peak, but last week, they were up almost 20%. One of the best weeks for small caps ever.
Looking at international stocks -- we're just going to look at the Vanguard Total International Stock ETF -- they're down a little over 20% for the year.
And as for bonds, bonds really ended last week very well -- or I should say, this week; last week, when you're listening to this -- because the Fed came in, announced a whole new program worth $2.3 trillion. Increased lending to mid-size businesses, but they're going into the bond market and, for the first time ever, buying junk bonds. So I actually have very mixed feelings about that, but regardless, the Fed is going up and buying up all kinds of bonds.
So the bond market went a little haywire for a couple of weeks in March, but now it's up 6% for the year. So for those who kept that money safe and dry, they're pretty happy.
So why is all this happening? Why is the market going up despite --
Southwick: Yeah, why, why?
Brokamp: Yeah. Well, of course, no one really knows, but I would say if I had to take a guess, it's two things. First of all, the government on all levels, including the Fed, has demonstrated that they will do just about anything to get us through this crisis. I think that's heartened a lot of people. And also, some of the news on the health front is encouraging. So hospitalizations are going down in New York. Number of beds and ICUs being used is going down. Tony Fauci said that the final number, in terms of fatalities due to COVID, may actually come in around 60,000, lower than that original 100,000 to 200,000 estimate.
So there's just some sort of light at the end of the tunnel that people may be banking on here. And it all brings to mind a line from Rob Arnott, who is the founder of asset management firm Research Affiliates, who said, "The strongest bull markets are not built on a foundation of good news, but on diminishing bad news." So that might be what's happening here.
That said, this could be just your standard bear-market rally. And it happens often during long bear markets, where the market does go up for a little while, but then it comes back down. I don't know if that's going to happen at this point, but we certainly have a lot of bad news, more ahead of us.
Which brings us to the worst of times. So an additional 6.6 million Americans filed for unemployment. That brings the total claims to almost 17 million. In other words, the U.S. workforce has lost 10% of its jobs in just three weeks, and we're going to continue seeing that for the near future. And while the government is willing to help out in terms of paying additional unemployment claims, giving loans to businesses, the rollout has been difficult, many people having trouble getting those loans, many people having trouble getting their unemployment benefits. So there's a lot of stumbling going on with that.
Relatedly, at least in terms of what the government is doing, there are a couple of developments. We've all heard about the payments from the CARES Act, which the government is calling economic impact payments, they're going to start rolling out this week. And they've created a website for people who don't file taxes to get those payments, and very soon they're going to create another website where you can put in your direct deposit information or update your address if you don't have that already on file with the IRS.
The place to go is IRS.gov/coronavirus. Go to that, and you'll see updates, but so if you're worried about if you're going to get your payment or not, visit the site, and it might be able to provide some updated information.
Some other interesting good news is that 10 insurance companies have said they're going to offer rebates to people, in basically recognizing that we're not driving very much anymore and we're kind of overpaying for our car insurance. So the big names -- GEICO, Allstate, State Farm -- it's going to automatically show up in your next bill, that's good news.
And if you're actually buying anything these days, chances are it's costing you less, the Labor Department said today that the consumer price index dropped 0.4% last month; that's the biggest drop since 2015. As you would guess, the biggest drop is due to gas, hotel, apparel, airline tickets, stuff like that.
For the last 12 months, inflation came in at 1.5%, down from 2.3% a year ago. Just anecdotally, the family and I drove on to the hills of Virginia to take a hike a few days ago and saw gas for $1.50 a gallon. So as we said in a previous show, if you have funds and you're looking to make a big purchase -- car, appliances, or something like that -- you might actually get a pretty good deal these days.
And that, Alison, is what was up this week.
Southwick: You know, it's funny. I remember in the good old days, when the market was in a bear market for over a decade and companies would report their earnings, but then their stock would still drop because they didn't report as good of earnings as analysts had hoped for. I wonder if -- because earnings season is right around the corner. Isn't it coming up here in April? -- I wonder if it's going to be like, earnings reports are awful, but they're not as awful as analysts had expected; therefore [laughs] their stock price is going to skyrocket. Maybe not skyrocket, but at least not take a hit.
Yet another reminder that the stock market is not the economy. [laughs] So there you go.
Feroldi: On that note, Alison, one of our longtime Fool.com writers, Seth Jayson, has long said, "You could give me tomorrow's news ahead of time and I still couldn't predict stock price movements," for the exact reason you just said. The numbers are going to be bad, let's just accept that, but are they going to be as bad as Wall Street is expecting? We don't know. And if that's the case, stocks might go up. This is why investing in the short term is basically impossible.
Southwick: Thank you again for joining us on this week's episode. There's a reason why we wanted to have you. And that's because you have been very busy as a contributor for Motley Fool, kind of being on the front lines of talking to our readers, talking to our members, hearing what their concerns and thoughts are as far as being investors today. And so we thought we would have you on to, sort of, sum up what are the most common questions you're getting, and then, obviously, offer an answer, because this wouldn't be a very helpful show if all we did was ask questions. [laughs]
Feroldi: It's kind of in the title of the show, don't you think?
Southwick: It is kind of in the title of the show, it is a promise we make. But I will say more often now, I feel like I just don't have any answers. And so, really, we should just name the show, "Questions" and then shrug, and go, I don't know, the stock market. But, anyway.
So Brian, thank you again for joining us, and should we just get into some of your questions that you're seeing?
Feroldi: Yeah, sure. And just to bring everybody up on speed, so The Motley Fool has basically put on a Zoom (ZM +0.39%) livestream for almost the last month. And we've invited all of our subscribers to kind of join us on there, and we have a huge range of contributors that, kind of, take different sections. And throughout each one, we're basically asking those that are watching for questions where we're answering the most common questions.
So that's why I'm on the front lines, so to say, is that I've been on, like, four hours a day of this livestream, because I just love it, it's just such an amazing educational tool, and it lets you connect with people in a way that you just can't when you're writing articles and sending them out into the world.
So yeah, the livestream, I absolutely love it, but to get to --
Southwick: This episode will be a bit of CliffsNotes for [laughs] listening to the livestream. So if you're a The Motley Fool member you're still welcome to go listen to the livestream, but we're going to cover the big questions here. So let's start with the first one that you're hearing a lot of, which is, should I invest in __________, by which I mean, insert any number of different company names here.
Feroldi: Yeah, and we've been getting the same companies over and over and over again. And these companies have been in the news a lot. So the No. 1 question we've been getting recently is, "Should I invest in Luckin Coffee (LK 3.30%)?" which is, unfortunately, a China-based coffeemaker that basically said last week that they were cooking the books. They inflated their revenue significantly.
And this one really stung, because it was actually a Motley Fool recommendation. And when they announced that, the stock dropped 80% in a single day. And there's no doubt a lot of people really got hurt with Luckin Coffee. So tons of questions about Luckin Coffee.
Southwick: But does it boggle your mind that you're like, this stock proved out to be fraudulent? Are you really asking me if you want to invest in a company that was, like you said, cooking the books? Or are people just so hungry for a value, [laughs] they just want to get a piece of that one?
Feroldi: Well, I think a lot of people, unfortunately, this is their first experience with this kind of shenanigans, and it's obviously gut-wrenching to see an investment you make drop by 80% in a single day. So they want to know what we think, what they should do with it? And in the premium services of The Fool that has recommended those, we have issued guidance for what to do. But no doubt that this is a company that's on the top of everybody's mind.
And there's actually been a couple of other Chinese companies, even since then, have come out and also admitted to wrongdoing. So sad time, unfortunately, for a number of Chinese-based companies that are listed on American exchanges.
Southwick: Yeah. What are some other companies that you're hearing a lot of questions about from investors?
Feroldi: So if I was to say, No. 1, definitely Luckin. No. 2, and it's a close tie, is Zoom Video Communications. I mean, not only has this been one of the best-performing stocks year to date, they came out and they basically said "the number of users that we've had, the number of meetings, has increased by 20X this quarter." 20X. It went from 10 million to 200 million. Which shouldn't be all that surprising given what we're all going through right now. But this has been a red-hot stock.
And then, of course, over the last couple weeks, we've seen numerous concerns about -- what about the security problems? Can I use Zoom? Is Zoom a good stock to buy? etc. So just another stock that has been in the news for good reason. And our members really have questions about Zoom.
Southwick: Yeah. And then, another stock that I assume has seen a big bump because of the coronavirus is Teladoc, which is remote doctors, right?
Feroldi: Remote doctors, done, that's it.
Southwick: -- where you chat with the doctor.
Feroldi: This is one of Jason Moser's favorite companies, road-to-growth stocks, and it provides face-to-face video conferencing with a doctor, so it skips the need to go to a waiting room. Obviously, a very attractive service in general, but the usage of this product is likely skyrocketing right now.
And the final company that I'll just call out, that we've gotten a lot of questions about, is Boeing. Boeing has been going through a huge number of problems unrelated to coronavirus before this, and the coronavirus has since accelerated this company's problems.
So no surprise to see these four companies, which have been in the news a lot, these are top of mind for our members.
Southwick: Yeah. What's your general advice when people are asking you, should I invest in this X company?
Feroldi: Yeah. So Boeing is not a company I followed or cared about before this, and still, it's not even close to being on my radar. Zoom was a company that I liked a lot before this happened. I always was held back by the valuation. The valuation of this company was very high even before it went on to basically double in 2019.
I'm a bit of a contrarian. When I see huge investor interest in a company, it kind of diminishes my interest in it, because it says, like, "Wow, this company is getting so much attention right now from people and rightly so for good reason." So I've just personally kept away, but Zoom is a very high-quality company and there are a lot of people at The Motley Fool that really like it, and I completely understand why. Same goes for Teladoc.
Luckin is, kind of, its own unique situation, where basically, again, they basically came out and said, "Yep. Don't trust our books. We cooked the numbers; our revenue is extremely inflated." So that wasn't a company I covered before and don't really have any interest in covering it now. So I can't be helpful on that one, in particular.
Southwick: Yeah. So we had a funny conversation with my mother-in-law over the weekend, because an aunt decided that she was going to invest in Zoom because of this hype around Zoom and everyone is using Zoom and they're going to use Zoom. And you know, what did we think about that? And I was like, well, you know, we use Zoom, it is a recommendation of The Motley Fool, it was a recommendation before it really hit the headlines as being the software everyone is using to communicate now. But, you know, if I were to invest in Zoom now, I would still want to be holding it for 5, 10 years down the road. I would want to invest in companies that I believe in beyond coronavirus.
And what's funny is that our aunt ended up buying Zoom and then selling it two weeks later. [laughs] I was, like, "Oh, man, we need to sit her down and have a talk."
Feroldi: Yes. So that wouldn't be investing in Zoom, that would be hoping to make a quick buck on Zoom, which is, unfortunately, when companies are really in the news. You see a lot of that, you see a lot of people that they're investing for the first time and they don't know what to do, but they've heard on CNBC or their simple logic is, "Zoom must be doing great right now, I'll buy it." And so, that I think is a big reason why we're seeing the share pop, price go up so much.
Now, I will say, a lot of people are using Zoom for the first time and I'm a true believer that habits are changing, and I think that people will be much more likely to use Zoom one year from now, three years from now, five years from now because of COVID-19. Same with Teladoc. So I do think that these companies will have not only short-term benefits but long-term benefits from the COVID-19 crisis, so that is something that does make me more bullish on both of their businesses over the long term. Whether or not that justifies their valuation today is a completely different matter, but the businesses themselves, I think, will see permanent increases from this.
Southwick: Yeah. All right, let's move on to the next question that you're hearing a lot of. And Bro touched on this at the top of the show, but when is the bottom? Did it already happen? I don't know.
Feroldi: Again, this is exactly [laughs] why investing and trying to figure out where prices are going in the short term is so unbelievably hard. You know, it's been pointed out many times, if you look back to the last crisis, when was the bottom? March 9, 2009. What were the news that came out on March 9 or March 10, 2009? I guarantee you it was bad. It was bad economic news that probably featured huge job losses and stories about businesses going under left and right.
The tricky thing for us is, you never know when a bottom is until well after it happens. So we always advise people: Don't try and focus on timing the market, you will never get in at the exact bottom. Focus your attention on finding investments that you like that you would be happy to own at the price today. And mentally tell yourself ahead of time, "I'm not getting in at the bottom. This company could drop 20% from today's price." And as long as you're OK with it, get invested.
Southwick: Yeah. Do you find that Fools are asking you when is the bottom because they want to get the lowest price possible for the stock, or are they asking when is the bottom because they are scared about their portfolio as a whole?
Feroldi: Yeah, both. I think it's a little bit of both. And, again, it's very natural. If this is your first time really going through a crisis or really getting interested in the market, it's natural to want to ask somebody that's been doing it for a while, "Well, when's the bottom? Obviously you know." It just makes sense that people that look at this all day, like we do, would know when the bottom is. But I'm here to tell you, nobody knows when the bottom is. I mean, if Bro doesn't know, who could know, right?
Southwick: Bro, Bro, do you know?
Brokamp: I don't know, but if I may add another question that's related to that; because I've done some of these livestreams too. Now that the market has popped up 20% or so since the bottom, now people are asking, "Is it too late to get back in?"
And many of us, myself included, had some cash on the side, gradually putting some of the money in, but not putting all of it in. And then people are like, "Oh, no, did I miss the bottom?" So I'll answer it, and then, Brian, you can tell me how you would answer it. And the question is, I don't know.
If I had to say, one way or the other, do I think the market is going to go down again? I would say, probably, yes, but just because of the really bad news we have coming out. On the other hand, it is quite possible that, because the cause of this downturn is well known and that won't be with us forever, that we may have put in the bottom. But I think any money that you put in today, five years from now, you'll be happy you did, because stocks still are down pretty considerably, and some parts of the market are still down really considerably. Like I said, small caps are still down 25%. I think if you were to buy in small caps today, five years now, you'd be happy you did.
Feroldi: Yeah. When it comes to this kind of stuff, Alison, I am personally a big advocate of investing mechanically on a schedule that you make up ahead of time. And what I mean by that is, rather than trying to time the market and pick the bottom, say to yourself, OK -- let's say you have $1,000 to invest. Say, "I'm going to invest $100 today and I'm either going to invest another $100 in some time period -- say two weeks -- or I'm going to add $100 from a 5% decline in the market from today's prices."
And that way you are taking the decision of when and you're deciding it ahead of time. So come up with rules for yourself that are either based on time or on percentage drawdowns in the market, and stick to that schedule. That way, you won't feel like you completely mistimed it, but you'll also make sure that you do get your money invested in a rather timely fashion.
I mean, everybody at The Motley Fool, I think, is a big fan of dollar-cost averaging, investing the same amount of money into your 401(k) or the market month-in and month-out. The reason that that works is because you get to take advantage of dips, you're buying when things are low, and you're buying slightly less when prices are high.
So my advice is, always take your lizard brain out of the investing process, come up with rules for yourself, and then follow those rules.
Southwick: All right. Another question you're getting that's along the same lines is, "When will it be 'safe' to invest again?" So this sounds like this is coming from people who are nervous.
Feroldi: Yeah. Again, same thing, people want to know when is this crisis going to be over, when is the market going to go back to "normal"? I say that in air quotes, because I don't know that the market is ever behaving normally. But, again, it ties into the same issue. Is now a good time, or have we bottomed? Is the crisis finally over? And, again, I have no ability to predict such things, which is why, again, I'm such a big fan of just doing it on a mechanical schedule that you set up. So Bro, when do you think, when's it going to be safe to invest again?
Brokamp: I don't know. And I would say, again, if --
Southwick: Boo! This show is called Motley Fool Answers. Boo! Get off the stage.
Brokamp: Yeah. So what can I say? The golden rule, as far as I'm concerned when it comes to investing, is any money you need in the next three years shouldn't be in the market, any money you don't need in the next three years, keep it in the market. And history says, 80%, 90%, 100% of the time, depending on how long you have, you're going to make money.
So I agree with Brian that there's never a normal time when it comes to investing, but we are going through an abnormal time in our society, right? We're all at home. We're working from home. Restaurants aren't open. No one is traveling. But that will change, and that will change before this year is over, I think. So given that the stock market always rebounds faster than the economy, you can't wait too long before things get back to an upward trajectory, as, really, we've already seen for a couple weeks now.
Feroldi: I always like to remind myself, what happened in the 20th century, right? The 20th century, this amazing period of progress, yet we fought how many world wars? How many presidents were shot at? How many...? Like, the Bay of Pigs, there was a Cuban Missile Crisis, there was so much bad stuff that happened in the 20th century. And yet, if you invested throughout the entire period, boy! did you make a lot of money at the end. So there's never a perfect safe time to invest. We say, just stay invested throughout good times and in bad, and it'll likely work out very well in the long run.
Southwick: Yeah. So I was reading through your questions that you said were the most common ones. And I'm like, "Okay. Yeah. Okay. Okay." And then this next one came up, and I was like, "Wait! What?!" [laughs] And so now I have a feeling that this question snuck in because of your tech bias, but maybe I'm wrong.
So the next question is, "What are some 5G stocks?" Are you really getting that question all the time on the livestream?
Feroldi: I am shocked how often people want to know about 5G stocks. And is it safe to assume that people know what 5G is?
Southwick: I just know that there's a conspiracy theory out there that 5G is what gave us coronavirus and somehow it controls you, and that's really all I know, so.
Feroldi: That is 5G; you are an expert. [laughs]
Southwick: There we go. It sounds like a hot investment tip. Mind control.
Feroldi: So 5G is the next coming wave of cellular connectivity. So the current "G" that we have is fourth generation. And 5G is basically going to increase the download speeds to smartphones and mobile devices dramatically. And I can't tell -- I honestly didn't want to include this question, because I don't have a great answer to it, it's just that we keep getting it, "What are some 5G stocks?" And it kind of made me want to do some research, because I was like, wow! There's obviously an interest in this.
And full disclosure, I have not invested in either of the companies I'm about to name, but just to put some out there, because, again, there's so much interest in it.
One 5G stock that I will call out is American Tower (AMT +1.39%), the ticker symbol there is AMT. This is a Real Estate Investment Trust that owns the actual physical towers that the telecommunication sits on. They don't own the equipment, they actually lease out space on their equipment to the Verizons, the AT&Ts, the Sprints of the world. And it's a very consistent cash-generation business that has been a fantastic long-term investment. So if you think that 5G is going to be a big deal, odds are pretty good that a company like American Tower is going to benefit from it.
One other one that I will throw out there is Skyworks Solutions (SWKS +1.41%). Skyworks is a maker of chips that, kind of, power cell phone and mobile device connectivity. They're a big supplier to, like, Apple and Samsung, for example. So if you own an iPhone or an iPad, you've bought Skyworks' products even though you didn't use it. So Skyworks has been a really great long-term investment because they've ridden that wave of iPhone demand higher. And what impresses me about them is they've actually been able to maintain their profitability, which is a big thing to say about someone that relies on Apple as a customer.
So again, not personal recommendations, but if you're interested in 5G, I would check out Skyworks, SWKS; and American Tower, AMT.
Southwick: All right. And the last question that you're getting a lot of is, "Can we invest in airlines/cruise lines?" So I assume these stocks have all taken a massive hit, and that's why people are wondering, huh?
Feroldi: Yeah, you can say that, yes. And, again, huge interest in just cruise lines, in general, airlines, in general. They see the headlines about these companies that are in big-time trouble. And the government is stepping in, I know, to save the airline industry.
My answer to that is that I personally did not like the airline industry or the cruise line industry as investments beforehand. So I have no interest in any of these companies now that their businesses are all in serious trouble. In a big way, we're depending on the government to take some sort of action in some cases to save these businesses, so that tells me that it's probably not a great place for shareholders to keep their money long-term, but I understand the interest.
If I was to play the airline or the cruise industry, I would highly suggest people check out either Booking Holdings, BKNG, or Expedia, EXPE, as a set instead. So Booking owns a number of leading search brands, such as, Booking.com, Priceline, Kayak.com, Rentalcars, OpenTable, and it's a portal that you go through to book airlines, to book cruises, to book hotels.
Expedia owns Expedia, Hotwire, Orbitz, Travelocity, CheapTickets, Vrbo, etc. So both of those companies have been crushed alongside with the airlines and cruises, but to me, they are far superior business models than what an airline or cruise operator is. So those companies do not need governments to save them, and they were wonderful long-term investments before this crisis.
So if you're interested in airlines or cruises, you might want to check out the booking sites instead.
Brokamp: I'll just add that when I've been looking for what to buy during this downturn, I've been thinking about businesses that are good, solid, long-term businesses but that have been hit particularly hard. So I thought about airlines, in particular, Southwest. But then I also looked at the holdings of the mutual funds that I own in our Fool 401(k), and I found that a lot of them already own a good bit of airlines as well as some of these. So you might want to look at what's inside any of your mutual funds, index funds, ETFs, because you might already have some decent exposure to some of these companies.
And I did not consider the cruise lines at all, because that is a situation where I'm just going to be very curious how long it's going to take for them to recover, because I think a lot of people are going to be reluctant to take cruises for a while.
Southwick: Yeah. Well, we had this exact same conversation, my husband and I are like, "Wow! maybe we should invest in something related to travel," and we're, like, "Okay, an airline?" And we are just, like, "Ugh! Southwest?" Like, I mean, it's hard to invest in these companies that you don't love as a consumer. And the same thing goes with the cruise line, like, we're not cruise people, so we're like, ugh! And we kind of landed at the same place you did, we're like, "I guess, maybe we'll invest in Booking..." We like to travel, but that's a tough one, so, anyway.
Feroldi: Yeah. The companies that own the physical assets, the airlines and cruise ships, those are capital-intensive businesses. So they rely on lots of debt, typically, to buy those things. By comparison, Booking and Expedia, they run websites. That's just a generally much more capital-efficient business.
Southwick: Yeah. All right, OK, so that covers it for the questions. Is there any other big question that we want to end on here, Brian/Bro?
Brokamp: No. I asked earlier about whether it was too late to get back in. Alison, I got something. So I just mentioned how I'm deciding to put my cash to work. Brian, have you been buying during this downturn, and if you have been, you don't have to name specific companies, but what's your just general frame of mind in terms of making those decisions?
Feroldi: Yeah, it's the same as it was before the crisis. I try to look for the highest-quality companies that I possibly can that I think will have substantially higher revenue 5 and 10 years from now, and then I do my best to pay an attractive price for them. So the coronavirus has definitely increased the number of businesses that are trading at far more attractive prices than they were, but nothing that I've done has fundamentally changed. I still add money to my brokerage account every single month, and I still look for the best use of my capital that I can.
So I have not really changed anything that I do because of this.
Southwick: Brian, thank you so much for coming on and sharing your answers to questions. We did provide the answers. It wasn't just all questions.
All right. I'm going to go first this week for Foolish recommendations. Let's see, so far, I have recommended podcasts, and I don't even remember what else I've recommended. But today I'm going to recommend some of my favorite mobile games, because I do love playing a good puzzle game on my phone. Other people, kind of, like to play, like, Candy Crush, like, games or war attacking games or I don't even know, I don't even know all the names for games. But I like a sit-down-and-figure-a-puzzle-out game.
So the games that I'm going to recommend are Monument Valley which are very popular; there's two of them. Basically, a visual spatial puzzle game. Donut County, which is a hilarious game, where it's a raccoon trying to take over Los Angeles by making these big holes in the ground, and you have to keep having bigger and bigger stuff fall into the hole as the whole grows; it's hilarious, it's adorable. A very peaceful game is Prune, where a tree, it's like a cherry blossom tree, is growing, and you have to prune just the right branches to get the tree to grow in the direction that you want it to and then bloom. It's very relaxing.
And then for those of you who want a tougher puzzle game, I'm going to recommend Lumino City. It's a really cool-looking game where you point and go places and solve little puzzles, and it's wonderful. It's a game that I have not finished because I don't want it to end, I love it so much.
So those are my recommendations for some mobile games: Monument Valley, Prune, Donut County, and Lumino City.
Feroldi: Luminosity.
Brokamp: That's what I thought too.
Southwick: Well, I know, but it's two words, Lumino City.
Engdahl: I agree, it's a good game. I'll just add on to that real quick. I've been playing a lot of board games online. A particular board game will have an app, but if you're into board gaming, you may know that already, but there's also sites like BoardGameArena.com and Tabletopia, and there's other ones out there that will host board games online. Some of them automate everything for you and some of them it's just a virtual desktop where you, kind of, put a virtual board out there and you have to be able to play it. And there's one where even, if you get mad, you can flip the table upside-down.
So virtual board-gaming, if you don't already know about it -- I'm sure everybody knows about all of these things already -- but I recommend it, it's a lot of fun and you could use Zoom at the same time, so you can have a chat with your friends.
Feroldi: I'll throw out a free game you guys may have heard of: Fortnite. My son got me into Fortnite last year, and I now play it way more than he does. He has since moved on, but I play it pretty much every day. It is by far my favorite video game of all time. And again, free, and it still exists. So Fortnite. [laughs]
Southwick: [laughs] Fortnite, it still exists.
Feroldi: It still exists. For board games, my family loves playing Dominion, which is a card deck-building game. And I assure you, even my kindergartener can play that one, so that's a good one that's entertaining for all ages.
For the book side, Alison, you asked me to bring recommendations, so I brought all kinds.
Southwick: You brought them. Yeah, you weren't sure when we would have you back, so you got to get them all out there.
Feroldi: That's right. I don't know if you guys have ever heard of an author named Alexander Green, but he has written probably two of my favorite books that I've read in the last five years that are my absolute favorite. So this first is called Beyond Wealth, and the second is called The Secret of Shelter Island. He's a former investment and money manager, and he actually writes about the good things in life, so not just money but how to have a rich life. They are extremely readable books. I just so enjoy them and can't recommend them enough. And he's not a name I've ever heard before until I found his books. So an unsung hero in the business financial world, Alexander Green.
And then for podcasts, I just listened to The Dropout this week, which is the story about Theranos.
Southwick: Yeah, that's a good one. That's a great podcast.
Feroldi: Even though I've seen the movie, I just love the podcast. I mean, it's such a fascinating story. And then I'll throw in there Crimetown too. I don't know if you guys have ever listened to Crimetown, the podcast. The first episode is all about the mafia in Rhode Island in the 1960s. It is a phenomenal, phenomenal story; it's so entertaining. So that's Crimetown.
And then a couple of my favorite YouTube channels. I don't know if you guys have ever heard of Wintergatan. But it's a guy that is building a machine that uses marbles to play music, and it's taken him about three years, and he's almost done. If you like --
Southwick: Oh, I just saw Rick's ears pricked up when he heard that: marbles to make music.
Feroldi: Yeah. This guy is unbelievable, unbelievable. He's, literally, three years into this project. And if you like engineering and music, I guarantee you will like this channel. So it's W-I-N-T-E-R-G-A-T-A-N. And then the final one --
Engdahl: More screen time for my kids.
Feroldi: There you go. Hey, it's engineering, it's educational, right? And then the final one is -- if you like chess like I do -- there is a grandmaster named Hikaru Nakamura, and he recently did a speed run where he plays the absolute worst possible opening and then he just blasts people into oblivion while barely paying attention. It is so entertaining to watch somebody that is that good at something just blow through people like me who are chess aficionados but still are nowhere close to his skill level. [laughs]
Southwick: That's awesome! Those are some great recommendations. Bro, you got to take us to a big finish.
Brokamp: All right. Well, I don't know if I got a big finish, but I do have a song recommendation just based on our conversation. Brian, I'll be curious if you know it. "Rhode Island Is Famous for You," are you familiar with this song by Blossom Dearie? Most of us, if any of us, know Blossom Dearie from singing the Adjectives Songs from Schoolhouse Rock. So she was big in the 50s, 60s, and 70s. I love that song.
Southwick: No, Bro, I don't think I remember it. Why don't you sing a couple of bars?
Feroldi: Right now.
Southwick: Go ahead. Maybe if you sing it, I'll figure it out.
Brokamp: Yeah. "Unpack Your Adjectives." That's it, there you go. You know that song. You know that song.
And finally, a place to buy books, if you want to maybe get away from Amazon a little bit. We're all shareholders or many of us are, so that's fine. But if you like to support independent booksellers, there is a relatively new website, Bookshop.org, where you can buy books from independent booksellers from around the country. Obviously, they're struggling because most of them are closed. So if you're looking for a way to support local businesses, visit: Bookshop.org.
Southwick: Great. You guys, these are awesome recommendations. Thanks so much. All right.
As always, The Motley Fool may have formal recommendations for or against the stocks we talked about on the show. Don't buy and sell stocks solely based on what you heard here. Well, I guess that's the show, huh? It's edited ... Brian, how's it edited?
Feroldi: Questioning-ly.
Southwick: Questioning-ly by Rick Engdahl. Our email is [email protected]. For Robert Brokamp, hey, and Brian Feroldi. Stay Foolish, everybody!
