Are Investors Unfairly Ignoring Walmart?

In this podcast, Motley Fool senior analyst Tim Beyers discusses:

• Why Walmart is the un-tech tech stock.
• Interview highlights from chats with investor Michael Mauboussin and author Annie Duke.
• Warren Buffett just turned 92.

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 August 30, 2022.

Chris Hill: Live, from FoolFest, it's Day 2. Motley Fool Money starts now. I'm Chris Hill coming to you from the Grand Hyatt Hotel in Washington DC. I'm very happy to be joined by Motley Fool Senior Analyst Tim Beyers. Thanks for being here, man.

Tim Beyers: Thanks man, fully caffeinated, ready to go.

Chris Hill: Our lunch is just waiting for us. We'll get to that right after. We won't put the dozens of listeners through the pain of listening to us eat, which is never fun. Yesterday, Bill Mann and I talked about some of the highlights from the first half of Day 1. I wanted to talk with you about the second half of Day 1 and what we've done on Day 2. But in terms of the conversation you and I and others had, we had a breakout session yesterday afternoon which I thought was a fun topic because there's so many in the Motley Fool universe of services and recommended stocks. There are literally hundreds of stocks to get recognized and there are some that get glossed over, overlooked and you highlighted one which I love because it's an overlooked stock and yet I can't imagine there's a single person listening who does not know this company?

Tim Beyers: Yeah. Smaller story. Walmart, a little company out of Bentonville, Arkansas. It is truly astonishing that it isn't widely recommended inside the Fool universe. Actually Chris, I don't know that it's really all that widely recommended amongst the institutional investors on Wall Street. I think it's more widely ignored. I think the reason for that is maybe a little bit of headline risk. What I mean by that is Walmart sometimes gets dinged for labor relations or it gets dinged for fines or runs afoul of something somewhere federally. That does happen from time to time. But let's remember that this company is a voracious user of data. It's the original gangster of data warehousing in the retail space, meaning that they're a better user of the data than most of its peers and have been for a very long time. That shows up in the margins, it shows up in the cash flow. Even in this period that we're in right now, which has been very tough on retailers, and we do know that Walmart is still generating billions upon billions of dollars of cash flow. It's a very interesting company that I think gets better coming out of the crisis that we find ourselves in right now.

Chris Hill: You made the point in the session about how it's not a name that people think of in terms of, oh, this is a tech company. But it's like you can make the case that Walmart is a tech stock.

Tim Beyers: They hire a tremendous number of data engineers. They hire software developers. They actually have a blog. They have a TechBlog, which is ostensibly meant Chris. They do show off tech projects, but basically what they're doing, a friend of mine and when we do this show together This Week in Tech, Tim White and I, we'll talk out about this. Is it really what this is? It's kind of performance art to draw in people who may not think of Walmart as a career for a software engineer and try to attract those people and say, hey, by the way, here's why there's an interesting software career for you at Walmart. They do a lot of really sophisticated stuff.

Chris Hill: It's a smart move. Today we had four external interviews, people external to the Motley Fool company onstage, I got the chance to interview Morgan Housel and Deidre Woollard interviewed Bryan Fairbanks, the CEO of Trex. Bill Mann interviewed Michael Mauboussin, who, when I made the opening remarks this morning, I refer to him as I think of Mauboussin as the investor's investor, but he's not as well-known as others. He's not on TV all the time. But a lot of people on the investing team here at The Motley Fool would love the chance to just sit down and talk with Mauboussin. As a heads-up to the audience, we're actually going to be bringing these conversations to the Motley Fool Money feed over the weekend. We're going to have Bill's conversation with Michael Mauboussin. You'll get to hear the full thing. But I'm curious if there was anything that stood out to you from that conversation that just sort of struck you.

Tim Beyers: I'll tell you the most important thing. He talked about how he started. He started talking about how as he got into analysis, as he got into equity research and his career at Credit Suisse. He started in a completely different role in which he described it, I think he used the term abject failure.

Chris Hill: I'm pretty sure he did. People can check us when we run the episode, but I'm pretty sure abject failure is how he described his first job.

Tim Beyers: Which is completely fascinating. I think the term of investor's investor, this is right, this is somebody who was accustomed to and understands what failure looks like and why you want to model in what expectations are and what does success has to look like as you model out whether or not a company is worth investing in. I do think Mauboussin's framework for Expectations Investing is an absolute must for anybody who is in my business of professional equity research. But also I think it's just a good, solid reading and an understanding for any investor. I think understanding expectations built into a company and its performance is critical. It'll make you better as an investor.

Chris Hill: Annie Duke, for those unfamiliar, was a professional poker player. She was one of the best professional poker players in the world.

Tim Beyers: Yeah.

Chris Hill: And walked away from that. Wrote a great book called Thinking in Bets.

Tim Beyers: Yes.

Chris Hill: Has a new book called Quit, which she and Morgan got into and some of the details. Again, that'll be an episode we run over the weekend. But one of my thoughts listening to that conversation was, I'm not someone who follows professional poker.

Tim Beyers: Yeah.

Chris Hill: But just the way she talked, the way she thinks, the way she was composed on stage, I thought oh yeah, I could just listen to this, I was like, oh yeah, I could see how she would be devastating to play against. What, if anything, struck you in that conversation?

Tim Beyers: Well, I had a follow-up conversation with her afterwards. I think a lot of the things she's saying is something that ties into something I talked about yesterday. I always talk about mindset. We had a mindset session here yesterday. When she was talking about various strategies for quitting and she was talking about this specific to stocks, it made me think of like is she talking about things like stop losses and that thing. What was clarifying to me as I talked to her afterwards is she was recognizing and trying to get us to think about, what is your weakness as an investor? What are the things that you have to account for, your biases, your emotional fragility, let's say in terms of your investing and accounting for that ahead of time. That was very clarifying, hearing her think about that. Honestly, it's going to make me think a little bit about how I want to do this in my own investing. So I really appreciate that conversation that Morgan and she had.

Chris Hill: This is difficult to do. It's tough for us as investors and it's obviously tough people in employment situations, but how important it is to try and remove yourself from the situation. Just the mental exercise of OK, do I think this way about this stock or the job I have right now, do I think this way because I'm in it?

Tim Beyers: Yes.

Chris Hill: And if so, is there a way for me to step outside myself and think, wait, if I can remove myself from this situation mentally, would I think about this differently?

Tim Beyers: Yes. Exactly right. She was very clear about this. I think it's such an important point like you just said. If you're in the moment, it's very difficult to make a dispassionate decision when passions are running high. And that happens to all of us as investors. We're supposed to think of emotions as information. Sometimes we take them as not just information, but like the signal, it's the bat signal and we have to do something and then we end up doing something irrational. So having a framework around that is such a good idea, I highly recommend that conversation with Annie Duke. Think of that or listen to it, maybe with a mindset lens. Think about your mindset and how what she's saying can help you. I think it'll be really instructive.

Chris Hill: Today is Warren Buffett's birthday. Yes, it is happy 92nd birthday, Warren Buffett who I cannot imagine in a million years is actually listening to this. But what do you suppose that it's like? Well, what do you get the billionaire whose turning 92 and has the wherewithal to get whatever he wants.

Tim Beyers: You know what you get that guy. You get that guy a cheeseburger and a cherry Coke. Because that's the thing that, our producer, Dan Boyd is shaking his head. Of course he is, because that is what Warren Buffett does. Like, that guy is winning it life because he has a diet that kills most 30-year olds, and he can go in and get another 10 years out of that. God bless Warren Buffett.

Chris Hill: It really is among other things, a case for DNA. Just like that, hey look, some people just, they can eat whatever they want.

Tim Beyers: Or even more than that. If you can, to the degree that it's possible, spend time doing things that you genuinely actually really love. I think it probably plays a much bigger role in our overall physical health than we may in fact realize because that guy lives his best life. I'm not sure the food is doing him any favors except for maybe his taste buds. But you know what? I think he's happy and God bless him for it.

Chris Hill: The documentary about Buffett, there have been several, but the one that's on HBO for anyone who has HBO Max, was done, I believe five years ago.

Tim Beyers: Yeah.

Chris Hill: If I'm recalling correctly, the documentary begins with Buffett speaking to a class of high-school children. Then after the credits, the first scene is Buffett driving to work. As he does every day driving to work, he goes to McDonald's to the drive-through and that's where he gets his breakfast.

Tim Beyers: There you go.

Chris Hill: This is not a healthy eater.

Tim Beyers: No. But you know what? The man knows how to live. So happy birthday, Warren. Keep living your best life, man.

Chris Hill: Tim Beyers, thanks so much for being here.

Tim Beyers: Thanks Chris.

Chris Hill: As always, people on the program may have interest in the stocks they talk about on The Motley Fool and may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.