On this week's episode of Industry Focus: Financials, host Jason Moser talks with Industry Focus: Tech host Dylan Lewis about a personal finance problem he and plenty of other investors have run into -- a sizable gift of stock in a company he knows not too much about. Tune in to find out how investors might want to handle a windfall like this, what your options are, what to know before gifting someone stock, just how investment-worthy H&R Block (NYSE: HRB) is these days, and more. Also, Jason talks with new Foolish analyst Maria Gallagher about her investing style, her favorite investing advice, and a stock she loves right now.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.
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This video was recorded on May 6, 2019.
Jason Moser: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market each day. It's Monday, May 6. I'm your host, Jason Moser. On today's show, we have a little bit of a different spin on things. We're bringing in Dylan Lewis today for a real life financial, I don't want to call it a crisis, but it's a situation. We want to learn more about what's going on there and how we might be able to help him. We've, as always, got One to Watch for you this week. But we're beginning this week with another installment of Between Two Fools.
You may have heard a few months back, we brought four new analysts on to our investing team with The Motley Fool. What better way to introduce you to them than through the magic of the podcast and Between Two Fools? This week, we're introducing you to Maria Gallagher. I hope you enjoy our conversation!
OK, Maria. First things first: Tell us who you are and tell us how you got here to the Fool.
Maria Gallagher: Well, hello, my name is Maria Gallagher. I think I have a unique and interesting story. I got into investing a lot later than most people. I, in college, studied psychology. I had a pretty specific track about what I wanted to do. And then I did an internship in that, and I didn't actually like it the way I thought I would. So then I did another internship and ended up at an investing firm, and I kind of fell in love with it. That was my senior year of college. So as I was graduating college, I was applying to a bunch of jobs and internships, and I ended up getting an internship here last summer. I was an intern down in the asset management department.
Moser: I thought you looked familiar!
Gallagher: Yeah! I was actually here for eight months before I joined the investing team. I was an intern over the summer and then I was doing someone's job while she was on maternity leave down in asset management. And then I made the leap upstairs in January.
Moser: I remember going through your interview process. We were excited that you had applied because we knew your psych background. Investing, while it involves a lot of critical thinking and number crunching and whatnot, it also involves a lot of psychology. Emotions take place. We felt like having that psychology background could lend to some great investing qualities that you could grow over time.
Now, speaking of investing qualities, when you get here, part of the challenge is trying to figure out what kind of investor you are. A lot of times, we'll see people frame it as, "I'm a value investor/ I'm a growth investor/ I'm somewhere in between/ I'm something entirely different." Given that you are still young in the investing world, have you thought about what kind of investor you are? Do you have a firm take on that yet? Are you still trying to figure that out?
Gallagher: I was thinking about this, I definitely don't think I fit into one sort of box. I'm a millennial, so I don't love labels. It's one of our tenants. But, if I was trying to label it, I would say that right now I would qualify myself as an excited investor. Anything that I find interesting and exciting is something that I will look at. Right now, I'm very interested in the ESG space, I'm interested in international investing. Anything that really piques my interest, I don't rule anything out as of right now.
Moser: I think that's a good perspective. That's what I consider myself, too. When I got here, there were a lot of people here at The Fool with a very strong value investing bent. I wasn't quite sure what I was, learning as I went along. David Gardner really opened my eyes to a lot of different ways to see the world and think about investing. And I ultimately came to that same conclusion. I consider myself just a motley investor. I'm OK with going anywhere, and the more I can learn, the better. It sounds like that is the direction you're headed as well.
Gallagher: It's a fun place to be!
Moser: Yeah, we'll have a lot to talk about in the coming years, hopefully! Since you got here, and you've been here now for several months investing and learning and finding your way, what have you learned in regard to investing since you've gotten here that surprised you? Something that you weren't expecting?
Gallagher: I've learned so many really, really interesting things. The broadest thing I can think of that was surprising was just, I am a fan of pretty strict rules. I thought that there would be, "This is the right and the wrong way." The most fun and the thing that I really, really enjoy about investing is that there's no hard and fast rules about anything. A lot of times, when you ask questions, the answer you'll get is, "It depends," which is kind of frustrating when you're trying to learn because you want a discrete answer, but it actually makes it really enjoyable, because everything is so malleable. It's moving, and it's sector dependent, industry dependent, so it has a long runway for learning new things. So I've really enjoyed that. It's been really interesting to see that it's not as hard and fast as a lot of people might think.
Moser: No. You think about the whole process of investing, you're buying stocks or selling stocks. There are two sides on every transaction. For every seller, there's a buyer; and for every buyer, there's a seller. And usually, both parties think they're right. How that actually works out, it can be a little bit difficult to frame sometimes. A lot of times, though, I think it really just boils down to timeline. I think that's probably one of our bigger advantages here, is being able to take that longer view and being able to be patient; understanding there are no hard and fast rules, and being able to change your mind when the facts warrant it.
Gallagher: Yeah. That's, I think, the hardest thing that people don't talk about as much. Once you've made your decision, having the ability to then change your mind is really difficult.
Moser: It's difficult to do, but I think the more you do it, the easier it gets. I think that you learn pretty quickly. Investing is going to humble everyone. You're not going to get everything right, none of us do. But being able to change your mind, I think, is one of the greater qualities out there. The facts are always changing. Things are always different when you wake up in the morning. Being able to keep an open mind is a valuable quality as an investor.
Speaking of valuable qualities, what would you say -- and this doesn't have to be here necessarily, it can be any time in your life -- what is the best piece of investing advice that you've ever gotten?
Gallagher: I'm going to talk about something I learned while I was here. One of the people we work with, Abi Malin, was talking to me as I was making one of my first DCF models. She said, similar to what you were just saying, "There's no chance you're going to be 100% right? That's just not possible. But make sure that every input is defensible and every argument you're making is sound, and you have a reason to back up your argument." That's been really valuable in DCF models specifically, but just in talking about companies, no one's really 100% able to predict the future. But just having ideas that you can back up and having them be defensible, I think, was really, really useful advice to know.
Moser: Yeah, I think that is tremendous advice. DCF models, any kind of earnings models, whether you're going on multiples, it's more about how the input numbers affect the company in the way of profitability. You have sales, that translates into operating income, that translates into earnings per share. There are all sorts of inputs there that can affect one business vs. another because there's so many different business models out there. That's an interesting take there. I know that when it comes evaluation, certainly one of the things I learned early on -- and I think David Meyer was really the guy that opened my eyes to this -- was to make sure you have as many tools as possible in your investing toolbox, being able to approach valuation from a number of different ways. I found that to be extremely helpful, because I certainly put that into practice even today, never getting married to that number that it spits out, "The stock is worth this." It's more about understanding how the numbers affect what the stock may be worth, then trying to assess the probabilities that one outcome is more likely than another, or the other way around.
Gallagher: Yeah, that's so helpful, especially also going back to psychology, not wanting to anchor onto that number and making decisions based on that one specific thing is really, really valuable.
Moser: Anchoring is a tough one. It's really easy to get married to those numbers.
Gallagher: It's so hard!
Moser: Have you learned about the adding to your winners mentality yet? Have you spoken with David Gardner about that adding to your winners mentality?
Gallagher: I don't think so.
Moser: I think a lot of people, they view buying stocks as, you want to buy it on a dip, you want to buy it on sale, you want to buy it cheap. David Gardner's notion is that adding to winners makes more sense, because the stock price is going up for a reason. The stock price is going up because the business is doing well. It's OK to buy stocks on the way up because that means you're buying into a very good business. That was one of those things that I learned early on from him. It's difficult to do in practice, but I think also, the more you do it, the easier it gets. Adding to your winners is really a fun way to invest, because it logically makes sense. The stock price is going up for a reason. Usually it's because the business is doing well. Don't you want to buy businesses that are doing well?
Gallagher: I do! That's the kind of investor I am, one that buys companies doing well.
Moser: Good, good, good! OK, let's get outside of the investing world here for a second. Tell us something interesting about you, something that's happened in your life, something that you want our listeners to know.
Gallagher: I was thinking about this, this is one of my favorite fun facts about myself, I am kind of famous.
Moser: Oh, really?
Gallagher: Yeah. I don't know how you feel about food TV shows.
Moser: I love them!
Gallagher: Do you like Man vs. Food?
Moser: I do, but you know what, I'd say, if I have a real guilty pleasure, it's going to be triple D. It's Guy Fieri in Diners, Drive-Ins, and Dives. My wife has to take the remote away at one point because Friday nights get really dangerous in our house.
Gallagher: That's a great choice! I was a waitress in college for two years at the same restaurant. It's called Boston Burger Company, up in Boston. It was on Diners, Drive-Ins, and Dives.
Gallagher: But Guy Fieri was there before I got there. But one weekend, I was waitressing, and I walked in, and they didn't warn us, but they said, "Just so you know, you're all going to be on TV." I was like, "Well, good think I showered this morning. [laughs] Good thing I came in prepared." And there were a ton of cameras. I haven't actually watched the episode, but I was promised that some of my arms are on an episode of Man vs. Food, handing people food.
Moser: Famous arms!
Gallagher: Actually, I can carry four plates, and they did take my plates away to hand to the host. And he could only do two. He's not as good of a waitress as I am.
Moser: If just your arms and your hands -- I don't know if you watch Seinfeld, but if you remember George Costanza, he discovered his hands, he became a hand model. Maybe there's a future! You never know!
Gallagher: [laughs] That's a great episode of Seinfeld. I actually love George Costanza. If I could relate to one character on TV more than anyone, it's George Costanza.
Moser: Always look busy, no matter what, even when you're not. All right, let's wrap this up for our listeners. You are here as a member of the investing team to research stocks, to find good ideas, to cover these good ideas and to communicate those ideas to our members. It's something we get to do every day. It's a privilege, we enjoy it. I want to give you a chance to tell our listeners out there today, what is one stock that you like today, and a couple of reasons why?
Gallagher: I chose a stock that you also really like, and we've talked about this before. I'm going to talk about Etsy.
Moser: I've heard of it!
Gallagher: I'm a big fan of Etsy, both as a consumer and as an investor. They tapped $3.9 billion in gross merchandise sales last year. That's a 20% year over year growth rate. And then they have this massive total addressable market of over $1.7 trillion. I think that they have this really strong competitive advantage because Etsy has carved itself out into this really great niche. You go there to buy something special. If I want to get you a gift, I'm not going to say, "I got you something super special. I went to Amazon/Walmart." You won't think I went really out of my way to get you something. Whereas with Etsy, you feel really connected, I think, to that object that you get. I think it's a great company!
Moser: I'm with you! I own shares in Etsy and I think it's been pretty amazing how they've been able to defend themselves in really what is an Amazon world. That was the big question when they came public -- how are they going to fend off that Amazon competition? I think it's really because of what you just said there. They developed that core niche audience in what they do. It is something unique, it's something special. Maybe it's not going to be as big as Amazon will be. But that's not the point. We don't expect that. I think it's a good business. CEO Josh Silverman has done a lot in a short amount of time to get that business going in the right direction. I'll hang onto my shares, and I hope it keeps on going.
Gallagher: Have you ever bought something on Etsy?
Moser: Come to think of it, I don't think I've ever actually purchased something. Now, I know my wife has. I will also say that my younger daughter and I went through the process of setting up a slime shop for her.
Gallagher: [laughs] Oh, nice!
Moser: Back in fifth and sixth grade, slime was all the rage.
Gallagher: I remember that!
Moser: She was inquiring about maybe opening up a little slime store. And I remember going through that process and thinking, wow, this is really robust! It's a tremendous marketplace! And the nice thing about that marketplace, it's just a network. Etsy's not carrying all that inventory. They're just providing the marketplace for people to connect. That's the kind of business I like.
Gallagher: Did she open up a slime shop?
Moser: We decided not to at the last minute because it was asking for too much of my banking information. I wasn't ready to take that leap. So we just let her set up a profile on Instagram. That got accomplished what I think she was hoping to do. And now she's in seventh grade, and slime was so yesterday.
Gallagher: Slime is no longer cool, no longer fun.
Moser: Nope. Well, Maria Gallagher, thanks so much for taking the time to stop by today!
Gallagher: Thanks for having me!
Moser: Now joining me in the studio as promised, he's not on Skype, he's here in person, it's Dylan Lewis. Dylan, what is up?
Dylan Lewis: You know, it's so nice to be sitting in the studio with you, Jason! We haven't really done a ton of stuff together before.
Moser: No. We do a little bit here and there. Our schedules are starting to line up.
Lewis: Yeah. The rapport's getting there, too. I will say, listeners don't really have a lens into this, because they only get the finished product on the show. I just got to watch you tape the entire introduction, because you're doing a little splicing here and there for the segments. Crystal clear, super clean! That doesn't happen when I'm doing it.
Moser: [laughs] Well, trust me, when I took this hosting gig for Monday, it was very different being on the other side of the table. I'm still not quite used to it. But having worked with Chris Hill for so many years, that's where I was taking most of my notes.
Lewis: Yeah, you got the best example you could possibly have with Chris. Just try to emulate him as much as you can.
Moser: Exactly! Before we get started, I do want to remind everybody, it was a Berkshire Hathaway kind of weekend. While we're not going to rehash everything that went on in Omaha over the weekend, you will want to tune into Thursday's episode of Industry Focus, the Energy show, where Nick Sciple is going to be digging deeper in the Berkshire, Occidental, Anadarko deal, and more, I'm sure. Make sure to give that a listen on Thursday. I think you'll be very happy if you're interested in what's going on in the world of Berkshire Hathaway.
Dylan, let's go ahead and get into why you're here. You pinged me on Slack last week, shot this across my radar. I thought it was a great idea. Why don't you take it away here? Explain to our listeners, what's going on in your life, and how can we help?
Lewis: Yeah, yeah! So, a couple of years ago, my mom approached me and said, you know, "I have this stock that I've inherited. Your grandfather" -- her father -- "had worked at H&R Block for quite some time as a seasonal tax preparer. And I think he wound up taking some form of his compensation there as stock.
Yeah, he knew what he was doing. Long-term, right? So he'd passed away right around when I was born in 1990. And my mom inherited some shares when he passed away. I think because of the sentimental value that came with that, the difficulty of him passing and all that kind of stuff, she never really was able to bring herself to do anything with the stock. So she approached me and said, "I'd like to give you the shares. You're a little bit more versed in this world. You might be able to do something with it. If you have long-term plans, this would be a great little cash cushion to give you so that you can get going on whatever that might be."
Moser: Nothing wrong with that!
Lewis: Nothing wrong with that!
Moser: Sounds like you might be walking down the aisle at one point or another, there's going to be a house involved, probably traveling. Next thing you know, you've got kids. You need this money, man!
Lewis: I'm going to tell my girlfriend not to listen to this episode! [laughs]
Moser: All right, all of that aside, seriously, this is, I think, a great topic! I'm sure there are a lot of people out there that have been faced with this type of situation. There's a lot of nuance that comes with it. I think really the first question that comes to my mind, and I guess really to yours -- do you want to continue to own this stock? Or do you want to own something else?
Lewis: Right. That's ultimately the capital allocation decision we all have to make all the time. It's really easy to think of capital allocation, if you're a portfolio manager, or if you're a business. If you're a CFO, you're always thinking about where money's going. Well, you're your own CFO. No one's going to be controlling the finances in your accounts a little bit better than you. You have the best insight into all that, and every dollar you put somewhere isn't going somewhere else. So, yeah, that was exactly where I was going with this. I have a very large chunk of money now that both of those gifts have gone through in stock that I don't really know all that much about and I didn't personally buy. It's actually multiples of my next largest holding. A lot of my returns are going to skew based on how that stock does.
Moser: Yeah. Multiples of your largest holding, that's significant. We get questions all the time about capital allocation, and how many holdings and whatnot. But anytime you have a position that is multiples of your biggest, that's when you probably need to take a look and think all right, is this causing me to lose sleep at night? If so, what can I do about that? Given the size of the position, it strikes me immediately that this doesn't have to all go into just one other idea. In theory, you could break this up into a few different investments, which probably is not a bad idea.
Lewis: Yeah. To put a number to it, it's around like $16,000. So there's a lot of flexibility with that kind of number. It can go into stocks, can go into some other life stuff that I might have come down the pike at some point, as you might have teed up there, Jason.
So, yeah, it's just, all right, I need to take stock here, see what's going on, and see if this is something that I really want to continue holding. I'll probably always maintain a small little position, just as a little nod to my grandfather. But, yeah, it's too big for me to ignore at this point.
Moser: I tell you, I put my analyst hat on, obviously, dug into Cap IQ to learn more about H&R Block. I knew the businesses as a consumer. I had never looked at it from an analyst perspective. I wouldn't put this up there at the top of my list as far as ones that I'd want to own today. Not that it doesn't serve a good purpose. I think this really is a very well-known name in the market it pursues. This is the tax preparer, and probably everybody out there has even used it once before, if not regularly. But I think when you look at the stretch of finances -- one of the things I always look for with a company is, how are they growing their top line? The revenue number, sales, how is that going? If it's stagnant, then you have questions that you have to ask. If it's growing, then hey, growth is great. The one thing that struck me here with H&R Block is that the top line is very stagnant. It doesn't seem like they're growing. And that makes sense, I think, as technology has disrupted so many things in our lives, certainly tax preparation is another one. Between things like Turbo Tax and whatnot, there are all sorts of ways to prepare taxes. Maybe people less and less want to go to a place to have their taxes done. Maybe they're figuring out ways to get them done themselves. You, I know, do some pro bono tax work yourself, don't you?
Lewis: I do. Yeah. I volunteer through VITA. So I have a little bit of an insight into the tax prep world. I'm new to establishing myself as an analyst with this company and really understanding what's going on. But yeah, I do volunteer tax prep. If you are below certain income levels in a lot of major cities, a lot of areas, you can get your taxes done for free by a volunteer preparer. It's a great program. Probably meets a different group of people than a lot of the clients going into H&R Block and Turbo Tax; although, if you're going there and you fall into that income limit, you might be able to do it for free elsewhere. Something to keep in mind, although that's a commercial against the stock that I own, I guess. [laughs]
Moser: I was just going to say, that's great for people, probably not great for H&R Block, because that's yet another way to get your taxes done where you're not really putting money into their coffers. Ultimately, when you look at that play out on their financials, the top line stagnating really trickles down into every aspect of the business. Its balance sheet is not the healthiest in the world. They do have a pretty decent slug of debt on there. When I think about the optionality of the business, they've been stuck in that tax world for a while. I don't know there's much they can do outside of that. Consequently, you've got a business that's hanging around maybe a $6 billion market cap. It's been around for a while. I thought it would have been bigger, so I was a little bit surprised at the size.
Lewis: Yeah. This is a case study and why you need to look at all the financial statements, and all the lines on the financial statements. EPS has been climbing up. Net income's been climbing up. $600 million in 2018, up from $420 million in 2017. That seems good. Well, that's really due to tax reform. That really doesn't have a lot to do with their operational business. The top line has been hanging out around $3 billion for like the last four years. Not a lot of growth there. Management talks often about the different markets that tax prep goes into. There's the assisted market, which is where you think of classic H&R Block. You go into a store, it's brick and mortar, someone's helping you out, helping you fill your forms. Then there's DIY, which is much more of the Turbo Tax type of preparation. The assisted tax prep market's going down and DIY is going up. H&R Block has some software plays in there, and they're investing in virtual, but really, Turbo Tax is the name there.
Moser: Yeah. Turbo Tax, part of the Intuit family, it's another Foolish recommendation here that's done very well. And we know why, it's because they've done such a great job capitalizing on that brand. It is unmistakable what they do, Turbo Tax. Going back to the financials there with H&R Block, your point there about how, when you get down to those bottom line numbers, also sorts of things can really play into those. It can create a little bit of a misleading picture. When you look at net income and earnings per share, you're thinking, "Wow, this company is growing!" You explained why maybe it wasn't. And when you take a look at the operating earnings of the company -- when you look at operating income, that tells you how the core of the business is doing, and that's where they have a harder time fudging those numbers. You can see, operating income essentially has done what top line revenue has done. It's not going anywhere.
Which then leads me to my analyst call here, man, OK? We need to put you into something else. I think you probably are better served reallocating this money. I have some ideas. I feel like maybe we should be soliciting listeners, though. Do you have any ideas?
Lewis: I would love to get some listener ideas. I am trying to build out some SaaS positions. I spend a lot of time on the Tech show talking about software-as-a-service companies. They're fun ones to talk about because they're high-growth businesses. And generally, the business models are very predictable, very stable. Once you get people in, sticky service -- we can talk about that with Intuit. Strong business. Once you use Turbo Tax once, they have all your information preloaded, you're going to go back. You think about that on an enterprise side, where you have hundreds of people at a company maybe using some type of software, it's a very compelling business model. So I think that's probably where I'll be focusing with some of the dollars that I get from selling some of this stuff. But, yeah, I think it's time to trim this position down, just a little bit.
Moser: You know, Dylan, because all the companies reported, I went ahead and published this morning an update on the war on cash basket. Just getting it out there. That's four different holdings -- Visa, MasterCard, PayPal, and Square. The basket, since inception, which is mid-2017, is up 100% vs. the market's 19% or so. Listen, those are some pretty reputable players in their space as well. Money's going to keep going from point A to point B, right?
Lewis: You know, I'm not a financials guy. But I am a fintech guy, and I have some PayPal and some Square. I haven't gotten into some of those credit card names, but maybe it's time I give them a look, Jason!
Moser: What about Markel Insurance? This is another one I was thinking of. You said SaaS, and I was making this joke and Markel is not sexy like SaaS, but that's beside the point. Do you own any Markel?
Lewis: I don't own any Markel. This is the baby Berkshire, is that right?
Moser: Yeah, that's the baby Berkshire. It is an insurance company built very much in that mold. They actually have the Markel brunch, which is held the day after the Berkshire Hathaway meeting. I had the good fortune to go to that one year when I was out there. Tom Gayner has come to speak with us here at The Fool before. Another one we're looking at. Insurance companies, that's an interesting market for sure. Reputable insurers can make some very good investments. Markel is no exception there. That could be another one to consider.
But it sounds like we also need to reach out to our listeners.
Lewis: Hey, I love getting stock ideas! I also love getting ideas for episodes! I think that's one of the most fun things about being host of a show. You get someone writing in saying, "I'd love for you to do a teardown of this S-1." Boom, a week later, we've got it for you. How fun is that?
Moser: And we love doing it, too. I mean, this is our call, right? This is our call to everyone out there listening right now. Reach out to us either via email at firstname.lastname@example.org or hit us up on Twitter @MFIndustryFocus and let us know where you think Dylan needs to be putting this money. If you've got some good ideas out there, we want to hear them. I know he does, and I do, too. Hey, I'm sure it's going to make for some good future show material as well.
Lewis: Yeah, that's a follow-up right there. One thing I want to hit before we wrap things up, Jason, is, if you are in this position, as a listener, investor, and you are either receiving or about to receive some shares as a gift, or you're considering giving someone shares, there are a lot of different considerations for that. It is definitely worth at least reading up on the IRS website, possibly consulting a tax professional, before you decide to do that. How you do that may create or totally avoid a big tax liability for you or the recipient.
Moser: Yeah, that's really good advice! It's impossible to sit there and give tax advice that cookie-cutter fits everyone's situation. I'm sure some people probably fell asleep right at the point you said IRS website. But you know what I've found is, when I have those questions, that IRS website really is the most valuable source. That is where the information is. They have answers to virtually every question there. You can get it from there instead of getting it from someone where you may not even know if they know what they're talking about. Of course, we know what we're talking about here.
Lewis: We like to think so.
Moser: Yeah, we'd like to think so. OK, as always, we wrap up the show with One to Watch. Dylan, I'm going to let you kick this off. What is the stock you have on your radar this week?
Lewis: You know I cover Tech, right?
Lewis: One of the biggest IPOs possibly of the decade going up this week.
Moser: Beyond Meat?
Lewis: Uber! [laughs] Come on! Beyond Meat? I've been tempted to buy a Beyond Meat burger.
Moser: [That IPO] was insane, man!
Lewis: Those burgers are expensive!
Moser: They are! I mean, did you see what that stock did? 145% or something. It's just ridiculous!
Lewis: The burgers make the stock look cheap. [laughs]
Moser: [laughs] You're right!
Lewis: I am watching the Uber IPO. We have talked about Uber plenty on the Tech show. The guidance I always give people is, even if you are dead set on buying shares of a newly public company, you love the business model, we've seen this with several IPOs so far in 2019 -- give it a little time. The financials might be interesting. There might be a lot of really awesome tailwinds there for that business. Give it a little time for the demand and the supply of shares to settle out. Maybe you can get a little bit more of a reasonable price. If you want to get a small position early, I understand. But really, it pays to sit on the sidelines for a little while.
Moser: I couldn't agree more. That reminds me, one of these days, I'll jump into telling the story about how I broke my own rule with Eventbrite here and got called on that recently. But yep, your point is very well taken there. Just give it some time!
Well, I'll stick with the car theme. I'm actually going to watch Tesla. The main reason why I was talking about this on MarketFoolery earlier is just, the fun back and forth that Buffett and Musk were having in regard to Tesla looking at getting in insurance. I mean, that was all fun and games. For me, listen, I'm a big Elon Musk fan, I support everything he's doing. I'm not an investor in Tesla, although I do think I would buy into SpaceX without even looking at the S-1 if I ever had the opportunity. I do wonder why he feels like going into insurance with Tesla really is even something that needs to be done. I'm not sure, given his track record of behavior, that he's someone that most people would be wanting to buy peace of mind from. And that's really ultimately what insurance is. Insurance is hard. A lot of regulation involved, a lot of capital involved. There's a lot of decision-making that has to be done based on data. There are actuaries that spend their lives plugging this stuff together, trying to come up with risk models that make sense. I just don't know that the juice is worth the squeeze there. But he seems to have no limits, whether it's space or candy or insurance or otherwise.
Lewis: Yeah, I wonder with this, what's the end goal, and what's the competitive advantage that they bring? You look at some of the fintech companies. You can say, "We're collecting data in a slightly different way, we might have a slightly more advanced look at some of our customers and their credit worthiness." That's a competitive advantage. I'm not sure that Tesla right now has a competitive advantage in pricing insurance.
Moser: Yes, I agree! And maybe they come to their senses and decide not to do it. Or maybe they put something out there that's just awesome and completely astounds all of us. I guess we'll just have to wait and see.
But hey, listen, Dylan, this was a great idea! Thanks for coming in today!
Lewis: Yeah, what a treat, Jason!
Moser: All right, man! Well, 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. Today's show was produced by Austin Morgan. For Dylan Lewis and Maria Gallagher, I'm Jason Moser. Thanks for listening! And we'll see you next week!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. TMFMGal has no position in any of the stocks mentioned. Dylan Lewis owns shares of Amazon, H&R Block, PayPal Holdings, and Square. Jason Moser owns shares of Amazon, Etsy, Eventbrite, Inc., Markel, Mastercard, PayPal Holdings, Square, Twitter, and Visa. The Motley Fool owns shares of and recommends Amazon, Berkshire Hathaway (B shares), Etsy, Intuit, Markel, Mastercard, PayPal Holdings, Square, Tesla, Twitter, and Visa. The Motley Fool has a disclosure policy.