In this podcast, Motley Fool senior analyst Bill Mann discusses:
- Bob Iger's second day back as CEO of Disney.
- Best Buy and CEO Corie Barry defying expectations (again).
- Zoom Video shares falling close to a two-year low.
- How Zoom could fit well into Oracle's business.
Motley Fool personal finance expert Robert Brokamp talks with Megan McCoy, professor at Kansas State University, about relationships and money.
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 Nov. 22, 2022.
Chris Hill: One well-known business could be the next acquisition target. Motley Fool Money starts now.
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I'm Chris Hill. Joining me today: Motley Fool Senior Analyst Bill Mann. Thanks for being here.
Bill Mann: Hey, Chris, how're you? Almost jumped the gun there. I have been in rush, apparently.
Chris Hill: Like me, you're just excited to get to Thanksgiving, not just for the family and the food but for the apropos-of-nothing episode that we're going to be dropping on the dozens of listeners.
But that's for Thursday. We got some business to take care of here and before we get to Best Buy and before we get to Zoom Video, it is Day 2 of Bob Iger's return to Disney. Jason and I talked about this yesterday. No surprise to us that he has already started his reorganization of the business. Any thoughts as you watch all this unfold?
Bill Mann: There's a lot underneath the surface that we don't have the answers to. I feel a little bad for Bob Chapek in that it has to be remembered that he took over in February of 2020. He had all of COVID. They were building Disney+ as the ship was flying.
But ultimately, the plan he was executing was developed under Bob Iger. He didn't change a whole lot. You're going to have to tell me a much better story about operational failures or some other failure, because otherwise -- and I'm a Disney shareholder, I've been one for a long time. Otherwise, this, to me, is not great. It's not great, Bob. It's not great.
Chris Hill: I think we're both looking forward to the stories that will continue to come out behind the scenes. How all of this unfolded.
Bill Mann: It'll be a new-story Thanksgiving over and over, I believe.
Chris Hill: It absolutely will.
The stock of the day is Best Buy. Shares are up 11% after some solid third-quarter results. Same-store sales declined, but less than expected. This is probably, as much as anything, what's moving the stock: They're raising their full-year guidance right as we head into the holidays.
Bill Mann: Yeah. They are also sticking to their holiday projections. Chris, let's call it six years ago, did you believe you would be talking about Best Buy as anything other than "Do you remember Best Buy?" by this point?
Chris Hill: If you go back maybe a little further. Certainly, you go back 10 years. Best Buy was mentioned in the same sentence as Sears, as bricks-and-mortar retailers that are almost certainly going to be taken out back behind the barn. Six years ago, when CEO Hubert Joly was executing his turnaround, I think you go back six years, and it's like, is this working? How is this working?
Bill Mann: How is this working?
Chris Hill: We were all so certain that Best Buy was going away, and I was like, holy cow, I think he's pulled this off.
Bill Mann: Thanks for getting my math right. I still call 2019 "last year" after the pandemic. It was a little bit farther back, but six years was the first hint that Best Buy might not collapse against the assault from Amazon. They have done an absolutely great job at Best Buy, and you see it. Their earnings for this past quarter were $1.38, well above expectations, $10 billion in revenue -- $10.6 to be precise.
This is a company that literally, I think from a decade ago, forgot to die. They literally forgot to die. Corie Barry, the new CEO, she's been in that seat for a little while now, has absolutely, positively done a great job with this firm. Not only is Best Buy surviving, I think you could say that they're absolutely thriving.
Chris Hill: I'm glad you mentioned Corie Barry, because if you look at the retail category in general, we're starting to see some separation. The better-performing companies separating themselves from the others. Because of that, retailers that are struggling... Look, during the pandemic, everybody had the same set of circumstances. Everybody was able to say, "Well, look, it's this global pandemic, we're all being affected by that."
Bill Mann: Let's go buy a television.
Chris Hill: But if you look at Corie Barry's leadership and in particular, the way they have dealt with supply chain issues, this is a very long-winded way of saying Corie Barry is making it hard for other retailers to blame supply chain.
Bill Mann: You know what, it's a really good point. The other thing about Corie Barry is that she's very humble about what they know and what they don't know. Obviously, they've managed their supply chain very well, but she is very much aware of the fact that there is no such thing as "the consumer." She's speaking a lot about how certain lower-income consumers are seeing a lot of pressure. They are maybe trading down a little bit in their purchases, where other ones have absolutely gone and feel much more confident now than they have in the past.
They've done great, you have to say, in an inflationary environment, which is no easy thing to do. Both humility and competence, I think, from Corie Barry and her team have paid off huge for Best Buy and its shareholders.
Chris Hill: Third-quarter profits and revenue were higher than expected for Zoom Video, but shares down 7% today and close to a two-year low after guidance for the current quarter just wasn't all that good.
Bill Mann: It was. Here's all you need to know about Zoom, I think: Zoom spent $135 million additional for sales and marketing versus the same quarter last year, and it generated $51 million and an increase in gross profit. That is a terrible, terrible return on investment. Let me say that again, $135 million spent to bring in $51 million. That's bad.
Chris Hill: That's not great math.
Bill Mann: It's great math, it's just bad for Zoom. I feel like I nailed the math. Are you talking about their math? I'm sorry.
Chris Hill: Your math was stellar, as always. You look at Zoom's stock performance, and it's easy to step back and say, "Basically, the stock is where it was before the pandemic." But the underlying metrics of the business are absolutely stronger. This is a profitable company. Unlike some of the businesses that we talk about that have really suffered in 2022, Zoom is profitable.
And I'm curious, to the extent that you have a crystal ball, what do you think their next act is? Because they've made it through the pandemic, they are a profitable business. Much like [Alphabet's] Google, they've become a verb. It's hard for me to imagine that the business just goes away. Having said that, it seems the narrative around Zoom Video is more pessimistic than the underlying business metrics would have you believe.
Bill Mann: That may well be true. I think that you have to at least have some grace about Zoom's results. I don't know that we will ever see anything more technologically impressive -- and I do mean this -- than Zoom dealing with a tenfold increase in customers during a period of time that Zoom as well went remote in 2020. The old saw of "They built an airplane while they were flying it." It is absolutely incredible. Zoom has been deeply ingrained in commerce in the United States and around the world. And I don't really think that will change.
I do think for Zoom, you have to view its core business as being mature. What's the next act for them? I think that they probably have some ways of expanding. I don't know if you saw their deal with AMC where they want to turn AMC Theatres into giant Zoom Rooms. I don't know, that's probably incremental for them. Ultimately, I think Zoom is a takeover candidate, and I think that companies that are acquisitive, like Oracle and Salesforce.com, would be looking at Zoom as an obvious benefit to have inside their stables.
Chris Hill: It is interesting to think about Oracle, in particular, acquiring Zoom if you think about the potential it gives them to go after Microsoft. Because Microsoft Teams is very much aimed at the enterprise segment. If Oracle were to swoop in and make some sort of a godfather offer to Zoom Video, it enables them to go after that same enterprise market while still having the consumer market. Say you want about Microsoft Teams, they're not going after the consumer market.
Bill Mann: No, they're not. They're not in the same way that Zoom absolutely has. Zoom, for everything else that we talk about in terms of very anemic growth, they carved that niche out of nothing and beat back some really impressive competition. Not least of which is Microsoft and Microsoft Teams.
We're no longer in the days of the two families, the Bill Gates-versus-Larry Ellison mafia throwdown, if you will. I don't want to use the term "mafia" too much because that doesn't sound great. But you know what I mean. The two families, the level of antipathy that they had toward one another. I don't think that's the case anymore, but I do think that Oracle, as an organization, should look at a company like Zoom and say, "This is a way for us to absolutely compete with Microsoft in another area of enterprise software."
Chris Hill: Bill Mann, great talking to you. Thanks for being here.
Bill Mann: Thanks, Chris.
Chris Hill: Talking about money with your family can be challenging. Before you have a tough conversation about finances and estate planning with your family, there's an easier one to open with. Robert Brokamp has more.
Robert Brokamp: Over the next several weeks, millions of Americans will be spending time with their families for the holidays. It'll be the perfect time to talk about estate planning and long-term care. We don't really expect you to greet your loved ones with a hearty, "Happy holidays. Do you have a will?" But the weeks that span Thanksgiving to New Year's Day present several chances for you to have crucial financial conversations.
That said, talking about money with your family can be, well, tricky. To help us navigate these difficult conversations is Dr. Megan McCoy, who is a licensed marriage and family therapist, as well as professor of financial therapy at Kansas State, and she's also one of my former professors. Welcome back, Dr. McCoy.
Megan McCoy: Thanks for having me.
Robert Brokamp: The first question is more of a general question, and that is, why are conversations about money with family members so potentially difficult?
Megan McCoy: They're so difficult for so many reasons. Our culture has a strong money taboo, whether it's because we have religious beliefs sometimes or cultural beliefs about not talking about money. Money is also interesting, too, because if you have more than someone else, you feel a little guilty. If you have less than someone else, you feel a little icky. Only if you have the exact same amount someone else does it feel comfortable talking about money.
Plus all of us have different views about money. Some of us see it as a source of power or safety or control or enjoyment. When we talk about money, we sometimes get conflict from that. Most of us just spend our life avoiding it.
Robert Brokamp: From the research I've done on the topic of financial discussions between couples, the research shows that the arguments tend to be more intense, more or less long-lasting. Is that the same with other family members? In other words, is this just endemic to conversations about money in general, or is it something special about conversations with your spouse?
Megan McCoy: I think it's true for all money conversations because we have so little practice talking about money. We did a study and looked at a data set, and 90% of the people in there had not talked to a single soul about money. No one has the chance to practice. I think there's an extra level of difficulty talking about money with your partner because power and control goes into these conversations. But it's really incredibly difficult with anybody talking about money.
Robert Brokamp: Let's get into some of the maybe specific topics that you may want to talk with your families. Let's start with perhaps the most unholiday-ish of all, and that is estate planning. You want to make sure that your stuff goes to the people you want when you pass away as quickly and as efficiently as possible, but it's also important for everyone in your family to have their wills and their trusts and all their other legal documents. Otherwise it could result in delays, additional cost increase but maybe also fights over assets and heirlooms. Estate planning really is a family affair. How might someone go about bringing this up with family members?
Megan McCoy: You nailed it. That only is there true financial consequences that people should be aware of them, and why we should have estate planning in it. But we need estate plans to make things easy because I think that the stages of grief have gotten into the vernacular of our culture.
But anger is a very normative experience when grieving, and family members who have to navigate difficult estate planning processes while grieving are more likely to let the anger out with each other and cause fighting and disruptions. When they really need each other to support and lean on, they're too busy fighting because anger is so natural.
The easier we can make it is a bigger gift to our family members. The more we could start small and talk about it in way-way future, is a lot easier, because our fears will be less, so that won't saturate our conversations as much. If you could start when your parents are quite younger and say things like, "How do you want me to celebrate your life? What's important to you in terms of the funeral? What music do you want?" Those nonfinancial-related conversations to make it normative that you respect their desires, their wants, their values, can make those financial conversations easier in the future.
Robert Brokamp: One idea that I've had in the past is that you just bring up what you do. You just bring it up and say like, "Hey, I recently updated my estate plan. This is who you should call in case anything happens to me." That then leads the conversation where you could say like, "So who should I call if something happens to you?" What do you think of that as a topic?
Megan McCoy: I think that's a great idea. I think anytime we can keep the roles as they always were. Our parents were our trainers, our coaches, our person who taught us thing. Let them get into that role of teaching us. By saying, "What do you think of my plan?" It lets them get really comfortable by saying, "That's a great idea. Let me tell you what to do differently based on mine." It's a great way of circumventing any potential rollover, so that it'd be difficult.
Robert Brokamp: On a somewhat related topic, some of our listeners may be visiting older relatives, older parents over the holidays. They frankly may see some signs of just cognitive decline, which is going to happen to all of us probably at some point, if we're lucky enough to live that long. You might start to think, well, "Maybe parents need some help managing their money or just their lives." How can someone begin that conversation? It might be with the parents, but it also might be with siblings if you have them.
Megan McCoy: I think what's interesting about aging is the old adage, "If you don't use it, you lose it." The goal when you start seeing your parents aging is not to take over and be the caregiver for them, but discover ways to create safety nets for them. And again, slowly, gradually take on things so that they keep their sense of empowerment while you start the conversation going down the road as things get worse, you can often to offer to lighten their load and it already be normative.
I think if you're starting to notice things like unusual purchases, unopened mail, lots of discussion about money or physical setbacks and memory problems, you might need to escalate the plan. But at the early stages or early you start, the better.
Robert Brokamp: We have other family members. It won't be just parents who may not be making the best financial decisions. Family members of any age could be in difficult financial circumstances, or maybe they're just overwhelmed. How could you have those types of discussions? It could still be with your parents even if they're not elderly, but it could be siblings or maybe even your adult children.
Megan McCoy: I think it's amazing. One of my favorite subtopics related to this is the idea of how do we scaffold our children to support them or siblings without enabling. We don't want to, again, take over everything or get in the position where we have to do things for others. Because it's like the old saying, "If you give a man a fish, he'll eat for a day. If you teach a man to fish, he'll eat for a lifetime."
In these conversations, it is about making sure that you believe in them, that you think they're capable, and seeing it as a way as "I want to be there for you if you're overwhelmed. But I believe in your capability of doing this, and maybe you just need a little bit of my resources that I already have for you and to make it easier for you to accomplish your goals, not for me to do it for you."
Robert Brokamp: Thinking of some other things you could talk to folks about over the holidays. I remember actually an assignment that I had in your class. Your class was Money and Relationships, so we had to write a paper basically about, I'll just frame it as, like our financial history. There were some things we had to do like a genogram. Is it pronounced as "gen-o-gram" or "gene-o-gram"?
Megan McCoy: I think gene-o-gram, or a family tree.
Robert Brokamp: It's like a family tree and then do a systematic analysis and all that stuff. But what was most interesting to me was that I actually had conversations with my parents about money and their upbringing. My parents are divorced, and money definitely played a big role in them getting divorced. To talk about them and their like earliest ideas about money, how they learned about money, what they learned from their parents, of course, from my grandparents, about money. It was really fascinating. Several aha moments in terms of where I was like, "So that's why you are the way you are, and that's why you managed money the way you did." It was really interesting.
Megan McCoy: I love that. And those conversations, like their money beliefs, their money attitudes, can be the preliminary conversations that get you guys open to having the more logistical conversations about estate or insurance or disability planning later on.
But yes, the genogram work and discovering the things that are unsaid and your family can beautiful. Any nerds out there, there's an article by authors named Mumford and Weeks. They have these beautiful questions you can ask: What were your biggest money worries growing up? Like how to navigate that? What does it mean to feel well around money? What would it look like if you didn't have stress about money? Who had power around money in your family growing up? Did you ever feel powerful around money? How do you think families and couples should navigate money?
Those questions give you insights on more than just money. It gives you insights in their belief system, in power, control, safety, and all those other things.
Robert Brokamp: I think I heard it described: Things like financial planning or external nuts and bolts of managing money. But the interior is what folks, how they relate emotionally to money and really what drives their decisions.
Megan McCoy: Absolutely. That interior side of money, those beliefs and attitudes and unsaid assumptions they have about money, is how we really connect on a deeper level. I once heard a quote that said, "Money is the object we project our deepest fears, dreams, and hopes and desires onto." I always loved the quote because when you are able to talk about money in a hopeful way rather than the scarcity mindset, you get a new level of intimacy.
Like, don't tell any of my colleagues in my financial planning department, but my husband and I do a Powerball every couple of months, because we spend 24 hours talking to each other about, What would life look like if money wasn't a worry? What would life look like? How would you fill your day? Where would you be? What would you be doing if money was not dictating your decision?
Those conversations just breed so much intimacy and insights on what we value in life. Don't do it all the time. But every once a while, fantasizing about what brings you joy in terms of money, where your values are around money, can be rich.
Robert Brokamp: I like the fact that puts a positive spin on it, because the research is clear is that if you want to have a difficult conversation, scolding and shaming is not the way to go. You're going to totally shut down the conversation.
Megan McCoy: Yes. The more you get into an antagonistic position with someone, the more cemented they get to their belief, because now they're not listening, they're defending. The more we can have just a desire to understand the other, the more powerful it can be.
Robert Brokamp: You have experience with family counseling, couples counseling, and you've been active in the emerging field of financial therapy. What would you say are some good guidelines for deciding when it's time to get professional help with these issues? And how do you find the right professional?
Megan McCoy: I'm not a huge fan of the "oil change" analogy when it comes to financial counseling, planning, and therapy in general. That we all treated our emotional well-being and our financial well-being like we treat our car, we would get intermittent and oil changes, because we wouldn't know if we waited till the oil was all gone, our engine would be on fire, and it will cost us a lot more money.
The second you feel stressed about your communication or money about your financial well-being, about your security for the future, that's a time to get help.
Honestly, it's much easier than it has been in the past due to COVID. First of all, AFCPE is offering free financial counseling to anybody who needs it and doesn't have the financial means. If you Google "pro bono AFCPE financial counseling" and they'll pop right up, you can see virtually.
Also, mental health professionals, because of COVID, are now allowed in practice more virtually, which makes it a lot easier to schedule. You don't worry about a long wait list or driving to a city or something like that. I think the taboo around mental health has decreased. We all know, in light of COVID, that we need to fight for well-being, and sometimes, a little extra help will, I don't know, will let us progress faster than doing it all on our own.
Robert Brokamp: That's true of financial planners too. I mean, they've all now built up their businesses to where they can work with people even across state lines, over Zoom, and then using things like Dropbox. It is easier than ever to get professional help with some kind or another.
Megan McCoy: It's important to note that financial planning, the whole education strategy has now focused on the psychology of financial planning. The financial planners coming up are going to be getting CEUs and trainings on the interior side of finances, how to talk and listen to their clients, help them navigate, change when they're feeling stuff. Financial planners, financial counselors, and mental health professionals, I think, can help you in all... I believe in thing called equifinality -- that if you're going to see someone, getting a second opinion, getting a time to space to think in process, that in and of itself is going to help you.
In terms of finding a good one, I would really highly recommend making sure your financial planer has the CFP, that your counselor has an AFC, and your financial therapist has either a certificate of financial therapy or some higher education such as K State's program of financial therapy or mental health specialization in it. Something extra to make sure that they have some cross-training.
Robert Brokamp: So let's go to our final question here. You teach a class entitled Financial Well-Being. What do we know about the role of money in a person's overall well-being?
Megan McCoy: We know from this book by [unintelligible] that there's different pillars of well-being, and if one pillar is missing, then we cannot have full well-being. They describe the things like financial health, emotional or mental health. Community, having a sense of a grander contentedness, socially, friendships, or partner. You don't need a ton, you just need at least one sound person you can rely on. Then something they refer to as meaning-making. It can be your career, it could be your family, but some sense of purpose.
Without one of them, including if you don't have financial well-being, you'll never, ever be able to get full well-being. That doesn't mean everybody had to be rich; it doesn't mean everybody has to Scrooge McDuck it. It means that we have to feel comfortable and safe with our finances.
Also, just to give a little plug, we keep on finding out that also, we have to give to others and that charitable giving and taking care of our friends and family, that really does bring us more joy than having a lot of stuff.
Robert Brokamp: There's various definitions of "financial whole wellness," but essentially, it's Can you pay your must-pay bills? Can you cover your week-to-week and month-to-month bills? Are you saving a little bit for a vision of the future? Then it sounds to me that according to you, it also includes a little bit of charitable giving just so you feel like you have a higher purpose for money.
Megan McCoy: Yes. I love it.
Robert Brokamp: Well, this has been fascinating. Thank you, Dr. McCoy, for joining us.
Megan McCoy: Thank you so much for having me.
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Chris Hill: 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. Don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.
