In this podcast, Motley Fool analyst Bill Mann and host Ricky Mulvey discuss JPMorgan’s investor day and CEO Jamie Dimon’s thoughts on stock buybacks and inflation. They also talk about the shift toward fast-casual dining and Red Lobster’s bankruptcy filing.

Motley Fool host Alison Southwick and personal finance expert Robert Brokamp answer listener questions about 403(b) accounts and saving for college.

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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.

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Ricky Mulvey: We’ve got a recap of the Jamie Dimon Show and a look at Red Lobster. You’re listening to Motley Fool Money. I’m Ricky Mulvey, joined today by Bill Mann. Bill, good to see you.

Bill Mann: Hey, Ricky, how are you doing, brother?

Ricky Mulvey: I’m doing pretty well. I spent this morning watching the JPMorgan Investor Conference, which is four hours of presentations, and then one hour of Jamie Dimon, at a podium with his energy. I guess my first question is, just to be fair, what are your top 15 takeaways from the first four hours of JPMorgan’s investor?

Bill Mann: What number was one through 14, we’re basically that I was excited to get to the Jamie Dimon hour.

Ricky Mulvey: There’s some stories there including some takes to bounce off of you, but the first section that needled him was about stock buybacks. The analysts there wanted to know about what Jamie Dimon was doing about stock buybacks. Why are they so curious about this, Bill?

Bill Mann: It’s funny because stock buybacks are thought to be a very efficient way to return cash to existing shareholders in the form of there’s not much in the way of tax, and every share of stock you should think of as being a perpetual claim on earnings and assets of a company. When you remove that from the mix, it concentrates the earnings into the remaining shares, so it should, in theory, all else being equal be the incredibly accretive thing for shareholders.

Ricky Mulvey: Mr. Dimon might disagree with you. He said, “We do not consider stock buybacks returning cash to shareholders, that’s giving cash to exiting shareholders, we want to give cash to existing shareholders.”

Bill Mann: What does that guy know?

Ricky Mulvey: Yeah, what does he know? You get a larger slice of the earnings pie, he has beef with it.

Bill Mann: He’s not wrong. The funny thing about buybacks is that the reason that you do it is that it makes the earnings per share go up over the long term. But if you buy them back at too expensive of a price, it’s not a particularly good use of capital. All of the money that they’re using for share buybacks is invested capital into the company. So they are making a choice, and you want your CEOs, your executives to be good stewards of capital. So they’re making that decision versus other things, and so I’m not so sure although he was pretty definitive about it, so I’m not going to try and parse Jamie Dimon too much, but all else being equal, if he thought that JPMorgan shares were cheap, I think his tune would be different. But what he is saying is that JPMorgan shares at current prices is not a good use of their capital.

Ricky Mulvey: He was very much needling the analysts. They’re saying, I’m not going to tell you when I buy back shares, however, here’s a metric that I look at when I’m thinking about buying back shares, and also our stock prices are high right now. Jamie Dimon was leaning on this tangible book value comparison saying, I’m not going to buy back stock when it’s worth a lot like more than two times tangible book value. I know that people in that conference room know what that means, Bill, what’s he talking about here? What is tangible book value here and why is he looking at that?

Bill Mann: So back in the days of Ben Graham, book value and tangible book value used to be in an industrial United States of America, maybe the single most important components for stock analysis now. Today, so many of our companies are software-driven, or their intangible driven, or their brands driven, that it’s not so important, but it still remains a very important measure for bags, And JPMorgan is a lot of things, but at its core, it is a bank. Their tangible book value is quite literally the value of their assets once you subtract out their liabilities, and so when you have a bank that’s trading above its tangible book value, the market is presuming that it will take its book value and continue to generate returns. A company like JPMorgan that’s trading at two times its book value, essentially means that for a bank, the expectations that are being put on JPMorgan from the current price, Jamie Dimon is saying, are extreme.

Ricky Mulvey: He’s saying this at a time where the market is very happy, I would say about the future, and Jamie Dimon is a bit more pessimistic, explaining to these analysts that he’s building up; he’s saying he’s very comfortable having a very large cash position because of threats like deglobalization, the geopolitical situation, cybersecurity threats, at one point he mentioned Ethernet cords in the ocean getting cut. The biggest thing for long-term stock returns is inflation, and he pointed out that the Dow Jones hit an inflation-adjusted all-time-high, I’m changing the dates because this is the inflation-adjusted return. But it hit an all-time high in 1966, and that was not surpassed until 1995, you had a 30-year period. That was a cycle where there was a lot of inflation, and his point was we just had a ton of quantitative easing that boosted the stock market, and it’s hard for me to believe that years of quantitative tightening will not have the reverse effect.

Bill Mann: Yeah. He is one of those guys. It’s easy to want to dismiss what Jamie Dimon is saying, but he is one of the greatest capital allocators in American industry today, perhaps all time, and he is absolutely correct that we have just gone through a period of time, which oddly enough, we had $17 trillion of sovereign debt around the world that was negative interest-bearing, that meant that you had to pay to hold that debt, and the reason that that was the case was that everybody was worried about inflation. Inflation was the great worry. So he’s not wrong, he’s not, but it doesn’t feel very great in a period of time in which the market is saying the exact opposite. So yes, I mean, he’s a cautious guy, he is a cautious CEO, and he’s a very deliberate manager of JPMorgan shareholder capital, and for me, my hats off to and for that, even if I disagree with some of the things that he is focusing on first and foremost.

Ricky Mulvey: You’d like to see a cautious person running a large bank. There were parts of this where you feel that, Bill I’m going to say either a political career or a podcast could be in this gentleman’s future riffing on the US debt and other geopolitical issues in ways that were not necessarily related to the analysts asking him a question.

Bill Mann: He did go out of his way to make some points.

Ricky Mulvey: Yes, he did. He also went out of his way to not give an answer on the CEO succession plan; I’ll call it sphinxian because I would say the headlines are saying JPMorgan CEO departure is close. In all he said was that succession was not five years away, which could mean it’s like two years away, six months away, or ten years away. What did you make of the comment and also the influx of takes on what this means?

Bill Mann: What he said was that he is more toward the end than the beginning and he has been in the chair for going on two decades now, so the actuarial tables would suggest that that is an obvious statement.

Bill Mann: I don’t think that he owes the market certainty in that type of decision. I don’t think he does, which is not what the market thinks. The market loves certainty. The market wants to know this is going to happen on x day or the earnings in 2026 will be this number. I don’t mind at all. What he is saying at this point is not, hey, I am staying here forever because that is a move that CEOs of the stature and let’s just say singular importance of Jamie Dimon has been want to do. He is saying that there will be a time definitive that he’s going to be stepping down. But next question or even better, let’s talk about the middle east.

Ricky Mulvey: Hey analysts, how about you start looking at the people around me and start studying them and then you can go. Speaking to next question, I sent you an article in Bloomberg about how more people are trading up, like fast-casual and fast food is basically the same price. This is helping fast-casual brands, hurting fast food brands. Then you responded to me on Slack with Red Lobster conspiracy theory. Red Lobster declared bankruptcy. It was part of Darden Restaurants, which is a publicly traded conglomerate that owns Olive Garden and then went through a series of private equity owners until now where it is selling whole restaurants at auction, it has gone bankrupt. I will remind listeners that we are not journalists, we are podcasters and analysts. Bill, the floor is clear for your Red Lobster conspiracy theory.

Bill Mann: Red Lobster was owned for a number of years by private equity and then it was sold a couple of years ago to a Thai company called Thai Union. Thai Union is a bunch of things, it’s a conglomerate, but one of its big businesses is that it is a provider of shrimp, and one of the primary reasons that Red Lobster is filed bankruptcy is they had this endless shrimp promotion that they’ve had on for a long time. It has cost them so much money that they’re going bankrupt. Now I ask you, if I am both the provider of shrimp and the owner of a maybe failing business, what is one of the best ways for me to get my money ahead of any debtors or creditors? Well, one way to do it would be to put endless shrimp on the menu forever until it takes down the company. Because at the parent company, I’m getting paid to sell this dying, struggling business shrimp. What is more important to me that I get my money or that I protect that equity. I think maybe Thai Union has shrimped its way into Red Lobster’s bankruptcy.

Ricky Mulvey: Well, they had other suppliers of shrimp that they basically cut out over the years, right?

Bill Mann: Yes.

Ricky Mulvey: It wasn’t a competitive bidding process, if you will, for this endless shrimp promotion, which also I think didn’t Thai Union blame this specific promotion for basically running the company at an operating loss?

Bill Mann: Yeah, and what’s crazy about that? This is because Thai Union is the owner of the company. The CEO of Red Lobster and the board of Red Lobster are their appointees. They’re not saying, those guys blew it. They’re saying those guys blew it by buying too much of the stuff that we sold them.

Ricky Mulvey: Well, also the customers weren’t buying anything else that they pointed out. They said they came for endless shrimp and then they weren’t buying any other items. Which logically, if you get endless shrimp, do you know what you can do with shrimp? You can bake it, you can broil it. You can steam it, you can put it in a pot boil, you can pan fry at deep fry at stir fry it. You can do a lot of things. [inaudible] Good point though.

Bill Mann: Not only that, but what do you know about all you can eat promotions, is that they are almost necessarily adverse selection. You don’t get a person who is like, I don’t eat very much to go, I want the all you can eat because I would like to pay a little bit more even though I can barely handle a regular size plate. I want an endless amount. Shrimp as I define it.

Ricky Mulvey: It’s a gamble with shrimp. I want to move on to a couple of other companies unless, do we have more on the Red Lobster conspiracy theories. That actually sounds really reasonable.

Bill Mann: I want to talk about this for a really long time, but yes. Let’s not make this a hostage situation for the listeners.

Ricky Mulvey: It’s not, they can leave at any moment. However, I will say that there’s a good Bloomberg article about this. It came from data essential, which basically has showed just the influx of investor interest in these fast-casual restaurants that have become less expensive than fast-food. Cava, basically saying we want to be a place where you can get a $12 lunch or dinner now seven days a week, which is maybe less expensive than a lot of combos in McDonald’s, Sweetgreen, which is markedly more expensive than has also performed extraordinarily well this year, Cava up about 100%, Sweetgreen up about 200% and that’s just since January, not 12 months ago. What do you make of this move? Do you think the investor interest in these companies are overblown at this point is a long-term trend?

Bill Mann: Investor interests in stock prices are always about predicting the future. The fact that the prices to go into a McDonald’s versus going into a Cava have converged means that people who were making a choice to go to a McDonalds from an economic standpoint, now have a much wider set of choices. Now, a lot of people go to McDonalds because they would like those fries or they would like a shake. The choices aren’t necessarily entirely all economics. There’s convenience. There’s a bunch of things that goes into, let’s call it consumer’s share of stomach when it comes to fast food and fast casual places. But the fact is now that a Sweetgreen or a Cava, they are much more price comparable, and one of the reasons is that one of the fastest areas of inflation has been in the protein component of the food cost. Whereas that hits McDonald’s squarely, it is somewhat tangential for these companies, they are not as protein-driven as a lot of the fast food places.

Ricky Mulvey: No, not cynical. It’s actually a credit to Texas Roadhouse. If you get a burger in regular fries at Five Guys right now, that is basically the same price as an eight-ounce sirloin with two sides over at Texas Roadhouse. I agree that beef, like there has been problems with droughts and beef inflation is real. However, there are companies that have managed this significantly better.

Bill Mann: To the extent that you believe that the pricing mechanism at a McDonald’s is being driven by the need to raise prices, I would agree.

Ricky Mulvey: Fair enough. That’s a good place. Bill Mann, good to see you again. Thanks been on here. I appreciate your time and insight.

Bill Mann: Take care, Rick.

Ricky Mulvey: Ricky Mulvey with Motley Fool Money here to tell you about a vehicle that is redefining sporting luxury, the Range Rover Sport. The first thing I noticed when I sat down in the driver’s seat, is that I felt like I was in a cockpit. You’re up off the ground in a focused interior that promotes exhilarating driver engagement. I also really appreciated the overhead 360-degree camera view that let me know exactly where I was going as I backing out of the parking space. I went for a drive in the Range Rover Sport out in Littleton, Colorado, tested the accelerator just a little bit, and felt the performance and agility. It’s an instinctive drive with engaging on-road dynamics and effortless composure. To put it plainly, the Range Rover Sport is powerful. It’s also quiet, and comfortable, advanced cabin technologies such as active noise cancellation and cabin air purification, offer new levels of comfort and refinement. The third generation Range Rover Sport is the most desirable, advanced, and dynamically capable yet. I’d like to invite you to visit to learn more about the Range Rover Sport. [MUSIC] If you’ve got a question for the show, email us at, that is podcasts with an s,, and up next, Allison Southwick and Robert Brokamp answer some of those questions about 403(b)s, saving for college, and tracking stock returns.

Allison Southwick: This question comes from Abram. I wanted to get your opinion on how to think about the difference between dollar investment and the number of shares you own of different companies. Is it better to have more shares of a company with a low share price than a few shares of a company with a high price?

Robert BroKamp: Hi Abram, theoretically it shouldn’t make a difference. Let’s say you invest $1,000 each in two stocks and one is trading for $100 a share, so you buy 10 shares and the other is trading for $500 a share, so you buy two shares. If those stocks both go up 10%, you’ll have earned $100 on each investment, 10 bucks for each of the 10 shares that were trading for 100 and 50 bucks for each of the two shares that were trading for 500. It really doesn’t make much of a difference. By the way, this is why stock splits are theoretically a non-event. But the two for one split, the number of shares get doubled but the stock price gets halved, so the value of the company hasn’t changed. All that said, if you’re investing relatively small amounts, say with monthly contributions to your brokerage account, it can be easier to put all your money to work in stocks that have lower prices if your broker doesn’t allow you to buy fractions of shares. This is one of the reasons why companies split their stocks because they believe that the lower share price will make it easier both practically and psychologically to buy their stock.

Allison Southwick: I’m surprised you explained that without bringing up the pizza metaphor. I feel like that’s legally required.

Robert BroKamp: [laughs] Standard. Trying to get away from that, but very good point.

Allison Southwick: Next question comes from Robin. I have been investing in my 401(k) for more than five years. When I retire in three years, can I transfer the Roth 401(k) to a money market or high yield savings account with no penalties or taxes? Transferring to a Roth IRA would restart the five year clock.

Robert BroKamp: Robin is highlighting something very important about Roth accounts and that for the withdrawal to be tax-free, you have to be 59 and a half, and the account has to satisfy the five year rules, which can be pretty complicated. Here’s the simplified version, for Roth IRAs, as long as you have had any Roth IRA open for five years, you’re good. However, each Roth 401(k) has its own five year clock. Furthermore, if you roll your Roth 401(k) over to a Roth IRA, and that is your very first Roth IRA, the five year clock resets, and Robin seems to understand this. What she should do is open a Roth IRA right now and fund it even with a small amount of money. If she earns too much to be eligible for a Roth IRA outright, she should open a backdoor Roth by contributing to a nondeductible traditional IRA and converting it to a Roth. There’ll be little to no tax consequences if she doesn’t have any other money in other traditional IRAs. If she does, she’ll pay some taxes due to the so-called pro rata rules, but it’ll still be worth it. Just deposit 50 bucks, convert it, pay the taxes, and get that five year clock ticking. When she retires three years from now, just keep her money in the Roth 401(k) for a couple of years until that Roth IRA has hit five years. By the way, the clock starts on January 1st of the year of the contribution. If she just did it today, she’s already got five ones under her belt since we’re in May at this point. Now to answer your question about whether she can transfer her Roth 401(k) to some savings account without taxes and penalties, the answer is yes, as long as she’s 59 and a half. But then she’d have to pay taxes on the interest and miss out on all the tax-free growth from here on out. Plus you generally use your Roth for your highest returning assets because it’s a tax-free account and you want your tax-free account to grow the most. Transferring her entire Roth 401(k) to a savings account is likely not the best route for her.

Allison Southwick: Next question comes from Matt. I’m a public school teacher of 26 years. Wow, thanks, Matt, it’s going to be rough. [laughs] I currently have a 403(b) with about $63,000 in it that I stopped paying into about 10 years ago because the management fees were growing. I started subscribing to Motley Fool Stock Advisor to get stock advice and opened up a Roth IRA and invest through there. Since I don’t contribute any more to the 403(b), should I just leave the money there or should I pull it out and take the penalty and put it in my Roth IRA, which I have total control over, and pick the stocks? Honestly, I’m not even sure if I’m able to pull it out since I’m still in public education.

Robert BroKamp: As a former elementary school teacher, Matt I salute you. I could only do it for five years, so I’m impressed, you’ve been doing it so long. The first thing I would say is that if contributions to your 403(b) are matched, then you might want to consider at least contributing to the 403(b) up to that point and then move on to the Roth IRA for additional contributions. But as is your experience, many 403(b)s are frankly really bad with high expenses. It’s astounding how school systems and 403(b) providers get away with it. It totally makes sense to favor an IRA over a bad 403(b). Maybe, even if it means giving up some match, it just depends how bad the 403(b) is. As for the money already in your 403(b), you’d pay taxes when you take the money out, plus the 10% penalty if you’re not 59 and a half. As you suggest, it may be difficult if you’re still employed by the 403(b) sponsor. It just depends on the rules of your plans. I would talk to the administrator to see what your options are. But all that said, I’d be inclined to leave the money there. Look for the lowest cost options within the 403(b), maybe an index fund or a few investment categories that are different from what you’ve chosen in your Roth IRA so that you get some diversification. Finally, a great resource about 403(b)s is, which provides all kinds of education resources, including ratings of 403(b)s offered by various school districts, and suggestions for how to get out of a bad 403(b).

Allison Southwick: Next question comes from Tim Jay. Dear, your Broliness. I think we may be reached peak Bro here. [LAUGHTER]

Robert Brokamp: [LAUGHTER] It’s all downhill from here.

Alison Southwick: Alright, dear Bro Leans. As a Motley Fool member, I’ve been investing for over 15 years. One question I never had time to research involves performance data. I often see a stock or fund price or annualized return tracked and tables and charts. Could you clarify the differences between the terms annual return versus annualized return versus cumulative return? When I’m trying to compare stock and ETF performance at publicly available websites. I usually see dividends listed separately as a percent. Does any of the performance data metrics above include past dividends? Is there a service, ideally, a free one, that combined stock-price fund expenses reinvested and special dividends all into one fancy grafts? I can see the most realistic picture of fund performance over time.

Robert Brokamp: There are few terms to keep an eye out for when you’re trying to figure out what kind of return you’re looking at. One is price return, which is just the change in the pricing investment, and doesn’t factor in dividends. In fact, the quotes we usually hear about or read about every day when it comes to the Dow and S&P 500. The Nasdaq there just the price return, doesn’t say anything about the dividends you would have received. To get the true return of any investment or any index for that matter, you need to look for the total return, which includes dividends. Usually assumes the dividends are reinvested. In other words, you’re buying more shares with each dividend. As for the terms, you asked about, annual return, usually means, when an investment earned in any given calendar year, like 2023- 2022, and so on. Annualized return is the compound annual growth rate, also known as the CAGR of an investment over a period of years. For example, you’ve likely heard that the stock market has returned 10% a year since the 1920s. The stock market has rarely returned exactly 10% in any single year. That 10% is just the compound average over the last century or so. I don’t want to get too much into the math widths, but that 10% is not the simple average, otherwise known as the arithmetic mean. Which would just be adding up all the individual year returns, and dividing by the number of years that actually would overstate the historical returns to the stock market. You need to use a some more complicated formula and Excel using present value for future value.

I often use the geometric mean function in Excel. You can find plenty of CAGR calculators online. Cumulative return is the amount you earn, total from the point you invest it to the point you are today. If you invested $1,000;10 years ago and it is now worth $10,000. The cumulative return is not annualized, it is just the one figure that shows the growth from point A to point B over that total time period. Enough about those, the final point I’ll make is that the reported returns for mutual funds. ETFs are always after annual costs, that are taken out, captured by the expense ratio that you’ll see on websites. However, they do not account for commissions are annual fees. You may be paying to a financial advisor to put you in those funds. As for where to find this information, every financial website provides most of it, including here at The Motley Fool, you just have to dig into the details to understand what information they’re presenting. As I’ve mentioned on shows before, by favorite source of historical info, especially for funds, is Morningstar.

Alison Southwick: Our next question comes from Adam, Alison, and Bro, thank you for all of the work you all do to help make the world smarter, happier, and richer. Thanks, Adam. I’ve been listening since having my own financial awakening nearly three years ago. At that time, my oldest was three and we were planning on having our second. While I am moving in the right direction with my finances, I am still playing catch-up from growing up in a family with next to no fiscal responsibility. About a year ago, we finally started investing in a 529 account for each of our daughters at the time, there were four and one, so our oldest effectively lost three years of investing time. Once my student loans are paid off later this year, some of that money will start being deposited monthly into each of their accounts. The question is, how do I allocate funding for these two accounts to ensure the older kid will have the same amount saved for college when they each turn 18?

Robert Brokamp: Well, Adam, I’d buy your desire to be fair to your daughters and I’m going to offer two perspectives on how you should handle this. The first is what mostly my wife and I did. That isn’t it really necessary to make sure each account has the exact same amount of money. Because here is the deal with 529 accounts. You’re the owner, not the kids. While they’re separate accounts, you can move money between the two. You can transfer money between accounts of qualifying relatives and siblings. If one account ends up bigger, you could transfer some of the difference later on down the load if you feel it’s necessary. You really can’t just think of 529, your money in different accounts. If you’re going to do it that way, I think it is important to be clear with your daughters about how much you’ll pay and how much they will be responsible for. My wife and I strongly encouraged our kids to attend in-state public universities. Which is easy for us because we live in Virginia and we have many excellent state schools we said we’d cover all the costs of an in-state public education. If they went out of state to a private school or an Out-of-State school that cost more, they may have to come up with a difference. Now just to provide a different perspective, I’ve a colleague here at The Motley Fool. Buck Hartzell, and his wife Tiffany, told their kids how much they had at each of their accounts and that their choice on schools was up to them. There’s no sharing of 529 money, but they had to find a way to pay for school with the amount that was in those accounts. What they didn’t use, they got to keep. When I was slacking with Buck this morning about this, he made the point. That he and his wife thought it was important to let the kids make their own decisions, and that they learn how to make choices given limited resources. If you go that route, you do indeed have to make sure that your daughters have roughly the same amounts in your situation. You might add a little bit more to the older daughter’s account to make up for those missed years. Once they’re in high school, you can transfer money from one account to another to get closer to an equal amount. Which way you go is really up to you and your wife how you want to decide to do that. I’ll close by pointing out that we’ll be talking more about 529s and college savings on the May 29 episode because May 29, this college savings day because the other way to say May 29, is 529. That episode, I’ll be interviewing Roger Young of Tiller Price. I hope they’ll tune in.

Ricky Mulvey: As always, people on the program may have interest in the stocks they talk about. The Motley Fool may have formal recommendations for or against, so don’t buy or sell anything based solely on what you hear. I’m Ricky Mulvey. Thanks for listening. We’ll be back tomorrow.

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