Jan 10, 2018 · 48 min
TM
Business
The Meb Faber Show - Better Investing
The Idea Farm
Ready to grow your wealth through smarter investing decisions? With The Meb Faber Show, bestselling author, entrepreneur, and investment fund manager, Meb Faber, brings you insights on today’s markets and the art of investing. Featuring some of the top investment professionals in the world as his guests, Meb will help you interpret global equity, bond, and commodity markets just like the pros. Whether it’s smart beta, trend following, value investing, or any other timely market topic, each week you’ll hear real market wisdom from the smartest minds in investing today. Better investing starts here. For more information on Meb, please visit MebFaber.com. For more on Cambria Investment Management, visit CambriaInvestments.com.
- 710 episodes
- Updated Friday
Episodes710
- TM
Jan 3, 2018 · 49 minEric Clark - “I Still Believe that Alpha is Available and Possible, and Beating a Benchmark is Possible" | #88
Eric Clark
- TM
Dec 20, 2017 · 57 minMichael Venuto - “I Would Suggest Seeking Out High Active-Share, Global Growth Themes" | #87
In Episode 87, we welcome market veteran and ETF expert, Mike Venuto. Mike briefly walks us through his background, which includes a fun story about a baffling situation years ago when the gold mining company, Newmont Mining, was falling in price despite gold rising in price. Mike tells us the culprit turned out to be the new ETF “GLD” – Mike realized he needed to learn far more about ETFs. Next, the guys dive into ETFs. Meb starts broadly, asking where we are in the ETF evolution. Mike tells us we’re still quite early. The growth rate has been largely the same over the last 10 years (a little over 20%); but that growth rate is compounded over a larger base now, so it feels like the growth is greater. And in terms of where ETFs are going, free beta is getting saturated. The next move in ETFs will be people thoroughly detailing the differences between two ETFs that appear largely the same at first blush (nowadays, people tend to see similarly-themed ETFs as somewhat the same). Meb pushes deeper on this idea, wanting to know more about this next evolution in ETFs. Mike tells us that myriad factors are a part of any given ETF beyond its expense ratio. For instance, there are the spreads, how well an ETF tracks its index, whether the ETF lends out its shares and what it does with that revenue, then there’s the share price itself. All these factors can make two ETFs that appear similar on the surface actually quite different. This dovetails into the idea of “active share” – basically, the measure of an active ETF that differs from its index. Mike tells us about a tool at Toroso called Smart Cost that helps embrace ETF transparency. The tool helps answer the question “how much am I paying for the smart portion of an ETF?” Mike goes on to tell us that the overall expense ratio is not the most important cost consideration – instead, it’s how much am I paying for the smart portion? He gives us an example, comparing it to its benchmark, then calculate its “price per unit of difference.” The tool shows the amount of the ETF you’re buying that is different – and this helps determine the true value of any given ETF. Meb echoes much of this, saying that in order to justify actively managed fees, an investor wants an ETF that looks truly different than its benchmark. Otherwise, you’re just paying top dollar for cheap beta. The conversation bounces around a bit, including some other tools Mike uses, but eventually Meb asks about something Mike is doing that’s on the forefront of tracking the entire ETF space. It turns out, Mike has created an index that enables investors to track the growth and exposure of the overall ETF ecosystem. This includes not just the issuers, but the exchanges, the data and index providers, the back-office companies, and so on – the entire overall ecosystem. So, Mike has created an index that tracks the growth of all these companies. Next, the guys move into the “fringe ETF” space. Mike predicts we’re going to see more “characteristic” based indexes. Rather than capture a factor, they systemize how to target characteristics – e.g. a spin-off, or insiders buying a stock, or great brands. This leads into a conversation about “structural” factors, where you create a different form of behavior. An example would be a put-write fund. The guys touch on a few topics before moving onto cryptos. They discuss whether crypto has any real legs, and what the potential could be. Mike has some interesting thoughts here. There’s way more in this episode: The Permanent Portfolio… whether gold bugs should be concerned about the rise of crypto… how Meb has a new army of enemies in the form of Litecoin crypto investors… and how one of Mike’s friends bought a pizza years ago with Bitcoin – probably the most expensive pizza that friend will ever purchase. And of course, there’s Mike’s most memorable trade. Hear about it in Episode 87. Learn more about your ad choices. Visit megaphone.fm/adchoices
- TM
Dec 15, 2017 · 34 minA Quantitative Approach to Tactical Asset Allocation | #86
Meb Faber
- TM
Dec 13, 2017 · 51 minRadio Show: Bitcoin Futures Are Here - What Now? | #85
Ep.85 - Radio show
- TM
Dec 6, 2017 · 53 minHoward Lindzon - “I Think There's So Many Ways the Markets are Rigged That I Think It's Best to Just Follow Along the Trends" | #84
Howard Lindzon
- TM
Nov 29, 2017 · 51 minRandy Swan - “What Do You Do When Things Are Fundamentally Overvalued, But You Want to Remain Invested in the Market?" | #83
EP.83 - Randy Swan
- TM
Nov 22, 2017 · 1 hr 7 minVineer Bhansali - “The Market is Severely Underpricing the Probability of a Sharp, Catastrophic Loss to the Downside" | #82
In Episode 82, we welcome trader, fund manager, and author, Vineer Bhansali. Per usual, we start with Vineer’s backstory. It involves his physicist-origins, an unexpected move to an assortment of trading desks, and a run-in with the great, Fischer Black. Meb soon dives in, asking about main strategies Vineer uses with his group, Longtail Alpha. Meb reads a quote from LongTail’s website… “LongTail Alpha’s sole focus is to find value in the tails of financial asset return distributions. Either in the left tail as a risk mitigation hedge on multi-asset portfolios, in the right tail to add convexity to an investor’s risk exposures, or in both the right and left tails to produce alpha from convexity and volatility opportunities in a hedge fund structure.” Meb asks Vineer to use this as a jumping off point, explaining his framework, and how he thinks about tail strategies. Vineer tells us that, at LongTail, they believe the probability distribution of returns for asset classes and multi-asset portfolios is actually not bell-shaped. Rather, there are many imperfections and anomalies in the market. And the tails of the distribution are quite different than the central part. While the central part of the curve tends to have many, smaller moves, the tails tend to be dominated by infrequent, large events. With this in mind, the goal is to implement various options strategies to help you position yourself for these tail vents. Keep in mind, there are left tail and right tail events (and a hedged strategy in the middle). Vineer references them all. Meb mentions how, right now, most investors are more concerned with the left tail events. So how should an investor think about implementing a tail strategy? And is it even necessary, given Vineer’s statement in a recent Forbes article: “…people generally feel better when they believe that they have portfolios with built-in insurance, i.e. protection against losses, even though the expectation (or average return) of a portfolio with or without such insurance is the same.” Vineer discusses the difference between “volatility” and “permanent loss of capital.” What you want from a left-tail paradigm is a methodology that keeps you in assets, serving your long-term benefit. Generally, you want to be invested in the stock market. Vineer tells us the name of the game is to be able to survive the relatively short-but-harsh pullbacks, and even accumulate more assets during those times. Given this, Vineer has a 4-lever framework he uses to help create a robust left-side portfolio. You won’t want to miss this part of the discussion. As the conversation unfolds, you’ll hear the guys discuss how, even though there is some concern about a correction now, the markets are still severely undervaluing the price of a sharp downturn. And option premia are incredibly cheap by historical standards. Meb then asks for more details about actually implementing a left tail strategy. Vineer’s answer touches on understanding and identifying how much exposure one wants to equity risk and inflation risk. Then, there’s the need to understand one’s risk threshold tolerance – the “attachment point” at which you cry uncle, whether that’s being down 10%, 15%, 25% or more. Given this attachment point, an investor could then go to the options market and buy “insurance” at this level, for a duration of time suitable to the investor. There’s way more in this episode: option selling strategies (instead of buying insurance, you’re the one selling it in order to generate yield)… A great piece from Vineer about selling bonds as a way to hedge your portfolio… How the traditional inverse relationship between market direction and volatility might not be holding up as much (look at Japan recently – surging markets and volatility together)… Vineer’s thoughts on artificial intelligence and “how to beat the machines”… And of course, his most memorable trade. All this and more in Episode 82. Learn more about your ad choices. Visit megaphone.fm/adchoices
- TM
Nov 15, 2017 · 1 hr 8 minRadio Show: Notes from Meb's Office Hours - Listeners Are All Making the Same Mistakes | #81
Jeff and Meb take listener questions
- TM
Nov 15, 2017 · 1 hr 6 minClaude Erb - “It Is Possible That We're in the Middle of a Period in Which Gold Becomes the New Frankincense" | #80
Claude Erb and Meb talk commodity pricing
- TM
Nov 8, 2017 · 1 hr 3 minJason Goepfert - “I Would Not Be Surprised at All to See a Multi-Day 5%-15% Decline" | #79
In Episode 79, we welcome Jason Goepfert, founder of SentimenTrader. Per usual, we start with Jason’s background. It involves listening to margin calls, when “real emotion” would come out. Jason tells us anger and panic were what you would hear, and that people are not necessarily rational. These experiences and others eventually led Jason to launch Sentimentrader which is, according to its website: “an independent investment research firm dedicated to the application of mass psychology to the financial markets… Our focus is not market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence.” The guys discuss some of the mechanics of Sentimentrader – the time-frames of the various models, the inputs, and how most people want just one indicator (but that’s not the best way). Meb asks for an example of one of Jason’s favorite indicators – it turns out to be the VIX, sometimes known as the market’s “fear gauge.” As of the time of the podcast, the VIX is quite low. One might assume this means it’s about to pop, but Jason tells us nothing works 100% of the time, with Meb noting it can stay low for a long while. Meb asks how investors – specifically long-term investors – should use indicators like the VIX. Should they pay attention at all? Jason tells us you can use these indicators for color. Meb throws in a funny aside about a “seafood tower” indicator – the idea being when times are bad, no one orders the seafood tower, but when times are good, towers are stacked at all the tables. And it just so happens, Meb recently had a meal out in which the table wanted a seafood tower…as did at least three other tables at the restaurant that night. The conversation bounces around a bit, with interesting back-and-forths about the AAII and Investor Intelligence surveys, the potential for “observer effect” to be skewing some results, and how every bull/bear cycle is different and people put too much weight on the market event that’s just happened. Jason tells us that many investors are now saying, “well, stocks probably aren’t going to peak because we’re not seeing the same kind of optimism we saw in 2007.” But 2007 was probably a once-in-a-lifetime type of a peak (and 2009 was a once-in-a-lifetime type of a bottom) – so we shouldn’t expect to see the same readings at those turning points. The guys breeze through a fun topic next: whether Twitter should be considered a useful sentiment indicator. Jason tells us it’s wonderful and horrible. The problem is we self-select and tend to follow people with a similar mentality as our own. So, we’re largely just in a bit of an echo chamber of our own opinion. There’s tons more in this great episode: how today’s cryptos are resembling the internet stocks of the late 90s… why it’s hard to buy, even when the sentiment indicators are signaling you should do so… and the time when sentiment called the markets nearly perfectly. And of course, there’s Jason’s most memorable trade. It involves a times when all the sentiment indicators were lining up together nearly perfectly. So Jason went in big…and lost big when things didn’t play out as he expected. What are the details? Find out in Episode 79. Learn more about your ad choices. Visit megaphone.fm/adchoices
- TM
Nov 1, 2017 · 1 hr 24 minAlex Rubalcava - “If You're Going to Be an Angel Investor... You Have to Be Devoting Significant Time to It" | #78
Alex Rubalcava
- TM
Oct 25, 2017 · 1 hr 27 minTobias Carlisle - “In Order to Find Something Genuinely Undervalued...There's Always Something that You Don't Like" | #77
In Episode 77, we welcome author and asset manager, Tobias “Toby” Carlisle. After discussing Toby’s background, including his time as an M&A lawyer and what drew him to investing, we jump into his latest book, The Acquirer’s Multiple. Toby tells us that the book describes a simple way to find undervalued companies. In essence, you’re trying to find a company trading below its intrinsic value. This is how to get a great price as a value investor. Of course, you get these prices because things don’t look too rosy with the stock – there’s usually a crisis or some hair on it, so to speak. Toby tells us “In order to find something that is genuinely undervalued…there’s always something that you don’t like.” This leads into a great conversation about what Warren Buffett seeks in a company, versus what Toby, through the Acquirer’s Multiple, seeks. While Buffett looks for wonderful companies trading at fair prices, Toby seeks fair companies trading at wonderful prices. Toby goes on to tell us that for a company, there are two sources of value – the assets it owns, and the business/operations itself. You have to look at both together. Buffett looks at wonderful companies at fair prices, and is willing to pay a premium to book value, but that’s generally because Buffett is able to ascertain that the stock is worth even more. Joel Greenblatt took this idea and ran with it in his book, The Little Book That Beats the Market. The idea relies on buying companies with high returns on investing capital (ROIC). But Toby thought “what if you can buy at the bottom of a business cycle?” You could likely get better returns by buying very, very cheap, hence his focus on fair companies at wonderful prices. The guys then discuss the merits of a high ROIC. Toby tells us that a high ROIC is meaningless absent a moat or competitive advantage. Don’t misunderstand – a high ROIC is incredibly valuable, but it has to be protected. Finally, we get to The Acquirer’s Multiple. Toby tell us you’re trying to find the real earnings of the business. The guys touch on lots of things here – why Buffett & Munger actually don’t prefer this multiple… a comparison between The Acquirer’s Multiple (AM) and Greenblatt’s Magic Formula… and an example from Toby about the power of the AM using the stock, Gilead. The guys eventually switch gears, and turn toward Toby’s private “special situations” fund. In essence, Toby looks for situations when there’s a corporate act, say, a board-level decision to buy or sell a company, or pay a special dividend, or buy back a material amount of stock. He then tries to arb it. He gives us any example of how he made money using the strategy back when Obama was attempted to stop corporate reverse-mergers. But in all cases, Toby is still looking for undervalued, cheap investments. There’s tons more in this episode: the “broken leg” behavioral problem… how investors trying to improve upon the Magic Formula tend to vastly underperform the Magic Formula left alone… how professional investors tend to behave just as poorly as non-professionals… what Toby is working on/excited about right now… and of course, Toby’s most memorable trade. It involves a basket of net-cash biotechs. While he made over 200%, if he hadn’t tinkered, he could have made 750%. What are the details? Find out in Episode 77. Learn more about your ad choices. Visit megaphone.fm/adchoices
- TM
Oct 18, 2017 · 1 hr 30 minPhil DeMuth - “Nothing in My Global Outlook is Telling Me It's Time to Pull Up the Anchor and Set Sail" | #76
In Episode 76, we welcome Phil DeMuth. We start with Phil’s background. It’s a fun recap, involving Phil’s clinical psychology roots, his move to LA to be a screenwriter, his experiences in the Dot Com boom with friend, Ben Stein, which led to the writing of his first investment book, which eventually resulted in his managing money. Meb dives into investing, asking for an overview of the framework Phil uses with clients. Phil seeks to construct a portfolio that matches each individual’s situation, so it’s largely bespoke. That said, in general, he starts with a global market portfolio, then adds various factors – for example small value, or momentum, or low beta… Then he’ll add bonds, some alternatives, gold, and so on – again, all relative to the individual’s needs and goals. This leads into a great conversation on the idea of a person’s “personal beta.” This dovetails into the concept of a person’s human capital. Meb believes that adjusting a portfolio to reflect a person’s human capital is something advisors do well, giving them an advantage over robos. Phil thinks there are ways the robos can catch up here. Next up, the guys discuss the various types of investing clients – doctors, engineers, celebrities, and so on – and whether any specific type is better or worse suited for investing. Meb’s opinion is that many doctors and engineers can be challenging clients because they’re brilliant and love to tinker. They can also have some hubris – an element of “I can do better than buy-and-hold”. Phil agrees that doctors and engineers should be excellent investors. They’re so smart that they can do it all; yet in practice, they tend to stumble. This leads the guys to the takeaway that, in investing, there’s not a linear correlation between time/effort and returns. Phil notes the correlation could even be negative! Meb transitions to Phil’s newest book, which is one of Meb’s favorites: The Overtaxed Investor: Slash Your Tax Bill & Be A Tax Alpha Dog. The guys discuss how implementing effective tax strategies in investing is one of the biggest, yet underused, sources of alpha around. Phil notes that any savings in this area goes straight to the bottom line. Meb asks for specific tax strategies. You’ll want to listen to this section, which dives into some of the details of parking the right kind of assets into the right kind of accounts. This dovetails into an idea Meb loves: (and the topic of a soon-to-be-released whited paper) avoiding dividends. Phil tells us he hated the taxes he was paying on dividends and capital gains, so he got rid of everything issuing him dividends and distributions, and instead, sought quality investments that wouldn’t pay a dividend. He goes on to say how dividends are great for retirees who are intentionally spending the money, but if you’re earlier in your working career, and the government is taking 30% of your income via taxes, that’s not good at all! So, Phil wondered how he could get the dividend benefit, without the dividend. It was this idea that led Meb to do his own research on the topic (the subject of the forthcoming white paper). So Meb thanks Phil for the inspiration, then takes the handoff and discusses what he found through his own research. If you’re a dividend investor, you won’t want to miss Meb’s conclusion. There’s way more in this great episode: additional tax tips… ETNs… tax loss harvesting… donating stocks with huge capital gains to charities rather than donating cash… wills… how Meb wants a Viking funeral (yes, you read that right)… Meb’s unexpected bill from the IRS… And of course, Phil’s most memorable trade – it involves an investment that turned out to be somewhat less liquid than Phil had anticipated. What are the details? Find out in Episode 76. Learn more about your ad choices. Visit megaphone.fm/adchoices
- TM
Oct 11, 2017 · 55 minMike McDaniel - “One of the Biggest Conditions that Will Lead to Success is Simply Being Invested" | #75
In Episode 75, we welcome Mike McDaniel, CIO and co-founder of Riskalyze. It’s a special episode, being recorded at the Riskalyze Fearless Investment Summit in Lake Tahoe. Per usual, we start with Mike’s origin story, but it’s not long before...
- TM
Oct 4, 2017 · 1 hr 13 minJeffrey Sherman - “There's This 'Buy-the-Dip;' Mentality... Do You Play in It, or Just Shake Your Head?" | #74
In Episode 74, we welcome Jeffrey Sherman from DoubleLine. We start with Jeff’s background – it’s a fun recap, including stories of running the scoreboard for The Stockton Ports… being a bank teller… earning graduate degrees… there’s a...
- TM
Sep 27, 2017 · 1 hr 12 minJeff Porter & Barbara Schelhorn - Why Financial Planning? Because Investing Alone Won't Get You There | #73
In Episode 73, we welcome Jeff Porter and Barbara Schelhorn from the financial planning group, Sullivan Bruyette Speros & Blayney. We start with Jeff’s background. He was a contemporary of Meb’s at the University of Virginia. The guys share a laugh recalling running out of class to check stock quotes back in the Dot Com boom. As the conversation turns to investing and financial planning, Meb asks about changes in the industry – with the rise of robo-advisors, indexing, target date portfolios, and so on, how does Jeff, as a financial planner, continue to add value on the investment side? Jeff tells us how the aforementioned products can be great for many investors, but less so for others. For investors who need more handholding, and/or have more complex financial situations, advisors can add significant value. What follows is a great discussion on questions Jeff asks his clients as he seeks to evaluate the right market strategy for them, as well as the right implementation. There are myriad issues: what’s the best asset mix? Do you add hedges? Active or passive? Factor tilts? And so on. Jeff looks to understand what his clients need from a return perspective in order to reach their goals, as well as their ability to handle risk. This includes variables such as when will the client need to take withdrawals. This leads to an interesting conversation about those risky years shortly before and after retirement begins. If luck is against you, and the market is down in those years, it can make a huge difference in your portfolio’s balance and therefore, your retirement lifestyle. Jeff tells the story of how retiring at two different points in time led to two very different outcomes. The conversation drifts toward allocating cash and savings. But one of the problems is that many investors have way too much cash sitting in accounts earning nothing. At a minimum, they could use that cash to pay down various debts or mortgages. Meb makes the point that countless investors are bad at optimizing the cash/debt equation. He says there are simple techniques to easily turn cash earning 0% into cash earning 1% per year. Meb continues to steer the conversation toward traditional financial planning topics: Social Security, retirement benefits, health and liability risks, and so on… Barbara provides some wonderful information on insurance and long-term health care. As an interesting aside, she tells us that most of her male clients don’t want to waste their money on long-term health care, while her female clients find it to be more of a need. Barbara says the reality is somewhere in between. This hardly even begins to scratch the surface of what’s covered in this episode. (It’s our longest to date!) You’ll hear about umbrella insurance policies (and why Meb could use one for some property he owns in Colorado)… The importance of proper titling of your assets and how it can protect you from litigation… Gifting loved ones with stock rather than cash to get around big capital gains… Effective financial strategies using tax bracket trends… SEP IRAs versus 401Ks vs Roth IRAs… When to start taking Social Security… And way more. And of course, you’ll hear Jeff and Barbara’s most memorable investments. While Barbara’s is interesting, Jeff’s involves a huge market loss thanks to a bad tip from a certain college friend (you guessed it – Meb was to blame). What was Meb’s bad investment advice that cost Jeff thousands? Find out in Episode 73. Learn more about your ad choices. Visit megaphone.fm/adchoices
- TM
Sep 20, 2017 · 49 minRadio Show: Investor Sentiment - What is it Telling Us About this Bull's Length? | #72
Episode 72 is a radio show format before we start back with guests this fall. Some of the questions and topics you’ll hear: You've said that bonds can face significant drawdowns. But because of the way bonds work, is it the case that bond ETFs...
- TM
Sep 13, 2017 · 25 minHow to Outperform One of Investing's Most Beloved Strategies | #71
Episode 71 is a solo-Meb show in which he reads a white paper we’ll soon be publishing. The white paper might be a tad controversial as it calls into question an investing strategy that’s so beloved, it borders on sacrosanct. What’s the...
- TM
Sep 6, 2017 · 52 minRadio Show: The 13F Guru Meb Would Follow Today | #70
Episode 70 is a radio show format. We start with a quick catch-up, discussing the recent eclipse and Meb’s upcoming travel, including Iceland, Reno, Orlando, Amsterdam, among others. Before jumping into listener questions, we get Meb’s thoughts on...