Aug 30, 2017 · 1 hr 30 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
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Aug 23, 2017 · 1 hr 11 minCorey Hoffstein - “Risk Cannot Be Destroyed, Only Transformed" | #68
In Episode 68, we welcome Meb’s friend and Newfound Research founder, Cory Hoffstein (or as Meb refers to him, a “fellow nerd”). Per usual, we start with Corey’s background, but then Meb jumps in by asking Corey to describe his general, 10K foot investing framework. Corey tells us that a specific product and/or style doesn’t necessarily define him or Newfound. Rather, he believes in a consistent, well-researched process that takes into account the behavioral challenges that accompany any given investment strategy. This is because the journey is often just as important as the destination. Meb asks where Corey starts when creating a portfolio. Corey tells us it’s about the balance of risk. This is because “risk cannot be destroyed, only transformed.” Therefore, when building a portfolio, there’s no single holy grail. You need to understand the goals and fears of your client, then figure out how to balance various strategies in order to find a robust, flexible portfolio that handles risk appropriately. This dovetails into one of Newfound’s white papers, “Portfolios in Wonderland,” which tackles today’s investing climate. Corey tells us that we’re in a unique environment, whether focusing on equity valuations or interest rates. It used to be that stocks and bonds zigged when the other zagged. But in the 1980s, both became cheap. Today, we have the opposite: high equity values and low yields on fixed income. This leads to a great discussion on bonds, including Corey’s rule of thumb for estimating future bond returns, and his research into the source of bond returns – how much was due to the coupon, versus declining rates and roll yield. The guys agree that with U.S. equities richly valued, and bond yields so low, future returns of the classic 60/40 portfolio don’t look too appetizing. So, what’s the solution? Corey likes the proliferation of asset classes that used to be found almost exclusively in hedge funds. Now, we can use them to diversify our portfolios and reach a solid rate of return. The conversation bounces around a bit here – how 8%-10% returns aren’t likely going forward unless you’re invested exclusively in emerging markets... how if you let a portfolio optimizer do its thing, you’d have almost no U.S. exposure in either equities or bonds... and how, behaviorally, most people couldn’t have 0% allocated to the S&P, so finding a balance between the best portfolio and the most realistic portfolio is needed. There’s way more in this episode, including answers to “Should we be holding more cash?” “Is dividend investing dangerous” and “How do you factor in various global interest rates when looking at a bond allocation?” There’s also how Corey constructs multi-asset portfolios… how value works across asset classes… the biggest concerns Corey is hearing from clients today… an idea Meb has for a “weird ETF”… and of course, Corey’s most memorable trade. What is it? Find out in Episode 68. Learn more about your ad choices. Visit megaphone.fm/adchoices
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Aug 16, 2017 · 56 minSimon Black - “I See a Lot of Red Flags" | #67
In Episode 67, we welcome Simon Black, founder of the newsletter, Sovereign Man. We start with Simon’s military background, having been an intelligence officer. He spent lots of time overseas, yet became disillusioned after the promises of WMDs...
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Aug 10, 2017 · 1 hr 4 minRadio Show: U.S. Equities: At What Valuation is Meb Selling? | #66
Episode 66 is a radio show. We start with Meb referencing the just-published book, , which he edited. It’s a great collection of essays from some of the smartest minds in investing. Check it out. Next, we jump into market commentary, using Meb’s...
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Aug 9, 2017 · 57 minEmil van Essen - “The Days of $80 Oil - That's a Long Way Away" | #65
In Episode 65, we welcome CTA and commodities expert, Emil van Essen. Meb starts with a fun bit of trivia – if you mesh his and Emil’s name, coming up with “Emil Faber,” can you guess in which movie that name appears? It turns out it’s from...
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Aug 2, 2017 · 49 minDavid Varadi - “Managing Risk is Absolutely Critical" | #64
In Episode 64, we welcome David Varadi from Blue Sky Asset Management. David tells us a bit about himself before he and Meb jump into investing. Meb starts by referencing a quote from Blue Sky’s website: “Unlike endowments, investors do not have an infinite time horizon. For this reason, we believe that a traditional strategic asset allocation approach based on modern portfolio theory is suboptimal. It makes more sense to adapt to changes in the economic environment. We favor a dynamic approach to asset allocation using market information to guide our investment decisions. Most importantly, we believe that a systematic, quantitative approach is necessary to avoid emotions and biases in decision-making.” Meb’s a fan of all the ideas in that quote, so he asks David to expound and discuss his general market framework. David tells us how it’s easy to be a buy-and-hold investor when market is going up; much harder so when the market is falling – especially when nearing retirement. Significant drawdowns can be devastating. So David tells us that “managing risk is absolutely critical.” Investors need to be able to adjust their strategies to handle a wide variety of market scenarios – bear markets, varying interest rate scenarios, and inflation. And “if you have a dynamic asset allocation, you have the ability to be more in tune with the market regime that is currently going on.” Meb asks David to dig deeper – what are the rules and frameworks in place that make his models dynamic? For David, much goes back to fundamentals, trend, momentum, and volatility. David starts with a strategic allocation that reflects longer-term assumptions. But what’s interesting is how David uses volatility in concert with trend/momentum, helping him know when to be in the market versus cash. Most people think time-series momentum is a binary decision, but David brings probabilities into the discussion. Meb then asks about the challenges a retail investor faces when trying to implement the strategies David has been discussing. A big challenge is tracking error. The more dynamic you are (moving away from buy-and-hold indexing), the more potential tracking error. Another issue is how often you trade. David tells us that the investor has to ask himself what is most important – does the investor want to reduce the drawdown in a 2008 scenario, and if so, is he willing to take the tracking error associated with that? Meb echoes this tradeoff between buy-and-hold versus active. It’s very hard to look “different” than the market and/or your neighbors when you’re underperforming. Next, Meb brings up another Blue Sky whitepaper, this one about retirees and risk. David hits the high points, discussing the challenges of volatility in retirement. There’s plenty more in this episode, including the new areas David is researching… David’s most memorable trade (one involves put options, the other Bitcoin)… And David’s one piece of investing advice to listeners, involving three mental “buckets” for your asset allocation. What are they? Find out in Episode 64. Learn more about your ad choices. Visit megaphone.fm/adchoices
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Jul 26, 2017 · 52 minGary Beasley & Gregor Watson - “We're Trying to Really Change the Way People Invest in Real Estate" | #63
In Episode 63, we welcome Gary Beasley and Gregor Watson, co-founders of Roofstock. If you’re one of our listeners who has written in requesting an episode on rental real estate, be sure not to miss this one. We start with some quick background on...
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Jul 19, 2017 · 59 minRon Lieber - “We're Not Having the Right Kinds of Conversations with Our Kids About (Money)" | #62
In Episode 62, we welcome journalist and author, Ron Lieber. Meb begins by congratulating Ron, as it was Meb's pregnant wife who read Ron's book about how parents should discuss financial matters with their kids, and promptly told Meb he needed to...
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Jul 12, 2017 · 59 minJack Vogel - “(Factor Timing?) It's Next to Near Impossible" | #61
In Episode 61, we welcome Jack Vogel, CFO/CIO of Alpha Architect, and the partner of Wes Gray, who you may remember as one of our earliest Meb Faber Show guests. After Jack tells us a bit about his background and how he came to be at Alpha Architect,...
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Jul 5, 2017 · 57 minWilliam Bernstein - “The More Comfortable You Are Buying Something, in General, the Worse the Investment It's Going to Be"
In Episode 60, we welcome the great William (Bill) Bernstein. Bill starts by giving us some background on how he evolved from medicine to finance. In short, faced with his own retirement, he knew he had to learn to invest. So he studied, which shaped own thoughts on the matter, which led to him writing investing books, which resulted in interest from the press and retail investors, which steered him into money management. After this background info, Meb jumps in, using one of Bill's books "If You Can" as a framework. Meb chose this as it starts with a quote Meb loves: "Would you believe me if I told you that there's an investment strategy that a seven-year-old could understand, will take you fifteen minutes of work per year, outperform 90 percent of financial professionals in the long run, and make you a millionaire over time?" The challenge is the "If" in the title. Of course, there are several hurdles to "if" which Meb uses as the backbone of the interview. Hurdle 1: "People spend too much money." Bill gives us his thoughts on how it's very hard for a large portion of the population to save. We live in a consumerist, debt-ridden culture that makes savings challenging. Meb and Bill discuss debt, the "latte theory," and the stat about how roughly half of the population couldn't get their hands on $500 for an emergency. Hurdle 2: "You need an adequate understanding of what finance is all about." Bill talks about the Gordon Equation, and how investors need an understanding of what they can realistically expect from stocks and bonds - in essence, you really need to understand the risks. Hurdle 3: "Learning the basics of financial and market history." Meb asks which market our current one resembles most from the past. Bill tells us it's a bit of a blend of two periods. This leads to a good discussion on how higher returns are more likely to be coming from emerging markets than the U.S. Hurdle 4: "Overcoming your biggest enemy - the face in the mirror." It's pretty common knowledge we're not wired to be good investors. So Meb asks the simple question why? And are there any hacks for overcoming it? Or must we all learn the hard way? Hurdle 5: "Recognize the monsters that populate the financial industry." Basically, watch out for all the financial leeches who exist to separate you from your money. Bill tells us a great story about being on hold with a big brokerage, and the "financial porn" to which he was subjected as he waited. There's way more in this episode: Bill's thoughts on robos... What Bill thinks about any strategy that moves away from market cap weighting (Bill thinks "smart beta" is basically "smart marketing")... How buying a home really may not be a great investment after all... Cryptocurrencies... and even Meb's "secret weapon" of investing. All this and more in Episode 60. Learn more about your ad choices. Visit megaphone.fm/adchoices
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Jun 28, 2017 · 1 hr 5 minRadio Show: The Death of Value Investing | #59
Episode 59 is a radio show format. This week we're diving into some of the recent market stories which Meb has found most interesting. We also bring back some listener Q&A. We start with a Tweet from Cliff Asness, in which he rebuffs a Bloomberg...
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Jun 21, 2017 · 1 hr 1 minAxel Merk - “Is Your Portfolio Robust Enough for Whatever Might Be Coming Your Way?" | #58
In Episode 58, we welcome Axel Merk from Merk Investments. After a bit on Axel's background, the guys jump in, discussing the Fed's decision to raise interest rates today (recorded on Wed 6/14/17). Axel discusses how the Fed has announced the...
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Jun 14, 2017 · 1 hr 31 minRadio Show: Meb's 17 Different Million-Dollar Fintech Ideas | #57
Episode 57 is another "radio show" format, yet this one is different than our others. In this episode, Meb discusses his 17 different "million-dollar" fintech ideas. In essence, Meb has had various business ideas over the years which he's wanted...
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Jun 7, 2017 · 55 minDave Nadig - “This is a Big Year for ETFs" | #56
In Episode 56, we welcome Meb's good friend, and CEO of ETF.com, Dave Nadig. Per usual, we start with some background information. Dave tells us about his early days in the investment industry, starting a consulting firm that was working on a then-new idea: fee-only financial advising. His first client was a little shop that went on to become none other than BlackRock. After some professional twists and turns, including running money for a while, Dave ended up at ETF.com. Meb then dives in by referencing an article Dave wrote toward the end of last year, called "Outlook for ETFs in 2017." There were several key points in the article which Meb thinks can help provide a general, 30-thousand-foot overview of the ETF space. The first point - ETF flows. Dave tells us "this is a big year for ETFs." He then takes us through a quick recap of the evolution of ETFs, going from a purely institutional product back in its early days, to something embraced by investment advisors, to an investment vehicle for retail investors. And here we are now, somewhat full circle, with ETFs even more embraced by institutions (think endowments), only now, they're no longer held as fringe investments, but as core holdings. Meb asks at what point ETF assets will surpass mutual fund assets. Meb had predicted within about 10 years back in 2013. Dave tells us there will always be a demand for mutual funds - that said, he believes the cross will happen around 2025, with asset levels around $14 trillion. Meb asks if the evolution in the ETF space today is primarily a movement from higher fee to lower fee. David believes this is the case. Most of the new flows are going toward low-cost vanilla products. Dave thinks the whole active/passive debate misses the point - it's really about cost. This dovetails into another business/investment idea Meb has that he's offering to any listener willing to pursue it. Next, Meb brings us back to Dave's 2017 Outlook piece, this time bringing up "ESG."(This stands for "environmental, social and governance" for anyone unaware.). Dave believes that we're near/in the greatest intergenerational wealth transfer in history. And the 40-year-olds that are inheriting, say, a $5M portfolio from their 70-80-year-old parents have different desires about what to do with that money. Dave tells us that this younger generation wants their money to do something - and this usually gets labeled ESG. So Dave believes we'll see more funds targeting this wealth transfer. As usual, there's plenty more in the episode: exchange traded notes... the regulatory change Dave would like to see... buying ETFs at NAV... Dave's one piece of advice offered to help listeners the most... and Dave's answer to a new question: since Dave is a big "game" lover, Meb asks which three games are his top 3 of all time. What are they? Find out in Episode 56. Learn more about your ad choices. Visit megaphone.fm/adchoices
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May 31, 2017 · 1 hrEd Easterling - “In Reality, Normal is Actually Volatile. Normal is Not Mellow" | #55
In Episode 55, we welcome Ed Easterling. Meb starts by referencing a survey he just conducted, asking readers’ opinions as to the single best investing book out there. It turns out that Ed’s book, , made the top 50 list, so Meb offers Ed a kudos....
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May 24, 2017 · 46 minElizabeth Dunn - “How Can I Use My Money Most Effectively in Order to Promote My Happiness?" | #54
In Episode 54, we welcome Elizabeth “Liz” Dunn, author of the book, “Happy Money: The Science of Happier Spending”. Meb suggests they walk through the book using its five broad takeaways as their outline. But before they dive in, he asks Liz about her inspiration for writing the book. Liz tells us that when she began making a “real, grown up” salary, she wasn’t entirely certain what to do with it. She was curious how to use it most effectively to promote her own happiness. Interestingly enough, there wasn’t a great deal of research on the topic. Next, Meb asks Liz to discuss her first main finding (and likely the best-known finding) – our happiness tends to increase when we spend money on experiences rather than things. Liz gives us the key takeaways, after which Meb asks why buying experiences over things is hard for us, when we know that’s what we should do. Meb and Liz soon move on to the second takeaway from the book: “make it a treat.” One of the greatest misunderstandings of happiness is the idea that if something makes us happy, then more of it should make us even happier. Apparently, that’s not the case. Whether we’re talking someone’s salary or a little luxury like “avocado toast” (Meb and Liz are both big fans), when we have more of it, this can erode our capacity to appreciate it. This dovetails into the discussion of the salary “line in the sand” above which added dollars has diminishing impact on real happiness. Liz tells us that in the U.S., this figure is about $75K. But she mentions it with an interesting context… There are two “flavors” to happiness: 1) the kind that comes when you evaluate a question like “am I living the kind of life I want to live?” and 2) the kind that comes when you ask “did I laugh or smile yesterday?” If you’re making more money – well beyond $75K, you’re more likely to answer #1 in an affirmative way. Sure, as you jet off to Bora Bora and evaluate your life, you’re likely to feel good about having the wealth to enable such a trip. However, it turns out this added wealth has very little effect on the second type of happiness – day-to-day happiness. The third takeaway is “buying time.” What are we actually doing with the minutes of our lives? Is there a way to trade our money for more time? Liz and Meb discuss spending an hour commuting to work every day, and how miserable that makes people. Wherever appropriate, it makes sense to spend money on things/services/people that can give us back our time, which we can then spend with loved ones or volunteering, etc. The fourth takeaway is “pay now, consume later.” This is hardly the way our culture does things, with its credit card mentality. Unfortunately, consuming first and paying later is exactly the wrong thing for happiness. Liz and Meb discuss this in detail, dovetailing into the toxic effects of debt. The final takeaway is “invest in other people.” Liz has found that we tend to be happier when we spend our money on other people, more so than ourselves. In supporting this takeaway, she tells us of her study in which she gave people either a $5 or $20 bill, and asked them to spend it by the end of the day – the caveat was that some people were asked to spend it on themselves, while others were asked to spend it on other people. Liz’s team followed up at the end of the day, calling the participants, and found that those who spent the money on others reported feeling happier than the people who’d spent it on themselves. There’s plenty more in this episode, including Liz’s next research project, discussion of Syrian refugees, what prompted a classic Meb-meltdown as a child, and finally, Meb’s pointed question to Liz: If I put you on the spot and asked you to give us one single piece of advice for achieving more happiness, what would it be? What’s Liz’s answer? Find out in Episode 54. Learn more about your ad choices. Visit megaphone.fm/adchoices
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May 18, 2017 · 1 hr 1 minRadio Show: Cheapest Countries Right Now for New Dollars | #53
Episode 53 is another “radio show” format. This means we tackle a handful of topics from Meb’s blog and tweets. TOPIC 1 – VALUATIONS 3 DIFFERENT TAKES ON CURRENT VALUE PICTURE: Meb’s recent blog post “A Bar Too High” indicated that for...
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May 17, 2017 · 53 minJason Hsu - “This is a Market Where the Average Human Tendencies Are Precisely the Wrong Thing to Do" | #52
In Episode 52, we welcome Jason Hsu, joining us all the way from Taipei. We start with a bit of background on Jason and his company, Rayliant, which is a spinoff off Research Affiliates. Listeners might recognize the name Research Affiliates, as it...
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May 10, 2017 · 52 minMark Kritzman - “We Have to Question the Assumptions that Underpin Our Models... Nothing is Simple" | #51
In Episode 51, we welcome Mark Kritzman. Per usual, we start with Mark’s background. He tells us a bit about his 40-year career in investing, leading to Windham, where he focuses on asset allocation and risk premia strategies. But it’s not long...
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May 3, 2017 · 1 hr 9 minRadio Show: Faber Spin-Off Executed | #50
Episode 50 is a return to our “radio show” format, in which we discuss current market news, Tweets Meb finds interesting, various research papers of note, and anything else on Meb’s mind. But first things first: A huge congratulations to new...