Episode 120 -- Mebane Faber (72:32)

Biotech equity analyst [which firm?] while going to grad school
Moved to LA in 2006
Started Cambria 2007
Chatted about stocks with his father growing up
Worked for a CTA
Interested in trend following
[What is Cambria? Research maybe? Not clear....]
Money management, ok they have mutual funds
Enjoys skiing
Everything they do is rule-based, quantitative
Value investing + trend following the ideal
Mutual fund managers skim 1.25% [How much does Cambria skim?]
Fund managers know their product is expensive and tax-inefficient, so they don't buy it
Triumph of the Optimists (his favorite book)
Global Investors Yearbook by Credit Suisse (great, free resource)
5-2-1 Rule ... Stocks 5% Bonds 2% Bills 1% (real long-run returns)
Market-cap-weighted indexes, price of the stock times shares outstanding
US is half of world market cap
Home country bias, gives you concentration risk
[Does Faber have a CFA?]
Maybe 20% of the stocks contribute all the positive returns
It's the best time to be an investor in the history of investing (low cost portfolios)
Robo-advisors -- re-balance for you, tax-manage them for you
Fund business very predatory, high fees, tax inefficient
There are even ETFs now that have a negative expense ratio
Index funds -- market-cap-weighting, low turnover, low cost
Change weighting methodology, you'll outperform market-cap-weighting
Start with US 60-40, then add global, then add real assets
Then move away from market-cap-weighted to momentum (trend following) and/or value
Wealthfront, Betterment [never heard of them]
Most people don't have a written investment plan
Emotional component of long-term investing the hardest, people panic
January 2000 the AAII survey was at its most bullish ever (greed)
March 2009 the AAII was at its most bearish ever (fear)
Why pay an advisor 1% a year? [Big expense best avoided]
10-year PE ratio as anchor, gives you common sense check (CAPE ratio)
Japan was half of global market cap in the late 1980s
Correct mathematical choice is to invest all of your money right now (global multi-asset class portfolio)
Rebalance tax efficiently
Afraid he's putting listeners to sleep
Taxes (high turnover) and fees (high fees) way more important than asset choices
Hedge funds sexy but taxes and fees are killer
Average mutual fund fee 1.25% would kill the best performing portfolio to worst performing over the long term
People should think about fees (and taxes) and almost nothing else
People struggle with their emotions the most
They don't teach personal finance or investing in high school or college
They don't teach how to manage money in school
Mutual fund salad -- people hold 30 funds ... just sell everything and start over (consider taxes)
People outside US esp. killed by fees (no Vanguard)
www.mebfaber.com
Twitter: @mebfaber