Oct 1, 2020
Think Globally When Looking for Stocks to Invest In w/ Meb Faber
- BRT S01 EP 35 10-04-20
Things We Learned This Week
- Investment Plan – write it down and stick to it, give yourself rules and guard rails
- Allocation – Global Stocks, Global Bonds, Global Assets (Real Estate, Commodities, etc)
- Talmud Portfolio – 2000 year old strategy – 1/3 of $ in land, business, reserves
- Invest With the House – monitor the 13F of big investors to get ideas
- Market Cycles – importance of identifying them, to know where you are at when investing to avoid Bubbles and Mania
Guest: Meb Faber at Cambria Investments https://www.cambriainvestments.com/
Website / Blog / Books: https://mebfaber.com/
Twitter: https://twitter.com/mebfaber
Book Recs / Investing Info: https://mebfaber.com/reading-list/
Meb Faber takes us on an in depth discussion on investing, doing your research, Quant investing, and looking at stocks outside the US to diversify your portfolio. Why following the big investors 13Fs, aka Invest with the House, can reap benefits and ideas. He is a historian on investing and always crunches the numbers and data.
Mr. Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management. Faber is the manager of Cambria’s ETFs and separate accounts. Mr. Faber is the host of The Meb Faber Show podcast and has authored numerous white papers and leather-bound books. He is a frequent speaker and writer on investment strategies and has been featured in Barron’s, The New York Times, and The New Yorker. Mr. Faber graduated from the University of Virginia with a double major in Engineering Science and Biology.
He has written multiple Books on Investing – Global Asset Allocation, Global Value, Invest With the House, Shareholder Yield, Ivy League Portfolio, The Best Investment Writing
You can Download some for Free here: https://mebfaber.com/books/
Notes:
Written Investment Plan, and stick to that plan
Learn thru experience what your real risk tolerance is when you actually lose $
Do you have the fortitude to stick to your investing plan, when the stock has a 50% draw down
Investment Market History – over a 200 year period to give you guide posts
Expectations of returns that are more realistic, to avoid disappointment
Market Cycles – living thru cycles to identify them
Long Term Investment Horizon - 10 to 20 years, downturns in stocks, bonds, gold can last years
Example – you expect to stay in your house for 10 – 20 years
Short term leads to chasing returns and bad behaviors
Deep Research on Investments, Quant analysis and review the numbers to avoid biases
Allocation – Global Stocks, Global Bonds, Global Assets (Real Estate, Commodities, etc)
Meb book rec: Triumph of the Optimists – historical review of market returns, also Jim Rogers books
Home Country Bias – most people in US invest 80% in US stocks, look globally ( and allot 50% to US)
Diversify Worldwide – research European or Japanese stock market for ideas
Biggest Stocks hit a size that will have trouble going forward growing bigger (got from $1 tril, to $10 tril size), also have a target on your back, biggest stocks over time will underperform the index
ETFs – worldwide and foreign markets
Invest with the House – monitor the 13F of big investors for ideas, institutional investors with $100 mil in assets must do a quarterly filing of stocks they hold (45 days after)
Analysis Paralysis – Simplicity is important, have an easy strategy
Talmud Portfolio – 2000 year old strategy – let every man invest 1/3 of $ in land, business, reserves
Meb modern translation – stocks, real assets, cash & bonds
Hard to beat strategy, can buy ETFs at low cost, and re-balance
Monitor details of taxes and fees, be defensive - Diversify your net worth to business, land, etc.
Start investing at a young age, save $ and stay invested, focus on low fees
Then Advanced Strategies of Value Investing, Trend Following, Tail Risk, etc.
MB on legendary investor, Howard Marks of Oaktree and his Memos, in particular, Market Cycles. The importance of understanding Cycles, and how to identify them in investing. A look at market history, and investor psychology all connected to Market Cycles.
Per Investopedia – Market Cycle
The four stages of a market cycle include the accumulation, uptrend or markup, distribution, and downtrend or markdown phases.
- Accumulation Phase: Accumulation occurs after the market has bottomed and the innovators and early adopters begin to buy, figuring the worst is over.
- Markup Phase: This occurs when the market has been stable for a while and moves higher in price.
- Distribution Phase: Sellers begin to dominate as the stock reaches its peak.
- Downtrend: Downtrend occurs when the stock price is tumbling down.
Examples – Tech Stock Bubble of 2000, Financial Crisis of 2008 (Housing Bubble), Pandemic of March 2020, Railroad Speculation mid-1800s, Great Depression 1929
Howard Marks quotes overheard in a Bubble: ‘This time it is different.’ ‘The market can’t fail.’
The market does not always go up, there is Regression to the Mean – prices will eventually go down and even out. Be leery when there is euphoria in the market (be fearful), and maybe sell. Then buy after, post crash at depressed pricing levels. Buy Low, Sell High. Even a depressed asset can be attractive at the right (low) price.
Michael Lewis book – Big Short on the Financial Crisis of 2008
Howard Marks Memos: https://www.oaktreecapital.com/insights
Books: Here (The Most Important Thing, Mastering the Market Cycle)
Bio (c/o Wikipedia) - https://en.wikipedia.org/wiki/Howard_Marks_(investor)
Howard Stanley Marks (born April 23, 1946) is an American investor and writer. He is the co-founder and co-chairman of Oaktree Capital Management, the largest investor in distressed securities worldwide. In 2020, with a net worth of $2.1 billion, Marks was ranked No. 391 on the Forbes 400 rankings of the wealthiest Americans.[2] Marks is admired in the investment community for his "memos", which detail his investment strategies and insight into the economy and are posted publicly on the Oaktree website. He has also published 3 books on investing.[3][4] According to Warren Buffett, "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book."[5] Funds led by Marks have produced long term returns net of fees of 19% per year. Investors are primarily pension funds and sovereign wealth funds.
Investing Topic:
https://brt-show.libsyn.com/category/Investing-Stocks-Bonds-Retirement
Best of – Investing: https://brt-show.libsyn.com/size/5/?search=best+of+investing
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