The Meb Faber Show - Better Investing Folgen

Episode 11 features the always-fun Sam Stovall. Sam starts by making an unlikely connection between Clint Eastwood and investing – “A man’s got to know his limits.” Being aware of his own limits, Sam put together a list of rules to help him win at the game of investing. He and Meb dive in, starting with “Let your winners ride, cut your losers short.” Easier said than done, as most of us tend to hold onto our losers, hoping they’ll come back, while selling the winners (prematurely) to lock in gains. “As January goes, so goes the year” is Rule #2. Sam compares investors to dieters looking for a fresh start every year. Rule #3 is a tweak on “Sell in May then go away.” It turns out that’s almost right, but not quite. The better strategy is “rotate rather than retreat.” Do you know the two sectors which historically will boost your returns if you’ll rotate into them during the summer months? Sam will tell you. Rule #4 challenges the idea that there’s no free lunch on Wall Street. According to Sam, there is. If you construct your portfolio in the right way, you can increase your returns without a commensurate increase in risk. “Don’t get mad, get even” is Sam’s fifth rule. Too many investors are losing money because their portfolios are overweight in a few bad picks. So don’t get mad, “get even.” In other words, look to shift your weightings to correct the imbalance. Rule #6? “Don’t fight the Fed, at least, for too long.” For all you bears over the last few years, this seems especially appropriate. Finally, #7 is Meb’s favorite: “There’s always a bull market someplace.” It turns out Sam and Meb share a fondness for rules-based investing. Sam has his own rules which help him identify these bull markets that are always happening someplace. What are they? Find out in Episode #11. Learn more about your ad choices. Visit megaphone.fm/adchoices

Episode #10 is our second “Listener Q&A” episode. This time, instead of spending the entire episode answering one question, Meb tackles many. Here’s a sample of a few of the topics you’ll hear him address: - How should young investors balance low expected returns (ZIRP, U.S. CAPE, etc) with the need to invest young/early? - How much should you allocate to your best idea or opportunity? You hear Charlie Munger talk about betting big on great opportunities. What is “big”? - I get the gist of your global asset allocation strategy, but I’m not an expert on it. Does my lack of knowledge make it dangerous for me to invest this way since I don’t fully understand it? (As opposed to Peter Lynch’s mindset of “buy what you know.”) - What does your (Meb’s) ideal portfolio look like right now? - I’ve stayed away from low volume/liquidity ETFs I would like to own because volume is basically non-existent. Is that fear unfounded? There are many more questions and answers, which dovetail into different topics including Meb’s thoughts on investing in private businesses, as well as several new business ideas which Meb would love to see an entrepreneur tackle. What are they? Find out on Episode 10. Learn more about your ad choices. Visit megaphone.fm/adchoices

“Do I have enough to fund my retirement?” “What’s the optimal lifetime asset allocation?” Those two questions, stemming from a recent academic paper written by Pete, help launch Episode 9. The answers point toward Pete’s solution for retirement challenges, something called “goals-based” asset allocations (as opposed a singular, static “all-in,” asset allocation applied to your entire capital base). In other words, your specific goal – say, college tuition, a second home, maybe a trust – dictates the asset allocation of the associated, earmarked funds. From there, Meb and Pete transition to a discussion on factor-based investing, starting with “term” and “market” factors. According to Pete, “Ninety-five, ninety-six percent of the return variation of all managers and funds in the Morningstar database are explained by…basic factors.” Meb then asks, “What are the best diversifiers to a traditional portfolio?” Hint: Pete’s response includes Meb’s “desert island” strategy. They then discuss whether individual smart beta factors such as “value” should be evaluated relative to their own historical valuation. Your own answer will likely reflect whether or not you believe markets are mean-reverting, a topic often debated. They then touch upon risk factors as applied to REITs before diving into a discussion of the Yale Endowment allocation. Pete tells us that Yale’s outperformance over the decades really boils down to just one thing: exposure to venture capital. The rest could be replicated in a factor-tilted portfolio. They wrap up with a reader question: “How do you know when your strategy no longer works?” Find out Meb’s and Pete’s answers in Episode #9. Learn more about your ad choices. Visit megaphone.fm/adchoices