The Meb Faber Show - Better Investing Folgen

If you’re ready to dive straight into the deep end, Episode 26 is for you. The guys waste no time, starting off with complicated topic of currencies. Jeremy takes issue with the currency-stance belonging to some former, unnamed Meb Faber Show guests. Specifically, he challenges the idea that currency hedging is expensive. Not true, he says. It’s only “selectively” expensive. You can actually get paid to hedge certain currencies. He gives us more details, leading to his overall takeaway: You should be hedged a lot more than you are. Meb then asks about any rules that might be applied when using a dynamic currency-hedging strategy. Jeremy gives us his thoughts, telling us when we want to be hedged versus when we don’t, as well as two good signals to use – interest rate differentials and momentum. Where are we overall today? Well, Jeremy says that there is no country so cheap that his shop would take their hedge ratio to zero. Eventually, Meb switches the topic to factor investing. Jeremy gives us his take, noting that minimum vol is where things are most expensive. The guys then discuss factor investing as it pertains to the bond space – in essence, moving away from market cap weightings. Why is that important for bond investing? Well, do you want to give the most weight to the countries issuing the most debt? Unlikely, but that’s how market cap weighting works with bonds. Next, Meb steers the conversation toward liquid alts, specifically managed futures. That’s followed by a great discussion on corporate buybacks. Gotta watch out for that dilution from new share issuance. Interestingly, it turns out that buybacks are largely a U.S. phenomenon. Jeremy agrees, but points out some spots around the globe where that might be changing. As we near the end of the show, Meb asks about the opportunities Jeremy sees going forward. His response in a nutshell? “People are underinvested overseas.” There’s plenty more, including an asset class that is coming up on being down a whopping six years in a row, as well as how Meb hacked a VPN service that enabled him to watch the last Super Bowl from a tiny village in Japan. How’d he do it? Find out in Episode 26. Learn more about your ad choices. Visit megaphone.fm/adchoices

We have some great guests lined up in the coming weeks, so we figured we’d squeeze in another Q&A episode. This week, Meb is back from traveling yet again, this time to The Caymans. The show starts with Meb giving us highlights from the trip, as well as one low-light (waking up one morning to find a welt on his head, and hoping it isn’t Zika). This transitions into a topic recently covered in one of Meb’s blog posts; of all the animals that people find most terrifying, lions and sharks are near the top of the list. But statistically, lions and sharks are responsible for only a tiny amount of human deaths per year. You know what kills 725,000 humans per year – yet few fear (until recently)? Mosquitos. Similarly, many investors are terrified about the outcome of the U.S. Presidential election. But this election isn’t likely to “kill” a portfolio. On the other hand, you know what is? The mosquito known as “fees.” Eventually, the conversation gravitates toward listener questions. A few you’ll hear Meb tackle are: -         What are some of the best ways and resources to learn about markets and investing?   -         (Dovetails into…) Why don’t we hear Meb discuss single-stock fundamental analysis more often?   -         What does the typical day look like for Meb and other successful investment professionals? Habits? Amount of reading? How much sleep? And so on…   -         How does an investor tell the difference between an investment strategy that’s simply “out of favor” (and therefore, underperforming) versus a strategy that has truly lost its effectiveness (and underperforming)?   -         One of the variables in Bogle’s formula for estimating returns is dividend yield. Why wouldn’t you substitute shareholder yield instead?   -         What are the pros/cons of protecting the downside by buying puts versus using trend following?   -         Assuming an investor is a huge risk taker and can handle it, should he put all his money in the asset class with the highest expected return – for instance, be “all in” Russia? As usual, there’s lots more, including Meb’s upcoming travel schedule. He’s going to be in Orange County, New York, Richmond, and D.C., so drop him a line if you’ll be in the areas. All this and far more in Episode 25. Learn more about your ad choices. Visit megaphone.fm/adchoices

Episode 24 brings us back to our most controversial episode format: the “solo Meb” show. Listeners seem to either love and loathe this style of show. If you fall into the “loathe” camp, it’s a short episode so the pain is limited. But hopefully you will listen, as Meb dives into the fascinating, and possibly timely, subject of bubbles. The quick takeaway? Using a trend following approach would have helped you reduce drawdowns as popping market bubbles ravaged portfolios. And this would have helped you achieve investing’s main goal: surviving another day. Meb then dives in, first defining bubbles, then referencing three of the most famous bubbles in history: the South Sea Company bubble, the Mississippi bubble, and the Dutch tulip mania, each of which saw drawdowns of 90%. Meb dives deeper into the South Sea Company bubble. In short, the South Sea Company was a huge pump-and-dump scheme – catching none other than Sir Isaac Newton in its carnage. From here, Meb discusses strategies for capturing the upside of bubbles while protecting yourself from the fallout. One solution? Trend following, using the 10-month simple moving average. It does a great job of reducing volatility and drawdowns, and improving returns. Meb ends the show by revisiting the South Sea Company bubble, this time putting an actual figure on Newton’s losses, and comparing them to what a trend follower would have made. What’s the difference? Find out in Episode 24. Learn more about your ad choices. Visit megaphone.fm/adchoices