The Meb Faber Show - Better Investing Folgen

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 read it and get Ron on the podcast. Turning attention to Ron's book, "The Opposite of Spoiled," Meb begins by asking about Ron's motivation for writing it. Ron tells us there were three factors: one, a pointed question from his three-year-old ("Daddy, why don't we have a summer home?"); two, the focus of Ron's writing at work (young people who borrow vast sums of money to pay the huge college tuition bills); and three, his own situation as a teen, having seen the collegiate financial aid application process thanks to his mother. All of this together led Ron to the conclusion that "we're not having the right kinds of conversations with our kids about this stuff." Meb mentions how it's a shame that they don't teach personal finance in high school, which makes it all the more important that parents have these discussions with their kids. Unfortunately, many parents are reluctant. Meb asks Ron why this is so. Ron points toward shame. Perhaps parents are ashamed they don't know the answers to the questions (maybe they don't have a firm grip on finances themselves), or maybe they're ashamed at how much (or little) they earn, or at how they earn their money. The conversation drifts toward a piece of advice in Ron's book; it's the suggestion that when facing a question from a child, the parent might ask "Why do you ask that?" The reason this is helpful is that many times, the stated question isn't really want the child wants to know. Questions like "how much do you make?" are rooted in fundamental questions such as "Mom/Dad, are we okay here? Is our family normal?" Meb brings up the four things spoiled kids have in common from Ron's book and asks for some commentary. Ron tells us that, ironically, these spoiling factors have almost nothing to do with actual money. They are: one, not having any rules for kids; two, if there are rules, not enforcing them or having consequences; three, smoothing out the path in front of kids and making sure they never face any challenges; and four, allowing kids to grow up without any context for how lucky they are for their opportunities – no gratitude, and instead, an attitude of entitlement. This dovetails into a great conversation about chores, which points toward allowances. Ron suggests dividing allowances into three buckets: savings, spending, and giving. The specific allocations will likely reflect the values the parent is looking to instill (for instance, if a parent wants to focus on giving, the allowance amount can reflect what the parent believes is an appropriate amount the child should skim off the top for "giving"). There's way more in this episode, and if you're the parent or grandparent of a young child, you don't want to miss this one. You'll hear more about the conditions that lead toward materialistic kids and how to avoid them... Unique ways to deal with things like a visit from The Tooth Fairy... How to handle kids wanting cell phones (do you know how long Bill Gates made his kids wait before buying them a cell phone? You'll find out)... And how to use a great tool called "The Fun Ratio" to help your kids make better spending decisions. What is it and how does it work? Find out in Episode 62. Learn more about your ad choices. Visit megaphone.fm/adchoices

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, Meb jumps in, starting with "factors" - specifically, the value factor. Meb asks about Jack's value philosophy in general, and how he creates a value portfolio. What follows is a great look at how a professional portfolio manager/asset allocator creates a portfolio. Using quantitative tools, Jack starts by constructing the universe of potential assets to include, keeping in mind scale. Next, Jack applies some forensic accounting in order to exclude certain toxic assets that one wouldn't want in a portfolio. Then, he screens for value. Jack likes using enterprise multiples. Finally, he looks for "quality." These are things like free cash flow, margin growth and marketing stability. Meb then points the conversation toward momentum investing. Jack offers us a general overview first, noting how momentum investing can be really beneficial for value investors. He also makes the point how it's definitely different than growth investing. In discussing creating a momentum portfolio, Jack discusses adding seasonality (which means addressing when to rebalance) and quality. On the topic of quality, Jack gives us a great example of what it means in the context of earnings; it involves two stocks, one of which is flat for an extended period, but then explodes in value in a short amount of time, versus the other that experiences the same growth, but gradually and consistently over the entire period. Which earnings are more "quality"? Jack gives us his thoughts. Next up is Alpha Architect's great tool, Visual Active Share. It's a wonderful way for investors to compare the holdings of an ETF to its benchmark index. Investors can use this to see just how "different" the ETF in question truly is. After all, you don't want to be paying too much in fees for an ETF that's really just a closet index fund. The guys discuss whether there's a particular number for what "good" active share is, as well as the challenge of tracking error as you grow more "different." As usual, there's a great deal more in this episode: Alpha Architect's new value, momentum, trend ETF... A discussion of the state of robos... What new tools Jack and his crew at Alpha Architect are working on now in order to help investors pull back the curtain on various funds... And of course, Jack's most memorable trade - it was the last individual stock he owned, which he now refers to as 'The Titanic.' What was the stock? Find out in Episode 61. Learn more about your ad choices. Visit megaphone.fm/adchoices

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