Mebisode – Red Light | #418

The Meb Faber Show - Better Investing

The Idea Farm

Business, Investing, Management

4.7 • 938 Ratings

🗓️ 25 May 2022

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

In this Mebisode, Meb reads his post from February 2022 titled “Red Light," which discussed the risk of an expensive market entering a downtrend. As he said in the piece, "historically speaking, markets have performed poorly when in a downtrend, characterized by higher volatility and drawdowns." ----- Follow Meb on Twitter, LinkedIn and YouTube For detailed show notes, click here To learn more about our funds and follow us, subscribe to our mailing list or visit us at cambriainvestments.com ----- Today’s episode is sponsored by The Idea Farm. The Idea Farm gives you access to over $100,000 worth of investing research, the kind usually read by only the world’s largest institutions, funds, and money managers. Subscribe for free here. ----- Interested in sponsoring the show? Email us at [email protected] ----- Past guests include Ed Thorp, Richard Thaler, Jeremy Grantham, Joel Greenblatt, Campbell Harvey, Ivy Zelman, Kathryn Kaminski, Jason Calacanis, Whitney Baker, Aswath Damodaran, Howard Marks, Tom Barton, and many more. ----- Meb's invested in some awesome startups that have passed along discounts to our listeners. Check them out here! Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome to the Mebb Favor Show, where the focus is on helping you grow and preserve your wealth.
0:11.0	Join us as we discuss the craft of investing and
0:13.5	uncover new and profitable ideas all to help you grow wealthier and wiser. Better
0:17.4	investing starts here.
0:19.4	Meeth Faber is the co-founder and chief investment officer at Cambria Investment Management.
0:23.4	Didn't industry regulations, he will now discuss any of Cambra's funds on this podcast.
0:27.1	All opinions expressed by podcast participants are solely their own opinions and do not reflect the
0:30.8	opinion of Cambria Investment Management or its affiliates.
0:33.4	For more information, visit cambria Investments.com.
0:37.0	Today's episode has the ominous title, Red Light. Let's begin.
0:45.0	When the facts change, I change my mind. What do you do?
0:49.0	Though there's debate about who originally said this, or if the phrasing is accurate, popular opinion gives credit to John Maynard Keynes.
0:56.0	In any case, it's relevant today because the facts have changed for investors, and that points towards an important question each of us would be wise to answer as soon as possible.
1:05.0	What are you going to do now?
1:07.0	I'll explain exactly what's changed in a moment.
1:09.0	First, let's establish some context.
1:11.0	The two primary pillars upon which we build portfolios are value and then on the other side momentum and trend.
1:18.0	Specifically, our main value framework is the shareholder yield strategy that invests in stocks trading at what we consider to be attractively
1:24.6	low valuations relative to their price and then also distributing their cash flows to shareholders.
1:30.5	On the other hand, we implement global momentum and trend strategies.
1:34.0	It seeks out the highest global momentum assets that are also in an uptrend regardless of valuations.
1:40.0	Sometimes value and trend tend to line up.
	...

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