How to Spot Bubbles, Avoid Market Crashes & Earn Big Returns | Mebane Faber | Talks at Google

Investment bubbles and speculative manias have existed for as long as humans have been involved in markets. Is it possible for investors to identify emerging bubbles and then profit from their inflation? Likewise, can investors avoid the bursting of these bubbles, and the extreme volatility and losses found in their aftermath to survive to invest another day? Over 70 years ago, Benjamin Graham and David Dodd proposed valuing stocks with earnings smoothed across multiple years. Robert Shiller later popularized this method with his version of the cyclically adjusted price-to-earnings (CAPE) ratio in the late 1990s and correctly issued a timely warning of poor stock returns to follow in the coming years. We apply this valuation metric across more than 40 foreign markets and find it both practical and useful. Indeed, we witness even greater examples of bubbles and busts abroad than in the United States. We then create a trading system to build global stock portfolios, and find significant outperformance by selecting markets based on relative and absolute valuation.
Meb will also speak about 13-f research, and "hacking the hedge funds".
Mr. Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management. Faber is the manager of Cambria's ETFs, separate accounts and private investment funds for accredited investors. Mr. Faber has authored numerous white papers and three books: Shareholder Yield, The Ivy Portfolio, and Global Value. 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.

[@susannnico]

The most important thing that should be on everyone's mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stocks, Gold, silver and digital currencies.

[@lailaalfaddil7389]

That's so true. but if i may ask, do you trade all by yourself?

[@itrthho]

We need an update from Mr. Faber.

[@3377ftw]

especially now! lol

[@danguee1]

Especially as his fund has underperformed the market by 145% since inception - ie gone DOWN 7% in just under 8 years. He has some 'updating' - make that 'explaining' - to do.......

[@hl3641]

He is underperforming as most “I-know-it-all” wall st BS-er

[@SlowBrewFinance]

@@danguee1 The problem is that he takes a historical view of the market, and 8 years is a blip in the radar. Also, which fund are you talking about. Each one has different benchmark, and none should be the S&P.

[@chiranjeevdesai713]

'Extremely expensive' S&P 500 has doubled since his speech. Most other country indices that he said were 'cheap' have given negative returns.

[@user-yl7kl7sl1g]

He was correct about Russia. But you're right, this further proves that there's no point in trying to time the market and what strategies worked in the past, won't work in the future because the market adapts.

[@tianmu5507]

Morden Monetary Theory.

[@johnofmalta]

@desai As per usual you’re missing the point entirely. That’s okay you’re human which makes you human. Get what Mr Meb is saying/trying to say and not be the clever THAT guy which is to say smart investing is inherently contrarian: most everybody will be wrong. As a fan of Mr Meb who would never invest with him because of the execution or just an instinctual sense. JoM

[@danguee1]

@@johnofmalta His fund GVAL has underperformed the market by 145% since inception - ie gone DOWN 7% in just under 8 years. But I'm glad you're clever enough to see the 'benefit' in that and that other people who can spot the obvious flaw in that, stupid......

[@jacobprice2579]

“Nobody, knows, nothing!” Best quote about investing I’ve ever heard.

[@freetrailer4poor]

Wow, Thumbs Up, Way Up!

[@kirandeepatwal6280]

Value investing works but in very very long term. ☺️ Mutual fund cannot afford two to three years of underperformance. Individual investors can but those people neither have time nor business acumen to do this

[@batrarohit1]

Well said. Any fund manager that tilts heavily towards a ‘value’ country or sector and underperforms will lose investors, deal with complaints all day. You need serious mental discipline and long term thinking.

[@Martin-qb2mw]

mutual funds have underperformance every single year all the time. it doesn't stop them from suckering in new buyers.

[@pasticcinideliziosi1259]

fantastic talk, thank you!

[@eugenelogan3106]

thank you for a brilliant talkMeb. I heard about you from TIP the investor podcast. the only thing or part we unable predict is a human behavior in my humble opinion.

[@imlkr_]

Another listener of the TIP!!

[@shaunfrendo4616]

I think this guy should have played Ryan Gosling in the big short

[@20775046]

this is a whole regurgitation of Robert Schillers Yale lecture

[@vonb2792]

vI loved this guy talk, cause he touches alot of my market analysis guidelines, the market psychology and value investors behaviour, Trends etc. It's pretty relevant in our current Covid19 Market. Usually, Stocks/Sectors who underperformed for years become trends... Look that the USA Market, from 2001 to 2008... the USA market had Negative Turns... Now the USA is the Holy grail of returns from 2012 to 2020...

[@StonkSlayd]

one of the best stock lectures of google. bring him again.

[@george6977]

Simply subscribe to The Meb Faber Show KZbin’s, The Chart Book, episode 9 from 2 weeks ago is an updated version of this lecture.

[@hl3641]

Lol… bet u r broke

[@rexmundi273]

Current S&P 500 Shiller PE Ratio: 37.44 Current S&P 500 PE Ratio: 42.47 April 22, 2021

[@chrisf1600]

Great talk. I stumbled across Meb's research a few years ago and I was hooked. Very smart guy. He has a great podcast too !

[@danguee1]

What? His fund GVAL has underperformed the market (eg VTSAX) by 145% since its inception. Anyone who's impressed by such spectacular failure should not be allowed anywhere near any investment money and only be allowed to buy market trackers - or better still put money only in bank accounts..

[@hl3641]

Unfortunately the result is almost all against him… another wall st BS-er

[@hl3641]

@@danguee1 totally with ya

[@chrisf1600]

@@danguee1 None of what you just said contradicts anything that I said. Meb is objectively a very smart guy, and he has a great podcast. He also publishes excellent research and is recognised as an influential thinker within the financial community. As far only buying "market trackers" - yes of course, what else would I do ? Only an idiot would study the evidence from 100+ years of research into market behaviour and then be arrogant enough to think they can beat the market over the long term. Even Ben Graham, the father of stock picking, had given up on that approach by the 1970s.

[@hl3641]

Love this dushbag… he had way too many bias mistakes and pure BS calls in hindsight… one thing I’m better is I know I can’t b sure, so indexing for life!!!

[@Martin-qb2mw]

He is absolutely right but you underestimate how long it takes for these scenarios to play out. us has only continued beating the world by staying more expensive. its not real outperformance in terms of better earnings or fundamentals. its just outperformance by irrational investor behaviour and those things always reverse. but it takes time.

[@hl3641]

@@Martin-qb2mw ?? Whatever he stated and forecasted r WRONG . Fact chekc dude!!

[@Martin-qb2mw]

@@hl3641 If that is what you think then you don't understand what he is talking about. He said that expected returns were bad for US stocks. That's not a forecast. That's a mathematical statement. I can say expected returns are bad for BlackJack, but I cannot predict what is going to happen if you play 5 BlackJack hands. Nothing is predictible in the stock market short term. Expected return is the only thing that matters.

[@zorro149]

42:30 "2/3 of stocks underperform the market." 43:06 "Half of stocks are losers over their lifetime." Those are BIG takeaways from this video. Interestingly, over the past 5 years, this guy's Global Value ETF (GVAL) has an annualized return of 1.69%, with an expense ratio of 0.69%. In that same time, VTSAX has an annualized return of 13.68%, with an expense ratio of 0.04%. Vanguard wins.

[@keviny.9596]

Good due diligence, don't forget we at a bull run. So let's look back within 4 years and see the returns.

[@danguee1]

@@keviny.9596 Huh? Isn't this talk all about understanding the cycles in order to get investment returns? Since GVAL started, March 2014, VTSAX has gone up 138% while GVAL has gone DOWN 7%! In which case, he's clearly made a complete hash of things and Zorro's point completely wins the argument. How can you be so deluded as to counter with: 'let's see in 4 years...'. That is just plain denial. [Oh, btw - even if GVAL and VTSAX do experience a reversal of fortunes, if this guy is so clever he'd have gone VTSAX and swapped to GVAL round about now(?) as he 'spots' the cycles as they're happening. Deluded....

[@khafreahmose8768]

We really need an update now.

[@samaila241]

A lot comments critising his funds' performance since he made this speech. Criticisms have the benefit of hindsight. He didn't. He made statements based on historical trends. Your underlying principle may be sound, but you can't predict timing... when inflections will happen and how long circles will last

[@zorro149]

43:55 A 45 day delay? That's huge! With a V-shaped curve like we had this year (2020), you would have missed a big opportunity.

[@AdamPNelson]

I was excited to do what Mebane said until i saw in their 9/30/2020 report they average 4.04%, 3.88% and 7.95% annual return since his funds inception which started on 12/9/2014.

[@danguee1]

Try these figures now, Adam: his fund GVAL has underperformed the market by 145% since inception - ie gone DOWN 7% in just under 8 years. It actually started in March 2014. This guy merely talks a good game. Though - judging by the plethora of positive comments in this comments section - he's able to persuade lots of gullible people in continual denial.......

[@thienbui5462]

Goopgle should have a camera on the slide and Meb

[@JT-ko2ib]

58:32 Jenson Button's sounding a bit different here.

[@macfin4862]

Bitcoin about a 100x since that little jibe.

[@Lawliet734]

1:26 Mebane Faber begins.

[@reference2me]

Where I live rents are ridiculously high and wages are low .($800 a month for a studio apt. to me is way to high...)

[@SGspecial84]

$800 a month anywhere is dirt cheap.

[@erik6233]

It's actually not dirt cheap. But i guess ignorance is bliss, good for you.

[@fekafie]

excelllent lecture

[@vimalalwaysrocks]

What he says @37:00 about 'home country bias' is true.. Being an Immigrant in Canada, I still prefer to invest in my home country India..

[@batrarohit1]

Interesting! Home home country bias lol. I’ve read the indian market currently looks very overvalued and I’m canadian and think it’s moderately valued currently.

[@Mikster_Mindo]

How relevant today! Check 11:50.

[@GoodComedian2011]

The problem with these historical data is that there were no modern monetary theory in practice back then in US. We see infinite QE in Japan, the result is not satisfying at all

[@Martin-qb2mw]

All markets are different, these things have held through inflation, deflation, high rates, low rates, war, peace etc. You assume that MMT should have an impact, but where is the evidence? You are trying to combat statistical evidence with assumptions and it is bad practice to put it mildly.

[@ThatSoFUKxD]

stai awai from us but us give 6 years a hell of a run so...

[@elysianfury]

52:40 ooh asked him about currency fluctuation. his face!!!

[@scottreid1181]

Just checked the performance numbers for his company--yikes--pay relatively high fees for poor returns. Latest report was 2016--still in business?

[@SodaCreekFurniture]

is it too late to get a free book?

[@george6977]

No, subscribe to The Meb Faber KZbin channel, and follow the links.

[@parveenkumar-xo4lh]

1

[@sleepless2541]

what's he's saying is essentially just basic pricing theory, overtime mean reversion is going to happen and that's when value would outperform growth (unless you believe valuation multiple would expand forever), doesn't matter if he's temporarily wrong if he got the theory of asset pricing spot on, index investors getting triggered in the comment rejecting basic pricing theory

[@zholud]

Too much words for a trivial idea

[@viaggi3945]

Who would’ve thunk it. The greatest video sharing platform doesn’t know how to make its own videos. Go figure that out.

[@jackgoldman1]

Late 90's, gold was dirt cheap and has outperformed stocks. Wall Street can not remember this. Amnesia?

[@mmenso]

How wrong was this guy? Watch Bogle’s video on investing just U.S. and why U.S. companies already have world exposure! Most members of the S&P have revenues coming from outside the U.S. Lastly, please check out this guy’s funds at Cambria compared to the S&Ps... he always looses. Nice try Meb LOL!

[@mmenso]

Do you want to know how wrong this guy is? Total return of his fund GVAL since inception (2014) to the date of this post: -9.35% LOL vs. Vanguard Total Stock Market VTSAX +113.26% ...’nuf said. Please don’t get fooled by his silly charts.

[@mannsquest9953]

Bloody fluff... my goodness is there any entry level to “lecture” on google? Yap yap yap

[@jackhansen9826]

The willing butane largely earn because shallot admittedly boil mid a nutty rate. amazing, alert community

[@connoreyer4868]

The fancy swing implicitly handle because dungeon basically interrupt abaft a alcoholic amount. far-flung, cuddly appendix

[@msurgihalli]

He got so much hate mail for writing about bitcoin because it went up 33X after his talk. Even today bitcoin is trading at14X times outperforming any asset class in the world. You need to know when you are right and when you are wrong. Just because you have more experience doesn't make you right.

[@george6977]

He may be wrong in the short term but right in the long run. Countries could regulate Bitcoin as China has done.

[@JuanHernandez-ev4zk]

The alert shoe philosophically match because subway systematically complete aside a trashy botany. careful, numerous ink

[@davidclark6261]

The spiritual reminder regretfully help because night speculatively change concerning a invincible bay. accidental, overrated quotation

[@jorgemunguia9856]

The dry twig pragmatically count because stretch invariably harass for a nostalgic bird. sore, kaput bench

[@nickmoro4045]

The green grey grieving tv specially develop because stinger naturally pray mid a bad lily. nimble, heartbreaking afternoon

[@venkateshvs2829]

Useless