Webinar Replay: Meb Faber - Navigating 2026

Key Concepts

• US Market Overvaluation & International Opportunity: The US stock market is significantly overvalued compared to historical norms and global markets, presenting a compelling opportunity in undervalued international assets, particularly emerging markets.
• Diversification Beyond Traditional Assets: Diversification should extend beyond US equities and include global exposure, potentially incorporating trend-following strategies and a significant allocation to T-bills for risk mitigation.
• Shareholder Yield & Value Investing: Focusing on shareholder yield (dividends and buybacks) and fundamental value principles are core to Cambria’s investment philosophy.
• Cambria Funds & Innovation: Cambria Funds aims to fill gaps in the market with unique offerings like shareholder yield funds and all-in-one portfolios, alongside innovative tax-deferral strategies like the 351 Exchange.
• Challenging Conventional Wisdom: The speaker advocates for contrarian approaches to asset allocation and risk management, questioning the safety of solely relying on traditional “safe” assets.

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Market Performance & Global Valuation (2023/2024)

2023 was a “monster year” for markets, with US stocks reaching all-time highs. However, ex-US stocks outperformed, gaining approximately 30%, a performance often overshadowed by the focus on US market gains. A central argument is the significant valuation disparity between US stocks and the rest of the world. The US market’s CAPE ratio is at levels not seen since the late 1990s, mirroring the Japan bubble of the 1980s. The US represents only 25% of global GDP, while emerging markets comprise over 50%, yet market capitalization is disproportionately weighted towards the US. Robert Hagstrom’s quote, “If you can buy half the world's GDP for single-digit PE ratio, like why would you not do that all day long?” underscores the potential value in international markets.

Cambria Funds: Growth & Strategy

Cambria is celebrating 20 years in operation and manages approximately $4 billion in assets across 20 funds, including six original ETFs launched in 2013. All Morningstar-rated funds currently hold 3-5 star ratings and consistently have lower costs than category averages. Cambria focuses on launching funds that fill gaps in the market, categorized into trend-following, shareholder yield, and all-in-one portfolios. The firm’s philosophy is encapsulated in the statement, “We try to only launch funds that don’t exist.”

Investment Strategies & Performance

Cambria’s shareholder yield funds are a unique offering, considering buybacks and share issuance alongside dividends. The Global Value ETF (GVO) recently experienced a performance turnaround, outperforming the S&P 500 over 1, 3, and 5-year periods after a period of underperformance. Managed Futures funds demonstrate the cyclical nature of investment strategies, with underperformance in 2023 but strong performance in early 2024. The speaker’s personal investment strategy involves holding 400 companies globally, with the best performers being ex-US companies, challenging the notion that the best opportunities are solely within the US.

Risk Management & Portfolio Construction

The speaker advocates for a contrarian approach to risk management, suggesting a portfolio consisting of 75% T-bills and global diversification is safer than solely relying on T-bills, despite historical drawdowns. This contrasts with highly volatile strategies like an all-in Bitcoin approach. The fixed income landscape is considered “extremely dangerous” due to insufficient yield pickup for the risk taken in corporate, junk, and emerging market bonds; the TYLD fund is currently 100% allocated to T-bills. Breaking the market-cap weighted approach to investing is encouraged, with equal-weight ETFs and shareholder yield strategies favored. Currency fluctuations are expected to stabilize over time, adjusting for inflation.

Tax-Advantaged Investing & Access

Cambria’s 351 offering allows investors to contribute appreciated portfolios into new ETFs, deferring capital gains taxes and diversifying holdings. The 351 Exchange requires a diversified portfolio (top holding <25%, top 5 holdings <50%) and currently requires investment through an advisor due to custodian limitations, though Cambria offers assistance in connecting investors with advisors.

Portfolio Recommendations & Resources

A global market portfolio is suggested as a starting point for international investment – 60% US, 30% foreign, 10% emerging markets – noting the average person holds approximately 2% of their portfolio in emerging markets. TRTY and ENDW/GAA are recommended as all-in-one allocation funds. The speaker emphasizes that optimal asset allocation is subjective and recommends resources like his blog, Portfolio Visualizer (with quality control caveats), and Allocate Smartly for backtesting and model portfolio creation. A coffee table book detailing the speaker’s investment philosophy is forthcoming on Amazon.

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Conclusion

The core takeaway is a strong argument for global diversification, particularly into undervalued international markets. Challenging conventional wisdom regarding risk management and asset allocation, the speaker advocates for a contrarian approach that prioritizes shareholder yield, value investing, and a significant allocation to safe-haven assets like T-bills within a globally diversified portfolio. Cambria Funds positions itself as a provider of innovative solutions to fill gaps in the market and facilitate these strategies, offering unique funds and tax-advantaged investment opportunities.