Episode #99: Radio Show: Meb’s Bullish on Emerging Markets… Strategies for Limited 401K Options… and Listener Q&A
Guest: Episode #99 has no guest but is co-hosted by Jeff Remsburg.
Date Recorded: 3/20/18
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Summary: Episode 99 is a radio show format. We start discussing some of Meb’s “Tweets of the Week.” The first involves a presentation from Rob Arnott at Research Affiliates, which Meb considered “required reading for financial advisors everywhere.” It involves the amount of extra alpha you’d need to generate in order to offset taxes given various market approaches.
Next, we discuss another Tweet from Meb in which he asked readers to guess at the largest drawdown in US bonds in real terms between 1900 and 2010. Turns out, the majority of respondents were far off. Meb gives us the results and takeaways.
Then there’s a discussion of taxes in light of crypto gains (and losses). It seems lots of people may not be factoring tax payments into the equation. Not sure the IRS is going to look favorably on that…
We then jump into listener Q&A. Some of the questions you’ll hear answered include:
- Why should we listen to your podcast when you say the best ROI is to focus on skills directly benefiting our work performance?
- You’ve said you’d like to invest in a farm REIT. But you’ve written about dividend investing as a suboptimal strategy. Can you reconcile these two apparently contradictory ideas?
- Which asset class is going to shine 5 years from now?
- What’s the best strategy for folks with a limited selection of 401k funds?
There’s plenty more, including why Meb is still very bullish on emerging markets, the realities of mutual fund investing with fees/taxes included, and Meb’s upcoming travel plans.
Check it all out in Episode 99.
Links from the Episode:
- 00:50 (First question) – Welcome and the mess that is March Madness
- 3:27 – When traders never see “something like this” before
- 6:08 – Upcoming travel
- 6:40 – Meb’s frustration with podcast curation
- 7:20 – Subscribe to the Idea Farm
- 8:51 – Meb’s tweet about Research Affiliates and a presentation that should be required reading
- 14:25 – Any tax strategies that Meb would suggest
- 14:38 – Unclaimed.org
- 17:08 – Tweet about crypto and tax implications
- 21:01 – Tweet about drawdown in bonds between 1900 and 2010
- 23:10 – Jim O’Shaughnessy tweet with chart
- 25:26 – What to do about bonds
- 26:11 – “Finding Yield In A Low Yield World” – Faber
- 27:17 – When should we pay more attention to TIPS
- 27:50 – Twitter question: Why should people listen to the podcast if Meb advocates focusing on improving work performance over added portfolio tinkering
- 28:08 – “The Best Way to Add Yield to Your Portfolio” – Faber
- 30:19 – Andrew Tobias Podcast Episode
- 31:10 – Vanguard PDF’s best levers for your portfolio
- 31:34 – Twitter Question: Reconcile how Meb wants to invest in a farm REIT but has argued that dividend investing is a sub-optimal strategy. Also, Michael Batnick tweet on dividend yielding stocks outperforming
- 32:50 – Shareholder Yield: A Better Approach to Dividend Investing – Faber
- 32:57 – Jack Vogel Podcast Episode
- 33:00 – “Stock Buybacks are Bad? What About the Alternative” – Vogel
- 33:08 – “Dividends and Buybacks” – Faber
- 34:14 – Meb tweet on the idea of restricting company stock buybacks
- 34:28 – O’Shaughnessy chart on buybacks and valuation
- 35:21 – The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success – Thorndike
- 38:14 – Buybacks as a manipulation to EPS
- 40:23 – Twitter Question: Which asset class between foreign and domestic will shine in 5 years from now
- 40:54 – Raoul Pal Podcast Episode
- 41:14 – Podcast Archive
- 44:25 – Global Value: How to Spot Bubbles, Avoid Market Crashes, and Earn Big Returns in the Stock Market – Faber
- 45:42 – Twitter Question: Best strategy for folks with a limited selection of 401(k) funds
- 47:26 – Twitter Question: Can you suggest a strategy for identifying the top 2% of mutual funds
- 47:28 – “How to Beat 98% Of All Mutual Funds” – Faber
- 48:38 – “The Incredible Shrinking Factor Return” – Arnott, Kalesnik, Wu
- 51:21 – “How To Pick Mutual Funds: The Netflix Prize For Improving Morningstar’s Star Rankings” – Faber
- 52:07 – “Asset Allocation Strategies” – Faber
Transcript of Episode 99:
Welcome Message: Welcome to the Meb Faber show. Where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment management or its affiliates. For more information, visit cambriainvestments.com.
Meb: Welcome, podcast listeners. We have a radio show for you today. Welcome, Jeff.
Jeff: What’s happening?
Meb: Well, it’s kind of the Ides of March for you and I both.
Jeff: Yeah, it’s been painful.
Meb: Our office consists of mostly…we got a UVA grad here speaking, Jeff is Carolina, and we got a couple Michigan State or two.
Jeff: We’ve all gotten demolished.
Meb: Though, Virginia, it’s funny… I have a group of guy friends from the south that we go and watch football games every year. It’s kind of a guy trip, and we used to always do it in Wrightsville Beach, and this year, we have a friend that now lives up in Brevard. Hey, Stu, if you’re listening.
Jeff: There’s no way Stu is listening right now.
Meb: No chance. No chance. And so he said, “Hey, I’d like to host this year.” And so we said, “Sure.” And Brevard, for those who are listening, who are familiar, is kind of outside of Asheville, but it’s also kind of blossomed into this big craft beer and food and music scene. It’s a really just awesome town. Anyway, so Friday night, Virginia was playing, and it was a 20 point favourite over… what was it, University of Maryland, Baltimore County was. An interest side note, the coach is the son of former Wake Forest coach Dave Odom.
Jeff: Also another interesting side note, he…well, let’s say about five doors down from where I grew up in Western Salem, there was wet concrete and Ryan Odom drew his name in the wet concrete. Ryan Odom is the coach of UMDB.
Meb: Yeah. It’s probably worth something today. Go dig up that concrete.
He also was a ball boy for UVA at one point. Anyway, I wasn’t even watching the game, because I just assumed it would be a huge blowout and we were having dinner with friends in Virginia. One of my buddies elbows me and says, “Meb, you know, Virginia’s losing.” I said, “Yeah, but they’re always down of the half. Whatever.” And became the first number one seed in history to lose opening round.
Jeff: They lose in tremendous fashion as well. Twenty points.
Meb: After thumping Carolina in the ACC tournament.
Jeff: Well, we’ll go back and rest on our six national championships.
Meb: But it’s funny, because there’s some interesting takeaways. I want to write an article with you, by the way. I forgot about this. And it’s basically called…any time like something bad happens in the market, in the way that financial advisors or investment managers who have a strategy or an algorithm, typically they mention something along the lines of, “Hey, clients. It’s okay, we’ve seen this before.”
And the article I want to write is called something like, “Hey, clients. It’s okay, we’ve never seen this before.” Meaning, the future…it’s great to look back at history, but there’s continually going to be surprises. And so at some point, statistically speaking, a number one seed would lose. And I love following… I don’t really do sports betting, but I love following that world, because it’s a lot of corollaries to quant investing and everything else, and anomalies. Some of my favourites, we talked about in old podcasts we had back earlier this year on, you know, there’s an anomaly, if the team has to fly far, that they have a headwind on the line.
Anyway, I was laughing because there is a… Both sides of this, there was a bet that Vegas published where a guy had bet $20,000, because the number one seed had never lost, and there was three number one seeds that are all favoured by like 18, 20 points. He bet on… It was a money line for Virginia, Villanova and, I don’t know, Xavier or someone to all win, and he lost the bet. So he lost 20 grand. But the ridiculous part about this bet is he was betting $20,000 to win $800,000. And this has so many parallels to the old kind of short fall trade that kind of blew up a few of these funds in early… February?
Meb: Where, you know, the old picking up pennies in front of a steamroller. And those trades are so unattractive to me. I get it on enough bets if you’re doing that 10,000 times over, but I would… Talk about ruining that guy’s weekend, man.
Jeff: Yeah. That what I found when I was doing more options a while ago, was that, you know, the win percentage was high. You know, I’d make money on, whatever, 89% of the trades, but the ones that would lose, the losses would offset so much of the actual absolute value of your gain. It just wasn’t worth it.
Meb: So anyway, I drowned my sorrows at… they had a couple really cool breweries in the area, Oskar Blues, which is kind of dually located in two of my states I grew up in. So they have one in Asheville and one in Lyons, Colorado, which is home to a big bluegrass festival, and there’s a Sierra Nevada new building. And I’m not kidding you when I say it’s the nicest brewery or winery probably that I’ve ever seen. We looked it up, because it was so ridiculous. It was like $170 million to build.
Jeff: That’s impressive. You are a huge brewery fan. You’ve seen a lot of them, so that’s saying something.
Meb: It’s really nice. It was beautiful. Anyway, we went to a really gorgeous Sapporo brewery when we were in Japan. So as far as travel, I may be in New York and Chicago in April and May, so listeners, if you want to catch up, drop me a line, and then Europe. All the European listeners, I think I’m going to be making a stop in Greece and Italy in June, but if there’s other listeners that want to set up a meeting or potential event or speech or something, reach out. Also, there’s a possibility of Ireland in the fall, so all TBD.
Jeff: Where’s the Ireland trip.
Meb: There was… Trinity College was putting on something, but we’re trying to organize the timing on it. We’ll see. So anyway, what are we talking about today?
Jeff: Let’s go through a few of your tweets of the week, and then let’s jump on some questions that have come in from Twitter, and call it a day.
Meb: By the way, Jeff, this is episode 99. Can you believe it?
Jeff: Oh, God. It’s been the longest 99 weeks of my life.
Meb: Ah, so exhausting. How do we ever live through this? Well, 100’s going to be a lot of fun. There’s a really fun episode coming up. If you guys have any guest suggestions, if you have any sponsor suggestions, any ideas for us, let us know. I think we’ve gotten better over the course of the 100.
Jeff: I think I’ve gotten better. You’re questionable.
Meb: Yeah, that’s true.
Jeff: Alright, let’s dive in here. So…
Meb: I still can’t solve my podcast creation problem. And I’m going to stop, because I don’t want to get into it, but listeners, if you have any solutions, let me know. Because I listened to two really bad podcasts walking the dog this week, and it just infuriates me.
Jeff: What’s the closest solution you’ve seen yet?
Meb: There’s no one. It’s…
Jeff: I thought Apple was doing something.
Jeff: I thought Apple was trying to come out with some prototype that basically…
Meb: No. It needs to be… It being able to rate per episode, and there’s one site, but it doesn’t have a critical mass of users yet. I think it’s Podbay. Is that it? And I think the only solution in the meantime, to bridge it, is brute force, getting some people to actually just listen to a bunch and rate them. But I don’t know. Let’s move on. I don’t know why I brought that up.
Jeff: I can sense the anger…
Meb: So angry. On the flip side though, we sent this out to the Idea Farm, and listeners, if you haven’t subscribed to the Idea Farm, it’s free trial, 30 days. Check it out. A lot of the stuff I send out is not really conducive to talking about or posting on the podcast. So for example, there’s a great Jeremy Grantham podcast that came out recently, and so we sent it out to the Idea Farm listeners. So there’s a lot of resources. We just updated our annual back tester, which at some point we should just turn into a website. So listeners, if anyone wants to turn that into a website for us and get paid for it, and you’re an amazing web developer sort of person, let me know.
Jeff: What’s the email address?
Meb: My email address?
Jeff: Which is…?
Meb: The feedback at the Meb Faber Show…there you go.
Jeff: Alright. So first thing let’s dive into is your tweet about a presentation from Research Affiliates. You were just down there at their conference last week, and it looks like they had a presentation that you claim should be required reading for financial advisors everywhere, especially the ones using mutual funds and hedge funds. So why don’t you recap for us what this was, what are the takeaways… Give us the rundown.
Meb: By the way, listeners, I assume most of you at this point listen to this pod at one and a half to two times speed, because Jeff and I are slow drawls, but if you want something just a little late March humour, try listening to about five minutes of this podcast as half times speed, and it sounds like both of us have had about 75 drinks and a bunch of, I don’t know, sleeping pills or something, and it’s really funny. Anyway, okay.
So yeah, the Research Affiliates conference, they put on an Advisor Symposium. A lot of great friends down there, I got to catch up with a lot of buddies, a really fun event, well done, some of the smartest minds in the biz. So Rob had a presentation… I actually wasn’t there for Rob’s presentation, but I had the slides, and at some point they said that they would distribute the videos. So if I can, I’ll try to distribute those to the podcasts links if we can, in the Idea Farm, but… There was a lot of great talks, but Rob’s was… Actually, he’s been kind of a early proponent of being mindful of all the costs in investing. And so the one that everyone pays attention to is the sexy, active/passive stuff, right? And then number two, or in the same sort of vein is fees.
Everyone talks about fees. But the one that no one really talks about or focuses on is taxes. And so Rob wrote a paper on this probably 20 years ago, maybe 30 years ago, on this point. And there’s actually been a lot that’s changed in the meantime, so the biggest development is…and starting in really the late 90s is ETFs. And ETFs are such a vastly superior structure. It’s actually amazing. I think back, and it’s amazing the mutual fund business and lobby like allowed this to happen, really. It’s kind of unbelievable. I mean, it’s a fantastic development for investors, but it put mutual funds at such a massive disadvantage.
Jeff: What’s the benefit? Explain for listeners what the massive benefit of the ETF structure is.
Meb: So ETFs, for most people that are listening probably know this, but an equity fund, for example, that has high turnover, the ETF can lay off capital gains, basically, on to the market makers. So for all intents and purposes, so let’s say you buy an ETF today, and you sell it in 10 years, and it goes up 500% or whatever, and it’s an active strategy that’s trading every day. That’s unrealistic, but let’s just say. If that was normally a mutual fund, you’d be paying capital gains every year.
Short term, long term, all that stuff. In fact, in mutual funds, you can even have a scenario where you buy a fund, lose money on it, and still owe capital gains taxes. It is a horrible possible setup, but it happens to people all the time. They don’t know better. They buy this hot mutual fund, and it has embedded gains in there. Anyway… So an ETF, you buy it, and for the most part, it’s over half of ETFs have never paid a capital gain, ever. And for the vast majority of the other ones, they actually just rounds to zero. So they paid a little bit.
And you can’t avoid dividends, of course, or bond income, but capital gains, talking about trading. So it is an enormous benefit. And Rob quantified it in his paper, or his presentation, and said, “ETF tax efficiency remains after adding in the impact of dividends on taxes and nearly half the mutual funds have distributions causing tax burdens in excess of 1%, which leads to a 0.8 worse tax alpha for mutual funds versus ETFs.” So it creates an enormous hurdle in sort of base case scenario for anyone to ever invest in a mutual fund.
And ETFs, it’s such a vastly better structure. And so we’ve talked a lot about this. And there’s a lot of offshoots, and, you know, we published this paper, which… I haven’t seen that much in the literature about it, and so we’re kind of in our own corner, and maybe I just haven’t seen it, but I circulated among a lot of academics and friends, and it was that concept of avoiding dividends, where there’s a value approach, but avoiding income. Because income is something you can’t really avoid, if you’re a taxable investor.
You have to pay on the income regardless, unless it in a tax-exempt account, but you could also avoid the income. And this is ignoring…doing a note. You could do an exchange traded note that would avoid it, but… But anyway, so it’s this big sort of… You know, the listeners, how many of you own mutual funds? And on top of that, how many of you own particularly active mutual funds, and active mutual funds that have high turnover and high fees? So it’s like all of these things… It goes back to like dieting and weight loss and getting your life in order with spring cleaning. Whatever it may be, everyone’s always going to fix it tomorrow.
And this goes back to our old zero budget portfolio and ideas. But how many of you still own these and, “I’ll clean up my portfolio at some point.” It’s crazy to me that, you know, it’s such a huge, huge mass of headwind when you combine the fees and the tax efficiency. It adds up to a pretty, pretty massive delta.
Meb: Have you considered any specific tax strategies? I mean here we are, nearly at April. Is there anything, off the top of your head, as something low-hanging that listeners can do from a tax perspective, just to help out their portfolios?
Jeff: Well, my side one, which is always unclaimed.org.
Meb: Yeah, you haven’t mentioned that yet this year.
Jeff: I haven’t mentioned it this year. It’s been a while.
Meb: Listeners, if you’re new to the program, we’ve found money. It’s at least $200,000 at this point. It may be $300,000, where a lot of people don’t know, but state governments have billions upon billions upon billions of unclaimed property, meaning usually, it’s…you overpaid your utility bill, or you had some dividends that went to an old address. You can go to unclaimed.org, search all the states and where you live, where you used to live, search your family members, ex-girlfriends, whatever you want to do, and they list assets. Some states only list whether it’s above or below $100.
Some states list exactly how much it is. So you could search California, for example, and search Britney Spears or ex governors, or anyone that’s famous. This used to be my favourite joke, I said, “Job applicants, you should search the people you’re getting ready to go interview for.” Because no one likes money, more than anything, but also found money. And third, money from the government.
Jeff: Well, your point earlier, where you said the last time we talked about this, RIA should be doing this. You know, go to their clients and say, “I just found you an extra two grand.”
Meb: We’ve a lot of investment advisors and planners that have done this, and they send us notes or words of thanks, and say, “I have clients for life, now. I found this person $500, $5,000…” The highest single claim was a family had found a trust or something that they didn’t know existed, and it was $80,000. So people have sent us some gifts. By the way, episode 100, I want to thank you guys. We’ve continued to get fun gifts in the mail, and what did we recently have? We recently had some…
Meb: Tennessee Barbecue and some wine from Oregon. Some pinot noir. So anyway, you guys want to send us something, send it to Jeff, and we’ll share with the group. Oh, no, we got some microbrews from award-winning state home microbrews. Oh, they’re the sour beers.
Jeff: Wait, wait, wait.
Meb: They’re in the fridge. Do you not know this?
Jeff: You’ve not told me of any microbrews.
Meb: Including some… they’re hidden behind all your yoghurt and spinach salads. And brought down a few Plinys, so… some great gifts. Thank you, listeners.
But so unclaimed… Unclaimed is really fun to look it up. It’s a great thing to do for your clients and friends. And so if you guys find anything, let me know. We should keep a running tally, but it’s certainly over $200,000 if not $300,000 now.
Jeff: While we’re on the topic of taxes, let’s pivot to another tweet from yours. This one is about crypto. And the tweet actually is about how there’s a 2%… only in the crypto world could a 2% management fee be considered a deal, a bargain. But what comes to mind, actually, more so than that, is the story about the crypto guy who had the various gains, then losses, and then the tax implications of all this. So why don’t you fill us in?
Meb: You see a lot of bad behaviour going on in…when there is kind of these euphoria manias, right? And crypto certainly died off quite a bit since most of these are in 40 to 60 to 80% drawdowns, but Coinbase, which charges, by the way, I think 2% per transaction… It’s so funny about crypto. So crypto is this big, libertarian bin. And I get that part, and I’ve been cheering for it. But it’s so funny because, “Yeah, we’re going to get away from the banks, and Wall Street. By the way, we’re charging you 2% to transact in this.”
And then, so the CEO of Coinbase does a tweet, and says something along the lines of, “Hey, we’re launching a market cap weighted crypto index fund. It’s for credit investors only, but without all the hefty fees of…” something. Of Wall Street or something. And so of course, what do I do? I go and look at the prospectus, or the offering docs, and it’s literally a 2% management fee. Probably also charging 2% transaction costs on it. I didn’t look. But it’s just classic people that make these claims, but, you know, it’s just such bad behaviour. So anyway, you see it’s a lot of funny stuff going on right now, so it’s tax time. And listeners, by the way, IRS has your information. Coinbase had to give up all the account info for anyone that has more than $20,000 in gains. And so I think the IRS is going to tax every single part of the entire ecosystem. You’re a miner? Boom. That’s income. You made a capital gain in trading crypto? Boom. That’s capital gains.
Jeff: And how many people do you think are reporting their gains?
Meb: I bet zero. I bet it’s like 10%. Particularly the younger set. The millennials, right? So anyway, there was a funny Reddit post where a guy had put his entire retirement into bitcoin or something and made some money near the end of the year, then switched it over, I think to some altcoins, but then realized he had to pay taxes. And then the altcoins have now all gone down like 70%. And so he actually owes more than he even had. Because he owes a bunch in taxes from last year 20… It’s just… It’s people investing in what they don’t know. You know? And it’s such… There’s so many similarities to every kind of mania. I mean, just all the people that were buying and flipping houses in the mid 2000s. It was all the people in the late 90s that were watching CNBC and day trading stocks.
Jeff: It’s funny, you mention the word ‘invest in’. I read something recently about the attempted counter argument to paying gains on these cryptos is that, well, this is a currency. If I go to Europe and I change my currency, I’m not going to pay any gains on that. So why would I do that here for my bitcoin?
Meb: First of all, you would, if you bought Euros, and then Euros tripled, or did whatever bitcoin did. You sure as hell would own capital gains on Euros. The problem is currencies mostly are stable, so you’re not…anyway. But good luck with that, listeners. Decide to avoid the IRS, see how that goes, let me know. Just don’t report it and see how that goes. I’m guessing you will regret that decision.
Jeff: Alright, the next tweet of yours let’s chat about. You showed the drawdown on US equities and bonds in real terms between 1900 and 2010, and there’s actually a quiz. Tell us about the quiz, what the results were, takeaways…
Meb: All that matters in investing, all that matters is what we call returns you can eat. So that’s returns after all fees, after all taxes, and after inflation. And that’s all that matters. The problem is everyone talks and thinks in what we call nominal terms. So before inflation. But inflation’s pretty low now, it’s called a couple per cent in the US, but historically, it’s been a lot higher. It’s been double digits here in the US, it’s been at times in UK, and then get even more dramatic in places around the world. With hyper inflations, it’s been much, much higher.
Jeff: It’s your Greek bond on the wall.
Meb: Greek… Yeah, we had a gift from an old speech I gave, this Greek bond from 18-something, or other, not paying interest, by the way. Anyway, so inflation is a really important function on returns, but people don’t think about it, because it’s too hard. And so here’s an example. I said, “Readers,” and this is also a prelude to our next podcast guest, which you guys are going to love. I said, “Readers, if you go back 120 years, what do you think the largest, real, after inflation drawdown, which is a peak to trough loss, if you held US government long-term bonds?” And I gave four choices: 0% to 20% loss, 20% to 40% loss, 40% to 60% loss, and 60% or worse. And most people said, 0 to 20, then the next most said 20 to 40, then the next most said 20 to 60, and less than 20% said over 60, and the answer is over 60.
Jeff: What is it specifically?
Meb: I think it was like sixty… Well, if you use longer-term bonds, and Jim O’Shaughnessy chimed in, and posted a great chart. And he showed that for long-term governments it was 67%. For T-bills, so if you sat on cash, you lost half. And so that’s the problem. So most people think of government bonds, and they think, “Well, if I just hold this for 10 years, I’ll earn 2% a year, and that’s gravy.” What they don’t understand, that’s fine in a world of 0 or 1% inflation. That’s horrible in a world of 3%, 4%, 5% inflation. But this applies to everything. It makes it a lot harder for people to compare apples to apples with various asset classes and investments.
I highly recommend listeners, again, listen to the 100th episode coming up, because we talk a lot about this. But there’s a lot of takeaways. So one, historically, has been, people love investing in stocks. They have the highest historical returns. We like to say 5% real, on average, going back historically, the old 5, 2, 1 rule. Bonds yield around 2% real, and bills around 1. And you can also lump housing and gold and a bunch of other stuff in that 1 bucket. And so people don’t like stocks as much, because the nominal price declines where they’re typically kind of crashy, where it happens over a couple of years, 1920s, stocks lost over I think 80%, and then in the 2000s, we’ve had a couple of 50% bear markets if people can recall.
And most people relate to bonds as not having really the big nominal price declines. And so people diversify, of course, but bonds are equally as risky. It’s usually a different reason. It’s the long, eroding effects of inflation. So for us, that was like the 60s and 70s, in the US, but different countries, different times. But very similar results in the UK, for example. So it just goes to show that it’s important to always think in terms of real terms, rather than simply in… We could go down a long alley on this, but it’s a good example…
By the way, my followers, super smart, probably mostly professionals. Not only did they get that quiz wrong, they got it extremely wrong. They answered the number 1,2,3,4, they got it directionally wrong too. The actual answer was the smallest amount of people. So over 80% got it wrong.
Jeff: I don’t know, this seems like a hard time for me to figure out what to do with the whole bond thing. Bonds have come down from whatever, 12, 15% yields back in the late 70s, and now it appears that they’re beginning to climb again from off…close to historic lows or historic lows. And so do you put them in a portfolio and expect they’re going to have the same sort of diversifying effect as a traditional 60-40? Do you anticipate massive headwinds for the next decade? Do you think rates will just go hover near these lows for another decade? I mean, what the hell do you do?
Meb: We don’t know what rates we’re going to do, of course, but… So there’s the Japan example on one hand, where once interest rates came below 2% they’ve never gone above, you have this weird world of negative interest rates, I mean, we wrote a paper on this called “On Sovereign Bond Paper: Finding Yield in a 2% World,” or something. We’ll post the show link. But that strategy’s done fantastic since publication.
And that’s simply just a value approach, where you’re investing in higher yielding currencies. The problem with that strategy is if and when it hits the fan, that’s historically not been a great safe strategy. So it’s not a safe bucket, where it diversifies, because a lot of it is emerging market countries right now. But it should, if according to history, outperform by a couple of percentage points versus a global bond portfolio, which is yielding… If like G5, G7, G10 countries, like a half or not even 1%.
U.S. is getting close to being in the top yielding bucket, by the way, which is kind of funny, because there’s just so many countries in Europe and elsewhere that have really low yields. So I think there’s two separate buckets. I think for us it’s a global tilt towards carry, and then as a diversifier kind of safety, you still you still want treasuries and/or munies, kind of the same thing, in my mind, high quality munies.
Jeff: At what point would you pay more attention to TIPS?
Meb: I think it’s a great asset class for the real asset bucket, both U.S. and global, and I think it’s… U.S. TIPS were introduced in the late 90s. I think they were actually legal to issue before that, for some reason.
Jeff: Define it first, for…
Meb: Treasury Inflation-Protected Securities. So they’re great. They’re more in the real return bucket than they are in traditional fixed income bucket.
Jeff: Alright. Why don’t we hop to some Twitter questions, unless there’s anything else you want to add?
Meb: Let’s go.
Jeff: Alright. First one’s great. Kind of holds your feet to the fire here. I like it. Says, “Why should we listen to your podcast when you say the best ROI is to focus on skills directly benefitting our work performance?” So first, why don’t you contextualize the article you’re referencing?
Meb: There was like an old article we did called, “The Best Way to Add Yield to Your Portfolio” or something? You probably wrote the headlines. You probably remember. I don’t. And basically, it showed the example that people are in this never ending alpha quest. And basically came to the conclusion, unless you have a couple million bucks, or maybe it was even $10 million, you shouldn’t be spending a ton of time on your investments. So that’s why you should listen to this podcast, so you learn that, by the way. Other podcasts won’t tell you that.
Jeff: Take that.
Meb: Yeah. So you wouldn’t have heard that elsewhere. But basically, if you’re spending a ton of time on your investments in search of alpha, you have to generate an enormous amount of alpha to compensate for the time you’re spending doing it. So if you love markets and history, and this is your hobby, that’s awesome. And you’re learning about the world. A cool part about learning about investing is you learn about econ and global finance and politics and psychology, and all that stuff makes sense.
So it’s not a waste of time. And being a little dramatic. But my point was that if you’re going to spend a lot of time on the search to outperform, it’s a little different than just understanding the craft of investing and studying all the other things I was talking about, business in general, is that you’re better off suited, particularly if you’re younger, particularly if you don’t have a huge portfolio, spending that time working, investing in yourself, making more money, saving more money… So one of the bigger investing takeaways I think is hard for people is that, when you have a smaller portfolio, and smaller amount of assets, your personal finance decisions swamp your investment decisions.
So the takeaway from most of these people is, “Hey, buy a bunch of low-cost ETFs, put them in an account and be done with it. Check back in in a couple of years, keep saving, adding more to it.” That’s really great advice for anyone, by the way, but particularly for people that are early in their career, and really invest in yourself, and try to get to a place where you’re building a business or you’re getting a graduate degree that may increase your salary, or you work 10% harder each week. But the returns are probably not going to come from you day-trading crypto and biotech stocks.
Jeff: Reminds me of Andrew Tobias. We had him on a few episodes ago, and the headline of that one was, there are just a few things you really need to know about investing, and they don’t ever change. It seems like a lot of people get into investing, and there’s this belief that the more you learn, the better off you’re going to be. So you learn all these strategies, and eventually people kind of have their moment where they’re like, “It doesn’t have to be this complicated.” And really, it’s just sort of the basic rules and just let time and compounding do its thing.
Meb: You know I talked a lot about this, about doing this kind of, “Investment 101,” book. Listeners, if you have a good title, let us know. We need to come up with a good title. But it’s almost like the old food pyramid, where what matters. And I think probably what people think matters probably inverted to what is really going to affect their returns and success. Vanguard, actually we sent these to the Idea Farm, had a couple of great PDFs where they talk about this. And they say, “Look, here’s the real big levers for your portfolio over time, and the growth.” And it’s what we talked about. It’s how much you spend, it’s how much you save, how often and early you are to investing, and your dollar cost averaging in, and all these things, versus outperforming the markets, is not really one of the biggest determinants.
Jeff: Alright, next question. This one also kind of holds your feet to the fire, which I like, and it’s a little bit of a two-parter. The reference is dividends, which you actually kind of touched on earlier in this podcast, but let’s just jump in. “Meb, you said you’d like to invest in a farm REIT, but you’ve written about dividend investing as a suboptimal strategy. Can you reconcile these two apparently contradictory ideas?
Also, Meb, you posted a tweet from Michael Batnick. He was referencing a quote that said, ‘Dividends have also held up relatively well during the market downturns. According to Schiller, the stock market fell more than 80% on a real basis during the Great Depression, but inflation-adjusted dividend levels were down just 11%. When stocks get chopped in half during the brutal 1973/74 bear market, dividends fell just 6% in that time. And since the 1960s, the annual rate of growth of dividends has never been negative over all rolling five-year periods.’ So basically, how do you reconcile these things?”
Meb: Okay, there’s a lot wrapped up in there. The first part is, going back there’s so much nonsense going on in the media right now that talks about buybacks and dividends and everything else, and I would direct all of our listeners to go pick up a copy of Shareholder Yield, it’s like two bucks, and really start to understand corporate structure and what goes on. Jack Vogel, who’s been on the podcast wrote a great article on this, this week, because a lot of people were being negative about buybacks in the media, and he said, “Okay, well…” And we posted an article about it as well, and so it said, “So let’s ignore the buyback dividend piece.”
He said, “There’s only a few things people could…companies can do with their money. They can sit on it, they can invest in their operations, you know, grow the company, build a new plant, R&D, whatever, they can return it, which is dividend and buybacks, and really the other one being they can pay down debt as well, if they have it, or they can go acquire a business.” But the main two ones: investment and returning the cash to shareholders. And he says, “Okay, so all these people that hate buybacks for some reason,” he says, “Well, okay, let’s look at the alternatives. If you’re not going to return to cash through dividends and buybacks, here’s investment only.”
And the funny part is if you invest in companies with high internal investment, the stocks, you do far worse than when you invest in the ones with low investment. And so it’s kind of funny because the media gets all… You know, the media is like, “All these terrible CEOs investing in these stupid R&D projects. But they don’t want them to return cash.” There’s like no possible right answer, you know? And the funny thing I tweeted about, I said, “All these people that hate buybacks, you know what the alternative is? You’re buying a stock that’s issuing a ton of stock.” That’s the other side of the coin. If they’re not buying it back, they’re issuing it. So you want to be highly deluded? That’s crazy.
And so there was a great chart from O’Shaughnessy lists that buybacks over time, back to the 60s, and what valuation those buybacks were conducted at, and so it showed that net issuers, companies issuing stock, were trading at evaluation premium, which makes sense, because CEOs are saying, “Hey, our stock’s expensive. Let’s issue shares.” And then buybacks were, in general, a valuation discount, and then high conviction buybacks that were 5% or 10% of the float in a year were in an even more valuation discount. So it kind of really goes as a huge argument against all the buyback haters, where they say CEOs are so stupid. We’re like, “No. CEOs are no dummies. The stocks, they were really cheap. They were buying back a hand over a fist.” So all this gets encompassed into the CEO’s job, and we’ve talked about this a lot on the podcast where the book… I’m blanking on the name… ‘Outsiders’?
Jeff: Yeah, ‘The Outsiders’.
Meb: Okay. Fantastic book. And it’s the CEO’s job to allocate capital where the return is best. So for some that may be investment. For some, it may be dividends and buybacks. For some, if their stock’s super expensive, it’s a good idea to probably issue some shares and raise capital and/or go acquire some businesses with your expensive shares. Some of them just do nothing because they don’t have any good ideas. So all this is you should be somewhat agnostic, what they do, it’s just where it’s best used. And it’s hard to know.
And so from a… what we were talking about with… First of all, I don’t hate dividends in general. It’s just that it’s a nonsensical investment strategy to focus on stocks that just pay dividends, or pay high dividends. And as we talked about in this paper we wrote, which we’ll do a show note link to, all you’re really trying to look for in the first place is value. And so if you look for value, then just do value. And often, that has a lot of echoes with dividends, or in our case we much prefer shareholder yield.
So there’s a lot wrapped up in that. But I think we’ve seen a lot of real-time evidence, both at our firm as well as others that those strategies work. We talk a lot right now about dividends being expensive, and so the listener who wrote into that first of the question about dividends and farmland, I mean, farmland is just an asset class. It has some exposure to real estate, because you own farmland, but really, it’s simply business that is pretty uncorrelated to the other businesses and has its own cycles, but it’s really hard to allocate to other than through private ownership or private funds.
There was one or two public farmland REITs, and I think one bought the other. There might be two left, I can’t remember. Anyway, but REITs, historically, by law, have to pay out… It’s like 90% of their earnings is dividends. Right? So it’s not that I hate dividends, and REITs are a totally fine asset class too. They can be great, they can be terrible, based on valuation. It’s really…you’re looking for value. And if they happen to pay out dividends, that’s just a function. That’s a part of the structure.
Jeff: Yeah. Well, the clarification would be your motivation for a REIT wouldn’t necessarily be the cash stream from the dividend payout. It would be either the value or the diversification or whatever the REIT structure’s offering you. The farmland itself.
Meb: In a blueberry farm. Or an almond farm or a wheat farm. I would love to own… If farmland was a publicly available asset class, it would constitute a large chunk of allocation for me. Like 10%, easy. Well, it’s a very diversified business stream that globally is a huge part of the global market portfolio on the private side. Not on the public side.
Jeff: Kind of quick throwback to buybacks, something I thought about a while ago which I haven’t heard much on recently, some of the detractors of buybacks were to reference sort of executing a buyback as a manipulation of EPS around earnings. Have you seen anything recently around that…?
Meb: There’s a simple answer to that. And that’s not a buyback issue. That’s a CEO compensation issue. So if you’re a board, and you’re tying your CEO’s compensation to EPS, that’s on you. Earnings Per Share. You’d tie their compensation to a gazillion other metrics. So that’s a board issue, not a buyback issue.
Jeff: But you don’t see this as like ubiquitous enough in the industry to really deem it a concern.
Meb: It’s not a concern from an investor’s standpoint or our standpoint because we’re never buying stocks. We’re not trying to buy expensive stocks. We’re trying to buy cheap stocks that happen to be buying back shares. And Buffet agrees with this. He says, there’s no better use of capital, if a company is cheap, than to buy back its own shares. And so the whole point is that, great. If a CEO realizes his company is really cheap and he’s buying back shares, great. We’ll be on the same side. If the company’s expensive, and he’s buying back shares, we’ll never invest in it because it’s expensive.
So you have to screen. No matter what you do in all these approaches, you have to use value as well. Otherwise, you’re going to end up… I mean, the last thing you want is an expensive dividend stock or an expensive company buying back shares. That’s stupid. That’s a horrible way to invest. And so you want to be on the correct side of the ledger. So there’s a lot of… I’m not saying it’s a bad incentive because it is, but that’s a board issue, not an investor issue, I don’t think. Now, if you’re a big enough investor, if you’re some trillion-dollar Cowper’s or something that’s, you know, investing in these companies, you could effect some change, and say, “Board, you’re going to…” And Buffet talks a lot about this, about having CEO pay better aligned with company and long-term stock interests, versus crazy, quarterly earnings per share that really have no impact on the long-term…
Jeff: Quarterly capitalism.
Jeff: Alright, next question. Which I assume is based upon valuation, here, but we’ll see. “Meb, which asset class both domestic and international, is going to shine five years from now?”
Meb: I would say the same thing that I said in a Real Vision interview. The sweatiest interview I’ve ever done. But it was town and they…
Jeff: I got to get a video of that.
Meb: I have it. I don’t know, if you sign up for probably a trial, or if you’re a Real Vision subscriber, it’s a great video service. Anyway, but I told Ral, who’s also been on the podcast… By the way, it’s really funny. We get so many emails and tweets from people like, “You need to have so and so on the podcast.” I’m like “But he was on like two months ago. Go check the archives.”
Jeff: We just had that.
Meb: Half the suggestions we get are people that have already been on, at least, if not three-quarters. Anyway, so check the archives, mebfaber.com/podcast. Anyway, so Ral and I were talking, and he asked that question that said emerging markets. And I said, “My portfolio is all in the Trinity portfolio.” Which, by the way, most of the momentum stuff is tilted towards foreign equities, cheap equities in a lot of emerging markets right now, and so is the value. So you have like a double exposure to emerging markets and cheap equities through both the momentum and the value side. And that’s my favourite.
It’s always, when value is agreeing with momentum and trend, that’s the best time for returns. And you’ve seen that. So emerging markets in some of these cheap cape countries over the last three years, really since 2015, have stomped everything else. 2014 was a stinker, but if you pull up any of these funds and asset classes since 2015, they’ve all really, really stomped. And it’s continuing in 2017. This makes sense. Emerging markets emerging market cape ratio is half the U.S. Half. So my entire… By the way, our company 401(k) or whatever it is we set up a couple of years ago, just goes all in emerging markets. Because we don’t have any at Cambria Funds, which is amazing.
Jeff: Do you see this running another 5, 10 years?
Meb: You know, so if you think back to 2000, 2003, emerging markets, really all the way through 2007, just destroyed U.S. stocks. And everyone was so excited about the bricks. And then, of course, emerging markets got expensive. India and China were trading in the 40s and 60s. It was crazy. And then, so when the next bear came, they all got hammered, and they’ve underperformed since then. Well, instead of being at evaluation premium, which they were, they are now at a huge evaluation discount. This is the largest discount that I can find, going back to the 80s, for foreign, and particularly the cheap stuff versus the U.S.
Jeff: Still despite the run-ups in 2015.
Meb: Despite the run-up. Because it’s such a… So the cheap cape basket went from 9 to…now it’s like 12 or something. Or 8 to 12 or 13. And the U.S. has continued to go up. So it’s at 32, 33. But look at Europe today. Emerging markets are up 5, U.S. is flattish. Depends on what you’re looking at. So yes, I think this continues for a while.
Jeff: If the US equity market rolls over, to what extent is that going to have collateral effect on…
Meb: Every bear market’s different. So would I expect emerging markets to emerge totally fine? No, I wouldn’t. But 2000 is a good example where a lot of asset classes did just fine. REITs did fine, bonds did fine, dividend paying stocks did fine, small cap did fine, emerging market did fine. It was really just this super market cap weighted NASDAQ, tech, market cap weighted stocks that did very poorly in 2000. Whereas in 2008, everything got hammered, but remember, emerging markets were expensive going into that. So I would… I mean, if you were to put on any pair trade, I think that cheap countries versus U.S. is about as good as it gets.
Jeff: That is like one of the few times I can think about you making a strong conviction recommendation right there. I’m impressed.
Meb: But I’ve been saying the same thing over the last four years, ever since, “Global Value,” book came out. It’s just the reaction is now changing from people. You know, it’s funny because over all these years, it’s now…everyone now kind of gets it, but it’s after emerging markets have gone up… I mean, Brazil is up 130% since the last couple of years?
Jeff: Is there a specific emerging market country you would want to stay away from, just because of…
Meb: No. I’m agnostic. People get into these weird sort of, you know, “Hey, we can’t invest in that country,” or “This one is habitually low cape ratio,” or “This one’s habitually high.” I note the differences and accept it, and I would never pick just one. Our fund buys a dozen countries. So if Portugal tanks, well, you know, that’s part of the game. And hopefully, one of the other countries will balance that out. So you certainly have to diversify, but Russia is certainly one of the cheapest. I think…was that the cheapest in our last update? Czech Republic doesn’t really…
Jeff: It’s been cheap for a while.
Meb: I got into Russia years ago, and I’ve been under water for a while. It’s coming back, though.
Jeff: Alright, next question. Best strategy for folks with a limited selection of 401(k) funds.
Meb: I think, depending on how bad it is, and some of these can be pretty bad, with high fees, I think the default is the lowest possible fee funds you can get in your plan.
Jeff: Well, that’s interesting. You would say low fees over, like, potentially, you just mentioned emerging markets as being great. So you would say fees over value?
Meb: Well, it just depends on the challenge. I mean, depends on the allocation. So if you’re going to do all equities, then do the global market portfolio, and/or tilt towards value. So buy value global equities. If that’s too much velocity for you, then put half in bonds and then do the same thing. Do global bonds. But 401(k) s, you got to remember, so people are going to be dollar cost averaging into those for the next 5, 10, 20 years. So the starting point actually starts to matter a lot less, because you’re going to be averaging it over time, and so putting it all in equities is actually fine if you can emotionally sit through it. Again, if I had to choose, I would certainly choose emerging, then developed, then US, but they probably have some sort of global fund or value, global equities fund, but, you know, you want to pay as little as possible for those funds.
Meb: And the ETF, by the way, so that I just don’t sound like some crazy ETF evangelist, you know, the ETF structure is actually not that big of a benefit in retirement, because it doesn’t have tax deferred accounts, because the tax benefit is not the same. Now they are still vastly cheaper on a fee basis, usually, and they don’t have a lot of the conflicts of interest, as a lot of the mutual funds do, but the tax benefit goes away.
Jeff: Okay. Next question. I read your article on how to beat 98% of mutual funds. It was interesting, but could you invert it and find a way to stay invested in the top 2% of mutual funds?
Meb: So that article was about just tracking Buffet. And the takeaway from the article was actually different than what this reader just asked. The takeaway was that if you picked Buffet’s top 10 stock picks every quarter when they were public back to 2000, you would outperform the market by five percentage points a year, and beat 98% of all mutual funds. But during that stretch, Buffet’s underperformed, I think it’s 8 of the last 10 years. So the point of the article was that it’s just to demonstrate how hard it is to stick with a strategy or style or a manager. So despite the fact you would have creamed everyone, you would underperform almost every year in the past 10. And almost no investor in the planet would sit through that. Or even institution, endowment, I don’t care, certainly not most mom and pop individual investors.
Jeff: Must be of Wes Grey, “And even God would get fired as an activist investor.”
Meb: And so Research Affiliates also just had a great article out on this where they looked at the six most famous value factors: so price-to-earnings, price-to-book, all that stuff, and looked at it on a three-year rolling basis, and did that kind of old school patchwork quilt, where they showed… they ranked each factor over every three-year period. And it’s like kind of random. And so the problem is that those are all the same thing. It’s value. But sometimes shareholder yield would crush price-to-book, and sometimes price-to-book would trail or beat for six years in a row. Whatever it may be.
And that’s the same damn thing. That’s literally the same category. So the challenge with persistence and mutual funds, I think there’s a lot of research that shows you can certainly skim off a lot of the junk. And a lot of the junk happens to be high fee. Going back to the Aronat’s [SP] presentation, you know, a lot of the fun categories outperform grosser fees, and then, depending on netter fee and then taxes, that’s really where they got hammered. And so this applies to hedge funds, this applies to CTAs… There’s a lot of research that, yeah, the managers do offer value, but they take all of it in fees, and then some.
So the best thing you can do if you’re searching for mutual funds, and you want to be top-quartile or decile, I think by far the biggest step is to avoid high fee funds. But the problem is that’s the least sexy for a lot of people, and so what are they going to do? They are going to chase the hot biotech or tech or energy or whatever it may be fund of the day, of this cycle or that cycle, and then ruin all their chances. So it’s hard. Even in certain areas where historically there has been persistence, so you’ve seen persistence in private equity funds historically, the top quartile, what they call it?
That’s deteriorated. And that’s kind of gone away over this past cycle. You know, I think there are a number of factors that, you know, and this all goes back to our belief that if you’re going to do the beta side, the buy and hold side, you should pay as little as possible, which is why we have a ETF that charges no management fee at all, and it’s 30 bibs. Because you don’t do anything. Really, you’re not doing anything. So it should be as low as possible. And that’s great. And that’s an awesome world to live in. And so all these asset classes, you should pay as little as possible. If you’re going to allocate to try to get alpha, it’s got to be super concentrated, active and really different. And, you know, the hard part about that is people sticking with it, so like the Buffet example, through a full cycle. I don’t think anyone can. It’s really hard.
Jeff: That would have to show up on the ‘How to Invest’ Maslow hierarchy. A type of behavioural control.
Meb: We had a old post, this might have been pre-you, where it was called “The Netflix Prize for Mutual Funds.” And there was a website, I think it might have just gotten sold, I’m blanking on the name of it. We can add it later. But it was a website where you could have some of these data quant prizes, like an XPRIZE sort of thing. Well, Netflix, back in the day, was like, if you’re going to improve our algorithm, we’ll pay you $10 million. Whatever it was. And they’ll give you the dataset. And so I said, “Morningstar should do this and just give everyone the datasets.” And I think what you would find is there’s probably six or seven factors that tilt the odds in your favour. And they’re pretty common sense ones, I think. But fees to me is probably the biggest.
Jeff: It reminds me of your own study, where you looked at the portfolios of whatever it was, 10 of the most famous portfolio managers out there from early 70s, and basically, since that time, the returns were all within, well, you tell me. The returns were all within like one or two percentage points.
Meb: Yeah, it was asset allocation portfolios, and it basically said that your allocation didn’t really matter.
Jeff: Yeah, it’s just fees.
Meb: A lot of it was fee… I mean, it did kind of matter, but as long as you had the main ingredients. So you couldn’t just be all bonds or all gold or something. But as long as you invested some in global stocks, some in global bonds, some in real assets, then they all kind of ended up in the same place, but a huge determinant would be fees. Then of course taxes, would be another one. But again, that’s just buy and hold. But yeah, I agree. And to be very clear, I agree with Swensen that all that matters, though, is the return after all these fees are considered. So if you find someone that can add value or an asset class or an approach, then that’s worth its weight in gold, and it’s great.
You can pay 1%, 2% for it. It raises the bar, is the thing. The default for every investor should honestly probably be just like Vanguard. Say, “Look, here’s my default…” Vanguard ETFs, not mutual funds by the way, although Vanguard has kind of a special patent structure on some of their mutual funds where they can lay off their capital gains on their ETFs, which is a whole other topic. But that’s the default. It’s paying almost nothing and then, only then, should you be able to say, “Okay, I’ll allocate to this fund, but here’s the reasons why.”
Jeff: Fair enough. We’re pushing an hour, so why don’t we wrap this up? You have anything more to add? No? Is this it? No more?
Meb: We had like 50 Twitter questions. Did you just edit out all these poor tweets?
Jeff: We’ve answered a lot of these before. They always tend to have a lot of the same themes, so we try to condense them into one question, and/or we’ve hit on them before.
Meb: Did anyone ever respond to our voicemail we tried for like a month? No?
Jeff: It’s still up there.
Jeff: Nobody responds to it. Nobody wants to have their message read or played…
Meb: We’ve got to figure out a way to do some sort of live call-in. Maybe we should do a real radio show.
Jeff: That would expose you to way too many rants from your angry fans.
Meb: Listeners, if you have any ideas, get us on the radio. That would be fun. That’d be fun to do live call-in. Otherwise it’s just too hard. Anyway…
Jeff: Well, the challenge is somebody’s going to mention funds, and so compliance would have an issue with that.
Meb: Yeah, but I’m compliance. So I just say, “That’s fine.” I just ignore it and segue.
Okay, listeners, again, if you’re in any of these cities, reach out. If you have any good suggestions for us for podcast number 101 to 200, let us know. Some good guests, sponsors, ideas, questions, new additions, should we move to five days a week, let us know. Shoot us, Email, [email protected] If you guys have some questions, send them to the mailbag, we will ask on air. They got to get a little different. Jeff says you guys are asking the same questions. And we’ll post show note links and everything at mebfaber.com/podcast. Leave us a review. We need to, Jeff, go in and look at these up to episode 100 and pick out the 10 best.
Jeff: You still need to read the worst ones. That would be a good sort of comedy bit.
Meb: We had an amazing one on the book, recently. It said, “This is a dump read.” And I don’t think it’s a compliment. I think it’s…
Jeff: Seems to be referencing where you read it?
Meb: I don’t know, maybe. He only reads my books on the toilet. I think that’s it. Thanks for listening, friends, and good investing.