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Episode #412: Radio Show: Meb’s Got News!…YTD Stock & Bond Performance…$7 Gas in SoCal – Meb Faber Research

Episode #412: Radio Show: Meb’s Got News!…YTD Stock & Bond Performance…$7 Gas in SoCal






Guests: Meb Faber, Justin Bosch & Colby Donovan

Date Recorded: 5/3/2022     |     Run-Time: 37:14

Summary: Episode 412 has a radio show format. We cover:

  • The Idea Farm is now free!!!
  • YTD stock & bond returns
  • Trend-following as a diversifier for 60/40 portfolios
  • Inflation and rising food costs


Comments or suggestions? Interested in sponsoring an episode? Email Colby at

 Links from the Episode:


Transcript of Episode 412:

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

Meb: What’s up, everybody? Welcome to another edition of the “Radio Show.” It’s been a hot minute. We got Colby and Justin back on to jibber-jabber. Colby, Justin, welcome back.

Justin: What’s going on? Hey, thanks for having me.

Meb: Justin looking nice and tan, just came back from somewhere in the Pacific. I don’t even know where. What chain were you on?

Justin: South Pacific, French Polynesian islands. Spent some time on the island of Moorea and Bora Bora before heading back to reality.

Meb: What did you guys do the whole time, just sip coconuts? Did you do any fishing? No surfing for you, I don’t think.

Justin: No, no surfing. We did a lot of snorkeling. The great thing about some of these places there is there’s overwater bungalows. So, that was an experience in itself. Lots of snorkeling, swimming, enjoying the weather.

Meb: I love it.

Justin: Had a great time. Wonderful hike, by the way, on Moorea. That has to be one of the most incredible places on the planet.

Meb: As you guys know, and listeners probably do too, I’m always cheap bastard out looking for a deal. There’s a hotel chain, a very fancy, not fancy but it’s an Asian-focused hotel chain. And I think it’s bear in entry, but I’m blanking on the name. We’ll look it up, put it in the show note links. They have an offer where if you buy a one-week gift certificate and there are certain stipulations, you get $200 a night and you get a credit. The rule is you have to stay at one property for a week. So you can’t do like three days and then four days. And so I looked it up because I had never been to the Russian hideout, now the Maldives, but was talking about it because that was listed on there. And I said, “No way for 200 bucks a night could you go to the Maldives and stay in one of these overwater bungalows.” The fine print on that one was that you actually had to stay on a villa on the land. I mean, oh, how terrible that must be? But I sent it to my brother who’s got three kids and he ended up going. So, we’ll post the link to the show notes. And listeners, if anyone sees the opportunity in this gift certificate, let us know. Anyway, what are we talking about today, guys? What’s on the docket?

Colby: Meb, we got lots of news with you lately, Cambria Idea Farm. You want to share with listeners in case they missed it, what you’ve been chatting about lately?

Meb: As our day business grows, and that’s Cambria, we have over 100,000 investors now. We’re knocking on $1.5 billion in assets. As that business gets bigger and bigger, some of the other projects we’ve been working on, specifically talking about The Idea Farm, and listeners, if you don’t know what The Idea Farm is, it goes back 10 years, which is crazy. I can’t believe it. It’s 10 years this summer, I think. There was a problem I had, which a lot of other investors have, which is trying to find the signal of the noise all day long. And it’s only gotten worse now. Ten years ago, yes, we were on Twitter, but most people weren’t. It’s just a daily deluge of information, CNBC, Bloomberg, Wall Street Journal, print, video on and on, and now social and everything else. And usually, it’s a lot of negative news. But trying to find some of the quality gems of research out there from any source, newsletters, paid bank, gated bank research. And I said, “I wish someone would do this.” And there was a few sites like Abnormal Returns, we love, and more recently, Savvy Investor that do a sort of curation.

But I said, “You know what? We’re just going to start doing it. We’re going to curate the one or two best pieces of research per week and send it to our followers. We’re going to charge, we’re going to add some other goodies.” Now, it’s 500 bucks a year. We were going to do quarterly valuation updates, backtesting the idea, all this stuff. And then fast forward 10 years later, as our business has grown, we have very much, the long time listeners know, a mission of education in the financial world. We complain a lot about the sorry state of public education around personal finance and money. As I said, you know what? It’s been 10 years. And while this will be personally painful for the company to give away all this revenue, we’re going to make it free. We just implemented that. We announced it. Everyone is really excited about it.

Listeners, if you go to, you can sign up. The way it’s working now is you get one email per week. It’s usually the top two or three investment research pieces. They could be public, they could be private. And if they’re private, we ask permission. Some of these publications charge a $100, a $1,000, $10,000 a year. Some of them you can’t even get if you pay. So, if it’s from some bank or hedge fund, we ask them and usually, they say yes, sometimes they say no. We share those, and then the top, say, two or three podcasts per week. Anything else we can find that’s of high value to listeners. We’ll add some other goodies as we go along in the coming years. So, we’re pretty excited about it. Listeners, check it out. There’s also a Twitter handle.

Colby: @TheIdeaFarm.

Meb: There we go. Sign up, let us know what you think. We’re pretty stoked on it. It’s short-term painful, hopefully, long-term exciting as well. And listeners, if you happen, we may introduce some sort of sponsorship ideas at some point that are aligned similar to the podcast. We like to include some pretty cool products or services that we think are awesome on the podcast, and may end up doing the same as well. So, reach out, hit us up. What’s the best email? We got What are we using for Idea Farm?

Colby: We’re going to use that for now.

Meb: Same. Okay, Hit us up.

Colby: Not only that, but you’ve also got big news about over 100,000, which is not just a reference to your Twitter followers.

Meb: Yeah, that’s cool. It’s kind of a crazy number as you think about it. But public funds, as we know, certainly scale. And the fun thing to see is it grow over time, which means our family is growing over time, the Cambria family. Thankfully, it’s not just performance chasing. So, it’s not just in one fund, it’s across the whole lineup, which is great to see. Now, part of that is certainly that we’re maturing. This company is almost double digits in age for the ETFs. We started launching them in 2013. You’re starting to hit some maturity, so people are comfortable that we’re not going to go out of business and disappear. But also, I think some of the strategies and ideas now that potentially we’re not in this S&P up 20% a year every year sort of environment, start to look interesting to a lot of people as well, diversification, foreign stocks, trend following, particularly value are coming back into favor. So, we’ll talk more about that, I’m sure. We’re humbled and blessed in many ways to have that very real responsibility. And the good news, as we said many times, we’re right there with you. You can check out my old article on “How I Invest 2022” to show that our money is right there with all the investors.

Colby: Thanks, everybody. Appreciate it. We’re going to start doing, Meb, stock market stat of the week to kick off episodes. And I think there’s no better stat than one year guest last week shared, Chris Bloomstran. This honestly feels incredibly fake. Like, I wouldn’t believe it. A lot of other accounts tweeted it. But Berkshire Hathaway can decline 99.3% and still have outperformed the S&P 500 since 1965. It’s ridiculous.

Meb: Let that sink in, listeners. I actually went and checked the math on my own because I said, “This sounds so fake. It can’t possibly be real.” But it illustrates a couple of points, the difference in compounding. If you are compounding 20% per year and something else is at 10%, it doesn’t sound like that much, but the alligator jaws just get bigger and bigger over time. The gap gets really wide. Even at a 1% is a difference, but at 10%, certainly, it’s just astonishing. And Omaha was actually last weekend. I didn’t get to go because I had a five-year-old birthday but got to see a lot of the tweets and comments and everything going on from there. Astonishing stat. And listeners, if you haven’t listened to Chris’s podcast, check it out. It’s full of two hours’ worth of gems in there too. Have either of you guys been to Omaha annual meeting?

Colby: I’ve been to Omaha once, but not the annual meeting.

Meb: It’s worth going. These guys aren’t getting any younger. I think Warren is in his ’90s and Charlie is like 98, still dropping bombs, still putting the crypto crowd in the headlock. I don’t know if they do it for pure trolling at this point, or they just like to tease that crowd, but certainly, it amps up the views. You guys better hustle. The hack, Justin, by the way, for local is to go to the Dow Jones meeting in downtown L.A., which is easy way to go see Charlie. And I forget when that is. You know, he just dropped a pretty monster Chinese stock trade. Was it Alibaba?

Colby: Yeah. Which is also down today.

Meb: Yeah. Where he bought a bunch in the Dow Jones balance sheet and then sold it, I believe, or at least sold most of it. He’s still spitting fire at 98. I love it.

Colby: Why don’t we get into a little bit of year-to-date return so far. Listeners, we’re filming this on May 3rd. So, we just finished a third of the year.

Meb: I think the S&P being down where it is, which is 12%-ish, somewhere like that right now, not a big deal. It’s certainly been down a lot more and probably will go down a lot more in the future, at some point, 50%, 80% plus in the great depression. That’s happened. Now, the curious part about this year, which should be no surprise given the starting conditions is actually the decline is happening while bonds are also getting smacked. Bonds, and we’re talking about like a 10-year treasury as our base case, are also down around 10%. Now, that is significant because bonds usually don’t go down that much in that short of a timeframe combined. If you look at like a 60/40 portfolio, it’s down at that low teen’s level, which, going back to the last 100 years, if we finished here for the year, puts it in a top-5 worst year for 60/40.

Now, usually, that is because stocks get absolutely creamed. Sixty-forty being down 10%, 20% plus is usually because the stocks just got massacred. It’s not usually that it’s the stocks and bonds. In fact, if you look back the last 100 years, and I had to check my math because, again, it sounds crazy. The number of times U.S. stocks, as the calendar year, and tenure bonds have been down in the same year in the past 100 years is twice, only twice. And I said, “There’s no way that’s right,” and then I went and looked at it again. And sure enough, that was the case. Because if you look at a time series on one, even randomly, they’re both up on a calendar year, let’s call it 70%, 80% of the time. Just the numbers of randomness would show that it shouldn’t happen that much. And then the anti-correlation, in general, would show that when stocks are down big, usually, bonds are doing okay. But that’s a crazy stat to me.

Thinking about that, we’ve said a couple of times over the past couple of years for institutions and endowments, the nightmare scenario for a lot of these that assume bonds are going to hedge is that both get whacked. Bonds are down pretty significant. Stocks, not yet. So, stocks continue to get worse. I mean, and the worst year for 60/40 ever was down 1/3 is 31%, I think, for a calendar year, which is pretty nasty. The drawdown for 60/30 is 2/3, which is nuts. Think about that, a 60/40 portfolio being down 2/3. And these numbers change a little bit on a real basis versus nominal. So, the number of times stocks and bonds has been down together on after inflation basis is like 13 out of last 100, which makes more sense because the times like the 1970s of higher inflation and other periods. I said, “This is actually going to look worse on a real basis this year because inflation…” We’re not even talking real returns at this point. We’re talking nominal. And if inflation stays around 8% for the year, these numbers, they may set some records.

So, we’re only one quarter-end, but hey, as I was saying on Twitter, the famous “Sell in May and go away,” or my southern version of it is “Take a break and see you all in the fall.” But usually, historically, if you go back to one of our very first papers, and listeners, it’s like Easter egg on our website because not only am I wearing a tie, I’m clean-shaven and I’m in my 20s when I wrote this paper. No one’s ever read this paper, but Leuthold replicated it. And we posted a chart to Twitter, and we’ll put at the show note links, but it’s basically looking at the four-year cycle for stocks overlaid with the yearly month to month sell in May sort of outperformance on a quarterly basis. And we’re currently entering if you overlap those two for the four-year as well as the worst period for stocks in the next six months over the course of the four years. And we’re also happened to be in an expensive market that’s in a downtrend. So, I say it sort of jokingly the sell in May or see you all in the fall, but it seems to be that’s actually lining up with the reality of the world as well.

Justin: This seems like a nice segue to get into the, like, practical application of different asset allocations and different asset classes. So, with a 60/40 that’s referenced all the time and we’re talking stocks and bonds, there was a time I’m sure when you look at history and you said, “What a nice diversifier bonds or treasuries can be?” And there’s not a lot of doubt in my mind that treasuries or bonds still can be, especially because we’re looking at this year in a pretty small window of time. But I think this year’s performance, the positive performance being dominated by commodities does serve as a reminder, in my mind, that other asset classes still can serve a really strong role in a portfolio. So, it’s something that I want to give a nod to CTAs and trend following as wonderful solutions and potentially great diversifiers as well.

Meb: We’ve been talking a lot on Twitter about this, where if you look at a traditional allocation, U.S. 60/40. We’ve done a lot of polls and a lot of comments on this, and so we can touch on a few, but, in general, still… And, by the way, Paul Tudor Jones was on CBC today saying that he thought trend following was the best idea he had for the next decade, which is pretty fun to hear. A lot of people, A, if they even know what trend-following or managed futures is, most don’t. B, they don’t use it or they don’t allocate. We did a poll where we said, “Do you use trend following?” It’s like half said 0% allocation, which is funny to me because if you look at a standard 60/40 portfolio and you show, all right, let’s say, you’re going to add a 20%, so you’re going to take it down to a 50/30 and 20% other. You get to choose one, one fighter. It’s foreign stocks, REITs or real estate, commodities, or trend, managed futures, which one improves risk-adjusted returns the most? Meaning, what’s the best diversifier? You got a traditional portfolio, what are you going to throw in there? And it’s not even close, by the way. Trend following improves every possible metric and the others don’t, or if they do, it’s not nearly as much.

The poll, the crowd, voted. And I think foreign stocks was number one, which is the weirdest to me because that’s just more stocks. That’s just beta. Yes, it does diversify, and particularly now I think they’re cheaper than U.S. stocks, but if you’re looking for a pure diversifier, it’s really trend. There’s paper upon paper, and so in a year like 2022, when you’re starting to see a lot of these growthy expensive funds, whether they’re hedge funds, whether they’re ETFs, whether they’re private equity just getting creamed. I mean, some of these are printing down half this year, which is just nuts. And then some peak-trough are down even more about 60%, 70%. From an allocator standpoint or from a thought perspective, the perfect complement to a lot of these portfolios, and we just had Antti Ilmanen on the podcast. He may be in the future. So, I’m not sure, listeners, if it’s dropped yet. If it hasn’t dropped, get excited. If it is already dropped, go listen to it. But he has a great book.

And in there, AQR has also written a paper that talks about what are the best diversifiers to traditional portfolio? It’s talking specifically to private equity at one point. It’s like is managed futures the ideal compliment? We talk about it to our VC friends. I say, “Despite the fact that it’s a similar strategy, long volatility, I don’t know any VCs that actually allocate to trend following or managed futures.” I don’t even think any of them know what it is. It’s a curious setup or scenario. And as we all know, what helps drive flows and interest to something it’s if the performance is doing well. 2022, not surprisingly, trend following is doing great. A lot of other assets have been getting creamed. And part of the trend, and people overlook this, if you’re doing a broad, long-short perspective, yes, you’re long, the stuff that’s going up, so commodities. That’s about it. I think everything else is going down this year, stocks, crypto, real estate, bonds, on and on. But also, if you’re doing the long-short component, it’ll be short some of those, it’ll be short stocks, it’ll be short bonds, which is an overlooked feature. There’s not a lot of ways to get exposure to that trade.

There’s cousins. So, in a rising interest rate environment, in a rising inflation environment, commodities usually help, and they are this year. But also not many trades will get you on the short bond exposure and managed futures will. So, if you look at managed futures or trend following strategies, in general, many of them have been kind of flattish since 2015. They peaked in 2015. They did kind of like a cup and saucer pattern over the past five, six years. And they’re all hitting all-time highs now. They’re breaking out. If you were to actually be honest, and there’s an old Goldman Paper that isn’t honest but it tries to be honest then concludes dishonestly or with parameters where it says, “You know what? We’re going to try this optimization. Let’s blind these and see what it kicks out.” And it says, “In every scenario, you end up with a gigantic allocation to trend. But no one’s going to do that. That’s not realistic. So, we have to limit it to a certain amount.” Well, as the listeners know, I mean, Cambria and me personally, our default allocation is half trend, which for many, is totally crazy. That’s way more than they would ever be comfortable with. And we probably have more than anyone in the country, but that’s serving investors really well this year.

We wrote the Trinity white paper, and in it, there’s a paragraph. It says something along the lines of like, “Look, if you’re having trouble following your portfolio, if you’re having trouble chasing asset classes, this might be a way to help you sleep.” The Trinity strategy, in general, has done fine, but really it’s in periods like 2022, and it’s a short year thus far. S&P is not even down 20%, 40%, 60%, right? It’s just down a little bit. It’s just a little jiggle, little wobble, but it’s this type of environment where you want a portfolio that’s designed for any scenario you can come up with. And this year has been a crazy one. If we’ve learned anything in the last few years, it could get crazier. So, I think you’ll start to see people get interested in trend again. People love to chase what’s working. And if you have a period of one year, two, three, four years where this does really well relative to U.S. stocks, you’ll see a resurgence of this world. Trend followers will be the new growth managers and rinse and repeat, but it’s good to see trend doing what it’s supposed to be doing in 2022.

Colby: Speaking of names that are down a lot, the list of NASDAQ names and where they are. Over 45% are down 1/2, over 22% of the NASDAQ are down 3/4, and 5% are down 90. If you look at some of the names that are down right now from their 52-week highs as from earlier this weekend, Clover is down 91%, Robinhood is down 88%, Peloton, 80%, Teladoc, Roku. I mean, all these names are just getting slaughtered from their all-time highs right now.

Meb: You know, we did a tweet in the last year ago, maybe. Basically, it said, “This feels like one of those moments when you blink and some of these names, you’re going to be like, ‘What happened?’” All of a sudden they’re down 50%, 70%, 90%. And sure enough, here we are. Now, the crazy part is we’re not even in like a romp and stomp and bear yet. A lot of the turbulence is occurring underneath the service, but at the market cap level, you don’t see the carnage like we have in past bear markets where the market cap is getting obliterated. The cool part, from our perspective, is value investors not so cool from the other side. If you look at a lot of the spreads, people are like, “Oh, my god, that’s crazy. Values had its day,” and then we’ll post these to the show note links. There are people that keep posting some of the value spreads of cheap versus expensive. And they’ve maybe just moved a tiny bit off the peak of mean reversion, whether that comes from the cheap going up or the expense continuing to go down, we’ll see, but it should revert at some point.

We wrote one of our value and momentum strategies about a year ago, the peak of all the craziness, February 2021, January, maybe. And we said, “Look, send it out to our full email list.” It said, “Totally crushing it,” but in prints, it said not, so totally not crushing it. And this was a strategy that invests in value and momentum securities. But hedge is top-down based on top-down valuation and trend. And that strategy, we wrote a white paper about it is a 100% hedge now. We talk a lot about this, where we say, “All right, you bucket the U.S. market into four quadrants, cheap, expensive, uptrend, downtrend.” The best is a cheap uptrend. You guys know I love that, cheap hated uptrend. The second best is an expensive uptrend, where we’ve been in the last few years. But by far, the worst is an expensive downtrend. And here we are. But what’s funny is we wrote this article and we said, “Everyone always talks about crushing it and how they’re king in the mountain, and the strategy is amazing because it’s easy to cheer when you’re doing well.” I said, “Well, we have 12 funds. So, usually, something is awful.” We said, “Let’s profile one.” And particularly it’s doing terrible, but we think has long-term prospects that’ll be positive.

And if you look at some competitors, there’s some AQR funds, Vanguard as a market-neutral fund, Gotham, others, they were all pretty stinky for the five years prior. Maybe it was just like the humility gods of markets They rewarded us because post-writing that strategy has had really strong returns. If looking at 2022 as well, it’s not necessarily just trend, but other ideas have reversed as well. So, this one will capture the cheap versus expensive, but it also takes out the market beta. There’s a few of these funds out there that are having a really strong year. So, this is another idea that alts bucket of where you can put some cash to capture a different part of what we’re seeing in the market. Not necessarily just trend, but also, in this specific case, U.S. stock, value spread closing, but also trying to take out the market beta too. So, that’s pretty cool to see as well. From all of the stats, man, it seems like this strategy has its best days ahead of it and a long way to go from where we are today. It doesn’t feel like remote capitulation. Despite the fact that if you look at the AI cinnamon, cinnamon’s pretty terrible. Like, the bullish percent is pretty low, but the amount that people allocate to stocks is still near an all-time record.

So, it’s a very curious setup where we said, “Look, it’s weird that people are grumpy and bearish on what’s going on,” but at the same time, it’s like, “Do what I say versus do what I do.” They still hold all their money in stocks. Part of that is because I think a lot of people assume the TINA, there is no alternative. They don’t want to invest in bonds because bond yields are low, but they don’t know what else to do. And the reality, there’s plenty more you can do. You can add trend following, you could tilt towards value, you could do some of the strategies we just mentioned. Commodities and real assets, that’s another area. We have a large strategic allocation too as well as tactical. Our momentum strategy is full boat long commodities and real assets now, which is exceptionally rare scenario to be in, but that’s where a lot of the momentum has been. There is no alternative if your opportunity set is U.S. stocks and bonds. But if the world is your oyster, all of a sudden, there are plenty of things to allocate to. People are going to learn the same lesson they’ve always learned. But the particular problem of allocating near highest percent to stocks at a time when they’re expensive in a downtrend I think could be particularly painful for many investors, not just retail but pros and institutions too.

Justin: All right. Meb, well, let’s talk about commodities. Naturally, I think we have to talk about inflation. There’s a quote from Leuthold, “The U.S. inflation surprise index has recently dropped by the largest amount yet in this recovery. A strong signal in inflation rate is likely nearing a peak.” So I know this is a tough one, especially if you start thinking about investing in this market. Okay. Well, we’ve seen it. We have some inflation on the books, as far as the stats go. We’ve seen commodities rip this year. But then, again, in the back of your mind, you have to be wondering, “Okay, is this going to continue for X amount of time? Are we at peak?” It’s like anything. It’s really hard to predict. So, how are you thinking about inflation? And then do you have any absurd, personal inflation stories besides the dinner at a local Mexican restaurant?

Meb: I think I see it everywhere now. And I think listeners would probably agree. I live in the couple miles from anytime the national news wants to do a special on inflation and do the gas station that’s here. It’s, like, the most expensive one in the country. It’s, like, seven bucks a gallon.

Justin: Oh, my God.

Meb: Yeah, I know, right? And I’m waiting for it to hit 10. I was kind of darkly just to see that number. They’ll have to, like, add. The sign is not big enough. It doesn’t have the double-digit part for it, but I’m seeing it everywhere. I saw $48 hamburger on a menu and also a $40 salad. I think anybody who’s been out to eat, certainly food inflation. And look, this is first-world problems. It’s going to be really heartbreaking to see the echoes. And this is talked about a little bit more now than it was last couple of months, but it’s still not appreciated yet because there’s usually a lag. It’s like a three, six-month delay before a lot of the food price inflation really starts to make itself known as a problem, particularly the developing world in Africa and certain countries to get a lot of their exports. A lot of their food and daily diet is from certain crops, whether it’s wheat, whether it’s corn, which are now in the double digits. They’re higher than all the unrest that happened in the Arab Spring. It’s a scenario that has implications far worse than me complaining about hamburger prices. But hopefully, it declines.

I would optimistically love to see inflation come down, but it’s at eight. So, even if it gets cut in half to four, that has lots of implications too. And four, someone was talking about this on Twitter the other day, because one of my least popular… I got a couple really unpopular topics that people lose their mind about. It’s somewhat shifted from buybacks and CAPE ratio, which seems to be still the G.O.A.T of Twitter triggers, but the one of why you should invest all your money in U.S. stocks is certainly up there. But the other said, “Look,” and this is just data. It’s not me giving an opinion. But I said, “Historically speaking, long-term, 10-year P/E ratio, CAPE ratio evaluations are like 18. When inflation is mild, it’s like 22.” And we’re at 36, let’s call it now it peaked at 40 at the peak of this run. But I said, “When inflation is above 4%, that number gets cut down to like 13, and when it’s above 8 or 7,” I think was the example, “It gets cut down to 10.” So, let’s call it half from here. I mean, I’m being generous. It’s really two thirds down from here. And that’s just the historical dataset. Don’t get mad at me. People say, “Wow, that’s a rare event.” I said, “You know what? Four percent inflation and above happens 1/3 of the time in the past 100.” That’s not a small percentage. That’s normal. Even if it gets cut down in half, which hopefully it does, and inflation comes down to a more normal level of around 4%, people still don’t want to pay giant multiple on stocks in that environment.

And I said this on Twitter. People got all upset. I said, “Look, a 50% decline in the multiple is normal. That happens all the time.” By the way, if you look at what’s happened in the past decade, post-global financial crisis, the multiple tripled. Don’t complain when it goes down and not complain that it’s not normal on the upside. Like, it happens on the upside and the downside, but it helped you in the past decade and potentially will probably hurt you on the other side. And people go crazy about it. Then, again, it’s like, what do you do about it? And let’s say that inflation remains elevated, well, certainly, there’s the obvious candidates, commodities we’ve seen go crazy over the past number of months. They’ve been a huge diversifier this year. Most investors don’t have any, but really any real assets tend to help. Real estate tends to be pretty expensive. So, we’ll see if that helps. On the financial crisis, it went down like 70% at the REITs. So, they’re not without risk as well. Value, if you look at value in the 1970s, as a good example, really helped a lot buying cheap stocks versus buying expensive ones. And there’s some theories we could probably spend an hour on about cash flows, growth stocks, and discounting cash flows in the future versus current. But the reality is it’s really never a great idea to pay huge. Ten times revenue used to be the crazy ceiling, and then we saw in the last year or two as like infinite.

Colby: That’s value today.

Meb: Yeah. Yeah. But all these things that we’re talking about, to me, should be a part of the portfolio process always. It’s not just about today, but these are compliments. So, look, fingers crossed, inflation comes down and settles, but you talk to investors around the rest of the world and they’re like, “Eight percent inflation? That’s nothing.” We look at that monthly. You go down to Argentina, talk to friends there and they’re like, “Eight percent inflation, not yearly, monthly.” We have an old story in the podcast where I went down to South America, I think was in Buenos Aires. And a friend took me out on a boat, but we passed some Marina. I said, “This is astonishing. This makes the Los Angeles Marina look like dinghies. Some of the boats here.” And he says, “Yeah, you live in a high inflation economy. You know your currency is going to get destroyed. What do you buy? You buy physical things.” That’s one way to really survive. Looking at the high inflation environment, there is the flip side. Could things get worse? That would really be dark. Oil and some of these commodities… I think it’s like 120 degrees in Pakistan and India yesterday. The weed crop is under stress there, who knows with Ukraine?

There’s a very real-world scenario. It gets worse, which would be awful, but you have to be prepared for that. Predicting these things are, of course, impossible. If we were doing this last year and you’re like, “You, Meb, we’re going to be talking a year from now and inflation is going to be 8%,” I’d be like, “What in God’s name is happening?” The thing we can all agree on is we can complain about our government and the policies. So, universally, that’s beloved. But as you see the Fed funds rate rip up and it’s going to keep coming up here shortly. The realities of higher interest rates and higher inflation are starting to set in. Because, theoretically, let’s say inflation settles at four, well, where should Fed funds be? I’ll tell you where it shouldn’t be is where it is. And it’s multiple percentage points higher of where it is today. So, we’ll do this again in a year and look back, hopefully, finally, on inflation coming down and no more $50 hamburgers. It’ll be really depressing we’re talking about a $100 one. So, TBD. But we want to have things in place that protect us no matter what, either way.

Colby: Sounds like a good time of year for me to step up my intermittent fasting again.

Meb: You know, that sounds like a good idea, no matter what. I’ve always wanted to try like a two to three day fast, and the problem is I never have a reason to do it. There’s no pinpoint in the future of saying, “All right. Time to do it. Let’s go two, three, seven-day fast.” Maybe you guys will have to hold me to it. So, you got to do it this quarter and put it on the books. But one of my best-performing angel investments is actually a smoothie company, which I think was originally based in France. I was trying to look the other day about the geographic locale. People are talking about home country bias and everything. And I said, “You know, it’s funny out of the 320-odd private investments, I think 3 of the 5 have been ex-U.S.” And it might even be four out of five. We’ll see. The stock market volatility is finally coming for the private sector, it seems like. I’m starting to see more and more down rounds, more and more companies, valuations being raised at more reasonable levels. We’ll see if it filters all the way through to startups. Hasn’t quite happened yet, but you’re starting to see that turn. But Kencko, we got to get them as a sponsor. We got a ton of Kencko smoothies.

Colby: Oh, that’s what you’re talking about.

Meb: Yeah.

Colby: My wife has them every day too. I died when I saw you invested in that. Oh, she loves it. It’s not like I said, “Oh, yeah, you should try this because Meb invested,” but she’s been on it forever.

Meb: Oh, wow. Good to know. So, listeners, Kencko, shout out. K-E-N-C-K-O. What they do is they do a shelf-stable, and smoothie might be the wrong word, but it comes as a powder. One of the problems with a lot of the cold-pressed stuff is you lose all the fiber. These retain that, and it’s in a little pouch. You put it in a shaker, you shake it up. They’re perfectly pleasant, and they have all sorts of different flavors. We also use Daily Harvest, which I like, but I’m not invested in. The problem with that is you got to freeze it, and it’s the actual fruit, and they can be pretty sweet. But check both of them out, Kencko. We’ll put a link.

Colby: Link in the show notes. There’s a nice discount for you all there. Let’s wind down here. You guys watch or read anything good lately you want to shout out?

Meb: “Tokyo Vice” for me. That was a fun Netflix series if you like Japan. We’re about halfway through. It’s a fun one. Takes place in the ’90s, so after the economic bubble and bust. It’s been a great show so far. What do you guys got?

Colby: I finished “Ozark” last night on Netflix, which no spoilers, but A plus. Last week we finished “Super Pumped” on Apple TV, which I have no idea how realistic it is or not, but I thought it was phenomenal about the story of Uber and all the stuff that happened there.

Meb: JB, you got anything?

Justin: I just finished actually a physical novel by an author, Clive Cussler. He writes adventure novels focused around Marine and the Navy. There was an older one called “Pacific Vortex!” And it was about this advanced Navy sub that was lost in this area of the Pacific. There was a whole story about recovering that. I found that pretty fascinating. Fun read as well.

Meb: I love it. Physical novel. There’s a guy I’m going to task you guys we need to get on the podcast. I think we’ve asked. He’s politely declined. He’s like the world’s most interesting man. I’m going to get his name, Vescovo. He’s got degrees from Stanford, MIT, Harvard. At 53, he ran his own private equity firm, sits on the board of 10 companies, 12th American to have completed in the Explorers Grand Slam standing at top all the seven summits, skied to the North and South poles. He made millions investing in industrial processes, pilots his own jet and helicopter, conversing in seven languages, proficiency in Arabic came in handy during 20 years as a U.S. Naval Reserve Intelligence officer, top-secret clearance. He flies rescue dogs to new homes in his jet, retreats to a workshop in his Dallas garage where he makes fountain pens, and attends to his collection of cars. He’s not someone who approaches life in half measures. He’s been on a boat exploring the deepest parts of the ocean for, like, the last year or two. Let’s get him on. I think we tried once.

Colby: Victor Vescovo?

Meb: Yeah, he seems super rad. This is the outside article. We’ll put in the show note links, listeners. That’s all I got, though. So, let’s do it again, listeners. Send in any questions, any ideas, if you have things you want us to touch on on-air. Let us know. We’ll hit them. And then sign up for The Idea Farm, We’d love you guys to join us. Send us some feedback on that as well. So, thanks for listening, friends, and good investing.

Podcast listeners, we’ll post show notes to today’s conversation at If you love the show, if you hate it, shoot us feedback at We love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.



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