Author Topic: Meb Faber's Personal Portfolio  (Read 3782 times)

hodedofome

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Meb Faber's Personal Portfolio
« on: October 16, 2014, 02:43:14 PM »
Thought this was interesting:

http://mebfaber.com/2014/10/16/omaha-process-skin-in-the-game/

"Lee: In a recent blog post, you disclosed the rough breakdown of your personal portfolio. Would you mind disclosing exact proportions for your liquid assets, and why you’ve made those bets?

Faber: I think it is hugely important to have a money manager with skin in the game. In addition, many commentators and portfolio managers are willing to provide you with plenty of advice, but just try getting them to disclose how they invest their own money–impossible! If you don’t believe me, or want to see how much your portfolio manager is invested in his own funds, the filings are public, so you can view them at any time. Next time you are chatting with your advisor or broker, or hear someone giving lots of advice at a conference, ask them one simple question: “Specifically, what do you do with your money?”

My net worth is dominated by my ownership in Cambria Investment Management. Next in line would be farmland and real estate owned with my two brothers. I also hold equity stakes in a few other private companies (including The Idea Farm and AlphaClone). On the liquid side, I have 100% invested in our funds. All of my cash flows simply funnel into these four investments on a periodic basis. My horizon is very long-term and I have a high risk tolerance.

The breakdown is currently:

60% Global Tactical Hedge Fund (private)

20% Global Value ETF (GVAL)

10% Shareholder Yield ETF (SYLD)

10% Foreign Shareholder Yield ETF (FYLD)

The percent allocation in the three ETFs is actually higher than stated above, as the Global Tactical private fund is composed of ETFs. I will be adding to this list as we launch new funds in the coming months. Specifically, my assets in the hedge fund will transfer to the Global Momentum ETF when it launches.

As you can see, my holdings are dominated by foreign stocks, portfolios that can and do have the ability to tactically move to cash (and have a high exposure to real assets), and stocks that are shareholder-friendly and returning lots of cash to investors. I am least exposed to traditional bonds, but for me they are not that attractive at these levels for my time horizon and goals. If stocks experienced a large drawdown of 30% to 90%, I would shift more and more of the allocation to the equity portion. As I’ve mentioned in our new book, I don’t think U.S. stocks are that attractive currently, but I am very positive on foreign stocks."

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This is actually very similar to my 'ideal portfolio' that I've been working on for the past year or so. I don't currently have my money invested this way, but I've been looking into the future where I'll have to worry more about taxes than I do today. Currently even short-term trading doesn't generate a high tax bill for me, but one day it will. By then I'll have to trade less and less in taxable accounts, and increase my time-frame, so that as much as possible I'm only seeing long-term capital gains. I came up with:

70-80% Diversified Trend Following/Tactical Asset Allocation

20-30% Long-only stock strategies - Global CAPE investing, Magic-Formula style systematic value, etc

Rebalance the weights annually, and weights may change based on which strategy has sucked the most in the past 3-5 years. In other words, that's about the timeframe that most people will give up on a stock or a strategy if it's been performing poorly. Therefore (if the strategy is actually robust) that's about the time that the strat will start performing well again. Incidentally, it's been the past 5 years ('09-'13) that diversified trend following has been sucking, and this year it's back to outperforming. It usually doesn't work that perfectly however.

milesdividendmd

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Re: Meb Faber's Personal Portfolio
« Reply #1 on: October 16, 2014, 04:08:53 PM »
The problem with Faber's "disclosure" is that we have no idea what's in the hedge fund, his biggest holding.  Is he holding managed futures?  options? No idea.

Also I'd prefer just low cost international and domestic value funds to holding all cambria bets.

I love Faber, but it's completely unclear at this point how good he is at running ETF's.  He may be an excellent idea guy with poor execution for all we know.

hodedofome

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Re: Meb Faber's Personal Portfolio
« Reply #2 on: October 17, 2014, 08:00:23 AM »
I get the feeling that the tactical hedge fund is very similar to his Ivy Portfolio strategy. However, he mentions that once their global momentum ETF becomes available, he'll switch it to that. You could classify my main strategy as global momentum.