Meb Faber

"SYLD... has struggled recently, placing it in the bottom 11% versus its category in 2025... P/E for SYLD was 12.52... S&P a whopping 27.61." The fund has underperformed for two consecutive years (2024-2025), creating negative sentiment and outflows. However, the underlying holdings are trading at less than half the valuation of the broad market (12.5x vs 27.6x). Historically, buying quality strategies during periods of peak pessimism and low valuation leads to significant mean reversion and outperformance. Long positions are warranted to capture the valuation gap as the "rough patch" normalizes. The "value trap" dynamic could persist longer than expected; the strategy is actively managed and may deviate significantly from benchmarks.

Faber notes that while the US is trading at a "nosebleed" 40x P/E (implying near-zero real returns for the next decade), Foreign Developed markets are in the low 20s, and Deep Value/Emerging markets are in the low teens. This valuation spread is as wide as it was in the 1980s (Japan vs. World). The mean reversion trade has already started (2025 was a monster year for ex-US), and momentum is favoring the cheapest global assets over the expensive US market cap leaders. Long Global Value and International Shareholder Yield to capture the continued rotation out of the US. A "melt-up" continuation in US tech/growth that defies historical valuation gravity.

Faber notes that while the US is trading at a "nosebleed" 40x P/E (implying near-zero real returns for the next decade), Foreign Developed markets are in the low 20s, and Deep Value/Emerging markets are in the low teens. This valuation spread is as wide as it was in the 1980s (Japan vs. World). The mean reversion trade has already started (2025 was a monster year for ex-US), and momentum is favoring the cheapest global assets over the expensive US market cap leaders. Long Global Value and International Shareholder Yield to capture the continued rotation out of the US. A "melt-up" continuation in US tech/growth that defies historical valuation gravity.

Meb confirms Gold, Silver, and Copper are hitting all-time highs (Silver broke $120). He notes that trend followers are "chock full" of these assets and that "normal" investors have zero exposure (under-owned). This is a classic Trend Following setup. The assets are breaking out to new highs, institutional ownership is low, and the "fear of missing out" (FOMO) phase hasn't fully hit the retail public yet. The breakout signals a continuation of the trend. Long Precious Metals and Industrial Metals via liquid ETFs. A sharp reversal in inflation expectations or a liquidity crunch causing a sell-everything moment.

Emerging market equities are deeply undervalued, massively under-owned by US investors despite representing over half of world GDP, and have been performing exceptionally. A FOMO-driven reallocation could push them much higher.

VAMO is an ETF that buys US value stocks and dynamically hedges market exposure (0-100%) based on valuation and trend, making it ideal for investors nervous about an expensive S&P 500 while still participating in upside.

The biggest Achilles heel of market cap weighting is people are kind of stuck in these positions and they get bigger and bigger. Theoretically, if you could sell out of them, recycle into for example small caps, smaller companies, that theoretically makes the ecosystem a little bit stronger. The current tax code creates a dead weight loss that traps capital in massive, appreciated mega-cap stocks because investors refuse to pay the capital gains tax to sell. As the financial industry scales tax-efficient diversification tools, this trapped capital will finally be unlocked and recycled down the market cap spectrum into under-owned, smaller companies. LONG. The proliferation of tax-efficient exchange funds and ETF conversions will systematically funnel capital out of the top-heavy indices and into broader, smaller-capitalization equities. The IRS cracks down heavily on Section 351 and 721 exchanges, keeping capital permanently trapped in mega-cap tech stocks due to the friction of capital gains taxes, or small caps continue to suffer from higher relative interest rates.

Faber notes that while the US is trading at a "nosebleed" 40x P/E (implying near-zero real returns for the next decade), Foreign Developed markets are in the low 20s, and Deep Value/Emerging markets are in the low teens. This valuation spread is as wide as it was in the 1980s (Japan vs. World). The mean reversion trade has already started (2025 was a monster year for ex-US), and momentum is favoring the cheapest global assets over the expensive US market cap leaders. Long Global Value and International Shareholder Yield to capture the continued rotation out of the US. A "melt-up" continuation in US tech/growth that defies historical valuation gravity.

Meb states that Trend Following (Managed Futures) solves portfolio problems by capturing "right tail" events (like the massive move in commodities) while chopping off the "left tail" (drawdowns in stocks). He mentions these strategies are up double digits year-to-date (Jan 2026). In a world where stocks are expensive and commodities are volatile/trending, traditional 60/40 portfolios fail. Managed Futures automatically adapt to go long commodities and short bonds/stocks if trends dictate, acting as a necessary diversifier. Long Managed Futures strategies to hedge against US equity valuation compression. Whipsaw markets (trendless volatility) where the strategy bleeds slowly.

Meb notes that the S&P 500 is trading at a CAPE ratio of 40+, while the spread between Market Cap Weight and Equal Weight is extreme (7th percentile on a 5-year basis). He explicitly advocates for "ABMCW" (Anything But Market Cap Weight). When the largest stocks (Mega Caps) become historically expensive, the index becomes top-heavy. Equal Weight indices (RSP) rebalance away from overvalued giants into the average stock, offering a valuation safety net and mean-reversion potential. Long Equal Weight S&P 500 to capture US exposure without the valuation risk of the "Mag 7" successors. Momentum in Mega Caps continues irrationally (the "melt-up" scenario).

Meb confirms Gold, Silver, and Copper are hitting all-time highs (Silver broke $120). He notes that trend followers are "chock full" of these assets and that "normal" investors have zero exposure (under-owned). This is a classic Trend Following setup. The assets are breaking out to new highs, institutional ownership is low, and the "fear of missing out" (FOMO) phase hasn't fully hit the retail public yet. The breakout signals a continuation of the trend. Long Precious Metals and Industrial Metals via liquid ETFs. A sharp reversal in inflation expectations or a liquidity crunch causing a sell-everything moment.

Meb highlights that while the US is at ~40x PE, the rest of the world is in the "teens" or "single digits" (specifically mentioning Brazil). He notes "European banks outperforming Mag 7" and a rotation into value. Valuation spreads this wide historically lead to a rotation. Investors seeking yield and reasonable entry points will flow from the expensive US market to cheap International Value and Emerging Markets. Long International Value (EFV) and specific cheap EM countries like Brazil (EWZ). A global recession drags down all equities regardless of valuation; US dollar strength.

Global REITs are putting up great returns and serve as a necessary real asset component that is typically missing from traditional US-only allocations.

For taxable investors focused on compounding, targeting stocks with low to no dividend yield via the TAX ETF is vastly more tax-efficient than high dividend strategies that force investors to pay taxes on reinvested dividends.

The Cambria Trinity ETF (TRTY) forms an ideal all-in core allocation by combining half buy-and-hold global asset allocation with half trend following.