Webinar Replay: Cambria Global EW 2 ETF and 351 ETF Conversions (GEQ) | Meb Faber
Summary
- Argues for a major shift from US market dominance to a "bull market in diversification," with global assets (foreign developed, emerging markets, gold, silver) beginning to outperform after a long period of US large-cap leadership.
- Highlights extreme single-market performance, noting South Korea's market was up ~180% over a one-year period (though has since pulled back).
- Promotes the 351 ETF exchange as a tax-deferred method for investors to diversify out of highly appreciated, concentrated stock positions (e.g., single stocks, direct indexing portfolios, unbalanced 60/40 portfolios) into a more diversified ETF.
- Strongly criticizes market-cap weighting as having "no tether to value," creating concentration risk, and being particularly risky at current elevated valuations, similar to the late 1990s.
- Believes any non-market-cap weighting methodology (e.g., equal weight, fundamental weight) likely outperforms cap-weight by ~1% per year over the long term, despite periods of significant underperformance.
- Advocates for a significant (10-20%) allocation to trend-following strategies, calling it the "premier diversifier" to a traditional buy-and-hold portfolio.
- Suggests foreign equities could see an "extended move" due to a combination of undervaluation, recent outperformance, momentum, and chronic under-allocation by US investors.
- Notes that real assets (commodities, commodity equities) can act as a hedge in a portfolio overly concentrated in US tech, contrasting today's 3% energy weight in the S&P 500 with the 25-33% weight in the 1970s.
- Predicts that 351 ETF conversions will hit the mainstream by 2026, though currently 90-95% of financial advisors are still unaware of the mechanism.
- Identifies key portfolio mistakes: paying high fees/taxes, lack of global diversification, no real asset exposure, and no tilt to value or trend.
Trade Ideas
Speaker states foreign and emerging markets had a "monster year" (e.g., +30%), and you could see an "extended move in foreign equities over the next few years." This is due to a combination of relative undervaluation, recent outperformance, positive momentum, and most investors being structurally under-allocated to non-US markets after a long cycle of US dominance. LONG because the shift away from US concentration and toward global diversification is believed to be in its early stages and could persist for years. A resurgence of US market strength and dollar momentum could halt or reverse the relative outperformance.
Speaker explicitly recommends a 10-20% allocation to trend-following strategies for most advisors, stating it is "about as close as you can get" to a magic free diversifier and is the "premier diversifier" to a buy-and-hold portfolio. Trend-following provides an asset-class and approach-agnostic source of returns that is historically uncorrelated to traditional equities, improving portfolio resilience. LONG because it is viewed as a high-conviction method to address a common portfolio construction mistake and improve risk-adjusted returns over the long term. Extended periods of underperformance (e.g., during strong, steady bull markets) and implementation costs.
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This Meb Faber Show video, published March 24, 2026, features Meb Faber discussing VEA, DBMF. 2 trade ideas extracted by AI with direction and confidence scoring.