Nov 10, 2026 · 52 min
Faber urges investors to diversify before leadership shifts
Meb Faber: 2 Big Mistakes Investors Make With Their Portfolios
The episode tests whether long-term optimism can coexist with expensive U.S. stocks, inflation risk, severe drawdowns, and changing market leadership.
- 1Compounding and ownership of productive businesses have historically rewarded investors more reliably than short-term speculation.
- 2Faber argues that concentrated U.S. mega-cap exposure leaves portfolios vulnerable to valuation resets, inflation, and leadership changes.
- 3A written plan with guardrails, low costs, tax awareness, and global diversification can reduce emotional decisions during market extremes.
Don't miss
Faber argues that a written investment plan with predefined guardrails matters most when gains, losses, and market extremes make emotional decisions tempting.
The brief
Meb Faber, author of Investing in America, frames 250 years of market history as an argument for compounding and productive businesses over COVID-era speculation.
American markets have survived wars, depressions, crashes, and technological manias, but Faber says resilience is not a reason to ignore today’s valuations or drawdown risk.
His portfolio prescription is deliberately broad: look beyond expensive U.S. mega-cap stocks toward foreign markets, value strategies, and real assets as leadership changes.
Faber’s sharpest practical point is that most investors lack a written plan for gains and losses, leaving emotions to make decisions at market extremes.
He remains optimistic about the next 25 years, while warning that cash, private-market hype, dividends, and other products can obscure taxes, fees, inflation, and risk.
What was said on this episode
40 statements · 18 positive · 17 negative · 1 mixed · 4 neutral
Money education should begin in elementary school.
“I think we should teach money starting in elementary school.”
Listen at 2:19
Hyperactive trading, zero-day options, and prediction markets are poor investment methods.
“these are very bad, terrible, no good, awful ways to invest.”
Listen at 2:45
One dollar invested in American markets can grow to roughly $200 million.
“One dollar turns into tens of millions of dollars today. I think it's actually like 200 million.”
Listen at 3:47
Long-term stock-market investing can build wealth without gambling or hyperactive trading.
“You just have to invest along with this amazing, amazing engine of creative destruction in free markets that we call the stock market.”
Listen at 4:03
A 10% annual return over 50 years turns $10,000 into $1 million.
“In over 50 years, if you do 10% a year, that's 100 bagger. 10 grand turns into a million bucks.”
Listen at 6:50
Stocks become less volatile than bonds over approximately 20 years.
“Once you zoom out, stocks become less volatile than bonds. And that really happens at sort of the 20-year time frame.”
Listen at 7:10
Investing in only one country is a poor portfolio strategy.
“investing in just one country, despite how much I love the U.S., is a terrible idea.”
Listen at 9:43
U.S. stocks are unlikely to repeat 15% annual returns soon.
“I wouldn't expect 15% returns like we've seen since 2009.”
Listen at 10:22
Valuation differences matter less over horizons exceeding 20 years.
“Over 20 years plus, the valuations start to wash out.”
Listen at 10:38
Investors should diversify globally.
“We think it absolutely makes sense to diversify globally.”
Listen at 10:50
Investors should prepare for stocks to decline 50%.
“Are you mentally prepared for stocks to go down 50 percent?”
Listen at 11:16
Value, shareholder-yield, mid-cap, and small-cap stocks are much cheaper than mega-cap technology companies.
“all of which we think have a Grand Canyon-wide valuation spread to a lot of these big tech companies.”
Listen at 14:28
Non-U.S. markets currently have more reasonable valuations than U.S. markets.
“the rest of the world looks much more reasonable.”
Listen at 14:52
A rotation away from U.S. mega-cap stocks has already begun.
“the healthiest outcome is the rotation, which I think has already started two years ago.”
Listen at 15:26
The S&P 500 need not be an investor’s entire allocation.
“The default, though, doesn't have to be the S&P 500 and it doesn't have to be all of your allocation.”
Listen at 16:09
“over the next decade, on average, returns have never been above average for any country we've ever found.”
Listen at 18:05
Investors should be cautious after unusually strong U.S. market performance.
“you should perhaps be cautious”
Listen at 18:57
Global diversification is important for portfolio survival.
“diversifying globally, I think, is a huge key to survival.”
Listen at 19:34
Most investors lack meaningful real-asset exposure.
“investors almost never have any real assets.”
Listen at 19:42
Investors should consider tilting portfolios toward value stocks.
“tilting towards value, particularly right now, I think is a very thoughtful idea.”
Listen at 20:01
A globally diversified, real-asset, value-tilted portfolio may outperform institutions over time.
“that's a pretty good portfolio to start as your base case, starting ground that I think will probably outperform most institutions over time.”
Listen at 20:22
The U.S. and non-U.S. markets have an exceptionally wide valuation gap.
“This is arguably the biggest valuation spread we've ever seen between the U.S. and the rest of the world”
Listen at 21:43
Investors are unlikely to reallocate from U.S. stocks until a major personal or market shock.
“I don't think anybody's going to move until one of the three D's happen, and that's death, divorce, or depression”
Listen at 22:35
Stocks can produce no gains for a decade.
“there's been plenty of periods where, hey, stocks can go nowhere for a decade.”
Listen at 22:54
Approximately 99% of investors lack a written investment plan.
“99% of you, the answer is no.”
Listen at 31:14
Without written guardrails, investors may damage portfolios at the worst time.
“if you don't have a plan, if you don't have structured guardrails, you're probably gonna nuke your portfolio at the absolute worst time.”
Listen at 33:18
Portfolio structure, investing consistently, and minimizing taxes and fees deliver most investor success.
“focusing on things like getting the structure right, putting money into work, leaving it alone, paying low taxes, low fees, low expenses. Like that gets you 90% of the way there.”
Listen at 34:15
Successful investing requires a time horizon measured in decades.
“having a long-term time rise. And listeners, that doesn't mean day, week, hour, month. decades.”
Listen at 34:38
Financial products marketed as democratization often carry high fees.
“Every time I hear the word democratize, I hear someone's about to charge me a lot of fees.”
Listen at 35:15
Investors should reject most complex private-market offerings.
“99% of the time, we should say no.”
Listen at 36:18
A simple global portfolio should be bought, held, and rebalanced annually.
“I'm going to buy and hold. I'm going to rebalance it once a year.”
Listen at 36:25
Farmland is an attractive asset class.
“Farmland, fantastic asset class.”
Listen at 37:05
Most investors do not need private equity or private credit.
“you don't need it”
Listen at 37:27
Most complex, expensive investment strategies are predatory.
“the vast majority of these crazy, awful, no-good strategies are predatory”
Listen at 41:01
Many investors mistakenly view dividends as bonus payments rather than capital distributions.
“when a company pays a dividend the stock doesn't go down meaning it's like a bonus”
Listen at 42:08
Berkshire Hathaway has never paid a dividend, according to Meb.
“Berkshire Hathaway has never paid a dividend.”
Listen at 43:07
Treasury bills are currently down 25% after inflation.
“T-bills are currently in a 25% drawdown after inflation.”
Listen at 46:41
A mixed global portfolio can exceed T-bill returns by several percentage points with similar risk.
“you add a couple percentage points of return over T-bills over time with similar levels of volatility and risk.”
Listen at 47:31
Space development will advance substantially over the next five to twenty years.
“I think it's going to be a lot of fun to watch that developed over the next 10. 20 years, even the next five years.”
Listen at 48:20
A 50% bear market remains possible despite optimism about space.
“That doesn't mean that we won't see a 50% bear market.”
Listen at 48:26
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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